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Top gold miners increased carbon intensity of their operations over the past seven years - Metals Focus

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(Kitco News) - According to Metals Focus, a leading independent precious metals research consultancy, gold production from 16 biggest gold miners has become more energy, carbon, water and land intensive since 2014.

In its annual peer group ESG report, Metals Focus said that unitized scope 1 and 2 GHG emissions for this group of companies have increased by 28% over the past seven years, showing that gold production from this peer group has become more carbon intensive.

“The prospect of global carbon emission taxes means there may be financial implications of GHG emissions in the future. Some countries, such as Canada and Sweden, already impose carbon taxes and there is certainly scope for this to become widespread across the globe,” the authors of the report noted.

The carbon tax in Sweden is currently around US$130/t. If this tax was applied to this group of companies, which had GHG emissions of 0.94t CO2e/oz in 2020, that would equate to an additional cost of US$123/oz, the consultancy found.

Based on Q2 2021 data, Metals Focus estimated that additional cost from potential carbon taxes would reduce “shareholder cash cost” (which includes AISC, project capex, cash taxes and interest) margin by 45% at the current cost of production and gold price.

“This demonstrates the potentially significant economic impact of carbon emissions on gold mining operations should they be taxed at some point in the future,” the consultancy said.

As for energy consumption, which is another important ESG metric as it is one of the main drivers of emissions, alongside the energy source, Metals Focus found that unitized energy consumption of these companies follows a similar trend to GHG emissions, rising by 30% since 2014.

“The source of the energy is equally important in influencing GHG emissions. Should a miner be able to increase energy consumption from renewable sources, such as solar or wind, they will be able to reduce GHG emissions. This is what is driving investment in renewable energy sources, such as solar power plants, in the gold mining industry,” the report pointed out.

Additionally, Metals Focus paid attention to water use, which is another key environmental measure as there is potential to disrupt other waters users, resulting in social and environmental impacts.

The consultancy estimated that unitized water withdrawals for this peer group has increased by 26% since 2014. However, current levels are 12% below their peak of 37kl/oz in 2018.

Moreover, Metals Focus added that the amount of land disturbed and not yet rehabilitated per ounce of production has increased since 2014 too, rising by 69% over this period.

However, the consultancy said that while the gold mining industry has become more energy, carbon, water and land intensive since 2014, they expect this trend to reverse.

“With many major gold producers now announcing targets to cut emissions and eventually achieve net-zero emissions, alongside increased pressure from investors and stakeholders to improve ESG ratings, we can expect a reversal of this rising trend in the future,” Metals Focus said.

Nevertheless, to achieve this will require capital investment from gold mining companies across a range of initiatives, such as renewable energy projects, electric vehicles and other technology aimed at reducing the environmental impact of gold mining, the authors of the report concluded.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.