As the Global Mining Industry Aims for Net-Zero, Big Players are Financing Sustainable Operations.
Six months after the world’s top miners committed to a goal of net-zero direct and indirect carbon emissions by at least 2050, a couple of industry heavyweights unveiled financing initiatives to fund more sustainable mining operations.
In early March, mining giant BHP Group announced that its venture capital unit would back a startup specializing in processes that make for cleaner and more efficient mining in lithium, the metal used in electric-vehicle batteries.
A couple of months later, metals and mining conglomerate Vale SA, the world’s second-largest iron ore producer, made a similar move by launching a corporate VC arm to back startups that focus on clean mining innovations.
The announcements come amid a move by the global mining industry to lower its carbon footprint. Mining is among the world’s biggest producers of carbon dioxide emissions, contributing to around 8% of the global carbon footprint, according to a February article in Nature.
Industry leaders want to reduce that figure. Just before last fall’s UN Climate Change Conference (COP26) in Scotland, the International Council on Mining and Metals (ICMM) announced the industry’s commitment to meeting UN targets of net-zero emissions by the middle of the century. Several of the world’s top mining companies – including BHP, Anglo American, and Rio Tinto – had already committed to net zero previously.
But the collective commitment from the 28 members of the ICMM represented a big step forward because their combined operations span 650 sites over 50 countries. Each of the members agreed to report annually on their decarbonization progress.
BHP’s strategy is to invest in companies disrupting the mining industry by developing cleaner processes. In March, BHP Ventures was one of the firms involved in a Series A investment round that raised $14 million for Summit Nanotech, a startup that has developed direct lithium extraction (DLE) processes to economically and sustainably unlock lithium resources around the world. Other leaders of the round were Xora Innovation and Capricorn Investment Group.
Summit’s core product is the denaLi DLE platform, which leverages advanced nanomaterials and uses proprietary processes to make lithium extraction cleaner and more efficient. One aim of the technology is to address supply constraints as the world moves toward greater adoption of EVs and renewable energy. It also seeks to reduce pollution, minimize chemicals and freshwater use, and cut waste by 90% compared to traditional lithium extraction methods.
Vale Ventures, the new VC arm of Vale SA, is starting out with a $100 million budget to invest in firms involved in sustainable mining initiatives. The unit will provide initial funding and early-stage investments in startups worldwide to hold 3% to 5% stakes in the firms.
“We’ll be part of a pool of investors working for the success of these startups,” Vale Ventures head Viktor Moszkowicz said.
Vale Ventures’ initial outlay should be enough to build an initial portfolio of investments in about five years. The first company in Vale’s portfolio is Boston Metal, which develops steel decarbonization technology with financial support from cleantech VC funds, mining companies, and steel users. Last year, Vale invested $6 million in the company.
Vale’s venture capital focus will be on four main areas: decarbonization, zero-waste mining, technology that changes mining operations, and energy transition metals. The latter aims to increase the supply and demand of key metals needed to support the transition from fossil fuels to clean energy.
“We will collaborate with forward-thinking startups bringing big ideas and bold thinking to these monumental challenges,” Viktor Moszkowicz, head of Vale Ventures, said in a press release. “By creating a portfolio of disruptive solutions, we can generate financial and strategic return and bring new business opportunities, insights, and knowledge to our company, customers, and society.”