The cost of emitting carbon dioxide has been a financial and material consideration for manufacturing and energy industries, but the relatively small contribution of the mining industry means it has not had to face the same fiscal burden as other industries - until now. Mines that do not include pyrometallurgical processes generally fall below the threshold of schemes such as the EU emissions trading schemes (ETS). The introduction of carbon trading schemes in key mining jurisdictions, including Canada and Kazakhstan , and the agreement by many other signatories to the 2015 Paris Agreement to initiate similar legislative steps have set the stage for carbon costs to make their mark on mining.
Carbon pricing schemes have been operating in Canada for several years, but approaches vary between provinces. In 2018, the federal government announced the 'Output-Based Pricing System' (OBPS) to set an escalating minimum carbon price per tonne of carbon dioxide equivalent (CO₂e) emitted across the country. While the individual provinces and territories have differing carbon pricing approaches, the OBPS sets a minimum carbon pollution price. For 2023, this has been set at C$65/t, increasing by C$15/t per year until 2030.
Carbon pricing has forced mining companies to evaluate the impact carbon taxes will have on their existing operations and future projects. The mine’s jurisdiction can have significant impacts on the magnitude of applied carbon pricing: a study by the Mining Association of British Columbia indicates that due to variances in carbon pricing structure, a mine in British Columbia will incur carbon price costs 10–13 times higher than an equivalent mine in Ontario.
Carbon taxes now must be considered at the earliest stages of mine planning. As mine plans and designs become increasingly detailed as the projects progress, energy and fuel data can be used to build Scope 1 and 2 emissions inventories along with associated carbon pricing. This calculation can help predict the potential economic impact of the project-related emissions and promote decarbonisation strategies.
Prior to reporting mineral/ore reserves, a company must demonstrate that its project is economically and technically viable under current and near-term conditions. International best practice resource/reserve reporting codes, such as the CIM and JORC guidelines, use the concept of ‘reasonable prospects for eventual economic extraction’, which must include a preliminary assessment of economic viability. To better withstand scrutiny by financial institutions and other external stakeholders, it is therefore critical that companies use shadow carbon pricing when evaluating their projects.
