Miners Test Greener Ways to Dig

Date : 07/16/2018 @ 9:59AM
Source : Dow Jones News
Stock : Alcoa Corp. (AA)
Quote : 28.24  0.13 (0.46%) @ 5:05AM

Miners Test Greener Ways to Dig

Alcoa (NYSE:AA)
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By Rhiannon Hoyle 

Miners are considering new ways to make the dirt they dig up green.

Across the U.S. border in Quebec, a research facility will fine-tune a technology that its owners -- Alcoa Corp. and Rio Tinto PLC -- believe could turn aluminum smelters carbon-free for the first time. Another initiative under way in Sweden could see hydrogen replace coking coal in manufacturing steel.

Miners have long seen investing in technology as a way to bring costs down and protect profits during swings in the global economy. But a new force for change has recently emerged: customers such as Apple Inc. and Audi AG that see a marketing advantage in ensuring their products are cleaner and greener than before.

Nestlé SA's coffee brand Nespresso, for example, wants to source all the aluminum for its capsules from sustainably managed operations by 2020, which includes strict limits on greenhouse-gas emissions. Audi introduced sustainability ratings for suppliers a year ago and said that was becoming just as important in determining its purchases as cost and quality.

"You want your green iPhone, not your brown iPhone," said John O'Brien, a clean-technology specialist at Deloitte in Australia.

Alcoa had spent nearly a decade at a site near Pittsburgh testing technology that would release oxygen instead of carbon dioxide during the smelting process when it was approached by Apple. Cupertino, Calif.-based Apple liked the technology's potential but worried how long it would take to become commercially viable.

"An iMac has more than half a pound of aluminum in it, so they are really interested in supporting advancement of technologies that allow them to reduce the footprint of their product," said Vincent Christ, chief executive of the Rio Tinto and Alcoa joint venture, called Elysis.

Sarah Chandler, Apple's senior director of operations and environmental initiatives, said, "We wholeheartedly reject the notion that you can't protect the environment while protecting your bottom line."

For Rio Tinto and Alcoa, it wasn't just about satisfying a big customer. Innovations like electric vehicles and batteries to power homes are deepening markets for a basket of long-ignored commodities such as cobalt. As a result, global mining companies want to shore up demand for the metals and minerals that have long generated the bulk of their profits.

Manufacturing iron, steel and aluminum can be heavily polluting. Together, these sectors account for a combined 30% of direct industrial carbon-dioxide emissions, according to the International Energy Agency.

Producers want to ensure their metals don't get substituted for cleaner alternatives or become exposed to carbon taxes. In the U.S., a group of veteran conservative political leaders recently established a political-action committee to amplify calls for a levy on emissions.

Mr. Christ said low- or no-carbon metal likely can be sold at premium prices, while the technology has the potential to lower costs and lift production each by 15%. The venture aims to begin selling the technology in roughly five years.

Consumer-goods companies concede they were caught off guard by the strength of feeling among their customers about which commodities they use, and in what amounts.

Nespresso had focused on promoting how it sources its coffee when it realized customers were fixated on the packaging, said Daniel Weston, who leads the unit's legal and corporate-affairs team. He also is the chair of the Aluminium Stewardship Initiative, an organization that has been set up to certify aluminum that meets certain environmental, social and governance standards. In April, Rio Tinto became the first company to be certified.

Critics say the mining industry has been slow to embrace change. Rio Tinto and Alcoa's Elysis technology, if commercialized, will be the first significant shift in the way aluminum is made in more than a century.

In the Swedish city of Luleå, steelmaker SSAB AB, iron-ore miner Luossavaara-Kiirunavaara AB and power-generator Vattenfall AB are jointly building a pilot steel factory that will use hydrogen in place of coking coal. They expect the facility to start testing their Hybrit technology in 2020, with a goal of producing fossil-free steel by 2035, SSAB said.

Sweden wants to become a net-zero emissions country in 2045, "so that makes the need for developing a breakthrough technology even more relevant," said SSAB Chief Technology Officer Martin Pei.

Other technologies on trial globally include a system in China that pares steelmaking emissions while turning waste into a sellable material used to make cement.

Australia's Commonwealth Scientific and Industrial Research Organisation, or CSIRO, has spent a decade developing a supersonic nozzle to make magnesium metal with 70% fewer carbon-dioxide-equivalent emissions. It is racing to adapt it for lithium, an in-demand commodity used in electric vehicles.

While the developers of the Elysis and Hybrit technologies hope to revolutionize the steel and aluminum industries, CSIRO mineral-resources director Jonathan Law said researchers have largely focused on technologies that can "bolt on and have a big impact quickly."


(END) Dow Jones Newswires

July 16, 2018 05:44 ET (09:44 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.

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