Vale targets 15% cut in Scope 3 emissions by 2035, invests in solar energy

Miner Vale is targeting a 15% reduction by 2035 in its net Scope 3 carbon emissions from its client and supply chain, the company announced Dec. 2. This follows the company's commitment to become carbon-neutral by 2050, and to reduce 33% of its direct and indirect emissions (scopes 1 and 2) by 2030.

Vale thus joins the ranks of major miners formalizing Scope 3 emissions reductions targets as environmental, social and governance (ESG) pressures on the industry rise. The company plans to work together with steel mills to further develop steelmaking using direct reduced iron processes and its in-house biomass-based pig iron Tecnored system. It also aims to reduce shipping emissions and will also increase the amount of native forest it protects.

At least $2 billion will be invested in 35 projects to reduce emissions and the company has already adopted a shadow internal carbon price of $50/mt of CO2 equivalent to assist planning and project approvals, CEO Eduardo Bartolomeo said in a Vale Day presentation to analysts.

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"An initial estimate is that Vale will be able to account for up to 25% of the total Scope 3 reduction target through its own portfolio," Bartolomeo said.

The Scope 3 reduction target references 2018 as base year, when 586 million mt of CO2 equivalent (MTCO2e) were registered from Vale's value chain, the company said. The company expects to reach 496 MTCO2e in 2035, down 90 MTCO2e from 2018 levels - equivalent to Chile's emissions from energy consumption in the same year, according to the International Energy Agency. The target will be reviewed in 2025 and every five years thereafter. Currently, Scope 3 emissions account for 98% of Vale's carbon footprint, it said.

The target already considers Vale's production capacity increase to 400 million mt of iron ore, to be reached by the end of 2022. It is also aligned with the Paris Agreement's ambition to limit global warming to well below 2°C by the end of the century, as are Vale's Scope 1 and 2 targets.

Vale is already recognized as a supplier of high Fe content iron ore products, which require less energy usage in steelmakers' blast furnaces and consequently reduce emissions. Ferrous executive director Marcello Spinelli said during the presentation that by 2024, Vale expects 90% of its iron ore portfolio will be of high-quality products.

Spinelli noted that output of Vale's high-grade BRBF (Brazilian Blend Fines), a mixture of ore and concentrate from its Carajas and Minas Gerais mines, will reach around 150 million mt this year, almost 14% above 2019 levels, showing significant growth from the product launch in 2014.

Vale added that it currently helps protect more than one million hectares of forest worldwide. By 2030, it plans to cover another 500,000 hectares through recovery and protection projects.

Solar energy project

Vale also announced it will invest $500 million to set up one of the largest solar energy projects in Brazil, Sol do Cerrado, with an installed capacity of 766 megawatts. Scheduled to start up in Jaíba, Minas Gerais state, in October 2022, the project will meet 13% of Vale's electricity demand in 2025 and is expected to lower the company's annual electricity costs by $70 million after startup.

The solar power investment, part of the miner's $2 billion budget for emissions-reduction projects, is aligned with its goal of consuming 100% renewable electric energy in its units in Brazil by 2025 and, globally, by 2030. The project still needs approval from Brazilian National Power Agency (Aneel), Vale said.