Winds of change? Engie to supply ‘green’ electricity for Anglo American’s Quellaveco copper project in Peru
Published by MAC on 2021-04-10Source: Mining.com, Reclaim Finance, Im-mining.com
Announcements of decarbonisation of potentially harmful mines and projects are proliferating.
While Engie committed to work towards the global phase-out of coal power, yet the company pursued the development of new coal plants in Brazil (Pampa Sul), Chile (Infraestructura Energetica Mejillones-IEM), Mongolia and Morocco. Engie mostly sold its coal assets instead of closing them – bringing no real benefit in terms of greenhouse gas emissions reduction. Most if not all coal plants sold by Engie remain operational, with no date for closure having been announced by the new owners, non-profit Reclaim Finance reported.
Daniel Gleeson
https://im-mining.com/2021/04/
7th April 2021
Anglo American and ENGIE’s Peru-based subsidiary have signed an agreement to convert the current contracted energy supply for the Quellaveco copper project to 100% renewable sources, in addition to agreeing on another eight years of energy supply for the mine, starting in 2029, from “green energy” inputs.
The agreement will see Quellaveco, a copper project being developed by Anglo and Mitsubishi Corp, become the first mining operation to promote the construction of a non-conventional renewable energy plant, according to ENGIE.
As part of the pact, ENGIE Energía Perú has agreed to convert the total electricity supply for Quellaveco (187 MW) to 100% green energy, with 150 MW of supply over eight years from 2029 also coming from green energy sources.
ENGIE Energía Perú will source the renewable energy from its Punta Lomitas wind power plant, an in-development wind farm with a joint nominal capacity of 260 MW located in Ocucaje-Ica and a 60 km transmission line connecting the plant with the National Interconnected Electric System.
The project has been granted a generation and transmission concession by the Ministry of Energy and Mines, and construction is expected to start in the second half of 2021, the company says.
Tom McCulley, CEO of Anglo American in Peru, said: “We are working from different areas to contribute to a healthy environment. Our goal is to transform the very nature of the industry to ensure a safer, cleaner and more sustainable future.
“By resorting to the use of higher precision technologies, such as those that Quellaveco will have, as well as by focusing on consuming less energy and less water, we will reduce our environmental footprint for every kilogram of copper that we produce, starting in 2022.”
Rik De Buyserie, CEO of ENGIE Energía Peru, added: “Thanks to the renewable energy certificates delivered by the Punta Lomitas Power Plant to supply the demand for the Quellaveco project, we are proud and committed to accompany our client Anglo American and mining in Peru, on their path to carbon neutrality.”
Quellaveco, owned 60% by Anglo and 40% by Mitsubishi Corp, comes with a production blueprint of 300,000 t/y of copper over the first 10 years of the mine, with first production expected in 2022.
Anglo American to spin off South African coal assets
Cecilia Jamasmie
https://www.mining.com/anglo-american-to-spin-off-south-african-coal-assets/
April 8, 2021
Anglo American is moving forward with its plans to exit coal by announcing it will separate its South African coal assets into a new business this year amid growing investor pressure to abandon the polluting commodity.
The demerged company, Thungela Resources, will list on the Johannesburg and London stock exchanges, Anglo said on Thursday. Investors will receive one Thungela share for every ten Anglo American shares they hold. Anglo executive July Ndlovu has been named chief executive officer.
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The soon-to-be standalone miner produced 16.5 million tonnes of coal last year and has assets worth $1.3 billion. It is close to an established rail network with secure access to export markets via the Richards Bay Coal Terminal.
Thungela has 137 million tonnes of reserves and 756 million tonnes in resources, along with seven operations — four open-pit and three underground.
“As the world transitions towards a low-carbon economy, we must continue to act responsibly,” chief executive Mark Cutifani said in the media statement. “Our proposed demerger of what are precious natural resources for South Africa allows us to do exactly that.”
Mounting pressure from investors, regulators and environmental organizations has pushed miners to either sell coal assets or to limit their exposure to the fossil fuel in recent years.
The world’s top miner, BHP, has also announced plans to exit thermal coal as part of its commitment to reduce emissions.
Rio Tinto, the world’s second-largest mining company, sold its last coal mine in 2018.
Anglo American has consistently been offloading coal operations since 2014. Last year it announced it intended to spin off its South African unit within the next three years. It also made the decision to sell Cerrejón, its thermal coal subsidiary in Colombia.
The strategy won’t affect the emissions caused by the thermal coal produced from the mines, which will continue running under Thungela. But Anglo said it wanted to give investors the choice to whether or not support the coal industry.
“The proposed demerger recognizes the diverse range of views held by Anglo American’s shareholders in relation to thermal coal,” the company said. The plan “provides the choice to act on such views and, following the implementation of the proposed demerger, to either retain, increase or decrease their interests in Thungela.”
Anglo, BHP and Rio’s decision leaves miner and commodities trader Glencore as the last major company in the coal sector.
The Swiss firm does have an ambitious plan to reach net-zero emissions by 2050 through reducing its direct and indirect carbon footprint by 40% by 2035, compared to 2019 levels.
Not fully out
While Anglo American is moving away from the most polluting kind of coal, metallurgical or coking coal appears to be one of its key commodities moving forward.
The miner recently increased its medium-term guidance for the steelmaking ingredient to an estimated 26-28 million tonnes by 2022.
Its main customers are all in Asia, including India, all of whom rely on coal-fired power, Cutifani said. “You can’t just walk away from billions of people across the globe,” he noted.
Anglo said it would inject $170 million into Thungela and continue to market the company’s products to customers for three and a half years. In addition, it would provide “contingent capital support” until the end of 2022 if thermal coal prices drop below a certain threshold.
The spin-off will be subject to a vote by shareholders at Anglo’s annual general meeting in May and requires 75% approval.
Engie’s tumultuous road towards decarbonization
https://reclaimfinance.org/
04/02/2021
As a growing number of financial players demand that companies in their portfolios achieve carbon neutrality by 2050, the climate and energy think tank, Ember, publishes today a conclusive report on Engie’s climate strategy. Not only is Engie late in publishing a plan to close its remaining coal-fired power plants, but it's gamble on gas poses serious risks to the climate and its shareholders in a context of climate emergency and an increasing competitiveness of renewable energies. See below a breakdown of the stakes.
Engie’s decarbonization path until today
Engie committed in 2015 to not build new coal plants and to reduce its activity in the coal sector. In December 2017, Engie joined the Powering Past Coal Alliance, reaffirming its commitment to work towards the global phase-out of unabated coal power. Yet Engie pursued the development of new coal plants in Brazil (Pampa Sul), Chile (Infrastructura Energetica Mejillones-IEM), Mongolia and Morocco and mostly sold its coal assets instead of closing them – bringing no real benefit in terms of greenhouse gas emissions reductions (1).
While Engie reduced its coal power capacity by more than 75% – from 20,872 MW in 2015 to 4,700.8 MW in 2019 – it still currently operates 10 coal power plants for a total of 4 GW of installed capacity. 76 % in Latin America (Chile, Brazil and Peru), 14 % in Morocco and 10 % in Portugal (2).
Of this installed capacity, 70% still does not have a closure date: 3 of Engie’s coal-fired power plants in Chile (Andina, Hornitos and IEM), 2 in Brazil and 1 in Morocco. Engie is trying to sell its coal plants in Brazil.
Engie’s business-as-usual road ahead
A new report by the climate and energy think tank Ember reviewing Engie’s transition strategy warns about the absence of a comprehensive coal-phase out strategy and the inconsistency of the company’s SBTi target of 2°C with the objectives of the Paris Agreement (3).
Renewable energy accounts currently for 27% of Engie‘s total installed capacity, against 54% for gas. Despite Engie’s plan to increase solar and wind capacity, Engie’s strategy focuses largely on switching from coal to fossil gas and biogas/biomass for power generation between now and 2050. In an interview with FranceInter, Claire Waysand, Interim Chief Executive Officer and General Secretary Engie group, suggested that Chilean power plants would be converted to gas or biomass (4).
Even in Europe, Engie is working to defend gas from regulations and is developing new gas infrastructures. A case in point is the Vado Ligure plant managed by Tirreno Power, 50% owned by Engie. The plant was 100% coal-fired before its conversion to fossil gas of an 800 MW unit in 2007 and the later closure of the coal units due to violating health standards. However, Tirreno Power recently announced that it will double the plant’s capacity to produce electricity from fossil gas.
Ember’s report also highlights that the intended reliance on fossil gas over the next decades is a source of potential climate and regulatory risks for Engie, especially if shale gas ends up being one of the fuel sources, given the higher risk of fugitive emissions. From a financial point of view, the collapse in the cost of generating electricity from renewable energy sources reduces the financial viability of fossil gas assets and would ultimately lead to the abandonment of these assets.
An alternative scenario
Engie‘s current decarbonisation strategy is not aligned with the objective of limiting warming to 1.5°C, nor with the goal of achieving carbon neutrality by 2050. This is, however, a demand of a growing number of financial institutions, notably those involved in the Net Zero Asset Owner Alliance.
Not only do 24 French financial institutions (5) expect their clients active in the coal sector to adopt a coal exit plan, but many of them are also committed to aligning their activities with the Paris Agreement goals. Nevertheless, Engie is far from complying with this expectation: its tardiness in publishing a plan to close its last coal-fired power plants adds to the risk of being one of the main promoters of gas as a transition energy.
Reclaim Finance calls on financial players to rapidly address this matter and push Engie to publish a roadmap to close its coal assets without switching over to biomass or gas, and to include it in a global strategy of transition towards a carbon neutrality objective consistent with a 1.5°C trajectory.
Notes:
(1) Until now, Engie only closed 23% of its coal power capacity (6 full plants and 2 units of one coal plant, for a total of 4,815.6 MW). 14 coal plants representing 54% of its coal capacity (11,356 MW) were sold to other power producers. Most if not all coal plants sold by Engie are still operational, with no date for closure having been announced by the new owners. The coal plant in the Netherlands should be closed by 2029 and the three coal plants recently sold to Riverstone Holdings in Germany should be closed at the latest by 2038 because of the national government’s decision to phase out coal.
(2) Following discussions with the Chilean government and with investors, Engie announced the closure in the coming 5 years of the last two units of the Tocopilla coal plant, two units of the Mejillones coal plant in Chile and of its coal plant in Peru.
(3) Engie certified its greenhouse gas emission reduction target by the SBTi (Science Based Targets Initiative). However, this accreditation refers to a target of 2°C. Not only is this target insufficient to limit the worst impacts of climate change, but the SBTi has also stopped accepting submissions for the “2°C” target in 2019, focusing on the “well-below 2°C” and “1.5°C” targets.
(4) Listen to the interview of Claire Waysand in FranceInter during a special program for the fifth anniversary of the Paris Agreement (in French), from 00:39:00 to 00:45:00.
(5) Notably the groups AG2R La Mondiale, AXA, BNP Paribas, CNP Assurances, Caisse des Dépôts, Credit Agricole/Amundi, Credit Mutuel, Groupama, La Banque Postale AM, MACIF, MACSF, Natixis/Ostrum, OFI AM, Societe Générale/Lyxor AM. See the Coal Policy Tool of French Institutions. When the French banks committed themselves to aligning themselves with the objectives of the Paris Agreement, AXA, Caisse des Dépôts and CNP Assurances became part of the Net–Zero Asset Owner Alliance.