Nature and Biodiversity

Natural capital accounts: What are they and how can mining companies use them to measure and value nature

Mining machinery in a mine

Mining companies have a responsibility to preserve and enhance the ecosystems they operate in Image: Shutterstock

Mischa Traynor
Vice President Environment, BHP
  • The metals and mining sector is central to the climate, nature and energy nexus.
  • Mining companies can better understand and manage their environmental footprint by measuring the extent, condition and value of their natural assets over time using natural capital accounts (NCA).
  • NCA do not put a price on nature so that it can be bought and sold, they recognize its societal and economic value so that companies can better use this in decision-making and reporting.

The metals and mining sector is at the centre of the climate, nature and energy nexus.

The World Bank estimates that the production of energy-critical minerals will increase 500% by 2050 to meet the growing demand for clean energy infrastructure, such as wind power and electric vehicles.

The increasing need for more minerals and metals requires more mining activity, and this can lead to pressure on ecological systems and the environmental, social and economic benefits they support. More than half of the world’s economic output – $44 trillion of economic value generation – is highly or moderately dependent on nature and the biodiversity that underpins our natural systems. Rapid declines in biodiversity, therefore, represent a significant threat to humanity and economic stability.

One path mining companies can take to better understand and manage their environmental footprint is to measure the extent, condition and value of their natural assets over time using natural capital accounts (NCA). These accounts can help mining companies better plan, monitor, and assess the nature-related outcomes of their actions and identify planning opportunities to contribute towards nature-positive outcomes for the world.

In a first for the mining industry, BHP has completed a pilot case study on the application of Natural Capital Accounting principles in the mining sector. The Natural Capital Accounting for the Mining Sector: Beenup Site Pilot Case Study (Beenup Case Study) examines the natural capital at BHP’s rehabilitated Beenup Mineral Sands site in southern Western Australia—where BHP continues to manage the ecosystem assets.

Natural Capital Accounting (NCA) in the mining sector

The pilot NCA developed as part of the Beenup Case Study compiles information on the extent and condition of the natural assets at the site and identifies the potential to contribute towards ‘nature-positive’ outcomes during and after rehabilitation activities.

Using a range of valuation approaches, the financial year 2020/2021 natural capital balance sheet shows, for illustrative purposes only, that Beenup’s restored ecosystems could have an estimated net present value of AUD$30-40 million.

The annual ecosystem service flows (the relationship between supply and demand on an ecosystem, such as the provision of food and water or supporting nutrient cycles and oxygen production) are significantly positive.

For example, the potential annual societal benefits associated with the removal and storage of carbon dioxide at the site (if it were eligible through the current legislative regime and markets) are estimated to be approximately AUD 1 million per annum. Because the wetlands at Beenup are constructed systems, the potential of carbon dioxide removal and storage is also increasing over time due to the gradual build-up of organic material located across the site's surface.

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Image: BHP
Image: BHP

Placing a value on nature is critical to the protection of biodiversity

The Beenup NCA compiles information on changes in the ecological status of the site, including the stock of ecosystems, species and habitats over time and the ecosystem service flows that these asset stocks support. In understanding the stocks of assets that we have under stewardship, we can support improved ecological and socio-economic outcomes.

The BHP Beenup site has already played a role in providing genetic material for a threatened species breeding programme. It is also being used for the translocation of species as part of ongoing recovery plans that the State Government of Western Australia is implementing, and consideration is being given to the potential to relocate and breed other threatened fauna.

In addition to the ecological outcomes, the wetlands within the Beenup site contribute to improved socio-economic outcomes, including the water quality of the nearby Blackwood River and Hardy Inlet, and a range of compatible economic activities, such as beekeeping and seed collection, have been considered based on the NCA information.

Early seed collection ensured that the rehabilitation of flora was conducive to the former environment Image: BHP
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Data is key to unlocking successful NCA

One of our key learnings from the pilot study is that having the ‘right’ data is important.

Some aspects of natural capital reporting already occur via operational and financial reporting in the mining sector, such as amounts and changes of the non-renewable mineral resources and reserves. BHP’s research efforts, however, demonstrate that renewable natural assets (natural elements that can be regenerated or replaced when consumed at a location) can be and should be included in NCA.

A renewable asset might refer to natural elements on a site, such as water, minerals, energy, timber or fish, which will renew when exploited. Think of harvested fish stocks, solar energy, depleted water bodies, or polluted air that can withstand pressures (up to a point) and return to good ecological status if allowed to be fully renewed (hence the term renewable resources).

The Beenup site is in a global biodiversity hotspot surrounded by a national park and two sensitive receiving catchments (Blackwood River and Scott River). Hence, the regulator had to implement a high-intensity monitoring and data acquisition programme for the mine during its operation. Combined with a thorough understanding of the risks associated with the mine, additional studies were commissioned that provided data typically excluded from typical operational reporting.

Mining monitoring programmes and datasets on renewable resources have been driven historically by environmental approval and regulatory reporting requirements. For successful environmental stewardship in the future, mining companies would need to review current programmes to ensure data capture is appropriate for developing and using NCA. As the industry grows more holistic monitoring and data collection, modern techniques, such as satellite imagery, aerial photography and drone surveys, will be increasingly valuable.

Image: BHP

Supporting societal, ecological and economic prosperity with natural capital accounts

While there is still a significant challenge ahead in developing consistent and comparable corporate natural capital accounts, the Beenup Case Study presents an opportunity to start a conversation about the benefits of NCA in the mining sector and beyond. This conversation will become more important as companies increasingly disclose nature-related impact and dependency information aligned with initiatives, such as the Global Biodiversity Framework and the Taskforce on Nature-related Financial Disclosures (TNFD) framework. The intention of NCA is not to commodify or put a price on nature so that it can be bought and sold but rather to recognize its societal and economic value so that companies can better recognize this in decision-making and reporting.

Tools, such as NCA, are one of the enablers companies and countries that manage large portfolios of natural assets need for better decision-making if society is to halt and reverse current trends in nature loss by 2030; and manage environmental impacts during the rapid increase in minerals extraction to support the energy transition.

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