Miners Attempt to Capitalize on Green Movement

Mining’s Role in Clean Energy

Anglo American (NGLOY) and Glencore (GLNCY) are among the mining companies attempting to capitalize on the green investment movement, positioning themselves as key players in the clean energy space. To that end, these companies and others are highlighting their production of materials used in everything from wind turbines to batteries and sidestepping the environmental impact of their operations.

As the world moves away from fossil fuels, mining companies want to be a major part of the transition. The shift does in fact present a big opportunity. Mining for the materials needed for clean energy is expected to increase rapidly in the coming years. Lithium used for batteries is one example. Demand for that chemical element is expected to grow 30% by 2030.

Investor Backlash

The mining firms are trying to send the message to investors that they are not like their oil-producing counterparts. Oil companies are facing pressure from investors who want to address concerns over global warming. For example, ExxonMobil (XOM) just lost three seats on its board to an activist investor group focused on pushing the oil giant toward cleaner energy.

The mining industry has flown under the radar to some extent, but risks a similar fate. Mining for the materials used in clean energy leaves behind a big environmental footprint. The industry consumes a lot of traditional energy and relies on toxic chemicals. Additionally, waste has to be stored in huge dams. The miners involved in coal are among the biggest global warming offenders.

ESG Matters

Glencore, which has big thermal coal operations, has been touting its copper production to investors. Copper is needed for electric vehicles and is expected to see a big pickup in demand. The company plans to exit coal production but notes this may take decades to happen.

The mining companies are certainly part of the supply chain for clean energy, but the way they obtain it is driving away investors that select stocks and funds based on ESG factors. That is a problem for companies in the mining space. So far in 2021 close to $3 of every $10 invested in global funds have gone into ones focused on ESG. Assets under management in ESG funds stood at $1.4 trillion in April—more than double 2020 levels. With the trend toward ESG continuing to grow, mining companies may face an uphill battle convincing investors they are on the right side of global warming.

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