According to a report by Deloitte, constituting approximately 30% of total cash operating costs, energy is one of the biggest expenses for mining companies.
With renewable energy fast-becoming an alternative energy source, mining companies have a material opportunity to use renewables to lower costs, improve safety, reliability and sustainability, and mitigate risks to ultimately gain a competitive advantage. Investment in an effective energy management program, of which renewables are a major component, can drive down energy costs by up to 25% in existing operations and 50% in new mines.
Australia’s Laguna Gold now owns the El Toqui Wind Farm in Chile. Like many mines, Laguna Gold’s El Toqui operation, which produces zinc, lead, silver and gold, is placed far from the regional grid system. To combat the high costs associated with operating its five diesel gensets, Laguna Gold uses the small wind farm as an additional power source. In 2014, total power generation from diesel, hydraulic and wind farm sources at the mine reached 42.24GWh at a total cost of US$6.3M. Of that, the wind farm generated 3.4GWh of power at an average cost of US$21.6/MWh, contributing 8.1% of total onsite power generation. This compared to an average cost of US$254.5/MWh for diesel generation.
Even though energy management practices are becoming more accepted by the sector, there is still resistance from some to integrate renewable energy sources and enabling technologies into their energy management programs. This may be due to perceptions about where renewables stand today in terms of complexity, cost, reliability, and performance.
Realising the full benefits from renewables involves more than installing a solar array or wind turbines, it requires a willingness to rethink operational processes and to reconsider the way work is done.
Renewables have reached a position where they should be examined as part of a broader social and environmental agenda in addition to their financial proposition as a replacement for traditional fuel sources at mine sites. By offering important social, health and safety, and environmental benefits, they create shareholder value.
To realise the fullness of these opportunities, mining companies will need to challenge their capital projects groups and their design teams to take a hard look at renewable technologies, not just as a pure substitute for existing energy sources, but also as a means of doing things differently.
“No matter how they go about it, companies seeking to address the triple bottom-line of social, environmental and financial value owe it to their stakeholders to consider integrating renewables into their energy management strategies,” said Marlene Motyka, Deloitte’s Global Renewable Energy Lead Partner. “The clean-energy movement is global, it is industry-agnostic, and it is irreversible,” she added.