Iron Ore Company of Canada: Greenhouse gas reduction efforts in the current regulatory environment

The Canadian government ratified the Kyoto Protocol in December 2002 and, prior to ratification, committed to equitable distribution of the burden of implementation. The Federal government's Large Final Emitters group is working with industry to develop covenants that will consider the unique nature of the company's operations and not unreasonably burden any one sector or company. Ensuring equitable distribution must consider local, national and international issues. From a Canadian iron ore producers perspective, the fact that most of the iron ore production in the world is in countries that have no Kyoto commitment is a critical issue. Another issue unique to this sector is the increased addition of fluxing agents in iron ore pellet production which has shifted some process related greenhouse gas emissions from steel producers to iron ore producers. While the objectives of the Kyoto Protocol are primarily environmental, the economic implications for Canadian industry are not trivial. For decades Canadian companies have been actively improving energy efficiency and reducing greenhouse gas emissions to maintain a global competitive position. Production of iron ore pellets is an energy intensive process and the Iron Ore Company of Canada (IOCC) is the largest Canadian producer. In 2002 IOCC identified energy and Kyoto Protocol implementation as critical risk factors for their organization and appointed a full time Energy Manager. In January 2003, IOCC initiated a comprehensive process for identifying energy cost reduction opportunities and established an Energy Master plan. This process included: