Are you ready for a low-carbon world?
Net zero carbon mining is not a question of “if” but “when.” Most of the majors – including Glencore, Vale, BHP and Rio Tinto – have announced pledges to become net zero carbon miners by 2050. The majority of majors have committed at least $1 billion each towards climate change mitigation, mainly through electrification, renewable energy, and energy management investments.
Usually at least 80% of a mine’s carbon footprint comes from energy, so energy management is key to any miner’s effort to reduce its carbon footprint. With the federal government recently announcing that the carbon price will rise annually from $40/t CO2e currently to $170/t CO2e in 2030, the business case for net zero carbon mining has become much more attractive.
Clearly, advanced energy management, carbon management, and carbon neutrality are a growing trend in mining. We also see this trend in some consumer-focused companies, such as Microsoft, which has announced: “By 2030, Microsoft will be carbon negative, and by 2050, Microsoft will remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975.”
Many of the best and brightest young workers like the idea of being part of something like that. Investors, bankers, managers of private capital and political leaders like the idea too, or at least can see which way the wind is blowing. They have targets and goals to meet, and increasingly those have to do with limiting greenhouse gas emissions.
Fortunately, there are ways for mining companies to avoid getting left behind in the competition for employees, funding and political support – and even to pull towards the front of the pack in a world that rewards good energy and carbon performance.
Comprehensive, verifiable data needing for funding
We can see how this is working out in practice through a recently approved application for multi-millions of dollars in government funding for energy and carbon management at a Canadian base metal mine (anonymous due to confidentiality agreements).
There are many such funds, including BC Hydro’s PowerSmart program, Enbridge’s Industrial Custom Solutions & Incentives, the Independent Electricity System Operator in Ontario’s SaveOnEnergy program, and Energir’s energy efficiency programs in Quebec.
Our firm, Thorn Associates, exclusively provides industrial energy and carbon management consulting services, focusing on the mining and metals sector. We collaborate with miners and mineral processors to create energy and carbon reduction or carbon neutral strategies, energy audits, energy efficiency and GHG reduction studies and implementation, energy management information systems consulting and more.
In collaboration with another engineering firm, we helped the mining company meet the grant application’s requirement for detailed, quantifiable and verifiable numbers on expected energy savings including electricity, diesel fuel and natural gas.
We were also expected to identify and quantify (in dollars) ancillary benefits including maintenance. We considered infrastructure changes required by the expected switch from diesel to electric vehicles and considered other ancillary benefits such as improved employee health (with fewer diesel emissions), dust reduction, and a less noisy work environment. The ability to prove the expected savings had to be baked into the designs right from the start of the process, through a measurement and verification plan that is aligned with an international protocol.
This included thinking ahead to determine what would need to be measured, and in some cases installing more electrical and natural gas meters than would normally be expected. We also had to show how we would calibrate all this measurement equipment.
Using sophisticated modelling, a base case was established, and a reporting period established for the verification – several years in which the data must be sent to the government to verify the performance of the energy-saving and carbon-reducing measures.
This funding application example shows some of the trends in energy and carbon management today. One trend is that detailed, realistic performance data is becoming increasingly available, to help put numbers on the options.
For example, we worked with a mining company that had aging air compressors underground that needed to be replaced soon. Our analysis determined that the best option lay in outright replacement of multiple 1000 HP compressors, with units that were smaller, more efficient and had a better turndown ratio, to save energy, improve operational flexibility and reduce maintenance. Given the size of the capital expenditure, having good data on the expected operational improvements and cost savings, helped “sell” the idea from a financial point of view.
Of course, the flip side of being able to measure energy savings – both expected and actual – is that mining companies find themselves being pressured to do that measurement. Then, they’re expected to take effective steps to reduce unnecessary energy expense and carbon production.
This pressure can come from the requirements of financing programs offered by various levels of government. But it can also come from bank financing or investors who want to be sure that their money is in good hands, with companies that will remain competitive even in an increasingly carbon-constrained world.
Shifting the competitive landscape
This new focus on energy and carbon management has big strategic implications. For example, it may improve the competitiveness of orebodies that are located within reach of grid electrical power – provided that electricity is generated from renewable or at least emissions-free sources.
In Canada, this means that mines in provinces like Ontario, Quebec, B.C., and Manitoba have a competitive advantage, in that their electricity grid is powered mostly by renewable or at least non-GHG-producing sources (e.g. nuclear). In some provinces with grids largely powered by fossil fuels, such as Alberta and Saskatchewan, miners may have to set up their own purchase power agreements with green energy sources, to get full climate-related benefits from using electrical power.
Increasingly, mines that are located off-grid will be able to build a better business case for generating their own power using wind or solar.
Self-generated power may also help manage the risks of relying too much on grid electricity. Over-reliance means that a major input – power – lies in someone else’s hands. As an example, our firm worked with a mining company in South America that had a contract for 15 MW of grid power, and they wanted to do an expansion. The electrical utility refused to supply additional power – until the mining company installed power factor correction capacitors to improve the power quality. Although the capacitors are currently being installed, the mine is nonetheless investigating renewable electricity options on-site.
In some parts of the world, the reliability of power supply – and its price – is a major risk that must be understood and mitigated. There may be significant fluctuations in cost, depending on time of day. This can influence whether the mine stores electrical power in batteries, or shifts its energy-intensive operations to off-peak times, for example doing planned maintenance work during electric utility peak times.
Battery-powered vehicles have received a great deal of attention. An alternative or additional option to battery-powered vehicles is trolley assist. Trolley assist uses a pantograph to connect to overhead trolley lines (similar to a streetcar) to enhance productivity by improving speed-on-grade. Caterpillar, for example, released trolley assist systems for electric trucks in February 2020. We performed a technical and economic analysis for a Canadian underground mining client to evaluate whether battery electric vehicles (BEVs), trolley assist with diesel or trolley assist with BEVs made the most economic sense.
While electric mine vehicles are still in their early stages, it’s important for mining companies to look towards a future in which this is possible – such as designing their access tunnels to accommodate a pantograph that may require more space (which can also increase excavation costs). Trolley assist may be more practical in open pit mines, given the need to move large volumes of ore.
Accessing energy and carbon management benefits
Competing in this new world of energy and carbon restrictions starts at the design stage for a new mine, expansion or retrofit.
Many mines are designed in a “silo” process – electrical, mechanical, structural and other types of engineering are often done separately. There may be only limited effort to make sure that the design is as energy and carbon-efficient as possible.
A skilled professional such as a certified energy manager (CEM) can lead an interdisciplinary team to take a holistic look at the design through an Energy Design Review and indicate ways to reduce energy costs. Experience shows that annual savings of 30-40% are often attainable if you start this work in the conceptual or prefeasibility design stage. With energy at or near the top of expenditure categories, these savings add up significantly year after year.
For existing mines, steps for de-risking energy and carbon price escalation include having a carbon reduction roadmap and using an Energy Management Information System. Energy audits help as well and should be followed by studying the energy-saving opportunities the audits reveal, leading to applications for funding energy-efficient and low-carbon investments.
These actions, ideally within an ISO 50001 framework, will meet energy and carbon-related investor environmental, social and governance (ESG) requirements. Having verifiable data on energy use will help mining companies compete as customer expectations change. This includes demand for no-carbon minerals by companies such as Tesla.
Good carbon and energy management can also put mining companies on track to meeting the United Nations’ Sustainability Development Goals, which include climate action and the promotion of affordable and clean energy, as a way to improve market competitiveness.
Emily Thorn Corthay, P.Eng., MASc., CEM, CMVP, was named the 2020 International Energy Engineer of the Year by the Association of Energy Engineers. She is founder and CEO of Thorn Associates (www.thorn.ca).