July 23, 2019 / 8:34 AM / 5 months ago

BHP makes $400 million climate-change emissions pledge

LONDON (Reuters) - Leading resources company BHP (BHP.AX)(BHPB.L) will invest $400 million over five years to reduce emissions, it said on Tuesday, becoming the first miner to pledge to tackle pollution caused when customers use its products.

FILE PHOTO: Visitors to the BHP (formerly known as BHP Billiton) booth speak with representatives during the Prospectors and Developers Association of Canada (PDAC) annual convention in Toronto, Ontario, Canada March 4, 2019. REUTERS/Chris Helgren/File Photo

BHP is the world’s biggest listed miner and biggest coking coal producer. Combined with iron ore, also mined by BHP, coking coal is used to make steel, producing millions of tonnes of CO2.

CEO Andrew Mackenzie said BHP would develop technology to curb emissions both inside and outside the company.

From next year it will set a medium-term, science-based decarbonisation target, he said in a speech at an event organised by the Financial Times.

“We won’t stop at the mine gate. We will also increase our focus on Scope 3 emissions,” he said.

Emissions are divided into categories. Scope 1 and 2 cover an organisation’s direct emissions and indirect emissions generated by power it buys to run its operations.

Scope 3 emissions occur when a company’s products are used, as in steelmaking.

Oil major Shell (RDSa.L) has also pledged to address Scope 3 emissions, but many other resources companies have been reluctant to confront what is a huge problem.

BHP says its Scope 3 emissions are estimated to be about 40 times greater than its Scope 1 and 2 emissions.

‘BREAKING OF RANKS’

Adam Matthews, director of ethics and engagement for the Church of England pension, a BHP investor, said Mackenzie’s position marked an important breaking of ranks.

“The key will be in the ambition of the targets they set next year and also how this relates to the lobbying undertaken by the trade associations they fund,” Matthews said.

BHP’s closest rival, Rio Tinto (RIO.L)(RIO.AX), has said Scope 3 emissions are caused by its customers, especially in China, and it has little control over them.

In an interview, Mackenzie told Reuters he could not yet be specific about the new investment, but measures could include work on recycling.

Some in the industry have criticised BHP for a focus on bulk commodities rather than minerals that are needed for electric vehicles, such as lithium and cobalt.

Mackenzie said BHP concentrated on the commodities it knew best, including copper, which has a significant role in a lower-carbon economy because of its usefulness as a conductor of electricity.

The company owns thermal coal mines, whereas Rio Tinto has sold off its thermal coal, thereby reducing one source of Scope 3 emissions.

Mackenzie said that BHP’s thermal coal accounted for less than 3% of revenue and is low-cost, implying that it would be among the last to be closed down globally.

“We would simply be transferring the Scope 3 emissions to someone else,” he said, though he added that this did not mean BHP would not decide to sell its thermal coal.

Reporting by Barbara Lewis; Editing by Alison Williams and David Goodman

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