Dec. 3 (Bloomberg) — The four windmills dug into northern
Canada’s tundra that power Rio Tinto Group’s $5.2 billion Diavik
diamond mine are the world’s first designed to work in gusts as
cold as 40 degrees below zero.
The mining company has sunk $30 million into wind energy
because roads are frozen and closed to diesel fuel deliveries
for 10 months a year. Near the opposite pole, in Argentina,
Barrick Gold Corp. is testing the highest wind turbine at 4,100
meters (13,450 feet), an altitude almost halfway up Mt. Everest.
The machine was designed for low air density and provides 20
percent of a Barrick gold mine’s power on windy days.
“All the big mining companies are studying different types
of renewables,” Gil Forer, Ernst & Young LLP’s clean-tech head
in New York, said in an interview. They are “very strategic”
for an energy-intensive industry, he said.
Gold and diamonds often are found where no power cables
exist, particularly at the planet’s extremes where winds are
stronger. Mining companies are investing in renewable energy
faster than other industries and will account for 1.8 percent of
global clean-power spending this year, double the 0.9 percent
rate in 2010, according to data compiled by Ernst & Young and
Bloomberg. At the same time, they’re risking more production on
weather, as cloud cover and still days can kill power supply.
The companies say it’s mostly driven by costs. Still, the
gamble can improve a corporate image tarnished over decades by
worker accidents, fouled rivers and toxic tailings in an
industry that extracts gems and metals formed over millions of
years.
‘Convincing Trend’
“What makes this trend much more convincing is that it’s
not a broader altruistic corporate motive” driving investment,
said John Drexhage, climate change director at the International
Council on Mining and Metals, whose 22 members include Anglo
American Plc, BHP Billiton Ltd. and Barrick. Instead, it’s
regulatory pressures “and also the simple bottom line that
renewables are helping to actually work as an effective means of
helping to cut down both exposure and costs.”
Clean power provides about a third of the energy consumed
by London-based Rio Tinto, the world’s second-biggest mining
company. Rio, like most competitors, backs up the projects with
fossil-fuel generation for when winds die and skies cloud over.
Anglo American, which owns 85 percent of De Beers, the
biggest diamond producer, invested about $180 million in low-
carbon technologies and gets 23 percent of its energy from clean
sources. Newmont Mining Corp., having spent about $171 million
on hydropower, biodiesel and geothermal power in 2011, uses
clean energy at 10 of its 14 mines, spokesman Omar Jabara said.
Grizzlies, Wolves
Explorers will invest about $5 billion in remote
alternative-power projects this year and at least $8.4 billion
by 2016, compared with $1.88 billion in 2010, Ernst & Young
estimated, based on Pike Research data.
Rio Tinto’s Diavik mine, estimated to hold 60 million
carats of diamonds, lies 220 kilometers (137 miles) south of the
Arctic Circle in land that’s home to grizzly bears and wolves.
Using wind energy there has cut its diesel use 10 percent and
the number of tanker trucks braving frozen lakes and ponds by
100 a year, company spokesman David Outhwaite said. The economic
payback time is about eight years, he said.
Energy used for crushing, grinding and hauling ores is
usually one of the top three operating costs for mines,
according to Mike Elliott, global mining and metals leader at
Ernst & Young. For gold mines such as those controlled by
Barrick and Goldcorp Inc., it could be the largest single
expense, he said.
Enter Solar
Barrick last year got about 14 percent of its electricity
from low-carbon sources. Energy accounts for about a quarter of
its operating costs. The company owns a solar farm in Nevada and
a 20-megawatt wind park in Chile that cost $50 million to build
and provides enough energy to supply 10,000 homes. It’s also
introducing solar panels at its mine facilities to power
kitchens and other camp amenities.
“Competition for secure energy in areas where there is a
rising standard of living in the population and therefore rising
energy demand, means mining companies may find they aren’t able
to access energy,” Elliott said. “In these situations they
would be looking at a partial or fully self-sufficient energy
supply from renewables.” Remote mines also provide the biggest
opportunity for clean power, he said.
Countries such as South Africa and Chile, where energy
grids are stretched to the limit, lend themselves to look at
other options, Drexhage said. In the Republic of Congo, one of
the largest diamond-producing countries, and in the Canadian
Arctic where Rio operates as well as BHP and De Beers, diesel is
relatively expensive, so biofuels are being considered.
Making Biodiesel
Anglo American, Newmont and Barrick are investigating the
potential of cleaner fuel. Anglo owns a minority stake in MBD
Energy Ltd., an Australian company developing technology that
uses algae to absorb flue gases from power stations to make
products such as biofuel. Newmont uses biodiesel at its mines in
Peru and to run its trucks and cut costs in Nevada. Barrick is
experimenting with biodiesel in Africa and South America.
Newmont’s projects in Ghana are almost exclusively powered
from hydroelectric facilities that are more cost-effective than
gas-fired or diesel plants. For Anglo, hydro is a “major” part
of its electricity mix in Brazil, where more than 80 percent of
the power used at its operations comes from renewable sources.
The company has also replaced charcoal with woodchips to account
for 30 percent of its energy use at the Codemin plant in Brazil.
Total’s SunPower
As the costs of solar energy come down, large mines present
one of the biggest opportunities for solar-panel makers because
they use diesel generators on-site, said Tom Werner, president
and chief executive officer of SunPower Corp. It’s just the
beginning of a market for the solar-panel maker majority owned
by Total SA, which expects close to 100 megawatts a year of
demand once the market ramps up, he said.
Rio Tinto has installed 20 solar-power plants across the
world to study their potential, and Newmont is looking “very
seriously” at using solar to cut costs and power its mines in
the remote Australian desert. Goldcorp too is working on a
feasibility study for a solar project in Nevada.
As much as 5 percent to 10 percent of SunPower’s business
in the future could be for off-grid mine applications, Werner
said.
To contact the reporter on this story:
Louise Downing in London at
ldowning4@bloomberg.net
To contact the editor responsible for this story:
Reed Landberg at
landberg@bloomberg.net
