New renewable energy contracts signed in Chile will reduce energy prices for Escondida and Spence copper mine operations by around 20 per cent and displace up to 3 million tonnes of CO2 emissions from our operations. These agreements not only benefit BHP’s business but they generate strong environmental and social value.
Population growth and higher living standards combined with greater electrification are expected to push up demand for copper. This means that copper in products such as electric cars and renewable energy infrastructure, which are vital to the world’s sustainable growth, must be produced to the highest environmental aspirations.
The new energy contracts, along with our investment in desalinated water in Chile, demonstrate social value in action and help drive the wider agenda for sustainable green copper.
Social value is one of our strategic pillars that we embed in all our decision-making and informs the way in which we provide resources and generate long-term, sustainable value.
That’s why we are transforming the way we manage power at our Chilean operations. We have negotiated four new power contracts that will meet the energy requirements for our operations at the Escondida and Spence copper mines from 100 percent renewable energy sources by the mid-2020s. When fully operational, these renewable supply arrangements will eliminate virtually all of Escondida and Spence Scope 2 emissions1, effectively displacing up to 3 million tonnes of CO2 annually compared to the fossil fuel contracts they replace. This is the equivalent to annual emissions from about 700,000 combustion engine cars and accounts for around 70 percent of BHP’s Minerals Americas total greenhouse gas emissions.
These actions also support Chile’s wider “Energia 2025” power policy target for 20 percent of all Chilean energy to come from renewable sources by 2025.
Following a competitive tender process, Escondida and Spence agreed separate 15-year contracts for 3Terawatt hours per year (TWh/year) and 10-year contracts for 3TWh/year ENEL Generación Chile and Colbún respectively. The ENEL contracts will begin in August 2021 and the Colbún contracts in January 2022. Power will be supplied from solar, wind and hydro sources.
These contracts are practical examples of our commitment to social value that are linked to a sound business case. We estimate the agreements will reduce energy prices at our Escondida and Spence copper mine operations by around 20 per cent, provide our operations flexibility and security of supply, and strengthen our ability to deliver sustainable copper across our supply chain.
But there is more we must do because sustainable mining demands effective management of our water resources.
Water is a precious commodity that is critical to our operations in Chile and to the communities where we operate in the Atacama Desert, one of the driest regions in the world. We recognise our operations have an impact on the environment given the immense amount of water they consume.
Our Water Stewardship position statement launched last month outlines our vision for a water secure world by 2030. It sets out our actions to improve water management within our operations and contribute to more effective water governance beyond the mine gate.
We strongly support the UN Sustainable Development Goals on access to clean and affordable water. That’s why we will set public targets and engage industry, communities and governments to improve governance, transparency and collaboration in water management.
For more than a decade, we’ve been working towards eliminating water usage from aquifers from our operations in Chile. We invested more than US$4 billion in Escondida’s desalination facilities to significantly reduce our groundwater usage and secure a sustainable water supply. And our Spence operations will begin using desalinated water as the main source of supply from mid-2020 upon completion of a 1000 litre per second capacity desalination plant.
This reflects our commitment to greater sustainable water and energy management in order to deliver sustainable ‘green’ copper.
We must all safeguard precious water supplies and reduce our carbon footprint not only for our future, but for the future of our communities, the environment and the planet.
Scope 2 emissions are those our operations emit via purchased energy.