Rio Tinto is looking for suggestions for renewable energy facilities to power projects in Queensland

Rio Tinto (RIO.AX), an Australian miner, revealed a $7.5 billion program on Wednesday to cut carbon emissions by half by 2030, a decrease three times bigger than its previous aim, but shares dipped as investors responded to the increased spending.

Rio said it aimed to halve its scope 2 and 1 carbon emissions – direct emissions by the firm and some forms of indirect emissions – by the end of the decade, as steel and iron ore companies continue their push to reduce carbon emissions in accordance with global climate obligations by 2050. Rio accelerated its objective for a 15% decrease in emissions from the year 2018 levels to the year 2025, five years earlier than initially planned.

“It’s a significant transformation, but it’s the future for Rio Tinto,” CEO Jakob Stausholm said at a press conference before an investor day presentation and conference.

To achieve this aim, Rio will expand its use of renewable energy, increase R&D spending on decarbonization pathways, and double spending on minerals key to the energy transition to almost $3 billion per year beginning in 2023. In London, stocks were down 3.1 percent.

“This change to higher spending at a time when the chances for iron ore cash production appear challenging will further aggravate this transformation, as it will occur in a lower-yield environment,” RBC wrote in a note.

“Thus, while we believe this is the proper strategy, it may take some period for the shares to represent this.” Rio increased its capital investment intentions for 2022 from $7.5 billion to $8 billion and stated that it anticipated spending about $9 billion in 2023 and $10 billion in 2024. RBC estimated that spending in 2023 will be $6.8 billion, with $5.8 billion in 2024.

Stausholm added that Rio was also undertaking a variety of “concrete initiatives” to assist its customers in reducing their emissions. The world’s largest iron ore miner announced this month that it is testing new technology that would utilize biomass instead of coking coal in the process of steelmaking to reduce industrial carbon emissions and that it is also investigating hydrogen.

However, Rio did not promise greater reductions in its customer emissions, which are currently planned at 30% by 2030. Rio’s new ambitions outperform those of competitor BHP Group (BHP.AX), which aims to reduce operational emissions by 30 percent by 2030 but misses the mark of Fortescue Metals Group’s targets.

“With some very aggressive carbon reduction targets, Rio Tinto has finally joined the party, demonstrating BHP and its investors what climate action for a multinational miner should be like,” stated the Australasian Centre for Corporate Responsibility, an activist investor.

Fortescue pledged earlier this month to achieve net-zero emissions from its steelmaking clients’ operations by 2040 by increasing hydrogen and green energy generation to reduce its carbon footprint.

Posted on

Leave a Reply

Your email address will not be published.