Rio the only major without coal or oil

RIO Tinto has declared it wants to be part of the climate change solution, rather than the problem.
Rio the only major without coal or oil Rio the only major without coal or oil Rio the only major without coal or oil Rio the only major without coal or oil Rio the only major without coal or oil

The wind farm at Rio's Diavik diamond mine in Canada

The company today published a report, Our approach to climate change, outlining its plans to contribute to, and leverage the transition to a low-carbon future.

Rio signed up as a supporter of the Task Force on Climate-related Financial Disclosures (TCFD) in 2016, and used its recommendation as a framework for the climate change report.

The company said it would take actions in four areas: supply essential metals and minerals for the transition; reduce its own emissions; identify and assess physical risk exposures; and partner to advance climate goals.

"Given our decision to strengthen our business and exit coal, we are now the only major mining company with a fossil-fuel-free portfolio, which means we are well-positioned to contribute to a low-carbon future," Rio CEO officer J-S Jacques said.

"The materials we produce, from infinitely recyclable aluminium to copper used in electrification to our higher grade iron ore product, all play a part in the transition to a low-carbon economy.

"At Rio Tinto, we have reduced our emissions-intensity footprint by almost 30% since 2008, putting us on track to beat our targets. Renewable energy is now used to produce nearly three-quarters of the electricity we use.

"We are aware that we have more to consider on climate change and will work with partners such as the members of the Energy Transitions Commission, Alcoa and Apple, the World Bank and others, to look at further sustainable solutions that enable us to continue to generate profits and contribute to people, the planet and prosperity."

The report admits there could be some threat to Rio's iron ore business, which accounted for US$11.3 billion of group underlying EBITDA of $18.1 billion last year, given the high energy intensity of steel.

Speaking to reporters, Jacques acknowledged aluminium smelting was extremely energy intensive, but the company was working on carbon-free aluminium smelting technology.

"There are some risks but there could be opportunities as well," he said.

Jacques said despite high profitability in the coal sector, the company was glad to have exited.

"I don't have any regrets whatsoever," he said.

"I think we extracted fair value for those assets.

"I can't look back, I can only look forward."

James Bevan, chief investment officer at UK charity fund manager CCLA, noted Rio's exit from coal.

"Over time the company will face other complex portfolio and operational choices, so it is useful to see initial quantification of the impact of the low carbon transition on different commodities," he said.

"We look forward to reviewing Rio Tinto's new targets and metrics for the 2020s: a critical part of the TCFD recommendations and investors' collective Climate Action 100+ request for Paris alignment."

AustralianSuper director ESG and stewardship and Climate Action 100+ member Andrew Gray welcomed Rio's first report under the TCFD structure.

"2018 saw the company undertake technological breakthroughs in materials that have a key role in the low carbon transition," he said.

"We are also encouraged that Rio Tinto has joined the Energy Transitions Commission which takes a multi-sector approach to hard-to-abate sectors like steel."

Jacques said lowering emissions would increase demand for many of Rio's commodities, particularly copper.

He said the Rio Tinto Ventures unit continued to investigate "new minerals", such as lithium, cobalt and high-purity nickel.

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