Mining Projects Facing a Wider Capital Requirement

Decarbonisation finance sits alongside conventional mine development finance rather than replacing it. A project may require capital for extraction, processing and infrastructure while also needing investment in renewable electricity, energy storage, electrified equipment or emissions management systems. • New mine development and expansion • Processing and material handling infrastructure • Renewable electricity and grid infrastructure • Electrified equipment and energy systems • Emissions measurement and reduction technologies The OECD estimates a financing gap of USD 180 billion to USD 270 billion for critical mineral mining projects between 2022 and 2030. Copper accounts for 36 percent of the identified gap and nickel for 16 percent. The estimate represents the broader financing requirement for critical mineral mining, rather than a dedicated decarbonisation funding gap.

Public Capital Taking a Larger Risk Sharing Role

The role of decarbonisation finance is also becoming connected with greater public involvement in mining investment. The IEA reports that public finance commitments for critical minerals in advanced economies reached around USD 65 billion in 2025, more than four times the level recorded in 2023. Public support can reduce specific project risks and help attract private capital, although commitments do not automatically translate into funds being deployed. • Public and development finance • Concessional lending • Guarantees and risk sharing • Private investment mobilisation • Long term project bankability The financing gap highlights the scale of capital required for new mineral supply before additional transition investment is considered.

Project Risk Shaping the Cost of Mining Capital

The availability of capital is only one part of the financing challenge. Mining projects also have to demonstrate that expected returns can withstand commodity price changes, construction delays, infrastructure constraints, regulatory uncertainty and technology risk. These considerations become more significant when projects include lower emission equipment or energy systems whose financial benefits may emerge gradually. Decarbonisation finance can become more useful when financial structures are designed around these risks rather than treating transition investment as a separate expenditure category. The risk profile can vary significantly between projects, making standard financing approaches less suitable for some new developments. • Commodity price volatility can affect expected project revenue • Technology maturity can influence capital and operating risk • Infrastructure gaps can increase development and delivery costs • Regulatory conditions can affect long term project certainty • Environmental and social risks can influence financing decisions The OECD identifies these factors among the conditions that influence critical mineral investment and notes that development finance can help address risks that commercial investors may not be able to manage alone.

Risk Sharing Expanding the Mining Financing Toolkit

Decarbonisation finance is increasingly connected with a wider set of instruments that can improve project bankability. Public institutions, development lenders and private investors can combine different forms of capital according to the risk and maturity of a project. The objective is not simply to lower borrowing costs, but to reduce specific barriers that prevent commercially viable projects from attracting investment. Decarbonisation finance can therefore involve structures such as: • Grants and concessional loans for early stage development • Guarantees that reduce selected financing risks • Blended finance combining public and private capital • Offtake support that improves revenue predictability • Equity participation for projects requiring higher risk tolerance The OECD also stresses that blended finance should address a genuine market gap and mobilise commercial investment rather than permanently substitute for private capital. This distinction is important for mining because projects need financing structures that remain viable after initial public support is introduced. The financing decision is consequently shifting toward a broader assessment of project resilience. A lower emission mining project may become more investable when its technology, infrastructure, revenue model and transition benefits are evaluated together rather than through a single measure of upfront cost.

Product Carbon Data Expanding Material Visibility

The usefulness of product carbon data depends on how clearly the calculation is defined. A product footprint requires a functional unit, system boundary and consistent treatment of relevant production inputs. Electricity, fuel consumption, processing, refining and other activities can influence the reported footprint, while methodological differences can affect how results are interpreted.

• Production emissions associated with a specific material
• Electricity and fuel inputs across the defined production system
• Processing and refining contributions
• Functional unit used for the calculation
• System boundary covering the assessed production stages

The need for this level of detail becomes clearer when the same mineral or metal can be produced through different energy and processing pathways.

Mineral Carbon Footprints Becoming More Distinguishable

The emissions profile of a material can vary according to the conditions under which it is produced. Electricity sources, mining methods, processing intensity and refining requirements can all influence the footprint associated with material leaving the production system. The International Aluminium Institute states that most cradle to gate carbon footprints for primary aluminium fall between 4.5 and 22 tonnes of carbon dioxide equivalent per tonne of primary aluminium, illustrating the range that can exist within a single material category.

• Electricity source and energy mix
• Mining and processing requirements
• Refining route and production inputs
• Material handling and auxiliary activities
• Operational efficiency

This makes product carbon data more useful when buyers can understand not only the reported emissions value but also the methodology and production conditions behind it. The documented industry range illustrates why transparent product level emissions information can make differences between production pathways more visible.

Carbon Methodologies Moving Toward Greater Alignment

As product carbon data becomes more important in mineral supply chains, the next challenge is ensuring that different footprints can be interpreted on a common basis. The 2026 mining and metals research compared 16 product carbon footprint and life cycle assessment standards and guidelines across 17 methodological areas. It found stronger consistency in areas such as functional units and system boundaries, while differences remained in electricity modelling and allocation approaches. The Partnership for Carbon Transparency (PACT) Methodology Version 3 provides a harmonised framework for calculating and exchanging cradle to gate product carbon footprints. It also strengthens guidance on data reliability, verification and electricity accounting, giving producers and buyers a more consistent basis for exchanging emissions information.

• Functional units need to be clearly defined
• System boundaries need to be transparent
• Electricity modelling needs consistent treatment
• Allocation methods need to be documented
• Data reliability needs to be assessed

Product Carbon Data Becoming More Actionable

The value of product carbon data increases when it can move beyond individual calculations and support purchasing, supply chain management and compliance decisions. PACT Version 3 includes requirements for data exchange, verification and reliability, while its technical specifications provide a data model for interoperable exchange of product level greenhouse gas information. This direction is also becoming relevant to mineral specific reporting. The 2026 mining and metals research notes that customers, investors and legislators are increasingly requesting product carbon footprint and life cycle assessment information, while different industry initiatives and regulations can still require different calculation approaches.

• Primary production data can strengthen footprint reliability
• Verification can improve confidence in reported results
• Consistent data formats can simplify supplier information exchange • Comparable calculations can support procurement decisions
• Clear methodology can make carbon figures easier to interpret. The comparison demonstrates that improving product carbon visibility requires greater methodological alignment as well as more detailed emissions data.

Existing Steel Assets Creating a Retrofit Question

The scale of the existing production base makes retrofit options strategically relevant. Rather than assuming that all conventional furnaces can be rapidly replaced, the industry is examining whether selected plants can integrate capture systems into existing process infrastructure.

Steel Decarbonisation Pathways

• Process capture: Target carbon dioxide from concentrated gas streams generated by ironmaking and steelmaking processes.
• Energy integration: Manage the additional heat and electricity requirements created by capture equipment.
• Alternative production: Combine capture with other measures where complete process transformation is not immediately practical.
• Infrastructure connection: Link captured carbon dioxide with transport and permanent storage systems.

Recent research illustrates why capture cannot be treated as one standard technology. A 2026 study comparing three amine systems across blast furnace gas, sintering gas and basic oxygen furnace gas found meaningful differences in regeneration energy and capture cost, even when the systems were designed around a 90% capture target.

Capture Performance Depending on Process Design

The performance of carbon capture depends on the composition and concentration of the gas stream, the capture technology selected and the energy required to regenerate the capture medium. A 2026 pilot scale study on real blast furnace gas demonstrated more than 90% carbon dioxide removal in its specific calcium and copper looping configuration, showing that higher capture performance is technically achievable under controlled conditions. These results do not establish a universal capture rate for steelmaking. They instead show why technology selection, process integration and plant specific conditions will determine how effectively capture can contribute to broader steel decarbonisation.

Capture Systems Adapting to Steel Gas Streams

The practical challenge begins once a steel plant identifies which emissions can be captured and how the capture system can be integrated into an operating process. Carbon capture is not a single technology with identical performance across steelmaking. Blast furnace gas, sintering gas and basic oxygen furnace gas have different compositions and concentrations, affecting equipment design, energy requirements and capture economics. A 2026 study comparing three amine based systems across these steelmaking gas streams found meaningful differences in regeneration energy and levelised capture cost, despite using a common 90% capture target. This reinforces the importance of matching the capture system with the characteristics of each process stream rather than applying a standard configuration.

Capture System Variables

• Gas composition: Determines the suitability of different separation technologies.
• Energy demand: Capture systems require additional heat and electricity that must be incorporated into plant planning.
• Process integration: Equipment must operate alongside existing ironmaking and steelmaking systems.
• Capture scope: The percentage captured from one stream does not equal the percentage reduction in total plant emissions.

Carbon Infrastructure Extending Beyond the Steel Plant

The next challenge is what happens after carbon dioxide is separated. Carbon capture becomes more strategically important when it forms part of a wider system that includes compression, transport and permanent storage. Global carbon capture and storage infrastructure is expanding, although deployment remains at an early stage. The Global CCS Institute reported 77 commercial carbon capture and storage projects in operation and another 47 under construction in 2025, alongside a much larger development pipeline.

Carbon Management Infrastructure

• Compression: Captured CO2 must be conditioned for transport.
• Transport: Pipelines, ships and other systems can connect industrial emitters with storage locations.
• Storage: Suitable geological formations require assessment, monitoring and regulatory approval.
• Shared hubs: Multiple industrial facilities can potentially use common transport and storage infrastructure.

Iron Ore Quality Becoming More Important

As direct reduction expands, ore quality becomes a more significant consideration. Conventional blast furnace systems can accommodate a broad range of feedstocks through established blending and preparation practices, while direct reduction generally places greater emphasis on iron content, impurity levels, physical characteristics and consistent feed quality.

Key Ore Quality Considerations

• Iron content: Higher iron concentration can support more efficient reduction and improve product quality.
• Gangue levels: Silica, alumina and other unwanted materials can affect process efficiency and downstream handling.
• Physical properties: Pellet strength, size distribution and reducibility influence process stability.
• Feed consistency: Predictable ore characteristics can help operators maintain stable reduction conditions.

This makes lower carbon ironmaking relevant before the ore reaches an ironmaking furnace. Beneficiation, concentration and pelletisation can become more strategically important as producers prepare feedstock for direct reduction systems.

Direct Reduction Expanding the Mining Connection

The relationship between mining and ironmaking is therefore becoming more integrated. Recent industry analysis indicates that suitable direct reduction feedstock can require higher quality concentrates and carefully controlled pellet characteristics, while research is also examining how medium grade ores can perform under hydrogen rich reduction conditions. The commercial implications extend beyond producing more iron ore. Mining companies may increasingly need to consider whether existing products match the specifications required by emerging ironmaking routes, while additional processing can introduce energy, capital and infrastructure requirements. This makes lower carbon ironmaking a value chain issue rather than solely a steelmaking technology issue. As ore preparation and ironmaking become more closely connected, carbon management in downstream steelmaking becomes the next part of the decarbonisation discussion. The increase in global DRI production shows the growing scale of direct reduction within the wider ironmaking system.

Beneficiation Becoming More Important for Direct Reduction

The shift toward direct reduction increases the importance of how iron ore is prepared before it enters the ironmaking process. Lower carbon ironmaking can place stricter demands on feed quality because the reduction furnace must operate with consistent material characteristics and controlled impurity levels. This can make beneficiation and pelletisation more important parts of the upstream value chain rather than simply preparation steps. For mining operations, the relevant variables increasingly include:

• Iron concentration: Higher iron content can improve the proportion of useful material entering the reduction process.
• Impurity control: Silica, alumina and other gangue materials can affect process efficiency and downstream slag requirements.
• Particle characteristics: Pellet size, strength and reducibility influence stable furnace operation.
• Feed consistency: Predictable chemistry and physical properties can support more stable reduction conditions.

Research is also showing that the relationship between ore grade and hydrogen reduction is not straightforward. Experimental work on iron ore pellets with different iron grades has demonstrated substantial reduction under hydrogen rich conditions across the tested range. This suggests that ore quality requirements should be assessed through actual process testing rather than treated as a single universal threshold.

Processing and Energy Requirements Reshaping the Value Chain

The implications extend beyond ore quality. Producing suitable feedstock can require additional crushing, concentration, pelletisation and material handling, creating new energy and capital requirements upstream of the ironmaking plant. Lower carbon ironmaking therefore has to be considered alongside the emissions associated with preparing the feedstock. A 2026 assessment of hydrogen based ironmaking using medium grade iron ore found that ore characteristics, renewable energy availability and hydrogen system design interact strongly in determining technical and economic performance. The finding reinforces the importance of considering the mining and energy systems together rather than assessing the ironmaking furnace in isolation.

Strategic Processing Considerations

• Beneficiation capacity: Upgrading lower quality ore can improve suitability for direct reduction but adds processing requirements.
• Pelletisation: Consistent pellets can support stable reduction while creating additional energy demand.
• Ore testing: Metallurgical testing can establish how specific ores behave under intended reduction conditions.
• Energy sourcing: Processing emissions matter alongside the emissions performance of the downstream ironmaking route.

This creates a more integrated commercial question for miners. Lower carbon ironmaking may increase the value of products that meet direct reduction specifications, but achieving those specifications can require investment in processing, energy and product quality control. The result is a closer relationship between mine planning, processing strategy and downstream ironmaking requirements.

• Heavy mobile equipment: Fuel cells can provide electricity for large vehicles without relying entirely on very large battery packs.
• Long operating cycles: Refuelling can provide an alternative to extended charging periods where continuous equipment utilisation is important.
• Remote operations: Hydrogen produced using renewable electricity could provide an energy storage pathway where grid connections are limited.
• Selected processing uses: Hydrogen may support applications where direct electrical alternatives remain technically challenging.

Mine Conditions Shaping the Opportunity

The potential for hydrogen opening new pathways depends on the characteristics of individual mining operations. Equipment duty cycles, power demand, terrain, operating schedules, renewable electricity availability, water requirements and refuelling infrastructure all influence whether hydrogen is practical. This means hydrogen opening is better understood as a site specific opportunity than a universal replacement for battery electric equipment. Its strongest applications are likely to emerge where high energy demand, long operating periods or infrastructure constraints create limitations for direct electrification.

Hydrogen Deployment Variables

• Equipment energy requirements
• Operating and refuelling cycles
• Renewable electricity availability
• Hydrogen production and storage needs
• Mine infrastructure and site conditions

The expansion of low emissions hydrogen production and electrolysis is creating an emerging supply base for industries assessing hydrogen as an alternative energy pathway.

Measurement Becoming the First Abatement Decision

Improving mine methane management begins with determining where emissions originate, how concentrations vary and which streams can realistically be controlled. Measurement is increasingly drawing on different forms of evidence rather than relying on a single estimation method. The IEA’s 2026 assessment combines measured, satellite and inferred data, reflecting the expanding role of multiple approaches in building methane inventories. Key Measurement Priorities

• Source identification: distinguish ventilation, drainage and other methane-release pathways.
• Emission quantification: establish credible volumes and concentration profiles.
• Operational monitoring: understand how emissions change with mining activity and conditions.
• Verification: compare different measurement approaches and improve confidence in reported data.

For mine operators, measurement is therefore more than an environmental reporting exercise. It provides the foundation for deciding whether methane drainage, utilisation, flaring or ventilation-air treatment is technically appropriate for a particular operation.

Mine Conditions Shaping the Abatement Pathway

The technical response depends heavily on methane concentration, mine design and the characteristics of each emission stream. Drainage systems can provide more concentrated gas that may be suitable for recovery or utilisation, while ventilation air presents a fundamentally different engineering challenge because very large air volumes contain comparatively dilute methane. UNECE’s guidance identifies this low-concentration, high-volume characteristic as a central challenge for ventilation air methane mitigation. Mine-Specific Abatement Considerations

• Methane concentration and flow rate
• Ventilation and drainage system design
• Safety and operational requirements
• Availability of capture or destruction infrastructure
• Economic value of recovered methane or avoided emissions

This makes mine methane abatement less about selecting one universal technology and more about connecting reliable measurement with mine-specific engineering, safety requirements and the economics of capturing or destroying methane. The global emissions scale shows why methane measurement and abatement across operating and inactive coal mines remain important decarbonisation priorities. The economics, however, remain site-specific. The IEA notes that existing technologies could address about half of coal-related methane emissions, but capturing and using methane is not economically viable at every mine. This makes the value of avoided emissions, policy incentives and available infrastructure important alongside the physical potential for recovery. For mines assessing mine methane projects, this creates a progression from identifying an emission source to determining whether it can be converted into a controlled abatement project. The same decision framework also becomes relevant when considering hard to electrify mining activities, where the challenge shifts from methane reduction to alternative energy pathways.

Methane Abatement Becoming a Mine-Specific Strategy

Methane management is increasingly shifting from broad emissions estimation toward a more structured process of measurement, source identification and targeted abatement. Mine methane strategies need to reflect the characteristics of individual operations because ventilation systems, drainage infrastructure, gas concentrations and available treatment technologies differ significantly between mines. The strongest approach connects emissions data with practical engineering and investment decisions:

• Measure consistently: establish reliable emissions baselines and identify major release pathways.
• Match technology to the source: assess drainage, utilisation, flaring or ventilation-air treatment according to gas characteristics.
• Evaluate the economics: consider infrastructure requirements, operating conditions, policy incentives and the value of avoided emissions.

This approach can make methane reduction a more measurable part of mining decarbonisation while maintaining the safety and operational requirements that shape underground mine ventilation.

References

1. International Energy Agency – Global Methane Tracker 2026 – 2026
2. United Nations Economic Commission for Europe – Best Practice Guidance on Ventilation Air Methane Mitigation – 2025

Comminution Becoming the Primary Efficiency Target

The largest opportunity is concentrated in comminution, where crushing and grinding account for at least 40% of total energy use in mining and mineral processing according to Australian Government guidance. That makes the front end of the processing circuit a particularly important target for energy efficient processing measures.

Processing Energy Priorities

• Crushing and grinding circuit design
• Consistent particle-size management
• Early rejection of gangue
• More efficient comminution technologies
• Integration of ore characteristics into mine-to-mill planning

The relationship between these measures is important. Ore sorting or selective blasting can remove material before it reaches energy-intensive grinding, while circuit design can reduce unnecessary recirculation and improve mineral liberation. The result is a broader approach in which energy efficient processing begins before ore enters the mill and continues through downstream separation.

Microgrid Components Shaping Mine Power Strategy

The architecture of mine microgrids is generally built around several interconnected elements:

• Renewable generation from solar or wind
• Battery energy storage for balancing and reserve
• Dispatchable generation for periods of insufficient renewable output
• Control systems that coordinate supply with mine demand
• Electrical infrastructure capable of maintaining stable power delivery

The interaction between these components determines how effectively a mine can use renewable electricity. Storage can absorb surplus generation and provide power when renewable output falls, while dispatchable generation can provide additional security when storage or renewable resources are insufficient.

Renewable Penetration Meeting Reliability Requirements

The trade-off becomes more important as renewable penetration rises. Higher renewable shares can reduce fossil-fuel dependence, but they can also increase the need for forecasting, storage and frequency control. Research into autonomous mining microgrids has found that frequency stability must be explicitly incorporated into planning, with battery storage playing an important role in maintaining system performance during power imbalances. A recent modelling study covering 135 Australian copper deposits provides a useful industry-level illustration. Its optimal configuration produced approximately 80% renewable-energy penetration, with an 84% reduction in median specific carbon emissions compared with baseline diesel generation and a minimum modelled levelized cost of electricity of $0.32/kWh. These are modelled results for the study scenario rather than universal outcomes for mining operations.

Energy Management Becoming an Operational Function

The development of energy management mining systems is therefore linking energy strategy more closely with day-to-day mine operations. Digital controls can bring information from generators, batteries, renewable sources and major electricity-consuming assets into a common operating framework, allowing decisions to be made around changing demand and supply conditions. Key areas of growing flexibility include:

• Matching selected electricity-intensive activities with available power
• Coordinating battery charging and discharge with operational demand
• Managing generator operation alongside renewable electricity
• Monitoring changing load profiles across mine systems

This shift is already visible in remote mining projects. Natural Resources Canada is supporting a hybrid Energy Management System (hEMS) demonstration involving B2Gold’s Goose Mine, combining energy storage and existing generation to improve energy management and reduce diesel dependence. Fortescue is also developing an integrated energy model in which renewable generation, battery storage and mine demand are coordinated through energy-management systems. The significance of energy management mining is therefore moving beyond efficiency alone. It is becoming a way to manage the timing and interaction of electricity supply and demand, creating the operating flexibility needed as mines transition toward more complex and increasingly electrified energy systems.

Renewable Procurement Becoming a Strategic Energy Decision

The emerging approach is not based on one renewable model. Companies are combining contracted electricity with physical generation and, in some cases, storage or supporting transmission infrastructure. Renewable Power Strategies

• Long-term renewable PPAs
• On-site solar and wind generation
• Renewable generation paired with storage
• Hybrid renewable and conventional power systems
• Dedicated grid and transmission infrastructure

BHP’s BHP Mitsubishi Alliance (BMA) provides one example, with renewable PPAs matching 100% of its forecast electricity demand from FY2027. Gold Fields is taking a more physically integrated approach at St Ives, where a 42 MW wind farm and 35 MW solar plant are expected to supply 73% of the mine’s electricity. These projects show how renewable power mining increasingly involves decisions about generation capacity, contracts and supporting infrastructure rather than electricity procurement alone.

Renewable Supply Changing Mine Planning Requirements

The strategic value of renewable generation depends on how closely supply can be aligned with mine demand. A large solar or wind project does not necessarily produce electricity when processing, pumping or other energy-intensive operations require it. As a result, mine planners increasingly have to consider the interaction between renewable availability, production demand and supporting power infrastructure. Mine Planning Considerations

• Electricity demand and production profiles
• Renewable generation availability
• Grid and transmission capacity
• Storage and backup requirements
• Alignment with mine life and expansion plans

Fortescue’s Pilbara development illustrates the scale of this integration, with construction underway on a 690 MW solar farm and a 650 MWh Battery Energy Storage System (BESS) as part of its broader renewable energy system. The growing complexity of these systems means renewable power mining increasingly depends on how electricity supply is managed against changing operational demand, bringing energy demand flexibility into the next stage of the discussion.