How the B.C. mining industry can transform itself into a global leader in sustainability—and what’s stopping it

Although the carbon tax remains a sticking point, the B.C. mining industry could use cleantech innovation to reduce emissions and other environmental impacts

Credit: Pexels

B.C. produces copper and metallurgical coal, which are used to make wind turbines

Although the carbon tax remains a sticking point, the sector could use cleantech innovation to reduce emissions and other environmental impacts

B.C. has all the tools to become a global leader in sustainable mining, but with that opportunity comes challenges and a narrowing window to make it reality.

That’s one of the takeaways from PwC Canada’s 53rd annual report on the province’s mining industry, which outlines its key advantages when it comes to environmental, social and governance (ESG) concerns.

The sector has a strong foundation, and from a regulatory standpoint, it positions B.C. mining really well in a global context,” says Mark Patterson, B.C. mining leader with PwC.

The foundation is the province’s carbon tax—which, at $45 per tonne of carbon dioxide–equivalent emissions, is the highest in the country—and its hydroelectricity grid. When mines use hydro power, their Scope 2 emissions fall significantly.

In the net-zero emissions model, companies must factor in three types of emissions: Scope 1 (direct emissions caused by operations themselves), Scope 2 (indirect emissions caused by inputs to production, like electricity) and Scope 3 (all other indirect emissions in the value chain, including those from end users).

In a 2018 report, the United Nations’ Intergovernmental Panel on Climate Change (IPCC) concluded that net carbon emissions must reach zero to stabilize global temperatures and stop runaway climate change.

B.C. mines produce metallurgical coal, a key ingredient in steelmaking for wind turbines. They also yield large quantities of copper, which is used to make electric vehicles. Production of these commodities can reduce B.C. mining companies’ Scope 3 emissions in the long run.

Credit: PwC Canada

The B.C. mining industry’s revenue share from copper and zinc—both used in the renewable resources industry—increased in 2020 versus 2019

Tax troubles

However, with this strong foundation comes concern from the industry. The provincial government’s 2018 Mining Jobs Task Force report found that the carbon tax is the leading competitive disadvantage for B.C. mining operations and anecdotal evidence suggests that it is already contributing to carbon leakage.”

Carbon leakage occurs when companies shift production to places with weaker emissions regulations because of the cost of complying with climate policies in countries where they currently operate. This can lead to an increase in their total emissions.  

Unlike its federal and other provincial counterparts, B.C.’s carbon tax offers no protections for emissions-intensive, trade-exposed (EITE) sectors like mining.

For Michael Goehring, president and CEO of the Mining Association of British Columbia, this is a sticking point. [When] you sell commodities, you’re a price taker, not a price maker,” Goehring says. So any costs that I have in British Columbia, I can’t add to the product I sell internationally because the price is set by the market.”

This forces mining companies to absorb the tax into their production costs and leaves them at a significant disadvantage relative to our provincial and global competitors,” he adds.

What worries Goehring is that when the federal carbon tax rises to $170 a tonne by 2030—forcing B.C. to match it—carbon leakage will occur. This would increase the chances that mining in the province will become commercially unviable.

We‘re asking the B.C. government to level the playing field,” explains Goehring, who has repeatedly said that he supports the carbon tax. How? By making meaningful change to how the carbon tax is applied so that we’re in alignment and have some equity with other provinces in Canada.”

Still, PwC’s Patterson sees an opportunity for B.C. There is an increasing recognition that the existence of carbon pricing measures in B.C. may actually represent a competitive advantage in certain circles.”

But the challenge is to communicate those measures to clients who would have to pay a higher price for products made here. Part of it is probably trying to figure out how you tell this story,” Patterson says. How do you actually articulate the benefits of what exactly we have in British Columbia?”

All of this needs to happen quickly, warns Patterson, because B.C.’s competitive advantage won’t last forever.

Goehring says there are developments in the mining sector that would make B.C. minerals and resources the brand of choice in the commodities market. There’s going to be kind of a task force that comes together to look in a greater way at this opportunity, and to see how we can do that most effectively.”

Credit: BC Mining and Carbon Pricing, October 2020, Mansfield Consulting

In 11 years, the B.C. mining industry cut its greenhouse gas emissions by 0.9 percent

Going electric

PwC’s 2021 CEO Survey found that 76 percent of global mining and metals executives were concerned about climate change and environmental damage,” up from 56 percent last year. This presents an opening for businesses like Port Coquitlam–based Foresight CAC, which aims to accelerate innovation in cleantech.

The mining industry needs innovation to make a dent in its emissions. From 2013 to 2019, the heavy industries sector in Canada, which includes mining, smelting, and iron and steel production, reduced them by just 1.3 megatonnes of carbon dioxide equivalent a year, to 77.1 megatonnes.

In B.C., the mining industry didn’t fare much better, contributing 5.3 per cent to the province’s total emissions in 2018, down from 6.2 per cent in 2007.

Electrification of mines is one way for the sector to cut emissions, says Jeanette Jackson, CEO of Foresight CAC. The strategy her company puts forward in the PwC report includes complete electrification of an open-pit mine, from operations to transport.

But because mines are often in remote locations, connecting to the B.C. power grid won’t be feasible. Mining companies can generate their own power from wind and solar, but that’s an expensive proposition. Jackson thinks they could offset the costs by selling that energy to nearby communities after a mine has stopped operating.

Credit: Pallavi Rao. Source: Statistics Canada

Greenhouse gas emissions from Canadian heavy industry have remained fairly constant in the past decade

Innovation ahead

Another area that’s ripe for innovation is exploration. Jackson cites MineSense—a Vancouver-based company that offers digital mining solutions”—as an example.

They have sensors on the rig, so that they can identify if they’re digging in the right area or not,” she says. Otherwise, what they have to do is dig up everything, and then run what they’ve dug up through a whole other series of processes.”

Besides making the exploration process more efficient, MineSense reduces a project’s carbon footprint and environmental impact, Jackson says. The company’s technology could be used in mining operations across the country, she adds.

But it’s still early days for cleantech in the mining industry, and the pace of innovation frustrates Jackson. Her biggest gripe is the lack of standardization and transparency across the sector, which makes it hard to know what problems miners face and what solutions would work best for them. 

I don’t think people are hiding things,” Jackson says. It’s more about standardizing and giving them the tools to report so that we can compare apples to apples [and] then develop solutions.”

As for B.C. mining and its potential to become a global leader in sustainability? Jackson says there’s a pretty compelling and interesting opportunity” for cleantech.

There seems to be some form of recognition by the sector that they’re going to be needing to look at innovation that helps them extract more with less damage and environmental impact.”

Patterson says PwC saw a step change” in the net-zero conversation when it was compiling its report, but he stresses that it’s important to turn talk into action.

There’s real opportunities for companies to think about in a structured way,” he says. How do you achieve those goals, and not necessarily just go out and make commitments that don’t have some substance and structure?”

This is especially relevant in the wake of a recent report by the BC Mining Law Reform network. The study, which identifies the province’s top 12 polluting or otherwise risky mines,” criticizes the industry for trying to present itself as sustainable while ignoring the health hazards posed by those operations. Noting that problem mines usually operate within government regulations, it concludes with this warning: Legal reform and enhanced enforcement and industry oversight are urgently needed.”