By Edward Nathan Sonnenbergs
8 November 2012 – The topic of climate change is frequently met with raised eyebrows and thoughts of doom and gloom. Climate change is indeed an on-going global concern, with the sustainability of our planet being the dire concern and responsibility of us all.
However, one of the characteristics of the climate challenge is that in the business context it comes with both risks and opportunities, with an emphasis on the latter. A comprehensive review of the challenges faced by industry in South Africa was undertaken in 2009 and 2010 and reported in Climate Change: Risks and Opportunities for the South African Economy. In acknowledging various risks that are posed to the mining sector the report also identifies associated opportunities which emerge from applying creative-thinking and context to the problems posed by the risk.
These are the promising prospects for the mining sector emphasised in the report, bearing mind that opportunities will arise for the South African mining sector from developments across the world and not only in the local economy.
Growth of existing markets and industries:
- Platinum: is required for the manufacture of fuel cells and it is anticipated that platinum producers will benefit from rising fuel cell demand associated with hydrogen energy.
- Uranium: a sustained drive towards nuclear energy will benefit uranium producers.
- Copper: is important for energy efficiency equipment and an increase in uptake of energy efficiency, e.g., prompted by the accelerated depreciation for energy efficiency assets (section 12L of the Income Tax Act, for which regulations have been drafted but which is not, yet, in operation).
- Diversified miners: opportunities exist to balance commercial risk with opportunity and to shift production emphasis depending on demand for a particular commodity.
Risk management / efficiencies and competitiveness:
- Enhanced energy efficiency is regarded as the greatest climate related opportunity for the country, and industrial energy efficiency has been consistently identified as a measure capable of achieving positive economic return while also supporting energy security objectives.
- Key industrial energy efficiency gains are those related to: improved lighting (LED and CFL technologies), compressed air, motors, thermal efficiency, steam system efficiency and heating ventilation and air conditioning (HVAC).
Investment and technology transfer:
- The development of coal bed methane, through the provision of financial and technical assistance, offers the opportunity to improve natural gas supplies, promote technological advancement, enhance energy security and reduce greenhouse gas emissions.
Other opportunities exist in a creative and informed utilisation of the law. For example, the Mineral and Petroleum Resources Development Amendment Act 49 of 2008, albeit that it has not been brought into effect to date, still suggests the notion of collaborative regional closure strategies becoming a statutory obligation for mining companies in the near future. In addition to the commercial incentives for embarking on robust climate change strategies as alluded to above, the implementation of greenhouse gas mitigation projects under the Clean Development Mechanism could provide a self-funding closure solution for mines including establishing a framework for interconnected and integrated positive environmental impacts.
It is suggested, therefore, that the mining industry not only has a role to play in mitigating its contribution to increasing anthropogenic greenhouse gas emissions, but also has an opportunity to develop this risk posed by this contribution into a resource for the sector. In short, there is opportunity presented by climate change that the sector can mine to its individual benefit but also to the global benefit linked to the reduction of anthropogenic greenhouse gas emissions.