Anglo's Carroll talks climate change

ANGLO American chief executive Cynthia Carroll has warned the mining industry it has to participate in the climate change debate if it is to stay in business. Ron Berryman reports from South Africa.
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The Indaba conference in Cape Town.

Ron Berryman

Carroll told the Indaba Mining 2010 conference in Cape Town that she believed the great challenges facing the mining and metals industry were energy, water, sustainability and climate change.

She said the mining industry had an obligation to keep the impact of what it was doing to a minimum.

“We’re founding members of the South African and Australian governments’ carbon capture initiatives,” she said.

“Our coal plants in Australia are capturing methane gas which is 21 times more damaging than the greenhouse gas in carbon dioxide and we’re now supplying this to power stations to generate electricity.

“The greenhouse gas savings are equal to taking 250,000 cars off the road – an enormous difference.”

Anglo American has succeeded in capturing methane to generate electricity and supplies it to industrial users in the form of natural gas. At the Capcoal mining complex in central Queensland it has established an onsite methane-fuelled power station that generates 32 megawatts of electricity for the Australian power grid.

Carroll said that carbon capture was only one of the technologies the mining industry needed to investigate.

“In the mining industry, the reality is that we have to take action if we are to stay in business,” she said.

“Our industry is responsible for 8 per cent of global CO2 emissions or 25 per cent if we include coal. We will simply not be able to continue carrying on the same way.”

Carroll believed there was an immediate opportunity for the industry post-Copenhagen.

“We have to be proactive and we have to demonstrate to the world that the mining and metals industry acts responsibly,” she said.

“One of the challenges we face is the future direction of legislation.

“Different policies in different operating areas only makes the situation for all of us so much more complex.”

She echoed a sentiment expressed earlier at the conference when she told a packed auditorium that there was a question mark over the sustainability of the current recovery trend, “particularly in the advanced economies”

“To some extent we’re operating in a world moving at two different speeds, with advanced countries going at relatively slow speeds whereas the major emerging economies should continue to grow robustedly,” she said.

But talk of decoupling no longer made sense because economies and markets had become more closely integrated and no one was immune to the global economic cycle.

“Over the next year the advancing economies will be wrestling with high unemployment while the emerging economies have to deal with the prospects of rising inflation,” she said.

“In the last few days financial markets have got a little more jittery as political and economic risks have been identified.

“Worries about China over-heating, the emerging crisis in Greece and what that means for other governments has triggered sell-offs. And while recovery is unlikely to be entirely smooth, I think we should take comfort from the strength of the underlying fundamentals in our key markets, such as China, India and Brazil.”

Anglo American had some exceptional brownfields expansions and a world-class pipeline of approved growth projects totalling around $US17 billion with a further $44 billion of unapproved projects.

“Our Sishen South development is one of the four main projects that we have globally and with $900 million investment on top of the just completed $1.2 billion expansion, this is a significant project for the group,” Carroll said.

Sishen would become one of the five top iron ore mines in the world.

On energy, she pointed out that because demand was expected to increase by more than 50% in the next 25 years, it was crucial that reliable, abundant, cost-competitive and secure energy supplies were maintained for the long term.

“Here in South Africa, how we tackle the energy challenges will be crucial to the region’s ongoing prosperity,” she said. “It’s a situation that calls for all parties to act in concert to achieve cost-effective solutions.

“There are no quick fixes.

“Clearly none of us is in a position to sustain large electricity price increases year-on-year. But we do need energy, so all of us – industry, government and Eskom – need to work together.”

The national power utility, Eskom, has proposed power rises of 35% a year for the next three years.

Carroll suggested that energy alternatives, supplementary supplies from industry and new technologies should be pursued.