Climate change report highlights miners’ exposure

Citigroup, the international financial conglomerate, has published a report that seeks to define the potential impact of climate change on mining companies.

The study reviewed the operations of 12 major mining companies and suggests that BHP Billiton, Rio Tinto and Norilsk “probably have the most significant exposures to manage” in the event of more frequent or more severe weather events.

The report looks at the potential for extended operational shutdowns, or the loss of operating licences due to environmental disasters.

It also takes into account the possibility that sea ice reduction could open up new Arctic shipping routes, increasing logistics opportunities for mining companies.

At the same time, food shortages and increased tropical disease in Africa could result in social and political instability.

Severe weather events may also affect the availability of fresh water, which is critical to most mining and processing operations, while new environmental legislation may place additional restrictions on exploration.

Operational disruptions caused by climate change could impact on commodity markets.

If, for example, major damage occurred at an export port, shipments could be delayed, forcing up prices in the related commodity market.

The companies reviewed by Citigroup for their climate change analysis included Alcan, Alcoa, Anglo American, Barrick, BHP Billiton, Freeport, Grupo Mexico, Lonmin, Newmont Mining, Norilsk, Rio Tinto and Norilsk.