Powering the pits

Materials World magazine
1 Aug 2018

As pressure mounts on mining companies to improve their environmental image, are renewable sources of energy the answer? Kathryn Allen asks Charles Hendry, former Minister of State for the Department of Energy and Climate Change. 

While the mining industry doesn’t spring to the public mind as the most environmentally friendly, many of the big players are investing in energy from renewable sources to help reduce costs, limit environmental impact, and improve their image, as discussed in Materials World October 2016

With a minimum target of a 5% reduction in carbon emission intensity by 2020 on 2016 levels, Glencore has invested in renewable sources, implementing a second wind turbine at its Raglan Mine, Canada, due to start generating electricity in September 2018. The first wind turbine at the Raglan Mine saved 2.2 million litres of diesel in 2017, according to the company’s 2017 Sustainability report.

Rio Tinto is also investing in renewables. With 74% of its total energy coming from hydro, nuclear, and renewable power sources, the company claims it is on track to meet its target of reducing greenhouse gas emissions intensity by 24% between 2008 and 2020.  

According to the company’s Climate Change Report, a wind-diesel hybrid system at its off-grid Diavik diamond mine, Canada, offsets about 4.5 million litres of diesel per year, generating 11% of the site’s operation energy needs. Rio Tinto’s aluminium smelters are also powered by renewable sources – with the company claiming that 100% of the energy used to produce aluminium comes from hydroelectric power. Excess power is also transferred to local communities during peak times. But what are the benefits and drawbacks of these investments? 

Exploiting renewables 

Using energy from renewable sources in the mining sector is discussed in two reports from Deloitte, a multinational professional services network. The bottom line: Driving value through energy management in mining states that ‘companies can reduce their energy consumption by 15–20% in existing mines through an effective energy management programme, and up to 50% for new mines by rethinking the mine design with energy management in mind’. The report refers to those investing in energy from renewable sources as part of this management programme as ‘the more progressive organisations’. 

Benefits of investing in these sources, according to the report, include managing uncertain future fuel prices and, as renewable installations can outlive mines and be handed over to local communities to run, improving the company’s image, and helping it keep its social licence to operate. 

The follow-up to this report, Renewables in Mining: Rethink, Reconsider, Replay, also covers benefits of investing in renewable sources. It states that ‘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’. 

Charles Hendry, former Minister of State for the Department of Energy and Climate Change, UK, told Materials World, ‘Every big company – and to be involved in the mining sector you’re going to be a larger company – is looking at how it can improve its energy efficiency, reduce the amount of fuel it uses, and do things in a more efficient way. That will continue, it’s driven by the economics of it [...] and I think people have been generally surprised across the economy at the extent to which energy efficiency has played a very significant role over the last two decades.’

Hendry continued, ‘What we’re finding now is that renewables are getting more efficient. We’re getting a much more predictable, reliable source of energy generation and the national grid has been able to manage higher levels of penetration than we thought would be the case. With this, costs come down dramatically, for offshore wind for example, going back less than a decade, they were more than twice what they are today – we’re seeing a faster fall than anyone thought was achievable, and that means there will be a faster roll out of those technologies in the future. The leading mining companies see this happening, so they’re looking how can they make the best use of it for their own advantages.’ 

Secure supply

As well as the benefits of alternative energy sources, Hendry highlighted the risks of continuing to rely on imported power. ‘There is an uncertainty that comes inherently with imported fuel products. If you’re looking therefore at how to generate power domestically, nuclear is part of that equation, but that’s a slow process to build new plants and replace the old ones, and renewables are part of harnessing that domestic supply. 

‘It’s inherently more secure, than something that is imported, and the price is predictable. We know what the price of an offshore wind farm will be for the next 10–15 years. That may be higher than what we’d like it to be, but it’s coming down, and it’s completely predictable, whereas if you’re relying on hydrocarbons, it isn’t.’ 

Hendry added, ‘My approach has always been that the best way of delivering security is having a balance – having gas, nuclear, and renewables in the system. It’s diversity that delivers security.’

Hedging your bets 

The barriers to renewable investment are also discussed in Deloitte’s reports, with a lagging perception of renewables – including their cost, reliability, performance, and technology – one of the foremost. Others include a reluctance to invest the initial capital to cover upfront costs, and organisational issues, as ‘responsibility for energy procurement and consumption is often fragmented across the organisation, and frequently no individual or group is looking at energy management from a broader integrated perspective’. 

Discussing barriers to exploiting renewable sources, Hendry said, ‘The biggest issue is that, because the change [a movement towards a low-carbon economy] is happening quite quickly, people think that if they chose a particular type of technology/approach now, then in five years time, they’ll look back and think that was the wrong one. There’s a tendency for people to think if they hang on a little bit longer, a better technology will have come forward or that technology will be much cheaper, but at some point they have to get on the bus. Companies have to say we can’t put it off anymore.’ 

Hendry suggests that, since these companies are generally big enough to be investing over a long period of time, it makes sense to start the process now, building up expertise. ‘This is never going to be done in one big step, but lots of smaller ones,’ he adds. 

Sensible on all fronts

Despite these barriers, the follow-up report claims that ‘all four of the world’s biggest miners plan to source more of their energy from renewables, mainly to manage costs, obtain security of supply, and to curb emissions intensity’.

Hendry acknowledged the momentum behind this move towards a low-carbon economy, claiming that it is not just triggered by environmental reasons, but that it makes financial and business sense too. ‘There is a real economic case being developed for how the mineral processing industry can work in a much more sustainable, green way’, he said. 

To read The bottom line: Driving value through energy management in mining, visit bit.ly/2mCx6G9 

To read Renewables in Mining: Rethink, Reconsider, Replay, visit bit.ly/2l41omg