The Pilbara Minerals Ltd (ASX: PLS) share price is down 2% following the company’s announcing a decarbonisation plan.
Pilbara Minerals is an ASX lithium share which is one of the leading lithium miners in Australia.
While electric vehicles are important for the global green transition, lithium miners aren’t exactly emission-less when it comes to extracting lithium out of the company.
Decarbonisation plan
Pilbara Minerals has announced its medium-term power strategy to reduce power-related emissions intensity by up to 80% by 2030 compared to FY23.
The company said it has a goal of becoming a “sustainable battery materials producer, as well as driving ongoing operational cost savings.”
It has executed two key agreements which will expand its on-site power generation at its Pilgangoora operations and support the transition from diesel to natural gas, which will include the installation of a lithium battery energy storage systems. The first stage is expected to be operational in the second half of FY25.
The second stage will aim to increase existing solar generation at the site, and stage three plans include emerging wind power generation if it becomes available via grid connection by 2030.
How much of a difference will this make?
Stage one will reduce emissions by around 20%, around 48% after completing stage two and by up to 80% after stage three.
Stages one and two are expected to deliver material power unit cost reductions. The ASX lithium share said the cost profile of stage three including any potential savings, is depending on “emerging regional wind solutions and infrastructure being developed and becoming available to the Pilgangoora operations in the future.”
The company is committed to achieving net zero scope 1 and scope 2 emissions (which are emissions Pilbara Minerals is responsible for) in the decade starting 2040 and positions the company for a “sustainable, cost-effective future.”
Leadership commentary
We are delighted to announce our phased power strategy that further moves us along the path to net zero, supports reduced operating costs and will grow in lock-step with our production expansion needs.
This strategy builds on the first phase of installed solar power generation commissioned in late 2022. Successful delivery of the strategy is anticipated to achieve a ~48% reduction in power emissions intensity by 2027 via our own natural gas and solar power generation initiatives at site and up to 80% reduction by 2030 should emerging wind power generation opportunities become regionally available. This also supports our aim to be a leader in the provision of sustainable battery materials.
Final thoughts on the Pilbara Minerals share price
This is a good move by the business to work on reducing its emissions. Miners are some of the biggest polluters, and Pilbara Minerals now has a plan to reduce its impact significantly.
This will come at a cost, though today’s announcement didn’t really address that.
Its longer-term success, aside from increasing production, will be determined by what happens with the lithium price. The boom wasn’t really anticipated last year, and the next price increase may not be expected either, though conditions are currently challenged. I’m not sure if this is a good time to invest or the ASX lithium share.