As the recent McKinsey report The net-zero materials transition: Implications for global supply chains explains, climate targets are changing global materials supply chains to the extent that the transition to a net-zero emissions economy has sparked a “materials transition.”1 Those who act boldly today to lower emissions and create value will become tomorrow’s leaders.
Platinum-group metals are important minerals in the energy transition because of their role in green-hydrogen production. As the world’s largest refiner of platinum in 2022, South Africa–based Anglo American Platinum is endeavoring to reduce its carbon footprint through new technologies and renewables while strengthening its community to ensure energy transition projects are implemented sustainably.
McKinsey’s Gerhard Nel recently spoke to Prakashim Moodliar, Anglo American Platinum’s executive head of projects, about how the company has approached its sustainability goals, the challenges it has encountered along the way, and its long-term targets.
Gerhard Nel: The transition to net zero is changing consumer expectations and the regulatory landscape, prompting the sector to evolve its extraction practices and its role in the global supply chain. What are some of the opportunities you are seeing within your organization when it comes to setting and delivering on carbon-neutral goals?
Prakashim Moodliar: The adoption of renewable technologies to provide electricity has been a big step forward. South Africa has ample sunlight and wind, so we examined potential storage technologies to find opportunities to create a renewable-energy ecosystem that generates a constant power supply for our sites. For example, through a joint venture, we’ve partnered to launch 600 megawatts of wind and solar projects in South Africa. The regional renewable-energy ecosystem that Anglo American has made with its partners is looking to put about three to five gigawatts [GW] of solar, wind, and storage into the South African grid. The electricity from these renewable sources gives us what we need to offset 90 percent of our carbon emissions and move us closer to neutrality.
We’ve learned that not all carbon emissions are due to electricity generation from coal; diesel is another energy source on our sites, responsible for approximately 6 percent of our carbon emissions. We also see emissions from transporting ore, concentrate, and matte, which can be addressed by transitioning to hydrogen trucks. Since 2020, we have worked on nine hydrogen pilot projects. For example, we worked with First Mode and other partners to retrofit a diesel-powered vehicle with hydrogen fuel cells to create the world’s largest hydrogen-powered mine haul truck, which was piloted at our Mogalakwena mine in South Africa.
Gerhard Nel: Starting to transition is not an easy step. What are been Anglo American Platinum’s biggest hurdles in achieving its goals?
Prakashim Moodliar: The biggest challenges that we face in moving to carbon neutrality are risks that stem from the social inequality and the large unemployment rate in South Africa. These factors make it difficult to construct these projects at a swift pace. Carbon-neutrality projects need to benefit local communities, enhance local livelihoods, and create jobs. To do this, we have to increase collaboration not only with electricity producers and energy providers but also with other mining houses and surrounding communities to learn how we can assist one another. For example, our decade-long partnership with TechnoServe has helped provide more than 1,400 jobs along the agriculture value chain in Zimbabwe.
Other factors include the supply chain, project risk appetite, costs, and the availability of land. As we’ve seen with the development of our Mogalakwena mine solar project, we have to ensure that we are offering opportunities to the local community, including employment during construction and operation, skills development programs, local and inclusive procurement, enterprise development, and participation in the renewable-energy entity. We also need resources and equipment to train the local communities and a supply chain that can adequately support the project.
Gerhard Nel: Based on lessons learned since embarking on more-sustainable mining projects, what advice would you give your peers or other capital leaders who are looking to integrate ESG [environmental, social, and governance] into their portfolios?
Prakashim Moodliar: Embracing innovation from discovery to delivery has been key for us. We have deployed technologies such as bulk ore sorting, coarse particle recovery [CPR], and hydraulic dry stacking to reduce the use of water, energy, and capital intensity and to produce less waste. Most of our mines sit in water-constrained areas, so we had to consider how to reduce our dependency on water and our broader footprint to find opportunities to recycle and reuse water. Through our Sustainable Mining Plan, we aim to reduce 50 percent of our freshwater intake by 2030. So far, the Carbon Disclosure Project has given us an A-minus rating for climate change–related and water security efforts.
Another important aspect for us was elevating our ESG intent, which helped us build on our capital allocation framework. We set annual targets with measurable KPIs on energy management, efficiency improvement, alternative renewable technology, and reducing greenhouse-gas [GHG] emissions. Our medium-term KPIs include reducing energy intensity and net GHG emissions by 30 percent by 2030 and monitoring annual targets aligned with achieving these goals. Our social commitment includes supporting five external jobs for every on-mine job.
Finally, we had to consider the broader social, economic, and environmental interests of all stakeholders. We intentionally align our capital allocation program to include community benefits, such as education, municipal capacity building, healthcare, and community water. Anglo American undertook to fund the Hall Core Water Mapela [HCWM] project, for example, which brings potable water to the Greater Mapela region. HCWM has been increasing the water supply by drilling, equipping, and maintaining boreholes, and Anglo American funds the potable water supplied to the community. The project ultimately aims to deliver 3.5 million liters of water per day to the 42 villages in the region.
Overall, we want an adequate number of projects that help us hit targets and be bold enough to stop work if it’s not getting the desired impact.
Gerhard Nel: What do you foresee being the biggest challenges and risks for the industry’s net-zero goals?
Prakashim Moodliar: One challenge is getting buy-in from the whole organization. Initiatives are owned by the sustainability teams, but we need integration across the technical teams, the social performance teams, and the operational teams. Without that pool, we can’t deliver on our ESG targets. Energy companies working together as a collective and treating ESG as something actionable instead of just a strategy will help make the transition to net zero.
We ask ourselves, “How do I confirm where I’m sitting on that journey? How do I confirm that I’m allocating the right capital to move the needle and that I’m moving the needle deliberately each year?” We’ve implemented a disciplined capital-allocation framework to embed ESG into our initiatives and create transparency on the potential ESG impact of our capital portfolio. It has allowed us to prioritize ESG dimensions where we can have the highest impact on our capital portfolio, then track them and communicate our progress.
Second, while the industry is moving in the right direction, in the capital project execution space, there are not enough vendors to meet the demand. For example, a large solar company announced that it was moving from 25 GW of solar to 80 GW of solar by 2030, and one of its biggest regional suppliers, another large solar company, is going from 20 to 100 GW by 2030. If everyone has this target in mind, it will be difficult to gather the suppliers and metals needed to manufacture these solar panels.
Gerhard Nel: Scope 3 emissions are some of the most difficult reduction targets for the sector. What are some near-term priorities that have been put in place along the procurement value chain to maximize Scope 3 emissions reduction?
Prakashim Moodliar: We are trying to mitigate the impact of our value chain emissions, and we aspire to halve our Scope 3 emissions by 2040.2 We also want to ensure that our large suppliers have commitments to their own decarbonization journeys.
Fortunately, as we transition in South Africa to a renewable supply, we will see our supplier base transition with us. To address climate and environment issues, we’re looking to create a responsible-sourcing program that measures emissions from capital goods and consumer goods and to use that information to create a baseline for our emissions. Then, we can engage with our suppliers to constantly track this. We’ve also looked to create a working relationship with the Carbon Trust to develop a supplier measurement tool.
Gerhard Nel: What are the biggest operational opportunities these goals create in helping to advance mining technology and local sustainability impact?
Prakashim Moodliar: South Africa is a water-scarce country. We’ve focused on improving water efficiencies and avoiding water contamination to create water-neutral sites. Using technologies such as bulk ore sorting and CPR, we have an opportunity to reduce our water footprint on our sites and maximize recovery from our tailings.
We’ve also looked at how we use treated effluent at our operations and focused efforts on developing relationships with municipalities that surround our operations to ensure that we support their wastewater treatment plants with funding, technical resources, and operational resources.
For example, we are an active member in the Limpopo area in the Lebalelo Water Users Association, which is a partnership of 12 mining houses. The association has created a public–private partnership with the Department of Water and Sanitation to build the ORWRDP [Olifants River Water Resource Development Project] infrastructure network, which links the eastern and northern limbs of the Olifants River in South Africa.
This 25 billion rand [$1.3 trillion] project will improve access to potable water for communities and raw water for the mines. Overall, 380,000 people across 150 villages will get water along a pipeline that they previously did not have access to.
This article is part of Global Infrastructure Initiative’s Voices on Infrastructure.
