Mining companies generate $16bn in emissions costs, according to research from international climate research firm CDP.
The not-for-profit organisation also found that the value chain of mining companies contain up to 30 times more carbon than their own operations, equivalent to India’s entire annual CO2 emissions. CDP said mining companies are “passing the buck down their value chain”.
The report “Digging Deep” analysed a grouping of the world’s major publicly listed mining companies.
It found that these companies remain heavily dependent on the sale and use of fossil fuels, despite the fact some are sourcing almost half of their energy consumption from renewables.
While mining firms are spending almost half (45%) of their capital expenditure on low-carbon materials, such as copper and nickel, they continue to spend over a quarter on fossil fuels.
Some companies, such as Rio Tinto, are showing signs of strategically moving away from thermal coal.
However others, such as Glencore, which made a recent failed bid for Rio Tinto’s coal assets, are trying to increase their coal production.
CDP CEO Paul Simpson said: “The mining sector must take stock and not risk being left behind in the global transition towards a low-carbon economy.
“Miners depend on continuing demand for the commodities they supply and the countries consuming the most commodities are making significant changes in addressing climate change.”
He said the most significant example of this was China’s proposal to put a price on carbon, which would signify a strong transition to a low-carbon economy and could disrupt the commodities market.
The report claims China’s scheme could provoke more widespread carbon pricing in commodity-consuming countries, hitting demand.
Carbon pricing was introduced in Chile this year and is due to come into force in South Africa and Canada in 2018.
According to the report, up to a quarter of mining production, worth $50bn a year, could be exposed to water shortages and drought by 2030.
The major mining regions most likely to be affected include Chile, Australia and South Africa.
Major mining companies with the best performance on climate issues were Vale, Boliden and BHP.
Freeport-McMoRan, First Quantum Minerals and Vedanta Resources were ranked the lowest among those who disclose to CDP.
Tarek Soliman, senior analyst, investor research, at CDP said: “As a sector with a significant carbon footprint that supplies the wider economy, mining is faced with the reality that a low-carbon transition will impact many of the industries that currently demand its commodities.
“Accordingly, companies will need to adjust their long-term strategies to reflect the changing grounds in carbon regulation and commodity consumption trends in light of events such as China’s proposed carbon pricing scheme.”
The fact some companies were doing more than others to prepare for a transition to a low carbon economy would become important to investors, he added.