Our client is an international mining company Global Mining Corp (GMC) that focuses on copper mining and is interested in the possibility of producing and selling “green copper”, which is the same product as normal copper but with a certified zero carbon footprint for its entire life cycle until sale. The client engaged your team to help determine the prospects for achieving net zero for their Chilean and Australian copper mines in the next 10 years and decide whether they should pursue this path.
Description of situation
The client operates open pit copper mines mostly in remote areas of Chile and Australia. In most cases, the copper ore is blasted with explosives and turned into rubble, which is then collected by heavy bulldozers in big piles, loaded by power shovels onto haul trucks, which transport the material over several kilometers to the processing site. Mobile equipment is diesel operated and very heavy, up to 400 tons for a fully loaded haul truck. During processing, a series of mechanical operations take place to break down the rubble further before chemical processes like acidic leaching are used to produce the final product: copper cathodes. This material is then transported by trucks and rail to the nearest port where it can be shipped to its final destination, depending on the customer.
What do you think would be some of the factors affecting whether GMC should pursue the production and sale of green copper within the next 10 years?
The team set out to investigate different technology levers for CO2 abatement that could be implemented to achieve zero carbon for a pilot mine in Chile, which produces emissions of 100,000 tons of CO2 per annum, excluding transport away from the mine. Exhibit 1 shows these levers on an abatement curve that compares total abated tons of CO2 per lever and the corresponding cost per abated ton of CO2. What can you make of this analysis?
The team acknowledges that nowadays, technology availability and cost for enabling green copper are less favorable compared to 2030. Considering the information in Exhibit 2, what is the maximum average cost per abated ton CO2 for the pilot mine in Chile today if the goal is to break even with a yearly copper production of 1.0 million tons?
What are some of the non-financial aspects that you can think of considering a potential pathway to green copper and zero carbon mining for CMG?