Commodities, Features, Gold

How AngloGold Ashanti is inspiring the green transition

AngloGold

As a true champion of sustainability, AngloGold Ashanti is setting a strong example that other mining companies – and wider society – can follow. 

In 2008, AngloGold Ashanti set itself emissions reduction targets long before it was fashionable to do so. 

The company committed to a 30 per cent reduction in greenhouse gas (GHG) emissions by 2022. While its didn’t see consistent gains until 2015, AngloGold’s emissions intensity has dropped by approximately 69 per cent since then.

This has been achieved by different measures, including improving electrical power generation at mines in Tanzania and Guinea, installing heat pumps in South Africa, and completing the Eastern Goldfields pipeline to the Sunrise Dam and Tropicana gold mines in Western Australia.

This latter development gave the two mines access to natural gas, which means they no longer have to rely on diesel fuel and liquefied natural gas (LNG) as power sources.

In October 2021, AngloGold committed collectively with members of the International Council on Mining and Metals (ICMM) to a goal of net-zero Scope 1 and Scope 2 GHG emissions by 2050 or sooner.

AngloGold Ashanti chief executive officer Alberto Calderon said it was encouraging to see the wider gold industry banding together for the greater environmental cause. And there’s more where that came from.

“Small as the gold industry is in the global context, we’ve seized the urgency of reducing our environmental footprint,” he said at a Melbourne Mining Club luncheon earlier this year. “Dramatic changes in the industry’s power consumption by 2030 are expected to almost halve emissions among WGC (World Gold Council) members.

“That’s not wishful thinking; the reduction will come through decarbonisation of national power grids, changes in production profiles of mines – notably the continued tapering of energy-intensive production from South Africa – and changes in power sources for those that remain.”

In 2022, AngloGold Ashanti will lay out a new 2030 emissions reduction target.

The gold industry might be small in the worldwide context, but it remains an important contributor to global economies.

In November 2021, the WGC released a report indicating that 2020 saw its member companies contribute $US37.9 billion to the gross domestic product (GDP) of the countries in which they operate.

WGC member companies paid $US8.7 billion in wages and $US7.6 billion in tax payments, while a significant contribution of $US26 billion was made through in-country procurement. It is estimated this created $US21.6 billion in indirect value to local suppliers.

Gold is facing more competitors in the investment world, with cryptocurrencies posing a particular threat to the commodity. However, crypto is more volatile and less dependable as a safe haven asset.

This has been highlighted by the ongoing Russia–Ukraine conflict and economic turmoil that’s come with it. 

In Australia, inflation rose to levels not seen since the introduction of the Goods and Services Tax (GST) in 2000, while a similar hike has been experienced in the US. 

Worldwide sanctions imposed on Russia in light of its invasion of Ukraine have crippled the country’s economy. Russian citizens’ bank accounts have been frozen, depriving many people of their only source of income.

Analysts tipped the current geopolitical crisis to be the perfect storm for crypto: a stable digital asset that won’t lose its value.

But it seems cryptocurrencies haven’t received that message. 

As of July 29, while Bitcoin was up 17 per cent on the month, it was still down 38 per cent on the past six months and the Russia–Ukraine war had lasted more than four months at that point. Ether was down 35 per cent across the same timeframe, while other cryptocurrencies such as Dogecoin, Waves and Binance Coin had also cooled.

Some analysts have suggested that crypto is still too volatile to be relied upon as a safe haven asset when compared to gold.

“(Bitcoin) does not yet have a track record as a safe haven,” Perth Mint manager for listed products and investment research Jordan Eliseo said.

“Gold, on the other hand, has an arguably unparalleled track record as a safe-haven asset, both in periods of higher inflation (gold has averaged returns of approximately 15 per cent per annum in years inflation has averaged more than three per cent), and in periods equity markets sell off.”

AngloGold Ashanti’s Tropicana joint venture in Western Australia.

A reliable asset to turn to in uncertain times, gold also has a much lower carbon footprint than cryptocurrency.

According to Our World in Data, Bitcoin emits an estimated 114 million tonnes (Mt) of CO2 per year, while Ethereum – a blockchain-based software platform which houses its own cryptocurrency – contributes 63Mt of CO2 emissions per year.

In contrast, the world’s listed gold companies emit a combined 78Mt of CO2 per year and, within that, AngloGold contributes 2.3Mt of CO2 emissions per year.

“Contrary to conventional wisdom, including gold in a multi-asset portfolio actually reduces the portfolio’s overall carbon footprint,” Calderon said.

“A modelling exercise by the WGC found that introducing 10 per cent gold in a portfolio of 70 per cent equities and 30 per cent bonds (reducing the other asset holdings by equal amounts) lowered the emissions intensity of the portfolio by seven per cent. A 20 per cent holding lowered it by 17 per cent.

“Interestingly, but not surprisingly, crypto is 15 times more carbon-intensive than producing the equivalent value of gold.

“That’s a big carbon footprint to produce a financial asset which in turn generates very little social benefit – no taxes, no salaries, no local supply chain benefit, and no infrastructure.”

As AngloGold continues to advance its low-emissions ambitions, the company will this year lay out a new 2030 emissions reduction target and continue to explore further measures to decarbonise.

Calderon said the company was “pretty confident” it can reduce its Australian emissions by 50 per cent by 2030, and harnessing the energy transition will play a big part.

“It’s renewables,” he said. “This first push is fundamentally power. After 2030, it’s going to be truck electrification, but initially, power will be a key driver. 

“In some places you can do it better than others. But across the board, it’s going to be all about substituting electricity, either for renewables or for hydro.”

As AngloGold looks to sustainable power generation to reduce its carbon footprint, the company understands it has a higher obligation to address its Scope 3 emissions.

Scope 3 emissions are those generated in the supply chain and are derived from assets not owned or controlled by the organisation in question. Calderon describes Scope 3 as the proverbial “elephant in the room”.

“If you do a great job on (Scope) 1 or 2, you do nothing,” he said. “I think the world needs to look at (Scope) 1, 2 and 3, and mining companies, even though it’s not their sole responsibility, they have to work with their clients in addressing this because if not, nothing is done.”

Calderon said the gold industry was in a strong position when it comes to Scope 3 emissions, and it’s the likes of BHP, Rio Tinto and Vale that have the largest carbon footprints in the supply chain.

A WGC report, ‘Gold and Climate Change: Current and Future Impacts in 2019’, found a large proportion of the gold industry’s Scope 3 emissions were attributed to upstream activities.

Purchased goods and services utilised by reporting gold mining and refining companies (ie the main materials and inputs supplied for use in the process of gold production) made up 21 per cent of total upstream Scope 3 emissions.

The WGC also considered the Scope 3 contributions of waste, transportation, capital goods, and business and employee travel as part of the report.

In contrast, the WGC found the gold industry’s downstream Scope 3 emissions to actually be very small, suggesting they made up less than one per cent of gold’s annual GHG emissions at the time.

“Refining and recycling is immaterial, contributing a miniscule proportion of gold’s total annual emissions,” the report stated.

“The minimal level of GHG emissions associated with gold in storage or circulation has significant implications when we consider how investors and wider stakeholders might perceive gold in relation to climate-related risks.”

The gold industry is an important contributor to global economies.

The WGC said the findings could also influence how gold is perceived in climate change mitigation. 

Net-zero ambitions are critical to a sustainable future, but a responsible mining company is not just one that’s eager to decarbonise. Most gold miners understand the wider ecosystem and the influence their practices have on society more broadly.

“Gold is a unique precious metal which has emotional, cultural, functional and financial value,” Calderon said. “It is purchased around the world for a range of different reasons, influenced by utility, sociocultural factors, local market conditions and macro-economic drivers.

“Gold is increasingly used in a wide range of technological applications, from cell phones and medical testing kits to vehicle air bags. It is the ultimate recycled asset, with virtually all the gold mined to date still in existence in one form or another.

“However, as long as there is gold in the ground and it is so highly valued, it will be mined. This is especially true in developing countries, where gold resources are recognised as a critical source of economic opportunity and growth.”

Gold’s contribution doesn’t stop there.

“Responsible gold miners create jobs for nationals, help build infrastructure and support local communities. They also pay sizeable taxes,” Calderon continued.

“Responsible gold mining should be championed; not only because it provides the world with a treasured financial asset that has been used by mankind for millennia, but because in the present day it supports true social and economic value.”  

This feature appeared in the June issue of Australian Resources & Investment.

* The article has been updated to reflect current market conditions on July 29, when the article was published online.

All images by Tony McDonough.

Previous ArticleNext Article

JOIN OUR NEWSLETTER

JOIN OUR NEWSLETTER
Close
Send this to a friend