BHP Group Ltd (ASX: BHP) shares are in focus today after the mining giant announced its progress in decarbonisation.
BHP is a significant polluter because of all of the heavy machinery used to get commodities out of the ground and transported to the port and then China. The ASX mining share wants to reduce its emissions.
Decarbonisation progress
BHP reported it’s on track to reduce its greenhouse gas emissions (GHG) emissions (scope 1 and scope 2 from its operated assets) by at least 30% by FY30 compared to FY20 levels.
The company also said it has a goal to achieve net zero operational GHG emissions by 2050.
BHP said the pathway will not be straight as it grows its business, while also acknowledging that technology must advance rapidly. The miner said it has made “strong progress” on its strategy in the areas of steelmaking and maritime decarbonisation via partnerships, trials and pilots.
The miner said it expects its scope 2 purchased electricity emissions to have dropped 100% at Escondida between FY20 to FY25, drop by 50% at BMA (coal mining) and drop by 50% at Western Australia Iron Ore (WAIO). These were the three projects with the biggest emissions in FY20.
How BHP is planning to decarbonise
The miner has made a number of power purchase agreements that allow it to buy energy from renewable energy projects.
BHP’s plans include trialling and adopting electric excavators, electric haul trucks, trolley assisted electric haul trucks and electric trains. I think this shift could be a boost for the BHP share price as it could attract ESG-focused investors.
Globally, haul trucks are the largest user of diesel at BHP. Its preferred pathway to eliminate diesel is through electrification.
The business said there are four main focus areas:
- Support the development and adoption of GHG emission reduction technologies in steelmaking
- Enhance the quality of the iron ore and steelmaking coal it produces
- Support the development and adoption of GHG emission reduction technologies in shipping
- Encourage suppliers to pursue net zero GHG emissions
BHP said it has nine partnerships with steelmakers representing around 20% of global steel production to help tackle long-term steel transition through the coming decades.
Its goal is to support the industry to develop technologies and pathways capable of 30% emissions intensity reduction in integrated steelmaking, with widespread adoption expected after 2030.
BHP also said it’s advancing readiness for an electric smelting pilot facility and it’s looking at low to zero-emission alternatives for ship fuel, such as ammonia.
Final thoughts on BHP shares
It’s good to see BHP is pursuing net zero, though it’s essential as BHP is one of the major Australian polluters. It could perhaps be doing things a bit faster than it has, decarbonising its operations will take a huge effort in the coming years.
Are BHP shares a buy? I don’t think it has a lot of growth potential and I wouldn’t call the current BHP share price of above $40 great value either. I think there are other ASX dividend shares capable of producing better total returns and more profit growth than BHP over time.
