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Anglo American greens Australia operations

(Photo: Anglo American)

London-based multinational Anglo American (LSE: AAL) has reached an agreement with the Queensland government to supply all of its Australian power needs from wind and solar generation by 2025 and onwards.

The 10-year deal will see Stanwell Corporation, a government-owned power utility, effectively remove all scope two emissions from Anglo American’s steelmaking coal business in the country.

Scope two emissions refer to greenhouse gas released into the atmosphere from the generation of purchased energy such as electricity, steam, heat and cooling.

It aligns with Anglo’s strategy of achieving carbon-neutral operations by 2040.

Critically, Anglo American Australia CEO Dan van der Westhuizen said in a statement that Stanwell’s investment in 650 megawatts (MW) of renewable generating capacity is NPV positive compared with the current energy mix.

Combined with the agreements Anglo already has in place for all of its South America operations, from 2025, the major expects to be drawing 60% of its global electricity needs from renewable sources, transforming the important scope two emissions profile.

The company says metallurgical coal production remains critical to global decarbonization goals.

“Many of the metals and minerals we produce are critical to the infrastructure and technologies required to decarbonize the world’s energy and transport systems – and this includes the ingredients needed for steelmaking,” said Anglo’s group director for corporate relations and sustainable impact in a statement.

No value for the investment was disclosed.

The partnership between Anglo American and Stanwell underwrites investment in the two major Queensland renewable energy projects – Clarke Creek wind farm in Central Queensland, and Blue Grass solar farm near Chinchilla.

Anglo is the world’s third-largest exporter of metallurgical coal for steelmaking, and its operations in Australia serve customers throughout Asia, Europe and South America.

Its tier-one coal assets include the Moranbah and Grosvenor metallurgical coal mines in Queensland (88% ownership). The mines are underground longwall operations and produce premium-quality hard coking coal.

According to Anglo’s 2021 annual report, more stringent environmental and safety regulations have required many steel producers to run cleaner, larger and more efficient blast furnaces. That, combined with several mine closures in recent years, resulted in increased global structural demand for high-quality coking coal, such as that produced in Australia.

Anglo has completed its exit from thermal coal operations, having demerged to shareholders its remaining thermal coal operations in South Africa during 2021, and completed a sale of its 33.3% shareholding in Cerrejón in Colombia in January.

Anglo started getting serious about investing in renewables in South America in 2019. The supply agreements in place will see its Brazilian, Chilean and Peruvian carbon dioxide emissions fall 70% over time.

Elsewhere, Anglo unveiled in May a prototype of the world’s largest hydrogen-powered mine haul truck designed to operate in everyday mining conditions at its Mogalakwena PGMs mine in South Africa. The 2 MW hydrogen-battery hybrid truck generates more power than its diesel predecessor and can carry a 290-tonne payload.

It forms part of Anglo’s nuGen zero emission haulage solution that entails another industry-transforming prong of its 2040 decarbonization ambitions.