BHP to tap green energy to mine coal in Australian state

MELBOURNE (Reuters) - Global miner BHP Group BHP.AX said on Tuesday it has signed an agreement to use more renewable energy at its coal mines in Australia's Queensland state which it expects will help it cut its indirect emissions such as those from fuel and power in the country by 20% in five years.

FILE PHOTO: A tonne of nickel powder made by BHP Group sits in a warehouse at its Nickel West division, south of Perth, Australia August 2, 2019. Picture taken August 2, 2019. REUTERS/Melanie Burton

The move comes as BHP prepares to update the market on its climate actions next week which will include targets to cut operational emissions by 2030, as part of its broader commitment to reach net zero emissions by 2050.

The steel-making coal that BHP digs out of the Bowen Basin in central Queensland will be exported and does not count towards BHP’s net zero target.

“This is an important step forward in BHP’s transition to more sustainable energy use across our portfolio, and a first for our Australian operations,” said BHP’s President Minerals Australia Edgar Basto said in a statement.

BHP produced 41 million tonnes of the steel-making ingredient last year.

The renewable power purchasing agreement with Queensland’s state-owned clean energy generator CleanCo, will run for five years from Jan. 1 2021.

Long-term power purchasing agreements improve the viability of large renewables projects because they guarantee a source of income, making projects easier for banks to finance.

The agreement will support the development of new solar and wind farms in Queensland – the Western Downs Green Power Hub due for completion in late 2022, and Karara Wind Farm due for completion in early 2023.

For the first two years, power will be contracted from CleanCo’s low emissions portfolio which includes hydro and gas generation assets, before the new projects ramp up.

BHP Group produced 3.5 million tonnes of direct greenhouse gas emissions and 1.37 million tonnes of indirect emissions in 2018-2019, making it among the country’s largest emitters, according to the Clean Energy Regulator.

Australian corporations reported 338 million tonnes of direct greenhouse gas emissions and 88 million tonnes of indirect emissions that year, the regulator said.

Reporting by Melanie Burton, editing by Louise Heavens