How can mining companies contribute to sustainable supply chains?

Alf Barrios, Rio Tinto Chief Commercial Officer

Climate change is one of the biggest challenges facing our customers and our supply chains, and it will take a coordinated effort to make meaningful progress.

We have an important role to play on this journey. We are part of a huge ecosystem that spans 20,000 suppliers and 2,000 customers across many industries and countries.

We spend around $20 billion annually on goods and services and have over 230 marine vessels transporting our products at any given time.

The insights and relationships we are afforded by the scale of this network present a significant opportunity for us to contribute to tackling climate change and building more sustainable supply chains. It is fundamental to our values, it is critical to meeting customer needs, and it makes good business sense.

Responding to changing market needs

Consumers want products that are sustainably sourced, and companies want products that help them meet their emissions and sustainability targets.

Many of the materials used in products today may not be the preferred choices in the future unless they can establish their environmental, social and governance (ESG) credentials or develop strong circular solutions.

Governments are also ramping up mandatory requirements and incentives to motivate companies to accelerate their ESG progress and meet their emissions commitments. As an example, the European Parliament backed a Carbon Border Adjustment Mechanism which would place a charge on the carbon content of emissions-intensive goods imported into the European Union from 2023.

Many countries have green building rating systems in place such as Leadership in Energy and Environmental Design (LEED) by the US Green Building Council. And sustainability reporting is now mandatory for large companies in many countries.

Investors too are seeking ESG-based opportunities to deliver sustainable, long-term returns, further driving demand for responsibly produced materials. Sustainable investing that incorporates ESG criteria is gaining traction among individual investors and asset managers, while ESG funds captured approximately $51 billion of net new money from investors in 2020 – more than double 2019.

Many banks are now offering green loans, aimed at advancing environmental sustainability, and financing facilities for low-carbon aluminium are already available.

Businesses committed to ESG goals will certainly benefit from this new paradigm and our sector has a crucial role to play. For us this means producing the materials the world needs for a low-carbon future in the most sustainable way possible. This ranges from R&D partnerships on decarbonisation solutions to supporting industry certification schemes. We know we need to continue to build the sustainability of our own mining and processing practices, while also supporting those we work with to do the same.

The role of R&D partnerships

No one company will solve the decarbonisation challenge. We need to collaborate across our supply chain, including partnerships with customers, technology providers, research institutes, government, and other stakeholders.

In our own business, we have a range of R&D and supply chain partnerships underway to both reduce our footprint and meet customer needs – not just on carbon, but across ESG more broadly.

START is one example of this. We call it a “nutrition label” for our aluminium products: Using blockchain technology, START captures 10 key ESG metrics – like waste and water management and safety – delivering transparency and traceability.

Through START, customers can measure and track the carbon footprint they have generated throughout their supply chain all the way to the end products. Information like this helps businesses make decisions about the materials they use.

The use of digital solutions like blockchain helps with provenance tracking – helping demonstrate to authorities that regulatory requirements have been met across the supply chain or have satisfied conditions needed to attain incentives or industrial certification. This is especially critical in the world of United States-Mexico-Canada Agreement, rules of origin or carbon border adjustment mechanisms (CBAM).

In copper, our Kennecott mine in the US and the Oyu Tolgoi  mine in Mongolia became the first in the world to be awarded the Copper Mark – the industry’s independent assurance programme – verifying the copper is responsibly produced.

In 2018 we launched the ELYSIS partnership with Alcoa to develop carbon-free aluminium smelting technology. We have made good progress and are now focused on accelerating the scale-up  of the ELYSIS technology towards larger, commercial-sized cells in 2023. If successful, this technology could revolutionise the industry and in Canada alone could potentially reduce greenhouse gas emissions by around 7 million tons – the equivalent of removing 1.8 million cars from the roads.

In the automotive industry, we worked with industry partners to enable large-scale giga casting for electric vehicles (EVs). Through this work, a section of the car which had previously required 70 different parts built separately can now be made as one single part. This means the next generation of EVs can be built more efficiently and with a reduced carbon footprint.

We are also focused on finding ways to create value from waste. In the US, we’re working with the Critical Minerals Institute to find ways to extract critical minerals from our waste streams – including scandium, tellurium, selenium and rhenium – and develop pathways to market these materials which are essential in solar panels, electric vehicles and wind turbines. In Australia, for example, we worked with a customer to develop a new high-strength, lightweight aluminium-scandium alloy for use in their breakthrough 3D printing for aerospace. The alloy is made with our low-carbon aluminium and a high-purity scandium oxide extracted from waste from our Iron & Titanium business in Canada.