Decarbonisation in Mining: The journey to cutting carbon emissions related to mineral resources

Good afternoon everyone. I'm Shannon Derejo from Crema Media. Welcome to today's webinar on decarbonization in mining, where a panel of experts will unpack the journey to net-zero carbon emissions related to mineral resources.

Today's webinar is sponsored by Shell Lubricant Solutions, African Clean Energy Developments, DRD Gold, Norton Rose Fulbright, and Partners in Performance. We thank them for making this event possible.

Before we get started, please note that we've enabled the Q&A, so please post your questions there. You'll find the Q&A at the bottom of your screen. The panel will answer as many of them as possible throughout the discussion. Attendees will also be able to interact with the panelists via the chat, enabling a rich conversation on decarbonization in the mining industry. You'll find the chat box at the bottom of your screen. Please remember not to post any questions in the chat, though, as we may miss them. You can post all your questions into the Q&A.

Please be aware that we're recording this webinar and will be sending the recording to you when it's available. We're also streaming the webinar live to YouTube and will share the link in the chat.

Today's webinar will be facilitated by Sandra du Toit from Partners in Performance. She leads the firm's energy transition practice in Africa. In this capacity, she supports clients in the development of their roadmaps to Net Zero carbon, including helping them to manage scope 3, collaborating on their go-to-market strategy for getting to shovel-ready energy projects and beyond, as well as advising on filling the shortfall with verifiable and value-based carbon credits.

Sandra will facilitate the discussion with our panel, which includes Jevin Martin, Head of Energy and Decarbonization at Sibanye-Stillwater; Paul van der Merwe, Technical Manager for Lubricants at Shell Lubricant Solutions; James, GM at African Clean Energy Developments; and Shahil Jagannath, Business Developer at ENGIE.

I'll hand over now to our facilitator, Sandra du Toit, to open the discussion. Over to you, Sandra.

Oh, you're on mute, Sandra. Of course, I am. For the start of the webinar, Shannon, thanks so much. And thank you to the audience for joining us this afternoon. We hope to spend an interesting and challenging hour with you, going through this very important subject of decarbonization in the mining industry.

So, while we were waiting for the webinar to get going, we were sort of jokingly trying to organize ourselves into causes of scope one, scope two, or scope three and mitigations and offsets. But Devin, I think it's fair to say that probably in the mining industry, you guys cover the whole gamut of emissions and emissions mitigation. So, for the benefit of the audience and just as a backdrop to our conversation today, what exactly for you in the mining industry does decarbonization entail, and why is it so vital for the mining industry to be on this journey?

Hey Sandra, and great to be on the panel today. Decarbonization really entails reducing greenhouse gas emissions from human activities. And why that's important is really greenhouse gas emissions in turn resulting global warming, climate change, and then some of the worst effects of climate change are things like rising seas, extreme weather events, loss of critical biodiversity, food and water security issues, as well as economic impacts.

If you put that in a mining context, those can impact our businesses. But mining really has a core role in addressing decarbonization or enabling it in two primary manners. The first is mining needs to produce those green metals that are required for global decarbonization, and that's really through reducing of fossil fuels with renewable energy sources and other critical technologies that enable it. And those minerals include the likes of lithium, copper, magnesium, cobalt, etc. And that, in turn, has actually informed Sibanye's strategy. We've moved into green metals through acquisitions of the Calibre project in Finland, the Rhyolite Ridge project in Nevada, both producing lithium, our zinc processing facilities in Australia, as well as nickel processing facilities in France.

The other way that mining can contribute to decarbonization is through reducing its own greenhouse gas emissions as part of its value chain. Mining contributes about 7% of greenhouse gas emissions, so there's really an onus on us to contribute to mitigating climate change. Maybe I could also just say from a customer perspective, it's obviously front and center in the way we think. Our customers are calling on us to produce those green metals, but they're also calling on us to produce low-intensity commodities. So, when we engage with some of our customers, they ask of us, "Do you ethically produce your minerals? Do you, are they in line with human rights, etc.?" But I think one of the key differentiators amongst commodities is its carbon intensity, and that potentially is going to become a differentiator for miners in how they produce the commodities and how their customers procure them.

Thanks, Jim. And do you see, you see in that context, that whole process of decarbonization, is that called an equally loud call coming from, you've mentioned customers, is it the same coming from regulators, same coming from investors, in the context of the broader kind of Paris commitments?

Yes, it is actually. Funny enough, it's a focus of all of our different stakeholders. So, it's about your store to believe in stakeholder capitalism or value creation for all of our different stakeholders. And when we think about decarbonization, decarbonization actually creates that value for our stakeholders in different ways. We spoke about customers, their requirements for low-carbon commodities. If we look at, for example, governments, governments are expecting us to deliver on our decarbonization commitments such that they can adhere to their Nationally Determined Contributions in line with the Paris Agreement. You've got our finances and our shareholders that are calling on us to set ambitious targets, demonstrate credible action plans, and deliver on them. We have our own employees that, when we engage with them, they see decarbonization as a value proposition, something they can work behind and believe in. We view the environment as one of our key stakeholders, and it's critical to live on it from a climate change perspective. And then, less so in a South African context, but our community is also calling for, if they want to see decarbonization, there's an enablement of job creation, localization for local suppliers. So, really, decarbonization doesn't only benefit a select future, it's really, really everyone.

Thanks so much, Jim. And I think we often see the sharp edge of that requirement of mining companies to decarbonize, either when we see extreme weather events or when that actually drives to incidents and challenges in the mining industry, so when communities are suffering from increased air pollution and the like. So, James, at African Clean Energy Developments, you were not just with companies like Sibanye-Stillwater, but you actually work in a broad range across the industry. So, these themes, these drivers that Jevin has highlighted to us in his introduction, what is the level of urgency that you get from your clients when they speak to you? And is that level of urgency really just about energy security and energy cost, or is decarbonization an equally important driver for them?

Hi everybody, thanks, Sandra. Yeah, I think the set against each other or, you know, they complimenting each other. One another. We're reacting to a client's need to both decarbonize, but then also reduce their input costs, and in so doing, providing a secure supply of power. I think an important nuance to be clear on, the power security is really a commercial one, in that it's a predictable price that escalates with CPI over time, rather than being exposed to the current norm, which would be Eskom price increases, which are a little bit more unpredictable and above inflation. What our renewable energy projects and the electrons that we wheel through the grid don't do is completely protect against energy security from a load shedding perspective. If curtailment is required, given the power crisis, the curtailment will still take place. That said, what we're also doing, and this is on the back of clients like Sibanye investing in offtake agreements with the likes of ourselves, is continuously putting electrons onto the grid, which in so doing, relieves the capacity issues that we're currently struggling with. So, it's a bit of a long-winded answer that it's it's it's it's both at the same time. It's cost, well, I suppose it's three things at the same time: it's cost, security, and decarbonization.

Yeah, and I think that certainly resonates what we are seeing in our own client base coming through together with, as Jevin has mentioned, this increasing pressure from customers and clients to decarbonize operations at a mining level, so that their own raw material supply becomes cleaner.

Yeah, I think the one thing I didn't address there was the urgency aspect of the question. And yes, the urgency is real, and it's real in the sense that it can actually be achieved now. I think we've got to commend government, the DMRE, NERSA, Eskom, in deregulating the power sector in the way it has over the last 18 to 24 months, that have now made it possible to service clients in the mining sector with renewable energy that wasn't possible in the way we're doing it and at the scale we're doing it now, just 24 months ago. So, the urgency is very real on the back of the fact that it is actually implementable. There are also group connection constraints that are that hinder our ability to do it at the scale we'd like to, and so there's an additional urgency amongst the private sector to secure capacity as soon as they can, given the grid constraints.

So, race to the transmission line, as it were. Indeed. And Paul, at the risk of simplification and sort of having heard from James about that energy security mix, Shell plays largely in what we would term the scope one space. Are you seeing a lot of questions from your client base in terms of urgency in scope one, given the multiple factors that James has mentioned that play into scope two, that's not just about decarbonization? Do your clients really ask you about what they can do to reduce emissions in that space, or are they all simply trying to get renewable energy into the mix? And Paul, maybe we can move, are you online?

Online, apologies for that. Thanks, and afternoon to everyone. Yeah, I'm actually there. I went after Jevin and James because they touched on a few elements that inform our approach to decarbonization in mining. And yes, we do see some urgency and a big appetite in decarbonization of scope one emissions. And you know, Shell Lubricants, you know, we've adopted a collaborative approach with our clients that obviously differ from client to client, and there's different factors that we consider, you know, some of which Jevin has mentioned. You know, when engaging with mining customers on decarbonization, it's called one level. An interesting thing that we consider would be, you know, what is the client's view on decarbonization in itself as a topic? You know, what are their key imperatives that that drives the journey towards decarbonization, and what is the level of importance of those imperatives? Secondly, with those, we look at what is their maturity of the majority of the programs that they would have in place in their journey towards decarbonization. You know, do they have timeline specific timelines that are embedded into their strategy, or is it essentially, you know, probably just starting on the journey? So, we look at those, those things. You know, and finally, the technology alignment. You know, some customers are largely focused on efficiencies, and some mining customers, you know, put look into constantly innovating themselves, you know, to constantly look for innovative and new ways of decarbonizing in their operations. You know, once we've had those engagements and analyzed all the information, we're able to put together customized solutions that speak to the customer's specific pain points. So, it's all a holistic approach for us, and as I said, it's really a collaborative approach that we adopt with customers. So, we are not only in the scope two space, I didn't scope one space. We have seen that urgency coming through to decarbonize.

That's great. And Paul, I was looking at your little marketing blurb in the chat, in the chat group, and I love the language of putting miners between a rock and a hard place with wanting to produce more and the middle East. So, let's say, you know, I just want to round out this discussion, looping back to the ENGIE team and Shahil. How big do you think the contribution is that renewable energy, overall, can make in the mining industry? If you had to give us a sense of a quantification.

Good afternoon. I'm Shahil. Thanks for the question. If we have to be very, very optimistic, I think renewable energy can probably power mining completely. The way that the industry has worked from 2010 to now, prices for wind, solar, and I think solar panels and both batteries are now over 80% cheaper than they were back then. So, it has become realistic to imagine a world where even mines can be powered by renewable energy. Right now, it is a case where the quantity seems daunting. In South Africa, I think over 10 gigawatts is being used by the mining clients. There are several smelters with over a thousand megawatts which you need to utilize continuously. But as we strengthen the grids, as we've talked about, and as wheeling becomes easier to do in South Africa, and as technology changes, we can definitely probably power these completely by renewable energy in the not-so-distant future. I also think it's not really a case of hoping. I think we need to use the technology at hand and use the knowledge that we have in the country from a very successful renewable energy program over the last decade to make these areas reality.

Thanks so much, Shahil. And I can see in the chat, the audience is quite eager to start getting into the meat of the conversation. So, just a reminder, as Shannon said in the introduction, for you to pop those questions into your Q&A functionality and not into the chat. But Jim, and I'm going to swing right back to you, right? Because the audience, as I said, wants to start understanding what mining companies are specifically doing. So, won't you give us sort of a landscape feel for the initiatives that Sibanye-Stillwater has initiated, for want of a better word, to actually start decarbonizing its operations?

So, Sandra, to Paul's points, there's different maturities in terms of decarbonization plans, and we like to think ours is relatively mature, as we've wrapped all of our initiatives into effectively an energy and decarbonization strategy that's being implemented across the group. And it really has six levers. The first lever being energy and decarbonization active advocacy. So, you really want to create an environment that enables decarbonization. So, we do spend extensive amount of time engaging with external stakeholders and creating an external environment for decarbonization, and that includes government and some of the reforms that we've seen over the last couple of years and the positive changes we've seen in that environment. Internally, we also advocate for change that enables decarbonization. We set policy, strategies, targets, and even incentive structures to align the actions within our organization with decarbonization.

The second lever is Energy Efficiency. We have five-year energy efficiency plans at all of our operations that are executed and capitalized on a rolling basis, and that's all traditional reduction in the energy that you'd see in our operations.

The third lever is Strategic Energy Sourcing. And some of the panelists today have really spoken about renewable energy. We need to have access to low-cost, secure, low-carbon renewable energy in order to enable our operations.

The fourth lever is Technology and Innovation. And I'm sure we speak to it later, but it's really saying how do we take technology and use it to enable a reduction of emissions in our operations? And that ranges from battery energy storage to greenhouse gas emissions, etc.

The fifth lever is Scope 3 Emissions. And maybe for the audience, scope one is those direct emissions that we incur in our operations. Scope two is those emissions that are indirect, so for example, consumption of electricity from a grid. But scope three emissions are beyond our own value chains, upstream and downstream, taking accountability for those emissions and ensuring that with our partners, we reduce them.

And the sixth lever is then really when you get to the back end of your journey, and you've got these hard-to-abate emissions, you need carbon offsets to neutralize those emissions. So, we have a strategy in place to actually address those emissions in the long run, although we don't plan to use carbon offsets to offset our commitment to reducing emissions in line with the requirements of science.

Thanks so much. Now, I think there's a whole lot in there that we can start unpacking. And I think probably the one that's on the minds of a lot of the participants in this conversation is around energy and energy sourcing. So, James, if you wouldn't mind giving the audience again, just sort of a little bit of a primer around what you're seeing as the various options that are available to your clients in terms of procuring renewable energy, because it is quite a complex landscape. I think we do hear a lot about self-generation, we hear a lot about behind-the-meter, in-front-of-the-meter wheeling. So, James, what is that landscape look like, and what would inform a client picking one of those renewable energy solutions over the other?

So, yeah, I think you've got it right there in terms of the spread of options. I guess the background to it is the renewable energy market in South Africa has been alive and kicking for a little over a decade now, but all of the projects developed and operating in South Africa, or the vast majority at scale, at least, were through the government procurement program in partnership with the DMRE and Eskom. We have long-term offtake agreements with Eskom. In the last 18 to 24 months, the market's been deregulated to allow for the private sector to procure power from Independent Power Producers, IPPs like ourselves. And it's on the back of the government procurement program experience and the development process that we have a stock of renewable energy developments in Greenfield. So, we've got a solar portfolio, a wind portfolio, and some small hydro. And in procurement processes or bilateral negotiations with the likes of Sibanye, we've done a project together that's under construction, and we've also done a project with Harmony Gold, a PV project that's just reached COD, and we've done another with Sasol, and we have some more. And they're all across different technologies. I think the most important thing for a client to consider is their load and matching. So, they'll look at the profile of their energy use and assess the technologies available to them, primarily wind and solar, and look for a technology, and sometimes even a site, because especially in wind, it's so site-specific in terms of its generation profile, that best suits the load requirement. And I think we're seeing more of a leaning towards wind than PV in a sort of low-hanging fruit load matching sort of optimization. But price is obviously very important, and typically PV is slightly cheaper than wind. And the other thing that impacts prices is location. And so, while we're now able to wheel projects from renewable energy facilities that are located remotely from a mine's facilities or operations, that means we can get the sort of best price out of that project, but there are costs associated with the wheeling arrangement that we have to enter into with Eskom, that in some cases, where land is available and the resources adequate, does make co-located projects interesting to offtakers. But what we're generally seeing is that large-scale power users have a huge amount of energy demand, and that's leading them to develop a portfolio of power purchase agreements that is a mix between wind and solar, and the mix between remote wheeled projects and co-located behind-the-meter projects.

And how complex are these projects? You know, one is maybe sometimes tempted to think about a solar panel installation on your roof and think, "Same, same, but a little bit bigger." And of course, that's an advanced oversimplification. So, how complex are these, and what does that mean in the process of selecting somebody that you're going to partner with in the renewable industry?

I don't think they're necessarily that complex on a fundamental level in terms of the technology. I mean, we've obviously been doing it for a long time, and so there's a learning curve that we've enjoyed. We understand how to develop and build. So, for wind, the complexity is centered on the fact that this is now a frontier market in the renewable space, where there's a private seller and a private buyer, and we need to understand how we need to allocate risk between each other, especially when a client is looking for a very bespoke product. So, there's a huge amount of variance in the complexity. But at least on a foundation of a certain level of simplicity, the complexity is producing with time, though. But it is still very, very new. I mean, the project that Jevin and I have worked on, that was only the second private wind farm in the country, and it was the largest private wind farm in the country. No others have closed yet. In the PV space, there's been a bit more, but it's also been fairly limited. So, I think we're still kind of having to learn by doing in reducing the complexity. And I don't think that complexity is going to be around forever. In fact, I would say within 18 to 24 months, there'll be a lot more precedence in the market that makes it more simple.

Thanks, James. I can't shade with us last week, switching on one of the early projects and sort of phoning the team at Eskom and saying, "Come and open the box because we switched in, we're switching on." So, a question that came from the audience, and I'm going to put you on the spot here from Mike Blankenberg, he wants to know if you've got any sense of what the average wheeling charges are likely to look like, and I think he's hopeful that it's going to be less than what the guys have historically paid.

It's a very challenging question to answer because every single project is different, and it all depends on the client's needs and desires in terms of technology, PPA term, whether or not they want partial or fully indexed tariffs, the scale of the project. There truly is no one-size-fits-all. And add to that, the location of the project, the level of generation, and the time of generation, as it pertains to Eskom's tariff pricing structure, also influences the generation use of system charges and the effective sort of foregone savings that an offtaker would have to consider when comparing an Eskom electron versus a wheeled electron. However, that all said, in virtually all cases, we are still beating an Eskom equivalent tariff. And I think what the private sector really has to offer the mining sector is certainty on pricing. So, while you might not see as much saving as you'd like in year one, or in terms of what one would expect, because there have been some very significant changes to the capex and Opex pricing and these technologies on the back of COVID and the global inflation that everyone's having to bear the burden of, the real value add is a certain price trajectory over a long period of time, rather than having to wait for April every year where NERSA and Eskom decide to potentially increase tariffs by as much as 20%.

Yeah, thanks so much, James. Jim, and I'm going to loop back to you. I'd like us to sort of start exploring balance sheet, but I think before we do that, we've just got to answer one question that came in from Mitchell Wernick in the audience. Devin, he wants to know what factors other than price do you, as a mining company, take into consideration when you select a specific energy partner?

Oh, I think that's a great question. And when we went out to market, we set out a certain set of criteria that we looked at when evaluating and picking partners. And it ranged from the credibility of the consortium of the partner that we would interact with, the experience and the delivery of projects to date, it was a technology solution and what they were proposing, their commercial structuring in terms of how they're going to plan to fund the project, which has probably one of the biggest bearings on tariff. We included what we called infrastructure for impact considerations, basically how would this project or this consortium or partner promote socioeconomic development, how would they promote HDSA ownership and B-BBEE levels. And then there were also the elements of pricing. What we also did target though was entities that had several ready projects with grid access, which was quite a critical factor in the South African context, considering the long length of time it takes to permit these projects, get all the relevant consents, and the further compounding factor of actually having grid access. So, we recognize that the grid access constraints quite early on, back in 20, the end of 2020, I think, and that's when we actually went out on tender. We identified a handful of wind projects and pursued those projects with the IPPs, and like James mentioned, we were successful in closing the 89-megawatt Kriel project, which had grid access, and we've got a handful more that we're pursuing in the course of this year. So, it is multi-factorial. It's definitely not just a price discussion. It's really around what's actually going to be delivered at the end of the day, because it's a combination of energy security, decarbonization, and costs. Hope that answered the question.

No, that's great. Thanks. And Jim, and then to just close that loop, you mentioned balance sheet financing, and that was effective for you in selecting an IPP. So, my question to you is a leading one, and I'm going to ask some of the developers that as well, but to what extent do mining companies' balance sheets make a difference here? How much of that should you be taking? How much of that is fee to support these various initiatives that are going to be rolled out? And I suppose that's a question that not only applies to renewable energy projects but potentially also, you know, applies to some of the other initiatives that one would have to look at further down the value chain.

Well, what makes the PPA negotiations quite contested between IPPs and the offtakers is that commercial and risk sharing. And James has attested, we've had some boxing matches over many calls, and it is our best discussion, and there are definitely precedents being set, and some of those terms do have balance sheet implications. But I think in a South African context, where from a private sector, we are enduring load shedding, we're enduring load curtailments, the rate at which renewable projects are coming online isn't quick enough to offset what's potentially going offline. There's almost an obligation on large power users to take one for the team, put their balance sheets up, put their demand out, initiate some of these projects to get them to financial close and into construction, and they're effectively, in some instances, forming the almost an anchor tenant that enables them to reach economies of scale, and hopefully, that will enable smaller industries with smaller offtake to start participating through aggregators, traders, as well. So, I think the market is going to evolve, as James alluded to. The terms of the PPAs are probably going to become less onerous, but someone needs to take a first step to get these things going for the benefit of the country and the globe in terms of decarbonization. But from a Sibanye perspective, we've weighed those up and said it's worth it to pursue, and we've engaged with our board and our investment committees, and they're fully behind these types of projects.

It's fantastic. Thanks, Shahil. You are likely to also, I suppose, have a view on bringing that balance sheet to bear. You know, sort of as a large developer playing in the space, what are your views? What are the developers' balance sheet constraints and challenges, and their approach to risk sharing in these projects?

I think utilizing big developers such as ENGIE, who have a very big footprint around the world, allows especially mining clients to go after those goals which they see as requirements for their stakeholders and shareholders. So, if there is a commitment to decarbonization, the mines can take that step with a company with a big IPP, and we are relatively happy to look at these initiatives which are going to help decarbonization. So, I think the question that's come up in the Q&A, and I think we are going to discuss this a little bit later, is the role that green hydrogen plays. We have a very well-known project with Anglo, who did look at decarbonization, and we've obviously created the project, the Rhino NewGen project, which produces green hydrogen for the use in mining trucks. So, the approach, especially with the bigger developers, is that we can assist and we can help mines decarbonize because we have that ability to support them on this journey, and this also helps the developers as well because we have a decarbonization part going forward, and we need to support big clients such as the mines to get there.

Thanks very much. And Paul, as another big balance sheet in the room, Shell is obviously going through its own energy transformation journey. So, what do you think it is that mining companies can learn from your own journey in the way that you are going through energy transition as a primary supplier?

So, as I mentioned earlier, there's a number of factors that we consider when we start engaging customers on the topic of decarbonization. Another one of the key factors is the decision-making process from the client. You know, is it a cost-based decision, or is it a holistic approach? Now, from Shell's perspective, you know, our objective is to decarbonize by 2050, but we also, I mean, to be Net Zero by 2050. That is a very dynamic process, you know, that will include short, medium, and long-term goals towards 2050. So, that decision-making process is very key when we engage with that client. Does it just cost-based, or do you have a long-term view? Because, as I said, this is dynamic, and technology evolves all the time. You know, and then from us as Shell, we consistently improving on our product portfolio, our equipment portfolio as well, to ensure that we are on track towards that transition. It really starts with embedding the culture of, you know, operating towards Net Zero, you know, embedding that into the strategy of the organization itself. And then, with that said, you know, we need to put short to medium-term and long-term goals towards that. But as I said, you know, with time, because of the dynamism of the topic, and of the decarbonization technologies change, and then we also have to review and then we look at what progress we're making, and that comes with commitments that we must get from customers.

Thanks so much, Paul. Jevin, I'm going to come back to you, and I'd like us to sort of start exploring some of the challenges and the things that we need to overcome in the process. And I'm going to start with a question that we received from Bruce Paul from Concord. And his challenge, I think, is an interesting one because he wants to know how are we taking supply chains with us? The example that he is giving us here is that they contract surface haulage and all operations, but they're not actually big enough to design or convert their trucks to hybrid or battery. They're still financing existing fleets. So, Devin, what do you think mining companies are doing? What could they do? And is there more to be done?

I think it is a challenge not only for the mining sector but sort of all sectors trying to decarbonize. A lot of these problems or these issues are bigger than a single company. If I talk to contractors, as an example, even Sibanye in some instances is not big enough if you want to attract, for example, OEMs that can provide electric vehicles or even fuel cell electric vehicles into the country. You need to demonstrate at least the demand of 20 to 30 buses or trucks, plus a pipeline of 10 or more recurring every year thereafter, in order for them to justify establishing a service footprint in a country like South Africa. So, it's really around partnership. How do we collaborate as an industry? How do we partner with service providers to look at solutions that are broader than just single companies to enable these type of things? So, for example, if we're looking at surface haulage, we're not going to transition overnight from diesel to electric or hydrogen. It's going to be a managed transition in partnership with those companies that have similar aspirations to us, those that demonstrate a willingness to walk this road along with us. And a private example in South Africa is we want to transition some of our underground vehicles to electric vehicles, and the equipment isn't really available for us. So, we've actually partnered with RAM, as a local underground OEM, and we've co-developed, I think it's four different electric vehicles that we've deployed in our operations on a pilot basis, testing those with them. And I tend to be great, but I don't think that the IP is ours, so they can then use that to replicate and roll out those machines to other mining partners in South Africa. So, it is really a partnership journey, and I've often open innovation is one of those things that can allow us to solve some of these critical issues.

And Jevin, what are the other stumbling blocks that you're seeing? I mean, we're hearing about balance sheet, we're hearing about technology. What are the other challenges that you're encountering in the decarbonization process?

Technology availability is definitely one of the stumbling blocks, and that's where huge amounts of resources and investment and capacity is required to unlock those technologies enabling decarbonization. Renewable energy, specifically in South Africa, granted that there's been massive reforms that allowed us to accelerate, but actually getting projects to financial close, grid constraints are going to be an ongoing issue to unlocking some decarbonization. And then I'd maybe say the third aspect is around balancing decarbonization versus the commercial impact on an operation. In most instances, there are technical solutions for decarbonization. You can deploy electric vehicles, you can electrify your furnaces, but you've got to balance that against the economic sustainability of the operation. So, again, it has to be a managed transition over the life of an asset rather than implementing it on day one. And maybe, for example, to put that in context, our US operations operate in a liberalized market where you can procure renewable, 100% renewable energy, but it comes at a premium. So, you've got to say, what is that sort of introduction of that renewable? How do you do it over time? How do you phase it such that you don't compromise the underlying economic viability of an asset in doing so at the same time?

Fantastic. And James, I'm going to shift to you with the same question, and maybe while you're doing it, you can also answer a question we got from Julius fromendorf. He's highlighting transmission infrastructure and having that available where needed. He's referencing Eskom's challenges, and he's asking, in overcoming that transmission infrastructure challenge, are you likely to provide your own infrastructure, or customers likely to start providing some of their own infrastructure to the extent that they can?

Yeah, I'll start with the latter first. It kind of transcends both questions anywhere, because I echo what Jevin says, is that transmission is the most significant hurdle we need to get over. I don't think it's insurmountable. And even on the projects we're doing now, on the private sector, we are piloting at growing scale the kind of capacity we need in turn luck to deploy renewable energy projects. And therein lies the answer to the question from one of the attendees, is that we are doing that already. We just handed over to Eskom, free of charge, once completed. So, we don't necessarily own the infrastructure long-term, but under what's called a self-built agreement, we effectively raise the capital through amortizing the grid connection upgrade required and putting that into the tariff. And that allows us to fund the build-out of a grid connection solution that then gets handed over to Eskom under carried regulations once we've completed that build. We're still completely reliant on that connection that we've built out, but it's not a sort of long-term asset of our own, but it's certainly been self-funded, and we take the risk on the construction of it up until handover. So, it's already underway. I think we're seeing the market evolve, and it's really exciting the kind of engagement we're having with Eskom, NERSA, the Presidency's office, currently. It's nothing we've really experienced before, and it's fantastic to see both private offtakers and private generators being able to shape the market, because everyone's acutely aware of this problem. We have to sort out the grid to deploy renewables at scale, and even to just solve the power crisis. So, I think we may see a change to being able to own infrastructure long-term, but currently, it's about building it and handing it over to Eskom.

Thanks, James. Let's shift gears, everyone, and talk about the more exciting stuff that we can see bubbling up from the audience. Devin, you've mentioned technology maturity as one of the challenges that you're seeing in the decarbonization journey. What is Sibanye-Stillwater doing to contribute, or how important is innovation, and how important is it for mining houses to get involved?

Maybe to highlight the importance for us, we undertook a strategic review in the course of last year, and one of the key things that we identified as a need in our organization is innovation, to the point that we incorporated innovation as our sixth value in the organization recently and then established a specified innovation function in the organization and capacity to create or stimulate an innovation culture within our company. And that's not only to solve decarbonization but all of our different issues. In the decarbonization context, a lot of the net-zero carbon neutrality commitments that a lot of mining houses have undertaken are underpinned by the idea that we will create a solution for certain issues. I don't know of one mining house that has the roadmap 100% sold today, but that's where innovation will come in, that's where technology will come in. So, the key enablers that we see is sort of four areas: digitalization is really applying digital solutions to operations. We've rolled out digital twins across a lot of our power-intensive infrastructure and identified where there's waste, where there's energy efficiency opportunities. Electrification is another area that will be key, is electrifying those fossil fuel-based mobility areas. The third area is storage. Storage will allow us to increase renewable energy penetration within our operations. So, we've done extensive study around understanding what are the different energy storage technologies. We've explored converting some of our care maintenance operations into underground pumped hydro with some very interesting results. The fourth area, which Paul, Shahil, as experts, can talk to, is hydrogen. Hydrogen is definitely a critical energy medium that will allow us to address our hard-to-abate emissions. It's also critical from a South African perspective in that it will be a key user of platinum group metals or PGMs in its value chain, from the electrolyzers to the fuel cells. And with about 70% of the world's PGMs coming from South Africa, it's critical for the economy's long-term sustainability that we look at promoting hydrogen. And there's a huge amount of government initiatives around that as well. But those are sort of the four sort of technology areas, but with the sort of overarching theme that innovation is required to enable the decarbonization and for us personally to deliver on carbon neutrality by 2020.

And Paul, what tech, what technologies, products have you developed at Shell to support clients on the decarbonization of specifically mobility assets?

Thanks for that question. And coming on detail of what you just mentioned, that's a global organization. Over the last couple of years, we partnered with IBM to develop a emissions control solution for mining customers. And what that does is it gives relevant and accurate emissions data to customers so that they are in control of the emissions coming out of their operations. And in that way, you can help them facilitate their journey towards complete decarbonization by depending on what the timeframes they are on. Overall and above that, you know, Shell probably recently acquired Panolin Swiss Oil Technologies, which is a company that specializes in biodegradable lubricants for mining vehicles, which means we have biodegradable products, you know, in every, you know, from takes to gas to engine oils, for all mining applications that requires lubricants, we have a biodegradable lubricant for that application. What that does and what that means for mining operations, and should the lubricants end up in the soil, there's very minimal impact to the environment. And that's essentially part of our portfolio, and we offer it to customers in the mining space. And again, it really comes down to working with the customer to really identify what their key pain points are.

Okay. And Paul, the questions are kind of becoming coming in from the audience again, and I'm going to ask you this question, and I'm going to ask Kevin this question. What is your assessment of the role of carbon capture and storage?

Look, it's a, for us, as you know, as a key pillar of our decarbonization strategy, you know, where we, you know, where there are, you know, for customers also for where there are no immediate solutions to reduce scope one emissions, you know, that's where we have CCS in place. You know, as Shell Lubricants, you know, in our strategy to achieve Net Zero globally, you know, our ambition is to have access to storage capacity of at least 25 million tons per annum. So, for us, it's a key enabler in our journey to decarbonizing, and that's something that we continuously engage on with mining clients.

Jevin? It's one of those solutions that I mentioned earlier that's technically feasible but economically challenging in its current form. So, direct air capture of carbon is a viable technical solution today, but it's prohibitively expensive at the moment. Unfortunately, our operations, we don't have a point source of emissions per se. Actually, 93% of our scope one and two emissions emanate from Eskom's qualified power stations.

Gas fire power stations. So, it's, it's remote from our operation. So, carbon capture and storage is something that's on our radar, but we don't see it as an immediate solution for our own decarbonization needs. So, as these sort of technologies evolve, including carbon capture, storage is something that we monitor and would hopefully incorporate it at the right points in time.

I did notice in the chat someone mentioned use of defunct or care maintenance mines for as a potential carbon sink. That would require direct air capture or a dedicated pipeline from, for example, a point source of CO2 to incorporate into the mine. There are some interesting studies around using certain geological features for to enable mineralization of carbon underground, but that's quite nascent, but it is quite an interesting way to potentially capture carbon in exposed rock.

Thanks very much, Jevin. Um, on the innovation, um, sort of seems still, um, what are you seeing, um, Shahil, um, specifically, um, in innovation terms, what technologies are you guys finding, um, most exciting? When we, when we look forward to a future perspective, um, just to go on Jevin's point there, I was nodding earlier because storing the carbon in specific rocks is something which I think is really, really exciting, especially with the mining sector where you have these big cabinet spaces underground. And, uh, what we've seen with some of our test facilities around the world is some of these are really good at storing the common. And there are some jazz facilities around which, uh, you know, repurpose these mines for something we never thought could happen.

I think from the innovation side specifically, and I think you can see this one of the questions, the question of green hydrogen is on everybody's lips. I think we, we need to to point out that the South African government is really committed to this, especially with the hydrogen roadmaps, as well as a lot of people looking at hydrogen as a really good economic as well as practical solution to a lot of hard-to-abate carbon specifically. So, what we have, uh, what, what we are demonstrating in the country with Anglo is the mining truck which uses green hydrogen, and hopefully that will scale up. And I think, uh, other mining houses which are, which probably don't have any as many trucks would then adopt that going forward.

There's also, uh, again, what Jevin pointed out with the smaller machines which, which are really interesting because those also immortalize hard-to-abate. So, there is a lot of research that we are doing, especially on smaller scale fuel cells to replace lead acid batteries in, um, much smaller pieces of equipment. And, um, there is also the the promise of green ammonia which will help with the explosives with mining and also possibly be a fuel of the future. Um, we are involved with the project in South Africa, uh, by the way, it's very, very early stage where we are looking at, um, at using green ammonia as a fuel that is going to help the decarbonization of Ino, actually, because the point of that is when you put it onto the ship, you are emitting a lot of carbon there. So, using an alternate green fuel makes a lot more sense.

There's a lot of other interesting innovations in the field, and these are coming from a lot of smaller companies, a lot of research institutes, and and a lot of big developers like NG who are working on these solutions to get to that Net Zero. Our target, uh, pinpoints 2045 is our date. We want to be Net Zero, but with the earlier dates, it just means things are getting pushed much faster.

Thanks so much, Shahil. Um, James, we're hearing, hearing a lot about technology, technology evolution, talking about costs when things become economically feasible. You've spoken to us about technology combinations and energy solutions. Um, there was a bit of a mention earlier on about battery storage technology. How, how should clients approach this, this very complex technology landscape? How often should they refresh their views on available technology, costs, impacts, how to work it into energy solutions?

I think fairly regularly, given the pace of change. I mean, uh, but at the same time, I, I think it's, it's also something that, and I can only really speak from, uh, an energy supplier generator perspective, uh, it would be to to, um, to leave it up to us. Uh, if, if you just gave it, what we can do very well is respond to a load requirement, um, and and price sensitivity, uh, and there, there we can then blend different technologies and assess whether or not, uh, battery storage makes sense, uh, either in, in sort of spreading the load of a PV plant, uh, or or moving some load to different times of the day. Currently, we're not seeing that as as, uh, very exciting, uh, economically. Um, I think it's, uh, it's, it's on the way, but it really needs some proper scale, um, and currently, it's really only showing itself to be viable at a, at a kind of public good or, or, um, government procurement level where there's sufficient support for a targeted program.

I think that'll change, uh, and and it won't be long until batteries are are part of the kind of, um, mainstream and the the renewable energy mix, um, but for the time being, uh, the the price sensitivity we're seeing from clients is really driving us to just, uh, generate when, uh, the renewable resource is providing, uh, energy. Uh, the marginal cost of of the wind and the sun is zero, and and so that that gives us a more competitive tariff and is more compelling.

What's also really interesting though, uh, just in in that kind of silo is how quickly wind and PV, uh, modules are developing. I mean, we we built our first project, uh, impacted this one behind me, um, in 2012, the Cookhouse one farm, and those are S88 machines, so the the the 88 is the rotor diameter of the of the turbines at 88 meters from tip to tip. And that, I mean, those that's minute in comparison to the the project that we're building, uh, for for Jeb and, uh, the others that will for Sasol, where we're now looking at rotor diameters of 150 to 165 meters. So, in the space of 10 years, we've almost doubled the size of turbines. Similarly, in PV modules, they're getting larger all the time, and that that's bringing costs down to a certain extent. As I said, we've seen a bit of a bump, uh, in the last 24, 36 months in pricing, but that the technologies themselves are developing at such a rate, uh, that I think that'll always keep renewable energy pricing competitive, even out without the advance of batteries just yet.

James, thanks very much. I, I know we were originally sort of planning to steer this. Kevin, did you want to add to that technology refresh?

Yeah, I just kind of add it's once the global macroeconomic environment, it is continuously moving, then we've also got our own challenges at home with exchange rates and interest rates and and and all that. So, you have to almost monitor these things on a daily basis and try time them right, although it's not always possible. Um, but it is a rapidly evolving space, and you have to have your finger on the pulse in order to ensure that you're going in the the right direction.

Absolutely. Um, so given and team, we were going to sort of head into, you know, sort of a bit of a space where we were going to begin to to mark our homework and our progress, but there's a, there's a grouping of questions coming through in the Q&A that we probably should detour to. And Devin, I'm, I'm going to start with you there. And a lot of these questions are sort of really focused on, um, SMME impact, the opportunities for SMMEs to take part in the rollout of of projects, you know, how more people can can play a role in this space. So, um, you know, my laws say, um, has asked about it, Bumlani has asked about it, and a few of the other, um, sort of, uh, participants. So, maybe we can start with the questions around SMME opportunities that come out of this, um, and then we can also move, Jevin, to some of the questions that are being asked around, um, community participation in these projects and these initiatives.

Yes, um, well, if I, if I maybe just speak to renewable energy in this context, where a lot of the spend actors is happening in the South African context, it's also really around how the wolf taker structures the the pride. In most instances in South Africa at the moment, with the large part users, it's typically a power purchase agreement with an IPP over a defined number of years, and that type of transaction is quite arm's length in that you appoint an IPP who will raise the finance for the project, appoint typically EPC and O&M providers that will build and operate it. So, the sort of layers to that where the off-taker doesn't necessarily have certain influence at certain levels, including appointment of contractors and such. But it's incredibly important that the way that the procurement processes are structured, that's the those sort of expectations are set at the outset or the framework and then are carried through in the contractual agreement. So, it is a brand new context. We, like I mentioned, we have what we deem an infrastructure for impact component that specifies our expectations around socioeconomic development, community uplift, and those expectations carry through contractually.

So, we, we would typically ask of the IPPs, demonstrate to us how you are going to source the maximum amounts of your components locally, demonstrate us how you involve communities or SMMEs, demonstrate to us also how you would achieve a high level of HDSA ownership and as well as B levels. And then we appropriately allocate, um, a higher procurement evaluation points to those types of companies. And what, what we've found through our procurement processes is there's a strong willingness for IPPs in the country to to adhere to that and demonstrate it, and we would want to hold them to those commitments and those, what they've promised. It is a tricky one, though, and to be fair to them as well, a lot of the equipment that they procure is imported. There aren't wind turbine manufacturers in South Africa. There aren't many, or the capacity of panel manufacturers are required, but there are certain components like steel structures, cabling, etcetera, that can be procured, but not necessarily always at a local community level. So, it's in those referee services during construction or support services during construction where we need to target. Um, but it is, like a balance, and and there's a tricky one to get right, but it is something that just has to do with the intent.

Thanks so much. Um, I'm going to go to ah, just just on that front and sticking with that, there's a question from Julius on future plans to include technology like wave generated power. Shahil, you made the mistake of being the first person to smile when I read out that question. Do you want to take that one from the audience?

Thank you. I think [Music] is, um, I think with regards to new technologies, especially with, uh, energy generation, we are continuously looking, both as NG and I think as South Africa, at what solutions can make sense. Uh, one of the projects which we are involved with, um, and hopefully reaching financial close very soon, is, uh, is a project which uses, uh, renewable energy to be dispatchable, and maybe 10 years ago, nobody would have thought that would have been, uh, possible to use that energy as basically day when you require it. So, there's a lot of interest in wave energy, and I, I did I do recall an article which I can't truly remember right now about wave energy being touted in specific countries, uh, overseas and being given the subsidies needed to, uh, continue. Um, but yes, I think, uh, with, with my company NG, I think we are looking at all these solutions, and I've mentioned the green hydrogen side where we are looking at what green hydrogen can do, especially in the mining sector, as well as using alternative green fuels.

Right now, there's a lot of focus on the aviation and the marine sectors, but this would be applicable to the mining sector as well, in the coming years.

Fantastic. And Shahil, while you've got the mic, as it were, there was also a question from Riaz Ibrahim around new technology and the learning curve on those new technologies with regards to safety. So, he was referencing the example of lithium batteries, you know, sort of experiencing exponential growth without certainty around fire safety. And I think it's, it's very important in sectors like mining where there are a lot of enclosed spaces where safety is paramount, specifically with lithium batteries.

One of the approaches we take is safety by design, where, uh, very early in the development, you look at what the technology looks like and ensure that your safety is built into the design from day one. One of the other things we've done, and we've done this locally, is engage with local stakeholders such as fire stations and make sure that the fire stations are equipped to fight fires, especially if you're in the rural Northern Cape and you have a lithium fire, what are you going to do? How far away are your fire stations, and what can you do when you, especially if you're putting energy storage, um, onto the ground? Another, another thing which is related to safety is emissions and carbon, especially underground, and the promise that electric vehicles and hydrogen can bring to removing specific particulars underground, which previously has been dealt with really well through ventilation, but now you won't have these within the mines. And this is, these are things we are looking at throughout the world.

Great stuff, Shahil. Thanks so much. Um, we've got 15 minutes left from the audience. I can see some people have had to move on to their following up meetings. So, I'm poor, starting with you, concluding thoughts. The scorecard, are we doing well? Should we be doing better? Have we let ourselves down anywhere?

Yeah, um, I think we're on the right track, right? Um, as I said, it really starts with the decision-making at the customer level of, you know, mining, mining customers. Um, you know, we do appreciate the cost implications of some of the, the solutions, uh, out there to decarbonize. However, as a, you know, as an ongoing or dynamic process, um, you know, with technologies changing, um, all the time, um, it's, it's really important that we engage continuously on solutions that are out there, that's meant to help customers decarbonize. You know, I've mentioned we brought in, you know, a range of completely biodegradable products, which for me is, you know, as a step into the right direction and something that's we're going to be very valuable in the context of South African mining. And secondly, you know, the worst question you, you mentioned in from the audience about how do we engage local communities? So, we, we actually proactively seek these opportunities with our mining partners, and we're currently working on a project where we go into implement, you know, circularity of our product, meaning from, we deliver, you know, from when we deliver to when we collect the waste oil, everything is done in an environmentally acceptable way. You know, we, you know, it's our responsibility to make sure that, you know, the products that we supply to buying us are disposed of, you know, effectively responsibly. So, that's, you know, that part of doing waste oil collection and bringing it back into the system with redefined base oils and putting it back into operations, that's the project that we actively seek out local SMMEs in order to help us with the waste oil collection, which we then reprocess into base oils and then sell back to the customer.

So, I would say, you know, based on, you know, some of the engagements we've had, it's a very big mining houses, we are making progress, but so it's, you know, the decision-making, what, you know, what are the imperatives for the customer? Is it cost-driven or is it a holistic approach? And then we, you know, we said we formulate solutions based on that. But I would like to think that, you know, you know, with government support that we've seen in some instances, you know, some of my panelists mentioned, we we are moving in the right direction, and it also comes down to, you know, having a clear decarbonization strategy as an organization, you know, clear timelines in terms of volumes of carbon and safe and by wind. So, short answer is, we we're making progress, you know, it's still early days, but, uh, we would like to think that we are, we're doing well.

James, concluding thoughts from you on on your contribution and how the the process is going.

Yeah, I think I'd echo what important says. I, I, uh, yeah, I, I would like to commend the mining industry for the way that they've really responded to the deregulation and the power market and the level of procurement they've they've put out to our industry. It's been immensely beneficial for, uh, our industry and our pipelines and and the country as a whole, all the while still obviously serving their needs to, uh, I, I think we're, we're struggling to keep up to be quite honest, and and that's fantastic. Um, we would like to see, uh, that be the case, um, going forward as well. So, I think we're, we're doing, uh, we're doing very well. We're doing as well as we can, I suppose. Um, the next big trick is going to be, uh, ensuring that we can continue to do so in the context of of the grid constraints that, uh, we need to get right.

Shahil, take a picture.

Um, of course. I think, uh, as James said, we are doing very well as a country. I think, uh, especially the bigger minds and well Kevin has committed to these green targets and committed to decarbonization, and right now, a lot of the talk is obviously around renewable energy and securing the supply. But right here locally, it must be noted that we are innovating. We are trying out these new solutions and utilizing green hydrogen to solve a lot of the, a lot of the challenges we have within the mining sector. I think going forward, it is very, it's quite great to know that we locally are looking at these solutions and we locally are going to implement these solutions, and I think this feeds also into that the Just Energy Transition which affects mining, because mining is a huge employee in the country, and you utilizing these innovations and looking at them locally is quite important to us reaching those goals and toggles.

Fantastic. Thanks, and Devin, you kicked us off. You get to close out the conversation this afternoon before we hand the baton back to to Shannon and the team. If you head to school, Sebanya Stillwater, the journey you'd like to be on, and where you are, and where you headed, what, what would your assessment be? It's a tough question to end on.

But I think at a global level, the mining industry is coming to the party. It's, it's evidence in the International Council for Metals and Mining's Climate Change Commitment, where 27 of the largest mining companies in the world have committed to, or net zero by by 2050. So, Sibanye Stillwater has in its own capacity committed to carbon utility by 2040, which is way ahead of sort of the the standard requirements, and we're confident that we will be able to deliver on that. I think we're in a fortunate position that's due to the high infrastructure and our minds, 93% of our scope 1 and 2 emissions eliminate from electricity. So, it means our ability to decarbonize is somewhere easier than our peers, and it's really premised on delivering on our renewable energy projects and with good partners like African Clean Energy Developments, we're making good head roads with at least one utility-scale project in construction or ready, and a number more to come. So, I think we would score ourselves fairly well, but it's, it's a journey. We are just sort of 17 years away from our commitment, so we've got a lot of work still to do and a lot of problems to solve, but at the same time, I think it's going to create a lot of value for our different stakeholders. So, we're positive on decarbonization, and we are tough that there's so much support for it within our industry and and those industries that support us.

Fantastic. Thanks so much. Shannon, are there any closing remarks from from the organizing team?

Foreign thank you so much, Sandra. Um, our closing remarks are that now this is the end of our discussion. Um, we'd like to say thank you so much to Sandra Detroit for enabling a robust and engaging discussion, and also to our panelists, Devin Martin from Sibanye Stillwater, I'm Paul McQueen from Shell Lubricant Solutions, James coming from African Clean Energy Developments, and Shahil Jagannath from NG. Thank you to our sponsors, Shell Lubricant Solutions, African Clean Energy Developments, DRD Gold, Norton Rose Fulbright, and Partners in Performance for their support in making this webinar possible. And finally, thank you to the attendees for taking the time to join us for this discussion on decarbonization in mining, where the panel discussed the journey to cutting carbon emissions related to mineral resources. Our next webinar takes place on the 4th of October at 2 PM and will focus on waste management and the circular economy. We'll share the link to register for that event soon. The recording of today's webinar will be sent to you soon, and if you have any additional questions, please be in touch. You can reach us at Shannon@cremamedia.co.za. Thank you so much for your time and goodbye.