We recognise that transition to a low carbon economy will require transformational changes in how we extract mineral resources and integrate climate-related impacts and risk into our business strategy and financial planning. Our approach is based upon the Paris Agreement principles to limit global warming to well below 2ºC above preindustrial levels and pursue efforts to limit the increase to 1.5ºC, with consideration to the Intergovernmental Panel on climate Change (“IPCC”) recommendations.
Our vision for a low carbon future is a mine with sources of onsite and imported renewable energy, reductions in absolute energy consumption through efficient operational strategy and new technologies, staged electrification of our mobile fleet and partnerships with our suppliers to select low carbon options and increase recycling in our supply chain.
Gold is rare and as with other precious metals, a lot of ore is mined and processed to produce small amounts of pure metal. Consequently, gold production has a relatively high GHG intensity on a mass basis. However, emissions associated with the downstream value chain – for example, in jewellery, investment and technology – are likely to be small and orders of magnitude lower than primary gold production. Gold may play an increasingly important role in providing financial stability as a stable store of wealth and an investment in gold may help reduce the carbon footprint of an investment portfolio while reducing investors’ exposure to climate change risks.
Through our climate change transition strategy we aim to accelerate our transition to a low-carbon emissions business, purposefully and profitably. The strategy comprises four areas of focus:
1. Reducing our carbon footprint (Scope 1 and 2)
In the short term, we are focused on the identification and delivery of projects that will effectively reduce our operational Scope 1 and 2 GHG emissions. Our programme for operational emissions reductions is built around:
- Renewable electricity: Sourcing clean power for our operation through the procurement or development of renewable energy supply
- Low carbon power sources: Switching to lower carbon fuels, together with electrification as an alternative to diesel use applications
- Energy efficiency: Continuous work to optimise and improve the energy efficiency of all our processes
Continued investment in renewable electricity, the growing decarbonisation of grid-sourced electricity, alongside enhanced energy and operational efficiency, will support our transition to a low-carbon future.
2. Collaboration with our supply chain (Scope 3)
We are committed to mitigate the impact of our supply chain emissions, while recognising that the nature of Scope 3 emissions are largely outside our direct control. The majority of our Scope 3 emissions, 98%, are upstream to our operation and relate to purchased goods, services and capital expenditure (Categories 1, 2 and 3).
Our actions are focused on collaboration with our suppliers to first understand the sources of our Scope 3 emissions, then identify how we can most effectively reduce them. Within our supply chain approximately 20 of our suppliers generate up to 75% of our Scope 3 emissions. We are collaborating with these key suppliers to understand the carbon footprint of their value chain and opportunities for abatement.
3. Operational resilience to climate change
We explore how the world might develop under a range of climate change scenarios and try to understand and test the resilience of our operations to physical and transitional climate risk.
We have assessed the physical climate risks at Sukari under future emissions scenarios based on General Circulation Models. Trends have been analysed for mean annual precipitation, 24-hour maximum precipitation and temperature for two assessment periods beyond baseline; near-term (2015-2039) and long-term (2080-2100).
Our business was assessed to be resilient to physical risk for the near-term predictions, indicating that adaptation specifically to mitigate the effects of climate are not required for the current operational life of Sukari. The longer-term predictions are, however, potentially relevant to closure planning and the resilience of closure structures.
In 2023, we completed a quantitative analysis of priority climate-related transition risks and opportunities for two climate scenarios, ‘Current Policies’ and ‘Net Zero by 2050’, and over different time horizons. The impact on Centamin’s free cash flow and attributable value was tested for each of the risks and opportunities. Under a Net Zero by 2050 scenario, the introduction of carbon pricing on our Scope 1 GHG emissions was predicted to have the most significant financial impact on the business over all time horizons.
We will routinely review and update this analysis and stress test the resilience of our business on an annual basis, using up to date climate models and forecasts for key parameters such as carbon price. These results will inform our business strategy and capital allocation decisions.
4. Transparency
We commit to report transparently on our progress in meeting our climate change objectives and to be fully consistent with the recommendations of the TCFD. Our TCFD Content Index is appended to this report. We also disclose annually to the CDP, for which our climate change response was rated 'B' in 2023; and publish climate data via the ESG Dashboard on our website.
We have set an interim climate target of 30%, to reduce our direct operational Scope 1 and 2 GHG emissions by 2030, compared to a 2021 base-year. This would put us on a Paris-aligned trajectory to limit global warming to ‘well below’ 2ºC by 2050.
In 2023 made good progress towards this interim target with a 7% reduction in our Scope 1 and 2 GHG emissions, driven primarily by a 21.5 million litre reduction in diesel consumption resulting from the first full year of solar power generation. In 2023 we also advanced studies to extend our existing solar plant and connect to the national electricity grid.
20MWAC Solar Power Expansion
In 2022, the Sukari 30MWAC solar plant was successfully commissioned. Adding an additional 20MWAC extension to the existing solar infrastructure (totalling 50MWAC) would fully meet the baseload power demand of the mine during peak daylight hours.
50MWAC Grid Connection
Following recent upgrades to Egypt’s power distribution infrastructure, a high voltage grid connection was extended through Marsa Alam, the local city to Sukari, located approximately 25km away from site. Establishing a 50MWAC connection to the national grid, combined with onsite solar generation, would fully meet the electricity needs of the mine without the requirement for onsite thermal power generation using diesel fuel.
Grid electricity is partly generated from renewable sources (12% in 2021), with the remainder from non-renewable fuels, predominantly natural gas. The Egyptian government is planning to increase renewable energy generation to 40% by 2030 as published in their Nationally Determined Contributions.
Additional Opportunities for Further Carbon Abatement
The Company’s commitment to decarbonisation goes beyond the 2030 interim target and carbon abatement projects detailed above.
Under the new LOM Plan for Sukari published in 2023, additional carbon abatement opportunities have been identified through optimisation of the mining schedule and reduced strip ratio.
Supplementary investigations are ongoing to identify additional opportunities to displace diesel fuel from our mobile fleet and energy efficiency processes.
Understanding climate related risks and opportunities across all aspects of our business is vital to inform our strategy and our continued ability to operate. Climate change is integrated into our enterprise risk management processes.
Physical Risk Analysis
Climate-related physical risks concern the potential impact on our operation and surrounding communities from both acute extreme weather events and chronic shifts in climate patterns.
We have assessed the physical risks at Sukari under future emissions scenarios based on General Circulation Models and have selected two scenarios aligned with the latest phase of the Climate Model Intercomparison Project (“CMIP6”) under which high changes are expected to the future climate:
- Scenario SSP2-4.5: Represents the medium pathway of future GHG emissions for which climate protection measures are being taken
- Scenario SSP5-8.5: Assumes an energy intensive, fossil fuel-based economy, representing the upper boundary of the range of scenarios
The potential candidate trends were analysed for mean annual precipitation and temperature for two assessment periods beyond baseline; near-term (2015-2039) and long-term (2080-2100). In 2023, we improved this assessment using locally sourced historic meteorological records to predict mean annual precipitation (“MAP”), 24-hour maximum precipitation and probable maximum precipitation (“PMP”).
Under this more robust assessment of physical risks, we maintain our judgement that Sukari is resilient for the near-term predictions, in relation to precipitation and temperature. Specifically, the pipeline supplying the mine with water from the Red Sea insulates the operation from any climate-related water supply risk and sea level rise does not present a direct threat to the operation. Adaptations to mitigate the effects of climate are either not required, nor deemed financially material, for the remaining operational life of Sukari. We will periodically review this judgement when there is either an update to the design of safety-critical operational infrastructure or upon the release of new climate models.
The longer-term predictions are relevant to mine closure planning and the resilience of structures in the context of increased intensity storm events. Updated forecasting of MAP indicates variable conditions over different scenarios and time horizons; but consistently higher maximum precipitation on a 100-year return period for all scenarios. These results will be considered in the definition of closure criteria for the mine and the detailed design of the post-closure landform.
Transition Risk and Opportunity Analysis
The transition to a low carbon economy will bring about a broad range of political, legal, economic, technological and other changes. Transitional risks and opportunities primarily affect the economic performance and viability of a business.
In 2023 we completed a quantitative scenario analysis of climate-related transition risks and opportunities to test the resilience of our business under different climate change pathways and time horizons.
A long list of climate-related risks and opportunities (“CRO”) were identified as relevant to our business, from which eight CROs were short listed based on a qualitative assessment of financial materiality and the feasibility of quantitative modelling. Subject to data availability, each CRO was quantified for three time horizons; short-term, medium-term and long-term; and for two climate scenarios, ‘Current Policies’ and ‘Net Zero by 2050’. The Current Policies scenario assumes that current national policies are maintained without an adjustment in ambition. The transition risks are less severe and under this scenario emissions continue to increase, resulting in 3°C of global average temperature rise, missing the Paris Agreement goals. The Net Zero by 2050 scenario predicts the immediate implementation of ambitious climate policies and rapid global takeup of clean technologies. This results in the achievement of the Paris Agreement goal to limit global average temperature increase to below 1.5°C. Under the Net Zero by 2050 scenario we stress test the resilience of our business to significant transition risks.
The key parameters underpinning the quantitative analysis of the CROs included carbon pricing, diesel price, grid electricity price, and prices for key consumables and commodities. Projections for these parameters were sourced from the Network for Greening the Financial System (“NGFS”).
The impact on Centamin’s free cash flow and attributable value was tested for each CRO, both individually and cumulatively; whereby financial impacts greater than $10million per year were assessed to be material. Under a Net Zero by 2050 scenario, preliminary modelling predicted that the introduction of carbon pricing on our Scope 1 and 2 GHG emissions in Egypt and domestic supply chain could have a significant material impact on the business over medium and long-term time horizons. A review of the regulatory landscape relevant to our assets noted that Egypt does not have any carbon mechanisms in place and there is no indication of when one may be implemented. As a consequence, carbon pricing is not expected to have a material impact on the carrying values of assets in the short term and not until such mechanisms are introduced. While the cumulative impact of the quantified transition risks were assessed to be material, the business is still judged to be viable over the life of our Sukari asset.
Through our 2030 Decarbonisation Roadmap we mitigate the financial impact of these transitional CROs on the business. We recognise that increased levels of decarbonisation would be needed to put us on a trajectory that limits global warming to 1.5ºC and continue to investigate opportunities to meet this ambitious target.
We will routinely review and update this analysis and stress test the resilience of our business on an annual basis, using up to date climate models and forecasts for key parameters such as carbon price.
We strive to continually enhance our carbon footprint accounting, monitoring, planning and target setting. Having adopted climate-related metrics since 2016 and disclosure to the CDP since 2019, we are continuing to widen the scope and accuracy of our reporting. Our Scope 1 and 2 GHG emissions data for 2023 has been subject to independent Limited assurance for accuracy and completeness in accordance with ISO:14064:3.
In 2023, we were pleased to record a 7% decrease in our total Scope 1 and 2 emissions, compared to our 2021 base-year; and an equivalent 14% decrease in emissions intensity per Au ounce produced. This is solid progress towards our target of 30% to reduce Scope 1 and 2 emissions by 2030, compared to a 2021 base-year.
In 2023, we updated our methodology for the calculation of Scope 3 GHG emissions. The consistency of these methods to the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard has been independently reviewed. We aim to set targets for a reduction in our Scope 3 emissions by the end of 2024.
The majority of our Scope 3 emissions, 99%, are upstream to our operation and relate to purchased goods, services and capital expenditure. Scope 3 emissions were 950,265 tCO2-e, of which 56% was associated with Category 1 purchased goods and services and 20% was associated with Category 2 capital goods. Preliminary analysis of our supply chain indicates that approximately 20 of our suppliers generate up to 75% of our Scope 3 emissions. We are continuing to collaborate with these suppliers to verify the carbon footprint of their value chain and opportunities for abatement.
We will routinely monitor a range of parameters to support update of our quantitative scenario analysis for climate-related transition risks and opportunities, including carbon pricing, diesel price and grid electricity price. In 2023, projections for these parameters were sourced from the Network for Greening the Financial System (“NGFS”).
In 2023, our capital spend on carbon abatement initiatives was US$2.1 million. In 2024, capital allocation for carbon abatement is budgeted at US$42 million for grid connection.