Greenhouse Gas Emissions Calculation

Methodology, 2023

Introduction

Carbon footprint calculation is a key indicator of our climate goals. Starting from 2023, we have calculated the carbon footprint of our company (Sotkamo Silver Oy) following the greenhouse gas protocol (GHG Protocol) of the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) and supporting guidelines.

To obtain comparable data, greenhouse gas emissions have also been retrospectively calculated for 2022. The calculation method, boundaries, and data used are presented in this document. We report greenhouse gas emissions annually as part of our sustainability report. We update the methodology annually and report significant changes in the sustainability report.

We are committed to the Paris Agreement's goal of limiting global warming to 1.5 degrees Celsius. We plan to take actions to achieve carbon neutrality by 2035.

BOUNDARIES USED

ORGANIZATIONAL BOUNDARIES

We follow the principle of operational control in our calculations. This means that we consider greenhouse gas emissions from companies in which we have ownership or operational control. Operational control means that our company has full authority to introduce and implement our policies in that operation. Using the operational control approach, we include 100% of emissions from operations over which we have operational control.

Contractors are a key part of the operations at Sotkamo silver mine. The contractors are committed to complying with our contractual terms, which we monitor. It can be stated that our company has operational control over the contractors' activities on the mine site but does not have ownership. It should be emphasized that operational control does not mean that our company has the power to make all decisions regarding the contractors' activities on the mine site. Following the mining industry's general practice, we include the Scope 1 and 2 emissions from contractors' activities on the mine site in our own Scope 1 and 2 calculations. This differs from the GHG Protocol's operational control consolidation principle but considers the industry's characteristics.

OPERATIONAL BOUNDARIES

Operational boundaries refer to the emission sources that we have considered in our calculations. The purpose of determining operational boundaries is to:

Identify which emission sources are included
Classify emission sources to avoid double counting
Provide stakeholders with more useful information
Contribute to managing greenhouse gas emission risks and opportunities in the value chain.

Sotkamo Silver's calculation covers Scopes 1 and 2 and the most significant categories for Scope 3. The categories considered are presented in Table 1. Market-based emissions from purchased energy have been calculated using residual distribution in 2022 and 2023, which reflects the production distribution of unverified electricity consumed in Finland and the average carbon dioxide emissions from electricity production. Residual distribution has been used because supplier-specific emission factors have not been available. Location-based emissions from purchased energy have been calculated using regional energy production emission factors.

Table 1. Categories considered (2022-2023)

Category	Considered	Not considered	Not material
Scope 1
Direct process emissions (Explosives)	X
Other direct process emissions	X
Own and leased vehicles	X
Scope 2
Purchased electricity	X
Scope 3 – Upstream
Purchased goods and services	X
Capital goods			X
Activities related to fuels and energy	X
Transportation and distribution	X
Waste generated by operations	X
Business travel		X
Commuting	X
Leased assets			X
Scope 3 – Downstream
Transportation and distribution	X
Processing of sold products			X
Use of sold products			X
Treatment, recycling and disposal of sold products			X
Leased assets			X
Franchise			X
Investments			X

DATA COLLECTION AND VALIDATION

A form has been prepared for the collection of primary data, i.e. consumption data of emission sources included in the calculation, in accordance with the set organizational and operational boundaries. For each emission source, its representativeness (e.g., Sotkamo Silver or service provider), usage, and consumption in the inventory year have been determined. The data is collected on a mass basis, and only the services included in the calculation are collected as euro-based information.

SELECTION AND VALIDATION OF EMISSION FACTORS

Secondary data, i.e. emission factors, are determined for each emission source, and necessary updates are made annually. The selection criteria for emission factors are technology, geographical representativeness, and publication year. If necessary, conservative and relevant assumptions are made. The sources of emission factors used by category are presented in the table 2.

Table 2. The sources of emission factors used.

Emission source	Source of emission factor
Fuels – Machinery and Equipment	DEFRA, Statistics Finland
Fuels – Own Energy Production	DEFRA
Direct Process Emissions (Explosives)	The Norwegian EPD Foundation
Purchased Electricity	Fingrid, Energy Authority
Purchased Goods	Ecoinvent 3.8
Purchased Services	Envimat
Activities Related to Fuels and Energy	DEFRA
Transportation and Distribution (Upstream)	DEFRA
Waste Generated by Operations	Ecoinvent 3.8, WWF
Commuting	Liikennefakta.fi
Transportation and Distribution (Downstream)	DEFRA

UNCERTAINTIES AND EXCLUDED SOURCES

SCOPE 1

In the calculation, uncertainties are related to direct greenhouse gas emissions from processes. Minor greenhouse gas emissions are expected from the enrichment process, but they have not been determined. The estimated greenhouse gas emissions from the enrichment process will be determined during 2024. For explosives, the volumes of explosives used in open-pit mining are estimates instead of data measured in the 2022 calculation.

SCOPE 3

The purchased products included in the calculation cover the most significant portion of annual purchases. Data on mining equipment is not currently available, so they are not included in the calculation. In addition, emission factors have not been determined for three purchased products. However, the impact of deficiencies related to purchased products on greenhouse gas emissions has been assessed as minor. The coverage will be improved during 2024 by improving primary data management.

The category of purchased services includes cleaning and textile services. Other services have been excluded from the calculation due to the availability of primary data. However, the impact of deficiencies related to services on greenhouse gas emissions has been assessed as low.

Business travel has not been considered in the calculation. There is very little business travel in our company, and it is estimated to have a negligible impact on greenhouse gas emissions. Business travel has been excluded from the calculation due to the availability of primary data.

The coverage of Scope 3 categories will be improved during 2024 by improving primary data management.

Sources

THE GREENHOUSE GAS PROTOCOL - A CORPORATE ACCOUNTING AND REPORTING STANDARD REVISED EDITION
GHG PROTOCOL SCOPE 2 GUIDANCE - AN AMENDMENT TO THE GHG PROTOCOL CORPORATE STANDARD
CORPORATE VALUE CHAIN (SCOPE 3) ACCOUNTING AND REPORTING STANDARD - SUPPLEMENT TO THE GHG PROTOCOL CORPORATE ACCOUNTING AND REPORTING STANDARD
SUPPLEMENT TO THE GHG PROTOCOL CORPORATE ACCOUNTING AND REPORTING STANDARD - SUPPLEMENT TO THE CORPORATE VALUE CHAIN (SCOPE 3) ACCOUNTING & REPORTING STANDARD CO2 CH4 SF6 N2O HFCS PFCS PURCHASED ELECTRICITY, STEAM, HEATING & COOLING FOR OWN USE PURCHASED GOODS AND SERVICES CAPITAL GOODS FUEL AND ENERGY RELATED ACTIVITIES TRANSPORTATION AND DISTRIBUTION WASTE GENERATED IN OPERATIONS BUSINESS TRAVEL TRANSPORTATION