Canada is becoming the top choice for global mining companies to invest in new technologies to reach net-zero emissions, according to a new report by the market firm DBRS Morningstar.
In response to economic troubles from COVID-19, many governments have made environmental promises part of their economic recovery plans. Mining companies are focusing on upgrades to existing operations to cut emissions. For new projects, incorporating green technology has become necessary to get community and regulatory approval.
The Sustainable Finance Action Council’s new rules for sustainable investing in Canada should help investors compare opportunities here and in other countries, the report says. DBRS Morningstar believes the new rules will attract more investment in Canadian clean energy research.
The report concludes Canada’s abundant hydropower, research expertise, mineral resources and skilled workers make it an obvious choice for developing technology and products for a green economy. The Canadian government’s 2023 budget also added tax credits and funding for clean tech, renewable energy and hydrogen.
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While the shift is unlikely to soon impact credit ratings for mining companies, DBRS Morningstar believes leaders pursuing lower emissions and renewable energy will benefit in the long run.
DBRS Morningstar says Canada appeals to global mining companies for several reasons including:
- Canada generates much of its electricity from hydro dams, which produce nearly no emissions. In 2019, hydropower supplied 60 per cent of Canada’s electricity and 94 per cent of Quebec’s. Most hydro dams are located where the industry can use the power.
- Canada has advanced mining research centres. Mining companies run their own research labs and work with universities and government on new technologies.
- The country has many of the minerals needed for the green economy, like lithium, nickel, copper and rare earth elements. These resources could boost Canadian manufacturing.
- Finally, Canada has highly trained workers with experience extracting and processing key minerals.
“For investment in new projects, incorporating new net-zero technologies has become part of the social licence for obtaining community consent and regulatory approvals,” the report reads.
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Big mining companies going green in Canada
Some of the world’s largest mining companies have operations in Canada that generate few emissions due to abundant hydropower and harsh weather. These sites make good places to test new green technology, reads the report.
BHP Group (NYSE:BHP) the biggest mining company according to the firm, is building a potash mine in Saskatchewan that aims to have the smallest carbon footprint in the world. BHP will use battery-powered vehicles underground and got $100 million from Canada for the project.
Rio Tinto Ltd. (ASX: RIO) (LON: RIO), the second-largest miner, has the biggest operations in Canada, mostly in Quebec. It’s working on new ways to produce aluminum and titanium with zero emissions. Rio is spending $737 million with Canada’s help to cut emissions at its titanium plant by up to 70 per cent. Rio is also building the first commercial plant to make aluminum with no direct emissions.
Vale S.A. (NYSE: VALE), the fourth-largest mining company, produces nickel in Canada with few emissions. Vale wants to build a plant in Quebec to produce nickel sulfate for electric vehicle batteries. Vale has a deal to supply General Motors with nickel sulfate starting in 2026.
The shift to green mining is unlikely to soon impact credit ratings but should benefit companies in the long run, says the report. Canada’s resources, expertise and government support make it an ideal place for the new green economy.