Monsters of Rock: BHP lands green punches and Rio shares big tax bill ahead of AGM season
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BHP (ASX:BHP) has boasted not one but two announcements to buffet its green credentials today, around a “green corridor” for iron ore and a deal to power its Nickel West operations with renewable energy.
A consortium including BHP, fellow Pilbara mining giant Rio Tinto (ASX:RIO) and shippers Oldendorff Carriers and Star Bulk Carriers Corp have signed a letter of intent to study the development of an low emissions shipping routes from Australia to East Asia.
What is a green corridor?
According to BHP it’s “a specific shipping route where the economics, infrastructure and logistics of zero or near zero emission shipping are more feasible and rapid deployment can be supported by targeted policy and industry action”.
Does that business jargon make all that much sense?
A lot of the communication around the consortium is wishy washy talk about business leadership and collaboration.
But there is one crucial detail – they are looking at green ammonia as the fuel of choice to power efforts to decarbonise their iron ore shipments.
It builds off a report from the Global Maritime Forum-backed Getting to Zero Coalition report last year called The Next Wave, which suggested green ammonia is the like fuel choice for this green iron ore corridor ‘based on favourable production conditions, an enabling regulatory environment and willing stakeholders’.
BHP and RIO both have significant emissions downstream in shipping and, more critically, in scope 3 emissions produced by steel factories which process their iron ore.
In more concrete green energy/large cap resources crossover news from the Big Australian, it has signed a power purchase agreement to take all the energy from the Flat Rocks Wind Farm near Kojonup in WA’s South West, large enough to cover the equivalent of all the power requirements for its Kalgoorlie nickel smelter and Kambalda concentrator from 2024 on.
The first stage of the Flat Rocks Rind Farm, owned by Enel Green Power, will boast the 18 tallest wind turbines in WA with a tip height of 200m. 120 jobs will be delivered in the construction phase and 10 once operational with work to begin in July and first power expected by October 2023.
Along with a PPA for power from the Merredin solar farm and the Northern Goldfields solar project, BHP says Nickel West’s scope 2 emissions will decrease by 60% against FY2020 baseline levels from 2024 onwards.
That’s a big deal for BHP, since ESG is a key performance metric in its supply deal with the world’s highest profile EV maker Tesla.
“BHP supplies high quality nickel to world markets for use in electric vehicle batteries and other growing technologies that will support global decarbonisation,” BHP Nickel West asset president Jessica Farrell said.
“We are taking great strides in making our operations more sustainable and strengthening BHP’s position as a nickel supplier of choice to global customers.”
Rio Tinto’s AGM season is upon us, starting in London this week before heading down under in May.
A timely reminder then of its “economic contribution” with Rio brandishing its tax payments in a new report.
The bulk of the US$13.3 billion Rio paid in 2021 came in Australia, where it owns its massive Pilbara iron ore business.
That came in at $11.1 billion in taxes and royalties, up from $6.8b a year earlier as iron ore prices sent its earnings and profits to record levels.
Rio has faced scrutiny in recent years over a series of PR disasters including the Juukan Gorge scandal in 2020, which prompted investors to force then CEO JS Jacques and other senior executives to exit the company.
It will eventually see the exit of chairman Simon Thompson, who is being replaced by Canadian businessman and diplomat, the China savvy Dominic Barton. Barton joined Rio’s board as a director on Monday.
Proxy advisors are no longer baying for blood at Rio in the new regime of Jakob Stausholm, with ISS and CGI Glass Lewis both recommending shareholders vote in favour of its remuneration report.
Word the European Commission wants to kick Russian coal imports out of the EU lit a fire under local coal miners today.
Whitehaven (ASX:WHC) shares rose 5.41% while New Hope Corp (ASX:NHC) was up 6.92%, Stanmore (ASX:SMR) gained 5.6%, Terracom (ASX:TER) landed an 11.7% lift, Yancoal (ASX:YAL) rose by 4.24% and Coronado (ASX:CRN) gained 2.25%.
Owen Hegarty’s Tigers Realm (ASX:TIG) was knocked down 5.88%. It operates coal mines on Russia’s east coast but mostly trades with China and Asia due to its location.
Outside of coal producers, miners were mostly hammered into the red today, with the materials index containing most of the big resources stocks down 1.45%.
Lithium stocks Sayona Mining (ASX:SYA) and Mineral Resources (ASX:MIN) were exceptions. MinRes announced major expansion plans for its Wodgina and Mt Marion lithium mines yesterday.