Gama and Nellie Mutemeri assess the threat posed by greenhouse gas (GhG) emissions to the continent’s lucrative mining sector
CLIMATE change has the potential to cause havoc on one of Africa’s most important sources of foreign currency earnings – mining.
If we consider the fact that between 2000 and 2008 alone, the value created from natural resources in Africa rose from US$39.2bn to $240bn, it becomes imperative that all investment decisions going forward should regard the potential impact of climate change as a top priority.
According to the Intergovernmental Panel on Climate Change (IPCC) global climate is changing significantly, as evidenced by average air and ocean temperatures, widespread melting of snow and ice and rising sea levels.
Scientists predict that as the climate continues to change, with greenhouse gas (GhG) emissions playing a significant part in the phenomenon, we shall experience further changes in average temperature, precipitation, sea level and extreme droughts, floods, heat-waves and storms.
Given that the mining sector worldwide is a major contributor to greenhouse GhG emissions, it is important to consider how the incomes of developing countries which benefit from mining revenues might be impacted by climate change in the long term.
For example, Mozal Aluminium Smelter in Mozambique consumes 900MW of electricity – four times more than the amount of electricity consumed throughout Mozambique.
Of greater significance still is the fact that Mozal, alone, takes out the entire clean electricity from Hydro-Electrica de Cahora Basa dam, leaving Mozambique to supplement with electricity generated from high-polluting coal sources.
Simply put, if nothing is done to halt the damage caused by GhG emissions, the impact that climate change poses to African economies reliant on extractive industries, will be catastrophic.
And if the mining industry were to vanish from the continent, billions of dollars accruing from tax revenues would be lost by countries where mining is a pivotal foreign currency earner. Massive job losses in the technical, scientific and professional services would also hit those economies very hard.
The extent to which the mining industry is able to mitigate its own impact and adapt to climate change will affect long terms success and prosperity and have profound economic consequences for host communities.
The danger to mining operations arises if:
The mining infrastructure is designed assuming the climate is not changing
Mine leadership and management believe that climate change is a minor concern
No climate adaptation planning is included in the mine risk assessments and evaluations
Adaptation planning is also excluded in the post operational phase of the mine.
The implications of severe weather can be devastating. Firstly, transportation routes and mining infrastructure are susceptible to the severity of extreme weather conditions.
Depending on the nature and location of a mine, containment facilities, buildings, energy sources and mine site drainage may be affected by permafrost thaw, rising average temperatures, stronger winds, changing water levels, ice composition, and greater intensity and frequency of precipitation.
Extreme weather can also weaken structural integrity, safety of roads, bridges, pipelines and airstrips. The walls of open pit mines and contaminant pit structures may not safely withstand these severe conditions.
Given that some mineral processing operations are intensively water dependent (e.g. sodium sulphate mining), increased water scarcity could impact on production rates and dust suppression efforts, mine drainage and coverage of tailings.
Some expected changes in climate are more certain than others.
It is expected that global and regional temperatures will continue to increase at a rate of at least 0.2 degree Celsius per decade for the next two decades (IPCC). It is also very likely that heat waves and extreme precipitation will become more frequent.
Global sea levels are expected to rise. However, the extent of that rise is highly uncertain. Overall, the magnitude and extent of any future changes will depend on the amount of additional amount of GHG emitted into the atmosphere.
Needless to say, each country or region is being affected differently by changes in climate. For some, the impact are far more severe, to the extent that they impact negatively on mining operations.
Mining houses, like all businesses tend to respond more effectively when national governments put in place policy or regulatory guidelines to which they can adhere. In the absence of these, the mining companies respond through their normal risk mitigation systems and processes.
However, the African mining houses, like their counterparts worldwide, cannot ignore the fact that investors are increasingly demanding to know how they are strategizing against the impact of rising seas levels, water scarcity and rising temperatures.
Through worldwide projects like the Carbon Disclosure Project (CDP), The Investor Network on Climate Risk and the Institutional Group on Climate Change, investment fund managers are demanding to know risk management strategies for potential asset value damage, additional maintenance costs/upgrades, reduced efficiency, increased risk of regulatory compliance and changes in operational practises resulting from a changing climate.
The manner in which African mining houses respond to challenges brought on climate change has important implications for the continental economy as a whole and for mining dependent communities specifically. Climate concerns are a central fact of business life.
Consequently, adapting to the reality of climate change is in the best interests of the mining companies and communities whose livelihoods are intractably tied to the industry.
To date the response to current and future climate change has been slow. And where there has been a response, it has largely been a reaction to the effects of climate change.
Yet scientific evidence persuasively suggests that future climate change is unavoidable and could be severe if emissions are not quickly and dramatically reduced.
Collaboration between African mining houses, mining associations, regulators, scientists and other industrial actors would greatly enhance success. By taking appropriate steps to adapt, mining companies would, among other things, achieve some of their sustainability goals such as:
Local community engagement
Protection of sensitive eco-systems
Natural resource stewardship
Mining operations tend to be located in remote, challenging regions of the continent. Being that far, it is absolutely critical that scarce water/energy resources, life times of fixed assets, global supply chains and stakeholder interests are given top priority.
Mr Gama and Professor Nellie Mutemeri are senior partners at Mutemeri Consulting, a boutique advisory firm which focuses on mining, energy and climate change on the African continent. They can be contacted via firstname.lastname@example.org