Rio Tinto Accelerates Carbon Targets While Pivoting Toward Growth - Update
By Rhiannon Hoyle
Rio Tinto PLC accelerated plans to shrink its carbon footprint
and said it intends to spend more on projects to mine commodities
needed for a global energy transition.
With investor and public pressure mounting for resources
companies to respond to climate change, the world's second biggest
miner by market value on Wednesday more than tripled a 2030
emissions reduction target and said it will lift annual capital
spending with a focus on increasing its output of materials needed
for a lower-carbon and more electrified economy.
"We do see the world changing fast right now," Chief Executive
Jakob Stausholm told reporters.
"Climate change has not been addressed and we believe it will be
addressed. The world is much more aligned than ever before on that
topic," he said.
Several major economies, including the U.K., the U.S. and the
EU, have recently updated their plans to pivot from fossil fuels.
In a recent U.N. address, Chinese President Xi Jinping reiterated
his commitments that China, the world's largest consumer and a
significant producer of many commodities, will cap its own carbon
emissions before 2030 and achieve carbon neutrality before
Companies that produce metals and energy commodities have been
progressively introducing--and raising--carbon goals, as they face
calls from investors and activists to respond to ESG, or
environmental, social and governance, concerns.
Miners face other risks if they refuse to act, from pushback
from authorities and communities on new projects, to consumer
brands that could stop buying commodities that come from heavily
Rio Tinto said it would pull forward an earlier target for a 15%
cut in its so-called scope 1 and 2 carbon emissions to 2025 from
2030, when compared with 2018 levels. Scope 1 and 2 emissions
include those produced by its mining and metals operations, as well
as from the generation of purchased energy at those sites.
The company will now target a 50% cut by 2030, and said it
expects to directly invest roughly $7.5 billion between 2022 and
2030 to achieve that aim.
"Today we are basically starting an internal race towards
decarbonizing our own business while at the same time grabbing the
opportunities that the energy transition represents," said Mr.
Rio Tinto, which today relies on iron ore for the bulk of its
profits, said it will double growth capital to about $3 billion a
year from 2023, seeking to capitalize on what it expects to be
rising demand for some commodities used in electric vehicles and
renewable energy infrastructure.
Miners have increasingly been touting their role in the shift to
a low-carbon economy by producing metals, such as copper, for wind
turbines and electric cars.
Electric vehicles are estimated to use roughly four times as
much copper as petrol-fueled cars. Wind and solar farms also
typically use several times more copper, which has the highest
conductivity of any non-precious metal, than coal plants.
Rio Tinto is working on several copper projects, and also said
in July that it had approved funding for a project in Serbia to
mine lithium, which is used in batteries.
Rio Tinto's total capital expenditure will likely increase to
between $9 billion and $10 billion a year in 2023 and 2024, the
company said. It also raised its estimate for capital spending in
2022 to $8 billion from $7.5 billion previously, and left its 2021
projection unchanged at roughly $7.5 billion.
"We are making a number of meaningful steps towards a growth
agenda," said Mr. Stausholm.
Mr. Stausholm earlier this year told The Wall Street Journal he
thought Rio Tinto had become too cautious, after mining companies
earlier overpaid for deals and projects during a China-led
commodity boom that left them vulnerable to asset write-downs when
commodity prices fell. Miners have in recent years focused on
making existing operations more efficient and paying out a large
portion of their profits to shareholders.
"This series of moves provides a substantial, and in our view,
much needed shift in strategy, which we think is a positive over
the long term," RBC Capital Markets analyst Kaan Peker said in a
Write to Rhiannon Hoyle at email@example.com
(END) Dow Jones Newswires
October 20, 2021 05:15 ET (09:15 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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