Dec '14/Jan '15

Winds of change blow for renewables

Alternative energy sources are playing a larger role in miners’ strategies

By Kelsey Rolfe

The Renewables and Mining Summit and Exhibition is only in its second year, but with several renewable energy projects commissioned at mine sites this year, the focus at the event has changed in short order.

While the 2013 conference revolved around whether alternative power solutions like solar and wind farms, natural gas, and fuel cells were feasible, this year “there’s no question of that,” noted Adrienne Baker, director of conference organizer Energy and Mines, in her opening remarks at the event held in October in Toronto.

Mining companies are demonstrating that renewable energy projects are doable and beneficial – especially for mines located in remote regions – and they are becoming increasingly popular. The central question now, Baker suggested, is how much of a role renewables can play in a mine’s energy mix, and what the production cost will be.

Representatives from Glencore’s Raglan mine and its partner Tugliq Energy explained how the northern Quebec nickel and copper mine plans to cut 2.5 million litres of diesel fuel from its annual consumption of 60 million litres through the installation of three wind turbines and a hydrogen fuel cell storage system. (The mine is the highest diesel consumer in the Arctic, due to its lack of access to grid and natural gas power.) The first three-megawatt (MW) wind turbine was installed in late August.

The cost of renewable energy is becoming more competitive, and in remote locations like parts of Africa, where grid power is prohibitively expensive or simply not available, solar and wind farms are being touted as the most viable options.

Ron Halas, Iamgold’s commercial vice-president of South America, highlighted the benefits of the company’s recent implementation of a massive solar plant at its open-pit Rosebel gold mine in Suriname. A combination of the increasing need for power to mine the lower-grade ore and no additional hydroelectric capacity at Suriname’s major hydro facility prompted Iamgold to partner with the Suriname government to build a 5 MW solar farm on site. The project was completed below budget, at just under $12 million, in July and is now operational.

The farm, composed of more than 16,000 panels, makes up a small amount of the mine’s power use: of the 38 MW per day the mine uses, it draws on the solar plant for 1.4 MW. “I’d be lying if I said it’s our main source of power,” Halas said, but added that “it’s quite an environmental saving as well as a cost saving for us.” Iamgold plans to implement a similar solution at its Essakane gold mine in Burkina Faso, and has set a goal to have renewable energy constitute 15 per cent of its global energy mix in three to five years.

Several speakers suggested that two cost issues are preventing more mining companies from integrating renewables into their power mix. The first is the upfront capital investment. For example, Glencore expects the total costs for its trial project at Raglan to come to $22.6 million.

“I’m fond of telling people that renewable energy is free, it’s just really, really expensive on the first day,” joked Robert Lydan, the director of solar and wind at Hatch, in his session on integrating renewables. Lydan and multiple speakers in other sessions pointed out that most companies would prefer to allocate capex to mining activities rather than to a power project with a large initial price tag.

The second cost challenge is the conflict between mine life and power project life. Wind and solar farms, with life spans of roughly 20 years or more, can outlast many deposits by a considerable margin, making the economics of renewable projects appear uneconomical, especially if the mine would be the sole user of the power project.

Some speakers suggested the solution lies in innovative power purchase agreements (PPAs). One example is the recently signed agreement between Rame Energy and Mandalay Resources, highlighted at the conference, for three recycled 600-kilowatt wind turbines to help reduce the reliance on diesel at Mandalay’s Cerro Bayo underground mine in southern Chile. (The turbines were previously used in Europe but are durable enough to continue working in Chile.) Cerro Bayo’s estimated mine life is five years, while the wind farm is expected to last 20. Rame and Mandalay handled the challenge by agreeing on a PPA that would see Mandalay pay Rame a fixed price for access to wind-generated power for five years, with an option to renew afterward. If, however, Cerro Bayo’s life is not extended, Rame will remove the wind turbines.

Others see long-lasting renewable power projects as a chance to leave a positive legacy in isolated communities that previously had no grid connection. “Within these communities, many of them being remote, energy is, in itself, an issue,” Lydan said. “That [renewables] can support the communities that these mining projects are situated in is an enormous value.”

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