IGO SUSTAINABILITY REPORT 2022— 71 70 —IGO SUSTAINABILITY REPORT 2022 Our Response to Climate Change IGO’SClimate Change-Related Risks andOpportunities Analysis Topic Description of Risk/Opportunity Management Actions and Plans Policy Opportunities Climate-related legislation is increasing across many jurisdictions, intended to drive resource efficiency and uptake of low-emissions technologies. This is expected to increase demand for electrification of infrastructure, renewable energy and battery storage technologies, presenting a strong opportunity to increase sales volumes and commercial value of our products. This transition also enables IGO to shift its business model to be integrated into this supply chain. IGO’s core business strategy is focused on supplying the products required for the decarbonisation of society. Key commodities on which IGO is focused include nickel, copper, lithium and cobalt. Risks – Short-Term The Nova Operation (100% IGO owned) reports energy and emissions to Australia’s Clean Energy Regulator under the National Greenhouse and Energy Reporting Scheme. Nova Scope 1 emissions of 68 ktCO2e are currently well below the 100 ktCO2e threshold for the safeguard mechanism (SGM). With the recent acquisition of Western Areas, our total Scope 1 emissions will grow, however they will remain below the SGM. IGO may be more substantially impacted by climate-related policy developments over the remaining life of the operations. State based climate legislation is evolving in Western Australia, and the federal policy response to meet the Paris Agreement commitments remains uncertain. The Tighter baselines under the current SGM, changes to diesel fuel tax credits and passedthrough costs from suppliers may all impact on IGO’s operating margins. IGO’s legal and sustainability teams monitor policy developments on an ongoing basis for potential impacts on the business. Scenario analysis completed in FY20 included stress testing our near-term margins using a high-side carbon price and removal of fuel tax credits to better understand our position (see Scenario Analysis section on page 73 for more details). IGO will complete a detailed scenario analysis on the business during FY23 considering the significant changes the business has undergone over the past couple of years. IGO’s carbon neutral approach to reducing our operating emissions also serves to mitigate direct cost exposures to near-term carbon pricing developments. Risks – Medium to Long-Term Discoveries and subsequent development plans resulting from our exploration activities in Australia and overseas may be subject to climate change-related legislation e.g., carbon pricing, environmental licence conditions and more stringent water regulations. As part of any development plan of an asset, IGO will consider design and technology to reduce emissions in line with our Climate Change Policy. This will be driven by our internal carbon pricing mechanism to ensure decarbonisation projects are incentivised and captured in any project development plan. Topic Description of Risk/Opportunity Management Actions and Plans Market Opportunities As the global economy tackles the challenges of climate change, new markets are expected to evolve, including improved electricity transmission, energy storage and EV products. Decreasing costs and shifting consumer preferences may accelerate the growth of these markets, presenting strong opportunities for IGO to diversify end-markets for our nickel, copper, lithium and cobalt and other high-value commodities. Nickel and lithium are positioned to benefit from the transition to energy storage and EVs, especially from nickel-dominant, lithium-ion battery uptake in EVs. Approximately 75% of IGO’s nickel concentrate is processed for use in downstream battery products. Risks – Short, Medium and Long-Term There has been considerable strengthening of the market supported by both Government incentives. EV penetration rates continue to grow. The largest risks leading to some market uncertainty is related to geopolitical tensions. There is also some risk associated with battery technology changes and potential technologies associated with unlocking battery grade class 1 nickel from laterites. There is a consistent shift towards higher nickel density batteries to drive increases in energy density. Given the capital investment by the world’s largest battery producers and Original Equipment Manufacturers, it is expected that battery chemistry technologies will not change significantly for the next 10+ years. The latest research supports both nickel and lithium supply deficits. The constraint to growth will largely be driven by the supply deficits of these critical metals. Legal Risks – Short, Medium and Long-Term As a listed company, IGO’s Board hold legal responsibilities to manage foreseeable risks, including climate change. IGO is also aware of the risks associated with perceived greenwashing by organisations on climate and ESG disclosure and management, alongside greater activism in the community. IGO’s Board is routinely briefed on climate change-related issues relevant to the Company’s financial performance and strategic plans and as other relevant matters arise. The Board’s oversight is reflected in the endorsement of IGO’s stated position on climate change, plans to align public disclosures with TCFD recommendations and our approach to managing material risks and opportunities. Technology Opportunities Advancements in nickel-dominant battery technologies present upside potential for IGO’s sales of nickel products, as well as other targeted commodities. Operationally, integration of innovative energyefficient and renewable technologies in our current and future operated mines provides the opportunity to minimise operating costs and maximise profit margins. Options to expand into downstream processing of our nickel concentrates using green technologies also provide strong opportunities for a low cost, market-differentiated product. IGO closely monitors market trends to maintain a well-informed view on target commodities for the business. This draws on internal and external analysis (including publications by the FBICRC, investment bank research and other research bodies) to ensure that our business strategies remain aligned with the latest technological developments, consumer behaviours and other relevant drivers. Risks – Short-Term Integration of new technologies on our existing operations carry some execution risk, particularly in underground fleet operations. We have an innovative culture that proactively applies new technologies and processes to leverage our business potential and enable the discovery of new resources. We continue to explore new technologies and have the appropriate change management controls in place to mitigate the adoption of these new technologies. We have been early adopters of new renewable technologies at our operations which has driven significant reductions in carbon emissions. IGO’SClimate Change-Related Risks andOpportunities Analysis Underground at the Nova Operation
RkJQdWJsaXNoZXIy MjE2NDg3