Our climate is changing, and this presents both risks and opportunities for the mining and metals sector. The International Council Mining & Metals’ Adapting to a changing climate report calls for building climate resilience without reinventing the wheel.

Mining and metals sector urged to adapt to a changing climate

In a statement, ICMM said that around the world, we were already experiencing some of the impacts of climate-related change.

“These include more frequent and extreme weather and climate events, along with gradual shifts in other climate-related factors, such as rainfall patterns, sea levels, sea ice and glacial retreat.”

Incorporating experiences and insights from ICMM members and other experts, the report provides an overview of how a changing climate could impact the mining and metals sector, identifies ways that companies can integrate climate considerations into existing risk management processes and sets out a step-wise process for building climate resilience.

Key issues for the mining and metals sector

A changing climate will affect the mining and metals sector in various ways, both directly and indirectly. Extreme weather events and longer-term shifts in climate patterns have the potential to damage fixed assets and disrupt supply chains.

“Key areas of concern for ICMM members are water management, the performance of facilities with long lifespans where the design criteria may include certain climate-related assumptions [such as rainfall], and how climate change may impact closure and post-closure,” stated ICMM.

“Left unmanaged, these climate-related impacts may weaken a company’s balance sheet as well as its social licence to operate.”

Climate change adaptation seeks to lower the risks and exploit opportunities resulting from the changes in weather and climate.

ICMM argues that for the mining and metals sector, building operational resilience to physical climate change depends on a company’s ability to adapt to changes, anticipate what might happen next and absorb weather and climate-related shocks when they happen.

“Building resilience doesn’t mean reinventing the wheel. The mining and metals industry has always responded to the challenges of working in varied physical environments, and many companies already have approaches, tools, data, resources and people in place to identify and manage related risks and opportunities,” said ICMM.

Mining and metals companies are well advised to integrate climate change drivers within existing risk management and planning procedures and identify the ‘hooks’ for climate risk and resilience within existing activities and across the entire asset life cycle.

According to the report, climate risk and business resilience cuts across virtually all components of the mining system and business units. For a company to develop a comprehensive picture of the key climate-related risks and opportunities across the mining system, multi-disciplinary teams are needed, as well as capacity building and training of staff.

Companies are also well advised to involve external stakeholders – particularly host communities – in discussions about how to build resilience and manage climate risk. This is not only important for relationship building but will also help avoid ‘maladaptation’, whereby the adaptation actions of one group can have negative consequences for others.

Some companies’ increasingly modular approach to project design can be useful when facing multiple climate futures. And new technology can also offer significant climate resilience co-benefits, helping manage climate risk while also lowering costs or improving health and safety at operating sites.

A step-wise process for building climate resilience

The step-wise process aims to help members identify climate risks and opportunities. Recognising that each company is on their own journey to climate resilience, the seven steps suggest ways in which companies can develop a plan to adapt to climate-related challenges. In particular, the step-wise process emphasises the need to use observed and predicted climate data and scenarios to understand both current and potential future risks, and using mining and metal companies’ well established risk management procedures and systems.

Physical impacts are already being felt

Extreme weather and climate change impacts are being experienced by mining companies in many geographies. Image source ©ICMM

ICMM reports that member companies are experiencing an intensification of weather and climate-related risks. In recent years, extreme weather and climate change have affected mining operations. Flooding, drought, increased storm intensity, greater variability of water supply and an increasing number of high-temperature days have led to reduction in or shut-down of production, increases in capital expenditure, health and safety impacts and made vulnerable communities more prone to social unrest.

Future climate variability and climate change will likely exacerbate these impacts. No company or geography is immune to the impacts of extreme weather and climate change.

“Members with operations in diverse geographies such as Argentina, Australia, Chile and Ghana have faced impacts from a wide-range of events, and the associated costs have proven to extend beyond immediate production downtime,” stated ICMM in the report.

In the World Economic Forum’s most recent Global Risks Landscape report (2019), environment related risks were by far the greatest concern raised by experts. These risks, which include extreme weather events, biodiversity loss and ecosystem collapse, major natural disasters, man-made environmental disasters and failure of climate change mitigation and adaptation were ranked high in terms of likelihood and impact. Extreme weather events were seen for the third consecutive year as the single most severe risk.

Rapidly evolving positions on physical climate risk and resilience

ICMM reports that in the past few years, the positions of many key stakeholder groups have undergone a step change vis-à-vis the imperative to understand and manage physical climate risks.

“This step change has also seen associated calls for companies to disclose climate-related risks and opportunities,” said ICMM.

“Arguably the most significant recent development is the 2017 publication of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) recommendations.”

The TCFD sets out a framework for the voluntary disclosure of climate-related risk and opportunities, as well as identifies physical risk as one of two categories of climate-related risk, alongside transition risk associated with a lower-carbon economy.

“ICMM members welcome the transparency around climate-related risks that the TCFD has brought and see value in its recommendations,” added ICMM.

Developed with input from the mining and metals sector and industry representation on the Task Force, the recommendations include specific guidance for key sectors, with mining and metals covered under the ‘Materials and Building’ guidance.

Alongside the TCFD, there have been a range of other significant recent developments relevant to the mining and metals sector. It is important for companies to monitor evolving stakeholder positions on climate resilience and to engage with them.

“Companies may capitalise on existing partnerships and/or develop new ones, to build shared understanding of climate risks, and identify and deliver climate resilience initiatives that bring co-benefits for companies and other stakeholders.”

ICMM sees climate change as a complex issue.

“But this isn’t a reason for inaction. And by building climate resilience today, ICMM members can reap rewards tomorrow – limiting future liabilities, safeguarding business continuity, making prudent investments and ensuring the sustainability of communities and ecosystems,” concluded ICMM.