Mining companies are increasingly turning to electrifying their large vehicle fleets to clean up mine operations as they brace for an expected boom in demand for materials used to manufacture renewable energy technologies.

Miners worldwide are starting to set targets to reduce their environmental footprint amid increased scrutiny from a wave of investors supporting the global transition to cleaner forms of energy. Ideanomics Inc. CEO Alf Poor said in a recent interview that the fintech company is targeting industries such as mining that are transitioning from dependence on petroleum-fueled vehicles to equipment that runs on electric power. The company uses a "Sales to Financing to Charging" business model that connects fleet operators to electric vehicle manufacturers and other services.

"We're not interested in competing with Tesla and Ford Motor Co. and Daimler AG trucks, or your know, Peterbilt Ab, or any of these types of people," Poor said. "We're not looking to disrupt automotive. Rather, we're looking to take advantage of the switching energy demand and what clean energy can offer. That's led us into some very interesting discussions around the world of mining, which is a heavy truck play, which obviously isn't friendly to the environment."

Ideanomics, founded in 2017, has pulled together a consortium of corporate debt buyers to finance commercial electric vehicles, batteries and electricity at group discounts. Ideanomics also recruits utilities to take on some of the financing risks as they stand to be one of the beneficiaries of the resulting increase in electricity demand.

The company is focusing its initial electric vehicle efforts in China, where high rates of pollution have led to regulations that are driving accelerated electrification of commercial vehicle fleets.

Ideanomics markets wholesale electricity from its utility and charging network partners to commercial fleet customers for charging their new vehicles.

Poor said Ideanomics plans to refine its business model and expand in South Asia, the United States, Europe and elsewhere.

So far, just eight of 30 of some of the largest companies by market capitalization recently surveyed by S&P Global Market Intelligence had set net-zero emission goals in line with the ambitions of the 2015 Paris Agreement on climate change. The mining sector is linked to about 28% of global emissions when including emissions from the end use of their products, a January estimate from McKinsey & Co. found.

"To date, mining companies have viewed sustainability mostly through a local lens, but achieving a 1.5°C to 2.0°C pathway will require significant global action," Oliver Ramsbottom, a partner at McKinsey & Co., said in a July interview. "Several big mining companies have installed their own sustainability committees, signaling that mining is joining the wave of corporate sustainability reporting and activity."

One of the biggest challenges for electrifying the fleet is the large amount of power that mining applications require. Until recently, diesel trucks were the only answer for providing the torque needed to do the job, Poor said, but that is changing with improved electric vehicle technology.

"You know, these [diesel vehicles] can do as little as a mile a gallon on those steep slopes that have to go up," Poor said. "That's a tremendous amount of fuel use. I think for anybody who's driven an EV passenger vehicle, the torque is instant. I think that's one of the things EV offers that no other vehicle type that had been considered until this time can really deliver, which is that instant power that they need."

With energy making up a substantial portion of many mines' overall costs, electrification offers a way to simultaneously reduce spending and increase a company's social license to operate.

"The world is already ushering in a new energy system, where cleanly generated electricity will power almost every aspect of our lives," Paul Mitchell, a global mining and metals leader with consulting firm EY, said in a July 2019 news release about a survey on electrification efforts in the industry. "The mining sector is on the verge of an electrification revolution, driven by significant cost reduction potential, lowered carbon emissions and improved worker health benefits."

Poor sees a tipping point coming in the next five years in which companies will largely have electrified mining vehicle fleets in China. The executive said that could take longer in places such as the U.S., where environmental issues are less visibly apparent and political influence could slow the transition.

"I don't think, at this point, I can see a particularly good argument for remaining with diesel-based vehicles in the heavy truck industry, except for the current investment that you have in your fleet, and the lifetime that's left in that particular investment that you have," Poor said. "The big problem right now is there's a lack of information. ... If you're a commercial fleet operator, whether you're in China or you're in the U.S., it's very difficult to see the wood for the trees in terms of getting access to information."