Abstract

This discussion presents the key Scope 3 emissions for the mining industry and offers insights into strategies for their effective accounting, management, and reduction. While our focus will be on precious metals (PM) mining, most of our findings apply to the mining industry overall.  We explain what each category is and discuss Scope 3 Categories that are typically the most material for mining companies. We will discuss some pitfalls and frequent errors in reporting as well as strategies for reducing Scope 3 emissions and setting realistic Scope 3 targets.

Scope 3 emissions are divided into Upstream Emissions and Downstream emissions. For most mining companies, Upstream Categories 1 (Purchased Goods and Services), 2 (Capital Goods), and 3 (Fuel and Energy-Related Activities) are high contributors and maybe the highest categories for PM mining companies. Depending on the product, Category 4 (Upstream Transportation) may also be significant. Downstream emissions for PM mining are typically small, but for other mining, Categories 9 (Downstream transportation), 10 (Processing of Sold Products), 11 (Use of Sold Products) and 12 (End-of-Life Treatment of Sold Products) may be significant.  Depending on the mining company’s size and cash position, Category 15 (Investments) may also be significant.

We find that many mining companies are challenged to evaluate Category 1 and 2 emissions (Purchased goods and Services/Capital Goods) because their accounting system classifies purchases by supplier rather than by the type of good or service purchased.  In addition, while industry-average Scope 3 emission factors can serve as useful indicators, they are of limited accuracy.  Supplier-specific Scope 3 emission factors are only gradually becoming available from suppliers. We will discuss how you can work with your suppliers both to improve the accuracy of your Scope 3 reporting for key purchases and to reduce your Scope 3 emissions from those purchases.

Downstream emissions are typically less material for PM miners but can be substantial for companies mining base metals and other similar materials.  We will touch on the main downstream categories. Since most mined materials are sold as commodities, it is difficult for an individual mining company to take action to reduce downstream emissions.  Mining industry trade associations can promote actions on the part of product users to reduce downstream emissions.

Category 15 (Investments) is intended primarily for the financial industry but applies to mining companies that have substantial cash resources or that have investments in junior mining and exploration companies. Reporting Scope 3 emissions from these investments can be challenging as exploration companies typically do not report their emissions.  We will review several approaches to estimating Category 15 emissions associated with these investments.

At present, a few mining companies have developed strategies for reducing their Scope 3 emissions or have set Scope 3 targets.  Before setting Scope 3 targets, we recommend that mining companies prioritize developing an accurate baseline measurement of their key Scope 3 emissions and identify reduction opportunities.  This will ensure that the targets are realistic and achievable.