Climate transition risk assessment for Tanzanian mine

Background

A mining company was seeking funding to build a mine in Tanzania. It had previously commissioned a greenhouse gas (GHG) assessment, which established that the mine would have emissions exceeding 100 ktCO₂e per annum. To be compliant with the fourth iteration of the Equator Principles and to satisfy lender requirements, the project needed to undertake a transitional climate risk assessment.

Challenges

Several assessments had to be completed as part of the transitional climate risk assessment. As part of this, the GHG efficiency of the project had to be compared to that of similar projects and be shown to be the best practicable environmental option. This was challenging as it is very difficult to ascertain whether projects can be compared on a direct, like-for-like basis, owing to several variables:

• There is a lack of publicly available GHG emissions and efficiency ratios for similar projects.
• It is not always clear if scope 3 emissions sources have been assessed within a carbon footprint, and if so, which scope 3 categories and sources have been included for the projects under comparison.
• Conversions and emission factors used to assess emissions across different projects may not always be transparent and/or consistent.
• There can be inconsistencies in methodology, for instance, around which GHGs are included (for example, some methodologies incorporate only CO₂ and CH₄, while other methodologies, aligned with the GHG Protocol, incorporate CO₂, CH₄, N₂O and a variety of fluorinated gasses).

Solution

Nature Positive reviewed the project’s GHG assessment and verified the methodology used. The team also conducted a literature review to understand the GHG emissions from similar mining projects globally and identified key reports where a life cycle analysis had been completed and discussed the various emissions sources from a mine in Canada. These reports allowed the identification of possible emissions reduction strategies regarding energy provision and component usage.

Nature Positive applied a global context by conducting a review into the emissions associated with national grid electricity supply, as grid electricity consumption was by far the largest emissions source for the Tanzanian mine. From this, the team demonstrated that Tanzania was a suitable location for a mine of this nature, as the national electricity had relatively low GHG emissions compared to other countries mining the same product.

Impact

The comprehensive assessments conducted by Nature Positive enabled the company to meet the lender’s requirements, thereby securing the necessary funding for the Tanzanian mine.