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Sustainable Gold Mining – The Impact Of GHG Emissions BY: Sam Ulrich Principal Geologist 16 September 2020
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Page 1: Sustainable Gold Mining – The Impact Of GHG Emissions...Relationships –GHG Emissions Intensity, Costs & Gold Grade (1 Jan 2014 - 30 June 2018) 0 200 400 600 800 1,000 1,200 1,400

Sustainable Gold Mining – The Impact Of GHG Emissions

BY: Sam UlrichPrincipal Geologist16 September 2020

Page 2: Sustainable Gold Mining – The Impact Of GHG Emissions...Relationships –GHG Emissions Intensity, Costs & Gold Grade (1 Jan 2014 - 30 June 2018) 0 200 400 600 800 1,000 1,200 1,400

Environment

• Environmental stewardship

• Biodiversity, land use and mine closure

• Water, energy and climate change

Social

• Safety and health

• Human rights and conflict

• Labour rights

• Working with communities

Governance

• Ethical conduct

• Understanding our impacts

• Supply chain

Responsible Gold Mining Across the Mine Life CycleWorld Gold Council 2019

What is Sustainable Gold Mining?

Source: OceanaGold 2

Page 3: Sustainable Gold Mining – The Impact Of GHG Emissions...Relationships –GHG Emissions Intensity, Costs & Gold Grade (1 Jan 2014 - 30 June 2018) 0 200 400 600 800 1,000 1,200 1,400

Key climate risks to gold mining are water scarcity and extreme weather

33

Page 4: Sustainable Gold Mining – The Impact Of GHG Emissions...Relationships –GHG Emissions Intensity, Costs & Gold Grade (1 Jan 2014 - 30 June 2018) 0 200 400 600 800 1,000 1,200 1,400

Metrics Used – GHG Emissions Intensity

Type of Mine

GH

G E

mis

sio

ns

Inte

nsi

ty

Type of Mine

GH

G E

mis

sio

ns

Inte

nsi

ty

Reported by gold ounces produced Reported by ore tonnes processed

UG

OP/UG

OP

UG

OP/UG

OP kg CO2-e/t orekg CO2-e/oz Au

• Not affected by gold grade

• Not related to saleable product

• Affected by gold grade

• Related to saleable product

My personal preference from a mineral economics and finance perspective

4

Page 5: Sustainable Gold Mining – The Impact Of GHG Emissions...Relationships –GHG Emissions Intensity, Costs & Gold Grade (1 Jan 2014 - 30 June 2018) 0 200 400 600 800 1,000 1,200 1,400

Relationships – GHG Emissions Intensity, Costs & Gold Grade (1 Jan 2014 - 30 June 2018)

0

200

400

600

800

1,000

1,200

1,400

1,600

0 200 400 600 800 1,000 1,200 1,400 1,600

Real A

ISC

(U

S$/o

z)

GHG Emissions Intensity (kg CO2-e/oz AuEq)

0

200

400

600

800

1,000

1,200

1,400

1,600

0 200 400 600 800 1,000 1,200 1,400 1,600

Real A

ISC

(U

S$/o

z)

GHG Emissions Intensity (kg CO2-e/oz AuEq)

UG

OP & UG

OP

Outlier

Low Cost

Low GHG

High Grade

Low Cost

High GHG

Low Grade

High Cost

High GHG

Low Grade

High Cost

Low GHG

High Grade

Cadia

Mean AISC

Mean G

HG

em

issio

ns

Mt Carlton

Edna May

Telfer

Boddington

Gwalia

Sunrise Dam

Circle size represents gold grade

Simple Relationships ExistHigher grade → Lower GHG

emissions intensityHigher grade → Lower costs

OutliersFosterville & Stawell minesVictorian grid electricity –

Brown Coal

Energy SourceImportant to understand

each mines main sources of energy

5

Page 6: Sustainable Gold Mining – The Impact Of GHG Emissions...Relationships –GHG Emissions Intensity, Costs & Gold Grade (1 Jan 2014 - 30 June 2018) 0 200 400 600 800 1,000 1,200 1,400

Australia GHG Emissions Intensity Curve30 June 2018

1. Gwalia; 2. Mt Carlton; 3. Agnew; 4. Granny Smith; 5. Tanami; 6. Peak; 7. Fosterville; 8. Carosue Dam; 9. Cracow; 10. Sunrise Dam; 11. Mount Monger; 12. St Ives; 13. Combined Jundee, Kalgoorlie and Paulsens; 14. Tropicana; 15. Combined Duketon North and South; 16. Plutonic; 17. Combined Central Murchison, Fortnum, Higginsville and South Kalgoorlie; 18. Tomingley; 19. Kalgoorlie (KCGM); 20. Mungari; 21. Combined Mt Magnet Operations and Edna May; 22. Thunderbox; 23. Matilda-Wiluna; 24. Paddington; 25. Cadia Valley; 26. Darlot; 27. Ravenswood; 28. Boddington; 29. Telfer; 30. Mt Rawdon; 31. Cowal.

Source: Ulrich et al., 2020a

6

Page 7: Sustainable Gold Mining – The Impact Of GHG Emissions...Relationships –GHG Emissions Intensity, Costs & Gold Grade (1 Jan 2014 - 30 June 2018) 0 200 400 600 800 1,000 1,200 1,400

Relationship – GHG Emissions Intensity, AISC with Mined Ore Source

0

200

400

600

800

1,000

1,200

0

100

200

300

400

500

600

700

800

900

0 2 4 6 8 10 12 14 16 18 20

Real A

ISC

(U

S$/o

z)

GH

G Inte

nsity (

kg C

O2-e

/oz A

uE

q)

Years

Phase 1OP Mining

Phase 2OP & UG Mining

Phase 3UG Mining

Mean Real AISC

Mean GHG Emissions Intensity

• OP mines – Lowest costs, highest GHG emissions intensity• OP & UG mines – Highest costs lower GHG emissions intensity• UG mines – Lowest GHG emissions intensity and costs higher than

OP, but lower than OP & UG

Source: Ulrich et al., 2020a

7

Page 8: Sustainable Gold Mining – The Impact Of GHG Emissions...Relationships –GHG Emissions Intensity, Costs & Gold Grade (1 Jan 2014 - 30 June 2018) 0 200 400 600 800 1,000 1,200 1,400

Country Average GHG Emissions Intensity Curve

1. Finland, 2. Bulgaria, 3. Canada, 4. Armenia, 5. Argentina, 6. Brazil, 7. New Zealand, 8. Democratic Republic of the Congo, 9. Tanzania, 10. Chile, 11. Indonesia, 12. Senegal, 13. Peru, 14. Laos, 15. Suriname, 16. Ghana, 17. Turkey, 18. Philippines, 19. Guinea, 20. Côte d'Ivoire, 21. United States of America, 22. Mexico, 23. Burkina Faso, 24. Mali, 25. Australia, 26. Papua New Guinea, 27. Kyrgyz Republic, 28. Namibia, 29. Egypt, 30. Russian Federation, 31. Dominican Republic, 32. Mauritania, 33. Greece, 34. Kazakhstan, 35. South Africa.

Can

ada

USA Au

stra

lia

Ru

ssia

Sou

th A

fric

a

Gh

ana

Source: Ulrich et al., 2020b

Page 9: Sustainable Gold Mining – The Impact Of GHG Emissions...Relationships –GHG Emissions Intensity, Costs & Gold Grade (1 Jan 2014 - 30 June 2018) 0 200 400 600 800 1,000 1,200 1,400

Impact of a Carbon Price Geographically

Hypothetical US$50/t and US$100/t carbon price used

Competitive advantage exists between countries due to primary energy sources• Low emissions energy (hydro, nuclear, solar, wind) versus High emissions

energy (fossil fuels - coal, diesel, gas). • Example Canada v Australia v South Africa

Source: Ulrich et al., 2020b

9

Page 10: Sustainable Gold Mining – The Impact Of GHG Emissions...Relationships –GHG Emissions Intensity, Costs & Gold Grade (1 Jan 2014 - 30 June 2018) 0 200 400 600 800 1,000 1,200 1,400

Declining Gold Grades

1991-2006 Study Average

40

%

2014-2018Study Average

616 kg CO2-e/oz Au

439 kg CO2-e/oz Au2006 - 2.44 g/t Au

2017 - 1.83 g/t Au

Forecast2029 - 1.02 g/t Au

49

%

32

%

34

%

OP

UGOP & UG

2029Forecast GHG

Emissions Intensity

Declining gold grades can negate the impact of real reductions in GHG emissions on an emissions intensity basis per ounce.

Source: CSA Global 2020b

10

Page 11: Sustainable Gold Mining – The Impact Of GHG Emissions...Relationships –GHG Emissions Intensity, Costs & Gold Grade (1 Jan 2014 - 30 June 2018) 0 200 400 600 800 1,000 1,200 1,400

Financial, Investment and Value Implications

Lower Cost of Equity & Debt Capital

Carbon Risk Awareness

Companies

Higher Carbon Risk

Lower Carbon Risk

GHG Emissions Abatement

Funds

Energy Substitution

Energy Efficiencies

Lenders

Source: CSA Global 2020c

Higher Firm Values

StrandedGold Assets?

Potentially

Future – Low-Carbon ‘Green’ Gold Premium

11

Page 12: Sustainable Gold Mining – The Impact Of GHG Emissions...Relationships –GHG Emissions Intensity, Costs & Gold Grade (1 Jan 2014 - 30 June 2018) 0 200 400 600 800 1,000 1,200 1,400

Climate Risks are Financial Risks - Considerations

Commodity differentiation, is it important?

Which reporting metrics do I use?

What are Scope 3 Emissions?

Interpretation? What does it mean?

How do I avoid poor disclosure and communication of GHG Emissions?

Do I understand the benefits or what the ramifications are?

Page 13: Sustainable Gold Mining – The Impact Of GHG Emissions...Relationships –GHG Emissions Intensity, Costs & Gold Grade (1 Jan 2014 - 30 June 2018) 0 200 400 600 800 1,000 1,200 1,400

Climate Risks are Financial Risks

FINANCIAL BENEFITS EXIST

• Available to junior companies• Access to lower cost debt and equity capital• Lower carbon risk higher firm value.

CHALLENGES

• Declining gold grades• Reporting and messaging• Not understanding the benefits or ramifications.

13

Page 14: Sustainable Gold Mining – The Impact Of GHG Emissions...Relationships –GHG Emissions Intensity, Costs & Gold Grade (1 Jan 2014 - 30 June 2018) 0 200 400 600 800 1,000 1,200 1,400

Thank You!

Sam Ulrich

CSA Global

[email protected]

Page 15: Sustainable Gold Mining – The Impact Of GHG Emissions...Relationships –GHG Emissions Intensity, Costs & Gold Grade (1 Jan 2014 - 30 June 2018) 0 200 400 600 800 1,000 1,200 1,400

CSA Global, 2020a. Part 1 – An Introduction to GHG emissions in gold mining. https://www.csaglobal.com/videos/

CSA Global, 2020b. Part 2 – GHG emissions in gold mining – Australia in depth. https://www.csaglobal.com/videos/

CSA Global, 2020c. Part 3 – GHG in gold mining globally. https://www.csaglobal.com/videos/

Schodde, R., 2017. Long-term forecast of Australia’s mineral production andrevenue. The outlook for gold: 2017-2057. MinEx Consulting

Ulrich, S., Trench, A., Hagemann, S., 2020a. Greenhouse gas emissions and production cost footprints in Australian gold mines. Journal of Cleaner Production

Ulrich, S., Trench, A., Hagemann, S., 2020b. Climate change and gold mining. University of Western Australia working manuscript.

References


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