Climate change and energy

Our key focus areas are:

Climate resilience and adaptation

We plan for our operations and host communities to be resilient to, and adapt to, the physical impacts of a changing climate. Through climate modelling and scenario analysis we seek to understand and respond to those risks and opportunities. We aim to incorporate climate modelling in our planning and investment decisions to ensure our business is resilient to changes in temperature, rainfall and extreme weather events.

Managing our own footprint

Parts of our operations are energy intensive and we seek to reduce the amount of carbon released to the atmosphere. This starts with making sure we have a strong understanding of how energy is used in our business and by setting metrics and targets aimed at reducing our carbon footprint. We aim to improve efficiency and assess low-emission technology opportunities.

Climate opportunity

We will work towards assessing our transition opportunities to a lower carbon future. We believe that mineral sands have an essential role to play in the supply of raw materials to low carbon technology. We will review our land holdings with the aim of identifying opportunities for enduring social, economic and environmental value through projects such as biodiversity conservation, consideration of developing carbon offsets and renewable energy opportunities.

Priorities for 2019 were:

• understanding the physical impacts of climate change on our operations;
• reviewing our risk management approach to ensure it can effectively take account of climate-related risks, including those risks that may be highly uncertain or create impacts over a longer time horizon (10+ years);
• addition of climate governance into the Board’s Charter, including the responsibilities of:
• reviewing the company’s performance with respect to sustainability and climate change targets; and
• reviewing annually the company’s climate-related risks and opportunities and approving climate-related disclosures; and
• continuing to monitor our carbon footprint and assess reduction opportunities.

As illustrated in the table below, the next phase of our climate change response will concentrate on assessing the risks and opportunities of transitioning to a low-carbon future in a 1.5°C and 2°C scenario, and to consider the setting of climate related metrics and targets.

 

TCFD Framework - Core elements

In 2019, to better understand Iluka’s climate resilience, we undertook a physical impacts review to assess water, extreme weather and temperature risks to Iluka assets and its supply chain. This encompassed undertaking climate modelling across our operations under two warming scenarios (2 degree and 4 degree) at timescales 2030 and 2050 to understand the projected changes to climate for Iluka’s sites. In general, the Australian sites are projected to become hotter and drier overall, with significant increase in heatwave events, and more severe rainfall events. Sierra Leone and Virginia were both forecast to become hotter and wetter, with increased intensity and frequency of storm events. 

Informed by the climate modelling, we completed climate-related risk workshops for our operations to identify risks and opportunities from the physical impacts of climate change – for integration into Iluka’s existing risk registers to adequately control and manage going forward. A materiality ranking was assigned to each risk. Based on the initial physical impacts assessment, it is not expected the identified physical risks will have a material impact on the carrying value or overall operating costs of the sites.

Examples of moderate to major risks and opportunities identified, from the physical impacts of climate change assessment, are presented in the table below:
 

Parts of our operations are energy intensive and we seek to reduce the amount of carbon released to the atmosphere and maximise the efficient use of energy where possible. This starts with making sure we understand how energy is used in our business. Iluka’s Carbon and Energy Standard requires all of our operations to monitor their energy use and greenhouse gas (GHG) emissions and seek emission minimisation opportunities.

We use standard methodologies to calculate direct (Scope 1¹) GHG emissions, including direct measurements of energy consumed by source, calculations based on site-specific data and calculations based on published criteria (such as emission factors and global warming potential). In general, we report our emissions and energy consumption under the country of operation’s regulations and policies. For example, in Australia, we report our emissions and energy consumption under the National Emissions and Energy Reporting System.

The majority of our GHG emissions are generated from energy use during mining and processing. Energy consumption for 2019 (7.0 petajoules (PJ) ) increased slightly over 2018 levels². Scope 1 and Scope 2³ emissions (504 ktCO₂-e) were also slightly higher primarily due to commencement of mining at Cataby from April 2019 and expansion projects at Lanti and Gangama at Sierra Rutile commissioned resulting in an increase in production in the fourth quarter.  

Scope 1 emissions at our North Capel synthetic rutile operation are largely related to the use of coal in the process, which makes up 42% of energy resources used. In the synthetic rutile production process, coal is used as a reductant for the metallurgical processing of ilmenite into synthetic rutile, which is high in titanium. Waste heat generated in the synthetic rutile kiln (SR2) is recovered and used to generate electricity. Scope 1 emissions at our Sierra Rutile operation are largely related to the use of diesel in vehicles and the power station for the generation of electricity. The power station consists of four engine-driven generators with marine fuel oil as a fuel source and operates all year to supply electricity to the operations.

 

¹  Scope 1 greenhouse gas emissions are the emissions released to the atmosphere as a direct result of an activity or series of activities at a facility level.
²  2018 energy (6.8PJ) and total greenhouse gas emissions (495ktCO₂-e) figures reduced slightly from previously reported figures due to a calculation error, refer to performance data.
³   Scope 2 greenhouse gas emissions are the emissions released to the atmosphere from the indirect consumption of an energy commodity. For example, ‘indirect emissions’ come from the use of electricity.