Renewables: Helping the Mining Sector meet the Energy Challenges
With the growing concerns over rising energy costs and security, the mining industry which had previously relied on fossil fuel sources have now turned to renewable energy sources. Coupled with rising fuel prices, commodity prices currently are highly volatile making profit margins narrower and with the global demand expected to increase 36% by 2035, mining companies are looking into renewables to manage costs in a sustainable manner. In order to meet the demand, mining companies are also expanding into remote areas especially in growing emerging markets to explore untapped resources where they face problems with unreliable power supply. ‘In most instances, grid-connected electricity needs to be supplemented with on-site generation, typically large-scale diesel generation, resulting in a dependency on diesel fuel. The more remote the mine, the more likely off-grid power solutions are required.’ (http://www.ey.com/Publication/vwLUAssets)
In response to the above issues, the international mining sector is implementing energy saving strategies and making investments into renewable energy infrastructure. Renewable energy infrastructure includes construction of renewable energy generating assets or contracting through power purchase agreements. ‘US$6 trillion will be invested in renewable energy infrastructure by 2035, compared to just US$1 trillion in nuclear and US$2.75 trillion in conventional energy.’ (http://www.ey.com/Publication/vwLUAssets)
With extensive mining activities occurring in remote areas of Mali, Mauritania, Senegal, Ivory Coast, Guinea, etc. the demand for renewables has shot up with miners not connected to the electricity grid looking for a sustainable option. This has led to a reduction in solar and wind energy costs, making renewables more attractive to the extractive sector ‘… as part of a broader strategy to lock in long-term fixed electricity prices and availability while minimising exposure to regulatory changes, market pricing and external fuels.’ (http://www.ey.com/Publication/vwLUAssets) Mining giants such as Rio Tinto have invested in a wind farm at Diavik Mine in Arctic conditions aiming to generate 10% of its mine demand form renewables and expecting to reduce its diesel use and co2 emissions. Anglo American similarly has stated that 12% of its energy is sources from renewables and they are currently working on utilising biomass, wind and solar projects to increase that share.
Countries Focussing on Renewables:
Zambia: Mining accounts for the greatest electricity consumption in Zambia and with the output capacity of Zambian expected to double, significant steps are being taken towards renewable power. The country expects to triple its power output to 6,000 megawatts (MW) in 2 years through expansion of solar energy. Construction of the US $60 million 54 megawatt (MW) Kafue solar power plant has started in Zambia to tackle the country’s power deficit and promote clean energy. ‘The ZDA has also issued an investment licence to Sunbird Investments Ltd which was looking to put up a $150 million biofuel plant…’ (http://www.zda.org.zm)
Mozambique: With the increase in mining activities in the country and more companies entering the market Mozambique aims to develop their renewable energy portfolio by attracting foreign investment and hoping to raise £500 million. This initiative is undertaken to ensure the country has adequate access to electricity within a period of 15 years using hydro and solar power.
Burkina Faso: To meet the power requirements of the IAMGOLD Essakane SA gold mine in Burkina Faso a 15 MWp solar farm will be constructed by EREN Renewable Energy (EREN RE) and its partner African Energy Management Platform (AEMP). The project will cost more than USD 20 million but will enable the mine to significantly reduce its fuel consumption and carbon emissions. This solution is extremely efficient and sustainable as the mine is currently off-grid and relies solely on costly and carbon intensive diesel power.
Senegal: The Santhiou Mekhe solar power plant basedin Senegal is said to be the largest in West Africa and was built in line with the government’s goal to renewables share to 20% in the energy mix.
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