Climate change

Climate change is a material issue that can affect our business through regulations to reduce emissions, carbon pricing mechanisms, extreme weather events or chronic changes to the climate, access to capital and permitting risks. Importantly, it can also affect our employees, host communities and suppliers. The strategic, effective and appropriate management of these risks is critical, both to our business and to the lives of the people that depend on us.

Our strategic response to climate change
Our commitments

 

To meet our commitment to net zero by 2050, we have completed a full review of emission reduction opportunities and aim to reduce our scope 1 and 2 emissions by 30% by 2030 (relative to our 2021 emissions baseline).

The first milestone on our journey to net zero will be to reduce our scope 1 and 2 emissions by a minimum of 30% by 2030. This target will be achieved by:

Renewable energy strategy

Central to our net zero pathway will be the incorporation of a minimum of 19 MW of renewable electricity by 2026.

Mine closures

Several operations are projected to close prior to 2030, namely Isibonelo, Goedehoop, Greenside and Khwezela. This will result in a reduction in GHG emissions associated with those operations. While rehabilitation activities will continue to take place after closure, once those have been completed, the energy consumption of those operations will be limited to that associated with ongoing maintenance and water treatment.

Energy efficiency opportunities

Thungela’s standard and related guideline on energy and carbon emissions’ management sets out the requirements to drive energy and carbon savings across the business. We have undertaken an extensive review of each operation’s energy and GHG profiles and identified business improvement opportunities to enhance energy efficiency and therefore energy intensity at each site. A focus is to reduce and optimise diesel and electricity consumption by large energy users.

More details on our tracking against these targets can be found in the climate change report

Pathway to net zero 

 
A scenario-based approach to net zero by 2050
 

We have adopted a scenario-based approach to chart our path to net zero, using the IEA World Energy Outlook 2022 scenarios. It is important to remember that scenarios are not forecasts or predictions and that accurately predicting the future is challenging, even in the short term.

Scenario analysis assists us in identifying key drivers of change and enables us to inform decision-making and evaluate business resilience against a set of divergent but plausible futures.

It also highlights the potential risks and opportunities associated with these.

To meet our 2050 net zero target, four distinct pathways are available, and are informed through climate scenarios. Given uncertainty over the future, these pathways provide us with a framework for decision-making based on triggers that may occur. Global trends and dynamics are reviewed annually to ascertain which plausible pathway we may be on so that we can be agile and adaptive in our decision-making.

The route we take relies on two critical inflection points: the security of the energy system in South Africa and the pace of decarbonisation globally.

The STEPS and APS both see coal demand declining more moderately than the net zero pathway and have been combined in our pathways as ‘slow transition’. The ‘accelerated decarbonisation’ pathways are aligned with the NZE.

 

 

Our climate-related risks and opportunities

A third-party performed scenario analysis using climate models to understand future potential climatic changes and identify adaptation requirements to build climate resilience. It also provided insight into what the future demand for our products may be to guide future decision-making.A physical and transitional climate risk assessment was performed across our operations, critical infrastructure and export destinations. This quantitative assessment included an examination of relevant acute and chronic physical climate risks as well as market and regulatory risks, and changes in exposure under various climate scenarios. In addition, it determined high-level climate impacts and vulnerabilities on our operations, employees, communities and customers. The assessment covered two time horizons to inform nearterm (2030) and long-term (2050) decision-making.

Physical risks identified are sea level rise, increased average rainfall, droughts,  storms and extreme weather events. Transitional risks identified are  policy and legal , market drivers and reputation.

For more information on the risks identified and our mitigation measures please refer to the climate change report