A look at the renewable energy possibilities for the mining sector as it heads towards net-zero emissions.
Ludovic Rollin recalls analysing the cost of installing fixed solar panels in a large renewable project to power a ferronickel processing plant.
Within two years, the same supplier was able to provide superior pivoting solar panels that follow the sun and provide greater power – for the same price as fixed panels.
For Rollin, a senior environmental consultant with SRK Consulting, the solar panel prices highlighted the immense pace of change in renewables.
“Everything in renewables is moving quickly,” he told Australian Resources & Investment.
“Mining companies must be open-minded to the potential of using 100 per cent renewables to power more mines and processing plants. The long-term benefits for companies, communities and the environment are compelling.”
Having just completed a two-year project on using renewable energy to power the furnaces at a ferronickel smelter, Rollin has a timely view on renewables. The processing plant requires 180 megawatts (MW) of energy.
The project team considered solar and energy storage solutions (such as batteries and pumped hydropower storage) and natural gas for a new power plant to replace the existing one. The natural gas was more expensive due to the cost of liquified natural gas and the capital expenditure of implementing such power plant.
The proposed solution for the ferronickel smelter was a 1000MW solar farm over approximately 1000 hectares. The farm would be supported by a large network of continuous battery storage (2400MWh) that powers the plant at night.
Pumped hydro storage required a higher capital expenditure and a longer construction timeline.
For context, the world’s largest battery storage is located in California (Monterey County) and comes in at 1200MWh – half the size of the battery for the ferronickel processing plant. This storage capacity was built and operational in under a year.
The world’s largest solar farms include the Bhadla Solar Parl in Rajasthan, India (2245MW), the Huanghe Hydropower Hainan Solar Park in China (2200MW) and the Pavagada Solar Park in Karnataka, India (2050MW).
Rollin said the solar-farm solution will enable the ferronickel processing plant to source 100 per cent renewable energy within 20 years. The project is current in the feasibility-study stage.
“Our analysis showed that renewables were a cheaper energy source for the ferronickel processing plant than fossil fuels,” Rollin said. “The long-term economics of renewables are attractive.”
Excess renewable energy from the solar farm is another benefit.
“Renewable projects are designed to produce more energy than the required capacity,” Rollin said. “This surplus power can help local communities and create other opportunities for mines.”
Rollin believes renewables can change how mining companies engage with communities.
“In addition to environmental benefits, large renewable projects generate jobs and a clean-energy industry for communities,” he said.
“A solar farm, for example, can change the dynamics of mine closure and leave a positive legacy for the community.”
Overcoming obstacles
The biggest complication to developing 100 per cent renewable energy at mines is outdated thinking, according to Rollin.
“Some companies are set in their ways with plant design,” he said.
“They can’t see how solar, wind or hydro could power the mine. Or they incorporate a small proportion of renewables in the energy mix, when they could get to 100 per cent.”
Rollin believes this approach is partly due to a lack of understanding of potential options.
“There can be resistance to change from people who have designed plants for many years using only fossil fuels,” he said. “Renewables technology is a fast-moving space that requires specialist expertise. The key is getting good advice on what’s available.”
Another obstacle is capital. Nickel and other mines require a large amount of energy to power their smelters 24–7, and that requires an even larger amount of renewable energy to be captured and the installation of costly battery energy-storage solutions.
Rollin said mining companies should investigate financial support.
“There’s a lot of funding available today from industry and government to encourage decarbonisation,” he said. “Attractive rates from lenders for renewables projects and government incentives can help decrease the capital-expenditure cost.”
Community opposition can be another issue. Solar farms require lots of space that can eat into community land; wind farms can have noise issues and affect bird life; pumped hydro requires dams and complex environmental approvals and planning.
“Communities understand the long-term environmental, economic and energy-security benefits of replacing fossil fuels with renewables at mines,” Rollin said. “But large renewable projects can still generate considerable community and political opposition. Mining companies need strong, early community engagement on renewables.”
Mitigating risk, maximising opportunity
Rollin believes mining companies that do not consider renewable energy to power mines – particularly for new projects – face greater risks in the future.
He gave the example of a company that is designing a processing plant for a new mine and will sign a 25-year power purchasing agreement.
“By the time the mine gets through the feasibility-study stage and is built, it could still be using fossil fuels as its main energy sources in 2050,” he said. “That would be a significant risk.”
As more countries commit to a net-zero emissions target, miners will be under greater pressure to decarbonise their operations.
Resource companies that lag on the transition to decarbonisation will have higher emissions throughout their supply chain. That could mean higher capital costs and less support from institutional investors who assess a company’s environmental, social and governance (ESG) performance.
Energy security, Rollin said, is another potential issue.
“The price of fossil-fuel energies could be volatile as the temperature warms and the incidence of natural disasters increases,” he said. “Greater climate variability could also threaten fossil-fuel supplies. Creating renewable energy at the mine, with back-up generators that use fossil fuels, improves the mine’s energy security and its capacity to operate continuously.”
The key may be in examining possibilities for renewables from exploration phase.
“When designing power sources for a mine, companies need to think at least 20–30 years ahead and where the world is heading on renewables,” Rollin said. “Most of all, mining companies need to think outside the box with renewables.
“Clean energy can take mining companies and communities in new directions that create sustainable economic and social wealth.”
Nine tips for good practice in renewable energy planning
Start early: Renewable energy should be a larger part of mine-planning discussions from day one of a project.
Aim for 100 per cent renewable energy: It might not be possible for a particular mine, but aiming for full renewable energy makes sense. This approach is more effective than trying to incorporate a small proportion of renewables into the mine’s energy mix and building from there.
Be open-minded: Recognise that renewable-energy technology is changing rapidly. Understand that cost assumptions for renewables could change as the project is planned, making capital expenditure more feasible at the mine.
Ensure you have the right internal people/external support: Assessment of renewable technology at mines requires expert skills and planning. Ensure your organisation has sufficient internal skills with renewable energy and/or access to external consultants with substantial expertise in the field.
Financiers: Understand the approach of current or potential financiers for the mining project. How do they view renewables in mining? How does implementing renewable energy at the mine affect the project’s cost of capital?
Government support: Determine if there are federal, state or local government incentives that can help decrease capital expenditure for a renewable project. Understand how governments view the potential of introducing renewables at a mine, and what it means for the local community.
Build a long-term case for renewables, beyond the mine: How many jobs will the renewable project create for the local community during and after construction? How many local businesses can the project support? How many local homes could the mine power? What are other potential uses for the mine’s excess renewable energy?
Consider renewables as part of mine closure: Discussions on renewables are important at all stages of the mine, and particularly for mine closure. How could renewables help the nearby community when the mine eventually closes?
Engage early: Renewable projects require significant support from communities, nearby industry and different levels of government. Consider what it means for the project to have and maintain a sustainable development licence to operate, and the importance of community engagement within that process.
SRK Consulting is a leading, independent international consultancy that advises clients mainly in the earth and water resource industries. Its mining services range from exploration to mine closure. SRK experts are leaders in fields such as due diligence, technical studies, mine waste and water management, permitting, and mine rehabilitation.
To learn more about SRK Consulting, visit www.srk.com.
This feature appeared in the December issue of Australian Resources & Investment.
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