It has also set a target of a 30 per cent reduction in “emissions intensity” – the emissions per unit of commodities it produces – below 2018 levels within 10 years.
Rio Tinto said it did not mine coal or extract oil and gas, and used renewable energy generation to power 76 per cent of electricity needs at its managed operations.
Chief executive Jean-Sebastien Jacques said the net-zero target was a “massive undertaking”.
“It means all of our future growth will need to be carbon neutral … and we will need new technologies and partnerships,” he said.
“We do not have a roadmap but we are working on it.”
Asked whether Rio would use carbon offsets to achieve the goal, Mr Jacques said it would be a “last port of call”.
‘It means all of our future growth will need to be carbon neutral … and we will need new technologies and partnerships.’
Chief executive Jean-Sebastien Jacques
“Our philosophy is to avoid generating CO2 in the first place,” he said. “We are open to offsets but it would be the last port of call because we want to be part of the solution.”
AustralianSuper, which owns shares in Rio Tinto, described the initiative as a “great demonstration of constructive engagement resulting in genuine outcomes on climate change”.
“These are issues that AustralianSuper as a lead investor has been engaging with Rio on for more than two years as part of the Climate Action 100+ initiative,” said Andrew Gray, AustralianSuper’s director of environmental, social and governance.
“We look forward to continuing to engage with Rio to fulfil these commitments.”
Rio Tinto’s $US1 billion ($1.5 billion) climate fund dwarfs the investment pledged by the world’s biggest miner, BHP, last year of $US400 million on emissions-reduction initiatives over five years.
Rio Tinto, however, is headed for another showdown with shareholder activists this year after Market Forces, a subsidiary of Friends of the Earth, lodged a resolution seeking to compel the miner to set targets for reducing the emissions generated by the end-users of its products, known as “Scope 3” emissions.
Although Rio Tinto has removed all its exposure to thermal coal, the worst-polluting fuel, its Scope 3 emissions would remain high due to the use of its iron ore in steelmaking furnaces. Steelmaking is responsible for up to 9 per cent of global greenhouse emissions.
BHP last year vowed to set Scope 3 targets, but Mr Jacques on Wedneday reiterated the company’s position that it would not set emissions goals for its customers.
Rio last year announced a partnership with China’s largest steel producer, Baowu Steel, to reduce emissions. The two companies signed a memorandum of understanding under which they would work together to drive down emissions across their steel value chain.
Market Forces executive director Julien Vincent said it was disappointing that Rio Tinto’s climate plan did not address Scope 3, which accounted for 97 per cent of the company’s carbon footprint.
“If they are not doing anything to manage the massive structural shift to the operations as we work towards the Paris agreement, that should be ringing alarm bells for investors,” he said.
Mr Vincent said key questions also needed to be answered about how the company planned to reduce emissions from its direct operations and whether the targets were in line with what was required under the Paris agreement.
Business reporter for The Age and Sydney Morning Herald.