Climate Change Risks and Opportunities

As a member of an energy-intensive industry, we understand that we have an important role in contributing to limiting global emissions. On account of this, we have realized that without concerted action, the implementation of further market mechanisms and policies that limit emissions or favour low carbon economies could potentially expose us to risks and additional costs.

We have supported international agreements on climate change. We also support Canada’s and Mexico’s ratification of the Paris Agreement, which brings all countries together to undertake efforts to combat climate change and adapt to its effects. We believe we can make a positive contribution to the achievement of the Paris Agreement’s goals, and we are proactively participating in industry and government outreach activities related to energy and climate change policy.

As a member of the Mining Association of Canada (MAC), we are prioritizing innovative policies and activities to address climate change and are promoting efficient and responsible energy use in our projects and operations.

We are committed to an effective response to climate change, and will:

  • continue to meet or exceed regulatory requirements, and where appropriate, contribute to the development of new regulations;
  • monitor and report GHG emissions consistent with international standards;
  • share and promote good practices of energy efficiency and GHG emissions reduction across the mine sites;
  • promote the development and use of renewable energy where economically viable;
  • monitor the development of new technologies and products, which, if substituted for existing processes, would result in an overall reduction in GHG emissions; and consider options to reduce GHG emissions in the design of new projects and operational upgrades.

We will continue to work with industry bodies, suppliers, governments and civil society in order to participate in a framework that will ensure effective and efficient responses to the global challenge of climate change. We are also working towards setting a new long-term goal to extending our commitment to climate change, based on what we accomplished and learned from our Energy Strategy in 2016.

Related to climate change, there are both regulatory and physical risks and opportunities.

Regulatory Risks and Opportunities

Governments have introduced climate change-related legislation in every jurisdiction in which we operate, including Quebec, Ontario, Mexico and Argentina. We anticipate the potential that our energy related costs could increase, with new requirements to pay for carbon emissions, whether in the form of a tax, a cap-and-trade system, a fine, or the purchase of renewable energy credits. Typically, there is a phase-in period for these costs, and we expect that some of the costs can be offset by increasing our energy efficiency and technological innovation. However, as the regulations phase in, we expect costs could increase at some operations.

This kind of change often results in technological advances and cultural changes, and we are ready for opportunities to advance innovation, improve management practices and form new partnerships between vendors, stakeholders, and research and development entities.

Physical Risks and Opportunities

Climate change has the potential to physically impact our operations. Several potential risks and opportunities are outlined in the table below:

Risk Description Potential opportunities

Sea level rise

Rise in global waterbodies as a result of changes in climate. Our mining operations are not directly threatened by sea level rise. All our operations are located well inland, at elevations of between 100 and 3,000 metres above sea level. We do ship product from a port facility in Mexico, and that facility has the potential for disruptions related to sea level rise.

As familiarization with climate change risks occur, facilities can benefit from regular reviews of any risk areas that are noted by implementing mitigation measures.

Extreme weather events

Extreme events (increased frequency or intensity of hurricanes, increased snow pack, prolonged drought, flooding events, forest fires, etc.) have the potential to disrupt mining operations.

Improvement and advancement of our water balance and modeling tools. Improved predictive modeling and analysis of potential operational impacts. Improved water stewardship.

Resource shortages

Mining and processing depend on the regular supply of consumables such as diesel, tires and reagents to operate efficiently. In the event that the effects of climate change cause prolonged disruption to the delivery of essential commodities, then our production could be impacted.

Active engagement with our suppliers to understand forecasted resource shortages that could impact the supply of products required for our mining activities. Improved planning and increased efficiency of material usage.

Water availability

Various climate change models show potential increases or decreases in precipitation or evaporation at the macro level.

Reduction in water consumption. Innovation studies on improved tailings management systems to potentially result in lower water consumption intensities and smaller facility footprint.

Financial Implications of Climate Change

Financial implications of climate change could result from new requirements to pay for carbon emissions, whether in the form of a tax, a cap-and-trade system, a fine, or the purchase of renewable energy credits. The financial implications can also be positive given that some governments are providing incentives to implement energy efficiency initiatives and renewable or cleaner sources of power. We will continue assessing any positive or negative financial implications due to new requirements and changing power supply options, where applicable. We expect that any financial implications will develop in the next five years.

Energy Consumption

Mining is an energy-intensive business, with energy as a key input and cost for our business. We therefore strive to ensure the most rational use of this resource. For this reason, we are committed to the most efficient management of energy consumption and subsequently greenhouse gas emissions. We promote energy efficiency at all our operations.

Improving energy efficiency is a straightforward and effective way to reduce costs, reduce emissions and enhance energy security. We are committed to continue increasing our energy efficiency in order to succeed in an increasingly competitive and demanding marketplace.

Energy used at our operations is primarily in the form of fuels such as diesel, propane, natural gas and electricity. Fuels are consumed primarily for transport of ore and waste rock (tonnes moved), as well as for on-site power generation, in certain cases. Electricity is purchased for both mining and milling operations.

The distribution of the energy types used in 2017 is shown in the figure below. Further details, by energy type for the last three years, is shown in the table below. Our total energy consumption was essentially unchanged from 2016 to 2017 (a 0.2% decrease) and in the last two years it has decreased by 4%.

Direct and Indirect Energy Consumption (MWhe)1

2015 2016 2017

Diesel [MWhe]

1,900,495

1,903,726

1,818,177

Biodiesel [MWhe]

848

0

42

Gasoline [MWhe]

24,553

18,205

18,578

Propane [MWhe]

113,687

94,164

105,232

Natural gas [MWhe]

129,236

120,365

189,079

Renewables [MWhe]

412

413

413

Explosives [MWhe]

82,185

68,332

61,170

Power from public grid [MWhe]

2,250,615

2,123,684

2,128,211

Total Energy [MWhe]

4,502,031

4,328,889

4,320,902

Site Energy Consumption Within the Organization [TJ] Energy Consumption Outside of the Organization [TJ] Total Direct and Indirect Energy Consumption [TJ]

Cerro Negro

324

373

697

Éléonore

426

901

1,327

Marlin

86

197

283

Musselwhite

473

516

989

Peñasquito

5,194

4,107

9,301

Porcupine

944

776

1,720

Red Lake

448

791

1,239

Total

7,894

7,662

15,555

Energy Intensity

The energy intensity of each of our mines depends on the type and maturity of the mine, depth, haul distance, rate of production, mine development and waste rock stripping ratios, ore characteristics, and type of processing. Energy intensity typically increases as we mine deeper and expand existing operations.

Energy intensity from 2016 to 2017 decreased by approximately 2.2%, primarily due to different initiatives developed at the sites.

2015 2016 2017

Total material moved (ore + waste rock) [t (metric)]

215,258,822

188,449,705

192,329,298

Total direct and indirect energy consumption [kWh]

4,505,630,320

4,332,347,566

4,324,356,639

Energy Intensity (direct & indirect energy / tonne moved) [kWh/t (metric)]

20.9

23.0

22.5

Energy Savings and Initiatives

Energy is essential for operating our mines. Mining, loading and transporting ore, ventilating our mines and the mineral extraction process all consume significant energy. The efficient use of energy, along with access to secure and reliable energy sources, is key to our long-term success. We also recognize responsible energy management as a key focus in addressing climate change issues. Energy savings resulted in a reduction of approximately 35,000 MWhs for the year. Some of these efforts are described below. The energy savings are calculated as compared to baseline energy consumption, where baseline energy consumption is the consumption that would have occurred if the energy savings project had not been implemented.

Élénore key energy optimization initiatives

  • Ventilation-on-Demand technology: In 2017, Éléonore continued with the use of the advanced ventilation-on-demand technology for the underground mine. This technology optimizes the mine air flow distribution in real-time, according to personnel and equipment demand. It reduces air flow when there is no demand and maintains air quality in all active locations. Ventilation-on-demand technology reduces electrical consumption while respecting air flow requirements. It also reduces propane consumption from heating large volumes of air in winter conditions. The implementation of this technology has contributed to savings in energy consumption during the last three years by 190,550 MWh.
  • Surface haulage improvement: Modifications to the road for hauling tailings decreased the distance traveled and allowed trucks to increase the daily tonnes moved, ultimately resulting in a 30% fuel savings. These modifications have contributed to savings in energy consumption during the last three years by 630,000 litres of fuel which is equivalent to 7,300 MWh.

Peñasquito key energy optimization initiatives

  • Acoustic sensors optimize semi-autogenous grinding (SAG) mill operation: The new process-control uses acoustic sensors and process control software to predict and adjust the SAG mill operation, according to impacts on the mill and other main process variables. The acoustic sensors ensure regular and accurate adjustments to mill loading. The solution employs state-of-the-art process-control technologies, stabilizing and optimizing the SAG mill operation. The implementation of this technology has contributed to savings in energy consumption by 9,613 MWh.
  • Control system in feeders: The control logic of the caterpillar and belt feeders were modified in the sulphide plant to prevent the motors from operating unnecessarily when the feeder is not being used, which resulted in energy savings of 111 MWh.

Red Lake key energy optimization initiatives

  • Red Lake Gold Mines (RLGM) Energy Management Program: Evolution of the energy conservation culture at RLGM was the primary focus in 2017. Efforts concentrated on communication, initiation, identification and implementation. A number of opportunities were identified and initiated. Some examples include: LED lighting upgrades, reduced auxiliary fan power consumption, primary ventilation optimization and peak power shedding. These initiatives have already yielded RLGM approximately 3,700 MWh in energy savings and are estimated to yield approximately 7,000 MWh in annualized savings moving forward. The site’s energy conservation program is also estimated to have contributed approximately CAD$10.1M in associated cost savings which resulted in both internal and external awards for leadership in energy management.

Porcupine key energy optimization initiatives

  • Ventilation upgrades: Porcupine Gold Mine (PGM) has recently completed a number of ventilation development projects to ensure safe and profitable production while reducing energy consumption and cost. The projects have increased air flow and decreased electricity consumption at the Hoyle Pond underground mine. The use of more efficient ventilation fans and the installation of variable frequency drives on various fans reduced electricity consumption by approximately 2,100 MWh/yr.

Musselwhite key energy optimization initiatives

  • LED lighting initiative: Musselwhite commenced an LED light project in late 2016, and the implementation of this project was carried out in 2017. LED lightbulbs use 90% less electricity than the incandescent bulbs with a lifespan of approximately 10 times longer than fluorescent bulbs. As of December 31, 2017 Musselwhite had saved approximately 700 MWh of electricity in 2017. It will continue to install LEDs in other areas of the mine.

Greenhouse Gas (GHG) Emissions

We monitor and annually report our direct and indirect GHG emissions both on an absolute (tonnes of GHGs) and on an intensity (GHGs per tonne of material moved) basis. Our emissions calculations are based on the GHG Protocol Corporate Accounting and Reporting Standard and are divided into three categories, depending on the source:

  • Scope 1 (direct) – GHGs are derived from sources that are owned or controlled by the reporting organization. Our principal source of Scope 1 emissions is fuel consumption for: our fleets (used to move material), heating and on site power generation needs.
  • Scope 2 (indirect) – GHGs are generated at sources owned or controlled by another organization. Our reported Scope 2 emissions include purchased electricity.
  • Scope 3 (other indirect) – GHGs include emissions from air transport of mine employees to remote work locations.

At our operations, Scope 1 and Scope 2 GHGs on an absolute basis have been decreasing since 2013; however, during 2017 GHGs were essentially unchanged from 2016 (a 1.1% increase). This increase was driven by the fact that more tonnes of material were moved in 2017 than in 2016.

Scope 3 GHGs on an absolute basis in 2017 decreased by 10% from 2016. Scope 3 emissions were 5,760 tonnes as compared to 6,380 tons in 2016.

Site GHGs-total, scope 3, [t GHG (metric)]

Red Lake

331

Cerro Negro

668

Éléonore

2,383

Marlin

223

Musselwhite

746

Peñasquito

1,409

Total

5,760

As of December 31, 2017, we are not currently involved in any carbon credit or trading system and do not anticipate being involved in any within the next two years.

Greenhouse Gas (GHG) Intensity

GHG intensity represents the GHGs produced for each tonne of material moved. We track GHG intensity across the company to measure our progress as we experience growth or divestment. In 2017 our GHG intensity was similar to the last two years, as shown in the table below.

As our mines mature, production zones tend to move deeper and further from material handling and processing infrastructure. This typically leads to increased emissions intensity, but our energy management effectiveness has helped to mitigate this increase.

2015 2016 2017

GHGs, total direct and indirect (scope 1 and 2) [t GHG (metric)]

1,174,258

1,038,810

1,050,808

Total material moved (ore + waste rock) [kt]

215,259

188,450

192,329

GHG intensity (scopes 1 and 2 / tonne moved) [t GHG (metric)/kt]

5.46

5.51

5.46

Greenhouse Gas (GHG) Emissions Savings

The GHG savings are calculated as compared to baseline GHG emissions where baseline is the GHG emissions that would have occurred if the initiatives had not been implemented. The following projects and initiatives in 2017 resulted in savings during that year of approximately 100,000 tonnes of CO2e:

  • Peñasquito – 100% of power was sourced from an efficient, combined-cycle natural gas power plant, saving approximately 100,000 tonnes of CO2e during 2017 when compared to the emissions that would have been generated if purchasing the same quantity of power from the grid instead. This resulted in Scope 2 GHG savings.
  • Red Lake – As a direct result of the energy saving projects, the GHG reductions achieved in 2017 were approximately 150 tonnes of CO2e and were estimated to have provided future savings of approximately 280 tonnes CO2e per year going forward. This resulted in both Scope 1 and Scope 2 GHG savings.
  • Éléonore – Ventilation-on-demand in the underground mine saved approximately 3,500 tonnes of CO2e. Also, improvements to the alignment of the haul road used for tailings resulted in a shorter haulage distance and thus the consumption of less fuel. This equated to GHG savings of approximately 800 tonnes of CO2e. This resulted in both Scope 1 and Scope 2 GHG savings.

Nitrogen Oxides (NOx), Sulphur Compounds (SOx) and Other Significant Air Emissions

Mining activities have the potential to release different types of airborne emissions into the environment. These emissions – primarily nitrogen oxides (NOx), sulphur compounds (SOx) and particulate matter (mainly dust) – are often regulated by national and local legislation. Additionally, Goldcorp sites often have site specific permit conditions for control of these emissions.

The table below shows the emissions of significant air pollutants. 2017 was the first year that the Peñasquito mine in Mexico began reporting on air emissions from mobile equipment activities such as loading and hauling. All our operating mines are now included in our reporting of our annual air emissions. Measurements were derived from multiple methodologies including direct measurement, calculations based on site-specific data and calculations based on published emissions factors and estimations.

2015 2016 2017

Carbon monoxide [t]

1,860

1,790

4,900

Oxides of nitrogen [t]

1,830

2,430

6,280

Sulphur dioxide [t]

20

40

60

Particulate matter <10 µm [t]

1,160

740

10,000