March/April 2009

MAC Economic Commentary

A guide to greening Canadian mining

By P. Stothart

MAC issues a guidance document to help companies improve energy and greenhouse gas management

Few industry sectors face the degree of scrutiny from environmental and social groups that is accorded to the mining industry. The actions associated with mineral extraction and processing raise a number of social and environmental issues, including managing open pit or underground mining, building access roads and power lines, treating and managing tailings, consuming energy to operate smelters and refineries, and engaging with aboriginal groups and others affected by the economic development. These actions generate encounters between humans and the surrounding environment — and the attendant need to manage and minimize the risk that accompanies these encounters.

The Towards Sustainable Mining (TSM) initiative of the Mining Association of Canada is an important vehicle through which companies can respond to these risks and challenges. When it was formally launched in 2004, TSM represented the culmination of several years of research and consultation. Adherence to TSM’s principles and disciplines is a condition of membership of MAC, and companies must report each year regarding their progress in the four protocol areas: tailings management, energy use and greenhouse gas (GHG) emissions management, external outreach and crisis management planning. New TSM policies on biodiversity and aboriginal relations have recently been put in place.

The Mining Association of Canada has finalized a new guidance document to provide companies with support in the second of these TSM protocol areas, namely, energy and greenhouse gas management. The document updates and broadens an earlier guide that was prepared in 2000. It is MAC’s hope that the new document will become a handy reference tool for companies seeking success stories, guidelines, checklists, TSM support, management advice and other information to help improve the efficiency of their use of energy and their GHG emissions performance.

The guidance document has been finalized at an interesting moment in the evolution of Canadian mining. The significant fluctuation in energy prices over the past year — with oil prices moving from $140 to $40 per barrel — has reminded companies of the significant amounts that they spend on energy on an ongoing basis and of the potential for energy prices to again climb significantly in the future. It has been a very active year for those working in the energy management field. Furthermore, the economic and mineral price turbulence and global uncertainty of recent months have caused companies to “batten down the hatches” and seek out opportunities for cost savings. Again, energy consumption, representing one of the three largest cost components for mining companies, ranks high on this list.

In terms of climate change regulation, while there remains uncertainty at the federal government level with respect to future regulation, there does appear to be some movement towards the concept of pricing carbon. Previous Liberal and Conservative governments have introduced an array of climate change plans and proposals over the past decade, the net effect of which has been minimal. Following from the most recent election, it now seems likely that the present government’s “Turning the Corner” plan is being reconsidered, in favour of a federal emissions cap and trade regime.

The past statements of U.S. President Obama also convey a sense of momentum towards the concept of attaching a price to carbon. One of the five main components of his energy plan is to implement an economy-wide cap and trade program to reduce GHG emissions 80 per cent by 2050. It seems likely that companies will someday operate within a Canada-U.S. GHG emissions trading scheme, with associated targets, regulations and costs.

For these and other reasons, MAC’s TSM guidance document is a timely addition to the energy and GHG management toolbox of Canadian mining companies. The document discusses the TSM energy/GHG protocol and the associated need for management systems, target setting, planning, metering and measuring, reporting and verification. It also discusses the concept of a carbon footprint and GHG emissions inventory, and includes information on incentive programs, energy management websites and regional GHG programs.

Download the document.

Paul Stothart
Paul Stothart is vice-president, economic affairs, at the Mining Association of Canada. He is responsible for advancing the industry’s interests regarding federal tax, trade, investment, transport and energy issues.

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