The mining industry: An essential part of a renewable future20 February 2020

Rising sea levels, intense heat waves and the endangering of even more animal species have led to global calls for de-escalating the dire consequences of climate change. This has caused a shift towards greener supply chains, and an aversion towards industries that are considered “dirty”, such as mining.

Following the Paris Agreement, and global pressure, governments and large businesses are trying to reduce energy-related carbon dioxide emissions. They have sought to achieve this primarily through deployment of renewable forms of energy, such as wind, solar and hydroelectric power.

The International Renewable Energy Agency predicts that to meet climate targets, the total share of renewable energy must rise by around two-thirds by 2050, suggesting that renewables can make up 60% or more of many countries’ total final consumption. This demand means that renewable energy sources will need to increase their capacity and generation. For example, the global cumulative installed capacity of onshore wind will need to increase more than three-fold by 2030 and nine-fold by 2050. For offshore wind, the increase would need to be ten-fold by 2030 alone[1]. In terms of solar power, global capacity will need to grow from a total of 480 gigawatts in 2018 to 2,840 gigawatts by 2030 and 8,519 gigawatts by 2050[2].

MINING INDUSTRY AND SUSTAINABLE ENERGY

The mining industry has faced significant challenges, from pressure from activists to stop carbon emissions and projects considered harmful to the environment, to investors and governments abandoning coal stocks from their portfolios. Just recently, both Goldman Sachs and BlackRock have announced new sustainable investment strategies, including lowering direct investment to fossil fuel companies and thermal coal producers.

However, the discussions around sustainable energy and the global supply chain are at odds with the fact that a plan for reliance on renewable energy is heavily dependent on the mining industry providing the metals and minerals necessary for its construction and operation.

Take for example rare earth metals, such as dysprosium and neodymium. Both metals are used to make alloys for the permanent magnets found in wind turbine generators, with China mining about 63% of the global rare earth market. Currently, a single five-megawatt wind turbine requires one tonne of alloy. Given the future forecasts for wind power, the global demand for neodymium and dysprosium is projected to increase by 2.1 times, with 65% of new turbines, installed in the next ten years, incorporating technology needing rare earth metals[3].

Similarly, copper is in high demand due to its high conductivity and durability. Within an installed wind turbine, the copper content is 2.5 – 6.4 tonnes per megawatt, used in the generator, the transformers and cabling[4]. The global wind market currently requires an average of 450 kilotons of copper per year and this is expected to increase to 600 kilotons per year by 2028[5]. This figure is likely to rise substantially considering that future requirements for renewable energy will lead to larger wind turbines and notwithstanding copper needs for other technologies, such as solar power and electric vehicles. Demand for copper due to electric vehicles alone is expected to increase by 1,700 kilotons by 2027 given that electric vehicles are projected to reach more than 7% of annual vehicle sales by 2025[6]. Whilst a conventional car requires 18 – 49 pounds of copper for its construction, a battery electric vehicle requires around 183 pounds.