Rio Tinto has upped the ante, announcing Wednesday evening that it will triple its climate ambitions by aiming to cut slash emissions by 50% by 2030 at a cost of at least $US7.5 billion (more than $A10 billion) over the next eight years.
That compares to the stuttering attempts of the Morrison government to get a net zero by 2050 and it seems little or no change in current policy (put in place by Tony Abbott of a cut of 26% to 28%) by 2030.
Fortescue Metals Group has already committed itself to net zero Scope 1 & 2 emissions by 2030 and net zero Scope 3 emissions by 2040.
A 15% reduction in emissions is now targeted for 2025, five years earlier than previously.
Rio Tinto is Australia’s user of electricity (and largest consumer of coal power) says it plans to will reduce scope 1 and 2 emissions by 50% by 2030 (from 2018 levels) and allocate $US7.5 billion in direct capital expenditure to decarbonise its assets between 2022 and 2030.
In a further blow to coal-burning energy provider AGL, which counts Rio Tinto as its biggest customer,
Importantly, Rio will progress options to switch its Tomago aluminium smelter in the NSW Hunter Valley to renewable energy which will place additional pressure on the already struggling AGL and its plans to hive off its fossil fuel power generating assets.
Rio is AGL’s biggest customer and the move will end up making AGL’s Bayswater coal fired power station in the Hunter even less economic to run.
Rio’s announcement and massive spend also puts pressure on the Federal government’s plan to have the Snowy Hydro build a $600 million, 660-megawatt gas fired power station in the Hunter Valley.
Rio says that to meet additional demand created by the global drive to net zero emissions, it will prioritise growth capital in commodities vital for this transition with an ambition to double growth capex to about $US3 billion a year from 2023.
Rio has ambitions for a big lithium prospect in Serbia and has significant copper interests via a shareholding in Escondida, the world’s biggest copper mine, with BHP, the huge Kennecott mine and associated facilities – again with BHP, the large low-grade copper and gold prospect in the Eastern Pilbara and the huge but troubled Oyu Tolgoi mine in Mongolia.
It is of course one of the major aluminium producers around the world (where a lot of the emission reductions will have to happen, such as in NSW and at its Gladstone refinery and smelter).
Rio Tinto can decarbonise, pursue growth and continue to deliver attractive returns to shareholders due to its strong balance sheet, world-class assets and focus on capital discipline.
Rio Tinto Chief Executive Jakob Stausholm said “Rio Tinto is taking action to strengthen our business and improve our performance by unleashing the full potential of our people and assets, working in partnership with a broad range of stakeholders.
“All our commodities are vital for the energy transition and continue to benefit from ongoing urbanisation. We have a clear pathway to decarbonise our business and are actively developing technologies that will enable our customers and our customers’ customers to decarbonise.
“We are able to do this, while continuing to provide attractive returns to our shareholders in line with our policy, because we have a strong balance sheet and world-class assets that deliver strong free cash flows through the cycle.”