Why Mines Need Your Help To Combat Climate Change
Author: Gustavo Marquez, MBA and MS Sustainability (E-IPER) program at Stanford University
The green energy transition, with its promise to electrify vehicles and provide stable renewable power with seamless battery storage, will require an explosion of “critical metals” (e.g. copper, nickel). The International Energy Agency (IEA) estimates that copper and nickel production will need to increase yearly at a rate of 2.4% and 6.0% until 2040, respectively, to keep up with demand[1]. The green energy transition will mean more mining from existing operations, and many more new mines at lower grades (i.e. metal concentration) to replace depleting ore bodies.
More mining presents a unique opportunity for governments to foster innovation to create the mining industry of the future that will safeguard the environment and local rural communities. “Food” doesn’t come from the “grocery store”, and “metals” don’t come from the “supply chain”. With the right policy tools, we could also create an ecosystem of mining innovation domestically leading to ground-breaking technologies that could even sequester atmospheric carbon dioxide. This particular breakthrough would transform mining into a possible lever to decarbonize the world’s economy, and surprisingly, it would unlock more future metal supply for the industry.
New metal supply requires decades to find, permit, and build a mine. Ernst & Young listed the top 3 risks facing mining projects in 2022 as “Environmental and Social”, “Decarbonization”, and “License to Operate”[2] — above geologic and economic risks. In this piece, I am going to focus on mitigating the carbon footprint of mining through new technologies, and why public policy is the key to developing and implementing these technologies.
As a traditional industry subject to high capital requirements and highly-cyclical metal prices, the mining industry has gotten good at extracting a specific commodity out of the earth and ignoring most everything else. The waste it generates (lots of it) is stockpiled in waste rock dumps, sometimes called tailings facilities. This waste can turn out to be an economic source of secondary minerals decades later as metal prices rise and technology improves. However, these rock dumps also have an underestimated resource: lots of alkali earth metals like magnesium and calcium. These alkali earth metals react naturally in what geologists call “weathering”; in the presence of water, these rocks naturally capture carbon dioxide and react into a carbonate mineral. In this way, carbon dioxide is permanently stored in mineral form, locked away in rocks, forever. Think of it as rocks “rusting” and helping combat global warming.
To unlock this solution and catalyze this naturally-occurring reaction on an industrial scale will require the right set of incentives. But governments need to implement them, because innovations like this one would capture one to four gigatons of carbon dioxide annually[3], and would allow mines to mitigate their own impact on climate change for the first time in history.
Carbon mineralization from mine waste is not a new concept to the mining industry — some of the largest companies have explored the idea before, but costs were (and still are) high and there wasn’t a drive to decarbonize. But today things are different, and we see a burgeoning and powerful voluntary carbon market; the demand for high-quality, permanent carbon offsets is clear (thanks Microsoft, Amazon, and Stripe). However, demand alone won’t drive miners to invest in R&D — mining companies are notoriously conservative and slow to innovate. This is where the right government policy will plug the gap.
The US federal “Tax credit for carbon sequestration”, better known as Section 45Q, is one established piece of tax code that could speed up innovation in the mining industry, if it were tweaked to address the needs of the industry. As it stands, 45Q provides a production-style tax credit of $10 to $50/tonne for carbon dioxide that is “disposed of … in secure geological storage”[4] — this goes a long way in offsetting the costs of a mineralization process. But current 45Q legislation is designed to reward established technologies, not develop new ones, and this is where it falls short. Additionally, 45Q rewards projects for up to 12 years — building a carbon sequestration process is capital intensive and 12 years may not pencil out. Finally, 45Q as it stands is for storing carbon dioxide in deep aquifer reservoirs where it gets mineralized over centuries — it was not designed for mineralization as an industrial process at a mine site.
Interestingly, enhanced oil recovery (EOR), which is a technique to increase oil production through carbon dioxide injection into oil and gas reservoirs, is singled out as a qualifying technology for 45Q. This is indicative of lobbying efforts by the oil and gas industry. The mining industry — with its access to 8 billion tonnes of waste annually that could be mineralized to store carbon away forever more effectively than EOR, and at a far larger scale than most of today’s carbon sequestration solutions — should have been singled out in order to incentivize R&D.
But there’s little interest currently in R&D in mining, because along with mineral exploration, it’s the first thing to go during a price downturn. The majority of mining companies are too focused on operational costs and managing geologic risk to worry about what they see as the fringe benefit of mineralization. And it’s why the mining industry needs public support to develop this technology. Public support for the mining industry in the past has paid dividends for the industry and for society. We need to continue investing in our future and in mining.
Historically, the public sector played an important role in spurring innovation and mandating mining industry best practices. From 1910 to 1996, the US Bureau of Mines (USBM), an agency of the Department of the Interior, conducted proactive research initiatives into health and safety technologies, limiting the environmental impact of mining, developing new techniques of producing rare minerals, and even discovering large deposits of critical minerals. The USBM accelerated the field of mine engineering to meet the needs of the late 20th century in a way the private sector, with its focus on day-to-day operations, could not have accomplished.
Legislation tailored to the unique circumstances of the mining industry has also proven to be an effective way of spurring innovation. The mining industry has transformed itself in the face of tough workplace safety regulations, and working at a mine no longer involves pickaxes. The industry has completely changed since the first mine safety legislation of 1891 in the US, and mining fatalities since the 1910’s have decreased by 99%.[5][6] Despite the common perception that mining is dirty and dangerous, the modern US mining industry enforces impressive safety and industrial hygiene policies to protect its workforce. A major reason for this culture is the 1977 Federal Mine Safety and Health Act, which created the Mine Safety and Health Administration (MSHA). While OSHA regulates safety across every other workplace in the US, MSHA enforces health and safety standards across all mines and mineral plants to address the unique hazards and challenges of the industry.
Legislation has also been pivotal in shaping mining innovation and best practices in the wake of environmental and societal harm. A century ago, mining companies across the globe left a trail of environmental devastation in the race to provide the metals that enabled the greatest economic development in human history. Mining wasn’t alone in its impact on the earth, but it certainly left some of the most visible scars. Since those days, thanks to the Clean Air and Clean Water Acts of 1970 and 1972, respectively, and the patchwork of varied state regulatory bodies, mining companies have had to reinvent themselves and innovate their operations to continue to operate against increasingly stringent pollution standards. Mining still has consequences for the environment, but its impacts are now rigorously monitored and largely controlled.
These three examples demonstrate how effective legislation has been in shaping the mining industry. Whether it’s a carrot or a stick, developed countries shouldn’t wait for innovation from the private sector to flourish organically in the low-margin natural resources industry. And two government agencies in the US and in Canada have come to this realization.
The US Department of Energy (DOE) founded its ARPA-E agency in 2009, and funds research to develop new technology in hard-to-decarbonize industries. In 2022, ARPA-E even announced a new program: Mining Innovations for Negative Emissions Resources (MINER) to stimulate domestic supply of key battery metals as well as improve efficiency of mining and mineral separation processes.[7] Similarly, Natural Resources Canada (NRCAN), a department of the Canadian federal government, announced $3.8 billion CAD to support physical and digital infrastructure development and critical mineral value chains. Canada understands that public sector support is pivotal in achieving its Critical Minerals Strategy. DOE and NRCAN are examples of the policy tools we need to decarbonize the global supply chain and increase global production of critical metals for the green energy transition.
Mining companies can’t innovate on mineralization alone given the established business model. Governments need to help if they really want to bring about the green energy transition. And it’s better to produce these minerals domestically, where they provide employment and can be regulated. In this spirit, the US’s 45Q should be amended to support the R&D potential of the mining industry with respect to carbon sequestration through mineralization. Similarly, 45Q should make the project funding period a function of the capital investment and amount of carbon sequestered, rather than a fixed 12 years. With this support, miners will step up to the challenge, because they understand that decarbonizing is about more than reducing carbon emissions. It’s about gaining and continuing to hold the social license to operate in communities with prospective mineral deposits — the biggest risks in the industry. And that’s why major mining companies have announced impressive and ambitious goals to decarbonize over the past two years.
Everything we have today was either grown or extracted from the earth, and we will continue to need mining to achieve our global decarbonization goals. But the future will be one with mines that produce metals sustainably, and lock up carbon permanently at the same time. To get there, the mining industry faces immense technological and financial hurdles. The right policy incentives, drafted in collaboration with mining companies and in recognition of their unique challenges, will make all the difference in producing the metals we need to fuel the green energy transition. As we think through policies to combat climate change, both new and established ones like 45Q, let’s not forget the untapped resource we have in the mining industry. The solution we all need might be right under our feet.
Gustavo Marquez is a registered Professional Engineer, and holds a degree in Mining Engineering from McGill University, in Montreal, Canada. He has worked in the US, Canada, and Chile in copper and nickel surface and underground mines for a major mining company. He has experience building, operating, and closing mining projects, and in implementing new technology on infrastructure and construction projects. Gustavo is currently a student at Stanford University in the dual MBA and MS Sustainability (E-IPER) program, where he studies the intersection of hard industries and decarbonization technologies.
___________________________________________________________________
[1] “The Role of Critical Minerals in Clean Energy Transitions.” International Energy Agency. Updated March 2022. https://iea.blob.core.windows.net/asset….
[2] “Top 10 business risks and opportunities for mining and metals in 2022.” Ernst & Young Global Limited. EYGM Limited. 2021. https://assets.ey.com/content/dam/ey-sites….
[3] Bullock, Liam, et. al. “Global Carbon Dioxide Removal Potential of Waste Materials From Metal and Diamond Mining.” University of Southampton. 28 July 2021. https://www.frontiersin.org/articles/10.3389….
[4] 26 U.S. Code § 45Q — Credit for carbon oxide sequestration. https://www.congress.gov/115/bills/hr1892/BILLS-115hr1892enr.pdf.
[5] “Coal Fatalities for 1900 Through 2020.” Mine Safety and Health Administration. Department of Labor. Accessed May 2022. https://arlweb.msha.gov/stats/centurystats/coalstats.asp.
[6] “Metal/Nonmetal Fatalities for 1900 Through 2020.” Mine Safety and Health Administration. Department of Labor. Accessed May 2022. https://arlweb.msha.gov/stats/centurystats/mnmstats.asp.
[7] “Mining Innovations for Negative Emissions Resource Recovery.” ARPA-e. US Department of Energy. 24 February 2022. https://arpa-e.energy.gov/technologies/programs/miner.
