Our world is changing and the global transition towards renewable energy is driving a surge in demand for metals. According to the International Energy Agency, for example, electric vehicles (EVs) sales alone are expected to reach 125 million by 2030. And with each EV requiring approximately 83 kg of copper, consumption could rise 50% over current global levels.
Meeting increased demands for copper – as well as other base metals like lithium, cobalt and nickel used in battery technologies – will require a massive increase in exploration, mining, processing and refining. As a result, coupled with the challenges of deeper mines, we can expect intensified energy consumption for mines, mills and smelters. With the sector already pegged as a leading carbon emitter, companies should be asking how to leverage renewable resources to contribute to a low-carbon future. Renewables can offer many benefits. They can:
- Improve economics: The cost of energy represents up to onethird of a mining company’s total cost base, making it a keenly managed component of operations. With the costs of wind and solar generation and energy storage falling rapidly, renewables – or a mix of fossil fuels and renewables – can reduce operation costs driven by the demand for power.
- Diversify energy sources and reduce dependency on imported fuels: As global prices for oil and gas continue to fluctuate, renewables can lower the exposure to oil and gas prices, import duties and inbound logistics risks.
- Contribute towards a low-carbon economy: Like many industries, mining and metals companies are getting called on by key stakeholders to reduce carbon emissions. As renewables anchor on local sources of non-fossil fuels, swapping diesel for electricity powered by renewable sources is a way to commit to a low-carbon future, while creating local jobs for installation and maintenance.
While many mining companies are known to have considered such an energy mix, the industry has seen minimal adoption to date. Operations still largely rely on fossil fuels to run equipment and electricity for processing, and mines in remote areas are likely to use diesel power generation. As companies start to consider the potential advantages of renewable energy, we need to think through what’s required to get there. Here are five things mining and metals companies need to consider: • Understand the feasibility: Solar, wind, hydro and biofuels are all renewable resources, but may not all be feasible options for a given operation. Location, infrastructure, regulations and community relations are all factors that need to be considered when exploring sources for renewable energy.
- System changes: New operations will not have a legacy energy system to replace, which will make decisions easier if the feasibility is positive. But, for legacy systems that require retirement or co-generation, change design and management is required to provide assurance that the power is reliable and appropriate for the existing plants and equipment.
- Integration of multiple sources and back-up strategies: If an operation loses power without a back-up, it could also lose days of productivity and put people at risk. Assessing the integration of fossil fuels and renewable energy sources could be critical for reliability of the power systems.
- Attracting local skills and talent: For renewables, local talent can be hired and trained to execute projects, which create new skill sets beyond the traditional mining operations ones.
- Explore alternative financing options: Independent Power Producers (IPP) have been present in the sector offering to raise the capital to develop and operate renewable power plants, in return for power offtake agreements. Such mechanisms, when well thought out, improve the likelihood of adopting renewables as a beneficial energy source.
As the industry looks at options to become more energy efficient, cut costs and contribute to a more sustainable mine, companies agree that renewables offer opportunities of a new dawn. Every journey towards renewable energy will be different, but in the end will present a viable channel for the mining sector to explore, mine and process mineral resources while meeting environmental and social expectations.
THEO YAMEOGO is the EY Canada mining & metals co-leader. He is based in Toronto. For more information, visit ey.com/mining.