An inconvenient sleuth

CLIMATE change - back in the headlines after John Howard this week committed Australia to new clean energy goals by 2020 - has finally been added to the list of life's certainties, alongside death and taxes. That
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Stephen Bell

There was a time not so long ago when the Metal Detective was a Greenhouse sceptic, bemused by the religious fervour associated with the climate debate.

After all, the earth’s weather proved to be highly changeable – running the gamut of ice ages to droughts – long before modern humans came along.

But, whatever the exact mechanism (fossil fuels and cow burps seems to be the latest culprits) you’d have to be Blind Freddy to deny something odd is happening to the weather.

Ten years ago we’d have been highly alarmed to hear about shrinking polar ice caps, extended northern summers and rising sea levels. Now, the stories are so frequent they no longer hold much shock value.

And with global temperatures expected to rise for the next 50-100 years the mining sector needs to decide how it will deal with the changes.

Up to now, most of the industry debate has been about the changing energy mix and how various companies will fare in a world with tighter greenhouse gas controls.

Uranium miners have blossomed on the back of the nuclear fuel’s “green” climate credentials, while coal has been cast as one of the key villains (smog over China, highly carbon intensive etc.).

Not that coal usage seems have suffered.

Abare, Australia’s chief commodities forecaster, said yesterday that the world’s thermal coal trade will rise by 4% to 662 million tonnes in 2007 and to 688Mt in 2008.

“Asia is forecast to remain the fastest growing thermal coal import region, with growth rates of 9 percent in 2007 and 6 percent in 2008.”

Clearly China’s rampant industrialisation is still feeding on coal, despite its likely contribution to rising global temperatures.

That’s the thing about economic growth and energy usage: everyone considers themselves a Greenie on climate change, but nobody wants to do without their new four-wheel-drive or air conditioner.

But MD was interested to see analysts are starting to look at the physical impacts of climate change on miners – ie the risks of getting washed or blown away as the weather turns nasty.

Miners are often identified with the causes of global warming; now some of them are being cast as victims.

In a report earlier this month, Citigroup identified the most “significant potential physical climate change impacts on global mining companies”

These are: more frequent or more severe weather events such as storms, floods and cyclones; changes in fresh water availability; and thawing permafrost in the Arctic.

After reviewing the world’s 12 biggest miners under its coverage, Citigroup concluded BHP Billiton, Rio Tinto and Russia’s Norilsk “probably have the most significant exposures to manage”

It may be stating the bleedin’ obvious, but severe weather poses the most critical risk, as “such events are by their nature unpredictable”, the broker said.

The exposure is particularly evident for Australian operations in cyclone areas, but the key operators, BHP and Rio Tinto, “appear to be assessing these risks”

So is Fortescue Metals Group, no doubt, after some of its rail construction camps were smashed by Cyclone George earlier this year.

On the other side of the coin, not enough water is just as bad as too much.

Most miners require fresh water, and this may become scarcer in Southern Africa, Australia and Andean South America.

“Management of fresh water will be increasingly important,” Citigroup says.

What about those melting icecaps?

Norilsk has the most concentrated Arctic exposure and may require “facilities modifications” as the permafrost melts.

MD is intrigued by changes will be needed.

He suggests moving plant to higher ground – perhaps on top of the slag heaps – would be a good idea.

Norilsk is the world’s biggest nickel producer, so the metal’s exposure to climate events may be significant.

And it doesn’t stop at melting ice. “Nickel is exposed to two possibilities that could occur concurrently - disruption caused by Arctic permafrost melting and the impact of sea level rise on small tropical island producers.”

Good news for those hardy nickel diggers in Western Australia’s goldfields, such as Minara Resources and Jubilee Mines, that will only need to cope with the occasional tail-end of a cyclone.

Like the Prime Minister, MD is only belatedly getting his head round global warming. But the problem looks like it will rear its ugly mug more often in the years ahead.

Dazzled by China’s economic miracle, Australian companies are rushing to spend billions of dollars on new iron ore, nickel, gas and coal mines.

Are they spending much time on assessing the inconvenient risks of climate change?

I don’t think so, but maybe it is time they did.

*Stephen Bell "The Metal Detective" is a weekly coulumnist with