Mining companies everywhere are looking to balance today’s pressures of using resources more sustainably, with the challenge of doing so cost-effectively and without compromising business productivity. A global leading producer of base metals was looking to take their sustainability practices to the next level by including climate change measures in their corporate policy. PwC helped the company establish a methodology to manage its environmental footprint and develop innovative ways to strengthen their sustainability leadership using abatement curves.
PwC Chile and the company developed a long-time relationship after working together for five years conducting sustainability reporting for the company’s operations in Chile. The scope of our collaboration evolved, as PwC started assisting with sustainability assurance. As part of this endeavour, our Sustainable Business Solutions (SBS) professionals helped the company’s team develop climate change and energy efficiency projects, including training to staff and management on related issues.
In line with this effort, the company launched a new policy for dealing with climate change, which outlined risks and opportunities and would eventually assist the company’s objective to look at ways to measure and reduce its greenhouse gas (GHG) emissions. This generated a bidding contest among major consulting firms, asking for suggestions on methodologies to map opportunities to reduce GHG emissions and also energy consumption. At the time, all three Chilean mines had no formal process or tools to identify project ideas, define and track performance goals, assess costs and benefits, and forecast and measure possible emissions reductions.
PwC, along with a major engineering firm, won the bid with a methodology involving marginal abatement cost curves (MACC), which would enable the company to map opportunities to reduce GHG emissions in graphical form and visibly show the costs and benefits of doing so.
At the start of the engagement, the project team, which had a mix of consulting, engineering, financial and mining industry experience, connected with PwC Australia to learn from its previous experience devising MACC.
“Climate change has introduced new critical parameters in company management systems, such as energy and water consumption and GHG emissions,” says Mathieu Vallart, SBS Senior Manager, PwC Chile. “Strategic tools such as abatement cost curves provide key information to companies looking to make decisions on projects that reduce environmental footprint and improve performance in a cost effective way.”
To make sure they understood the scope of the company’s Chilean operations and their environmental impact, PwC collaborated with sub-groups at each of the three mines of the company’s operations, including members from corporate and operational areas, as well as support, production and environment teams. The project team held brainstorming workshops with all groups on how to improve performance and reduce emissions. They looked at the production process, key performance indicators (KPIs), and how other areas within the company were managing emissions to assess what could be applied to their division. This process helped to establish communication lines between the different areas, which didn’t exist prior to the project.
From there, the team used the data to produce MACC, which showed in a single chart the abatement potential of each proposed environmental sustainability project (x axis) and the related cost of implementation (y axis). The MACC helped prioritize and quantify the abatement opportunities based on the cost of implementation and the potential to reduce GHG emissions or energy consumption, allowing management to focus on the most attractive approach.
At the end of the project, PwC delivered the following:
The company decided to expand the scope of their climate change program to include water management. They re-engaged the PwC team, who with the assistance of a specialized engineering team applied the MACC methodology to calculate the company’s water usage and forecast future water consumption.
The MACC provided a complete view with technical and financial evaluations of the company’s requirements to improve GHG, energy consumption and water management, in just one graphic. The process was formally implemented and requires update every six months, enabling management to make strategic decisions on their focus areas for improvement.
After implementing the GHG and energy abatement curves in the company’s Chilean operations, PwC helped implement them in other regions, including Australia.
The company has since integrated the abatement curves methodology to its corporate environmental policy, which is now a requirement for all of the company’s major operations around the world.