20 November, 2019
Mineral Resources is predominantly an iron-ore miner and mining services company. But the company’s November 2017 acquisition of Energy Resources Pty Ltd means it now holds nine exploration permits for substantial oil and gas projects in the onshore Perth Basin.
Today the Mineral Resources board was met with protestors from Lock the Gate outside the annual general meeting, putting pressure on the company to rule out unconventional gas. Inside, shareholders questioned these acquisitions and the rationale behind the company’s move into oil and gas.
“We have an entire section of our sustainability report on ‘Managing our resource use and environmental impacts while innovating towards a low-carbon economy.’ Yet the company is spending capital on undeveloped fossil fuel assets that are not going to be needed in a Paris-aligned carbon constraint scenario,” said a shareholder, asking why the company was moving into these new ventures.
Chairman Peter Wade replied by asking the shareholder to choose between the company burning diesel or gas, again making the point that they would rely on gas expansion to ‘cut’ their emissions.
He then went on to say “I’m hoping that one of these 16-year-old bright sparks is gonna come up with some form of energy where we don’t put any emissions into the atmosphere. I’m not smart enough to do it – all I can do is aim to do the best that our organisation can do.”
Mineral Resources seems to be shirking responsibility for climate action, leaving it up to future generations to find a solution to the problem the company is contributing to.
Research shows worldwide gas and oil production must slow, with no new projects undertaken, if we are to stay below 1.5°C warming, as outlined in a recent report by Global Witness. Mineral Resources’ reliance on gas as a transition energy source disregards the fact that any new oil and gas development is discordant with Paris climate goals.
Scope 3 emissions in steel production
Given Mineral Resources’ exposure to the carbon-intensive steelmaking industry, the company will have considerable downstream (Scope 3) greenhouse gas emissions. This represents a significant exposure to climate change transition risk, yet there is no mention of Scope 3 emissions in the company’s 2019 Sustainability Report.
In response to a shareholder’s request that they disclose Scope 3 emissions, Chairman Wade replied, “I fail to see how anybody can get involved in their customers’ emissions…We’re doing the best we can. We are a mining company, we are putting emissions into the atmosphere, we know that. I don’t have an answer for what our customers do.”
This misrepresents the issue as an attempt trying to control customers’ emissions. But if we are to meet the goals of the Paris Agreement, the steel industry must either decarbonise or decline, meaning there is a real risk that the market for Mineral Resources’ iron ore will decline.
There are some positive signs of a potential low carbon future for the steel industry, but Mineral Resources’ doesn’t seem interested in helping to drive this transition, again demonstrating a willingness to leave climate risk management up to others.
Is your superfund investing in companies like Mineral Resources that are acting in direct conflict with the climate goals of the Paris Agreement? Find out here and tell your super fund to only invest in companies that are compatible with a safe climate future.