Sorowako, Indonesia — Amid rising demand for critical minerals driven by the transition to renewable energy, mining companies are actively seeking cleaner energy sources to reduce greenhouse gas emissions. Although mining operations currently contribute to 4%-7% of global greenhouse gas emissions, there is growing pressure from downstream customers and governments to establish more sustainable supply chains.
The Indonesian island of Sulawesi is home to a nickel smelter operated by global mining firm Vale, which churns out 75,000 tons of nickel annually. The unique aspect of this facility is its power source—electricity generated entirely from three hydroelectric dams. This clean energy approach is a significant step towards reducing emissions, given that mining activities have historically been associated with heavy greenhouse gas emissions.
According to Vale, utilizing hydroelectricity rather than diesel can result in a reduction of over 1.115 million tons of carbon dioxide equivalent annually. Remarkably, Vale claims to have already reduced its greenhouse gas emissions by nearly 20% since 2017, a noteworthy achievement within the mining industry.
The surge in demand for materials necessary for the production of batteries, electric vehicles, appliances, and solar panels has heightened concerns regarding the carbon emissions associated with mining and refining processes. As a result, the need for sustainable practices that minimize the environmental impact of the mining sector has become paramount.
To meet this challenge, mining companies are exploring improved technologies, responding to customer demands for cleaner supply chains, and adhering to clean energy policies. These steps are essential for advancing sustainable mining and refining practices while simultaneously meeting the increasing global demand for critical minerals.
In addition to Vale, numerous companies and countries worldwide are taking measures to reduce their reliance on fossil fuels in mining operations. For instance, Chile employs solar power to support its mining sector, which consumes a substantial portion of the country’s electricity to extract copper, lithium, and other vital materials. Similarly, wind power has been harnessed to electrify Canada’s Raglan Mine, showcasing the industry’s commitment to cleaner energy sources.
The move towards cleaner energy in mining operations is also being fueled by the financial and environmental commitments of multinational corporations such as Volvo, Mercedes, Hyundai, and Apple. These companies are actively seeking materials produced through sustainable practices to align with their environmental, social, and governance (ESG) commitments.
Indonesia, the world’s largest nickel producer, is now considering the development of its domestic industries for critical minerals. Indonesian President Joko Widodo’s visit to Vale Indonesia’s Sorowako facilities in March this year coincided with the signing of a $4.5 billion agreement for a nickel processing plant, backed by Ford Motor Co. This partnership is expected to ensure that the nickel used in electric vehicle batteries aligns with stringent ESG standards.
However, despite progress towards cleaner energy sources, some mining operations may continue to rely on fossil fuels, such as coal. For example, coal is currently used to power drying and reduction kilns at Vale Indonesia’s Sorowako facilities. The company’s CEO, Febriany Eddy, explained that transitioning these operations to liquefied natural gas (LNG), though not perfect, could reduce emissions by 40%, providing the best option currently available.
While the use of LNG as a “bridge fuel” has raised some concerns due to methane and CO2 emissions during production and transport, it remains a practical transitionary solution. Nonetheless, transitioning towards greener energy sources and technology advancements are expected to remain at the forefront of the mining industry’s efforts to reduce carbon emissions.
The initial costs associated with transitioning to renewable energy sources in mining operations can be substantial. However, these investments offer long-term benefits and sustainability advantages. For instance, Vale’s Sorowako facilities were powered by three hydroelectric dams constructed over decades, and they now provide significant savings, particularly during periods of high global energy prices.
Moreover, mining operations powered by renewable energy sources may unlock green financing opportunities and attract future investors. The finance and investment sector is increasingly focused on the environmental and social responsibility of supply chains, with a keen eye on reducing greenhouse gas emissions.
However, achieving a complete phase-out of fossil fuels in the mining industry presents challenges, especially as countries like the United States aim to reshore production of critical materials. The transition will be costly, and consumers and investors alike will need to accept a premium for materials produced using green energy-based processes.
In conclusion, as global awareness of environmental issues grows, the pressure on mining companies to reduce carbon emissions and adopt cleaner energy sources intensifies. While the transition may be complex and expensive, the mining industry’s commitment to sustainability and cleaner practices is critical for the world’s efforts to combat climate change and achieve a greener future.