How can miners reduce operational costs through adopting cheaper energy alternatives?
We are currently face to face with a global energy crisis which requires every single one of us to play our part in attempting to mitigate the situation. The mining sector is no different. A large challenge the local mines are facing is the current energy costs. At present, the electricity costs are towering at US$0.14 per kWh, while thermal generating costs are ranging at about US$0.10 per kWh. Hydro electricity stands at US$0.02 per kWh. Miners are looking at US$0.07 per kWh.
By Kundiso Chimbima.
With the already high costs of production that the mines face, the energy costs are a significant contributing factor. This, coupled with the fluctuating metal prices, poses a large concern on how the significant goal of sustainable mining can be attained.
Mines can consider energy efficient alternatives that can, in the long run, lower the high cost of energy they are facing. These are as follows:
Investing in Renewable Energy Sources
A very common renewable energy source is that of Solar Energy. With an abundant supply of sunlight in Zimbabwe, investing in the required equipment for solar energy can, in the long run, allow the mines to move off the grid and rely on solar. This can be maximised by the procurement of heavy-duty equipment, including the best panels and energy storage solutions such as batteries, to maximise returns from this investment. An example of a mine that has adopted this approach is Caledonia’s Blanket Mine, which constructed a 12MW solar plant. This plant will improve the mine’s electricity supply, contribute to a greener and more sustainable form of mining, and reduce reliance on the national electric grid. Zimplats’ ongoing project of constructing a 185MW solar farm will make even larger strides in support of this, which will, in time, lead to maximising efficiency in the mine’s operations. Solar energy requires a very high initial capital investment, but in the long run, it will lower energy costs substantially.
The use of biomass and biogas are viable ways to reduce energy costs and enhance sustainability. Biomass can be utilized in cogeneration systems, where heat generated from biomass combustion is used to produce electricity. It can also be used as a fuel source through the conversion of mining operations waste into biomass fuel. Biogas production is done through anaerobic digestion of organic materials from mining operations. Through burning, it can be used for electricity production as well as reducing methane emissions.
Procurement of Energy Efficient Mining Equipment
To complement the measures that would be implemented in this plight, it is also important to review the current energy policies being used in the mines. Adapting to products that maximise energy efficiency would largely support this. Examples of these could be the change of electric motors used in the mines to premium or super-premium efficiency (IE3 or IE4). The Super Premium range presents 20% fewer losses compared to conventional motors, providing high-efficiency levels. Investing in replacing less efficient motors with Super Premium motors yields returns in a significantly shortened time frame, bringing in higher energy savings. The use of Variable Speed Drives, as well as adapting to LED lighting, are other contributing factors to be considered. The Tailings Storage Facilities management of each mine would require a synergy between water and energy consumption as well. This way, when the other measures are implemented, the mine goes a step further to be even more efficient.
In the previous years, Zimbabwe has introduced several mining policies that emphasize sustainable mining practices. One noteworthy policy is the Zimbabwe National Renewable Energy Policy 2019 (NERP). This policy was mainly focused on promoting renewable energy sources but at the same time supports the use of energy-efficient equipment by creating incentives for companies to shift towards greener and more efficient energy practices.
Improving Supplier Relations
The mining sector is the centre of an ecosystem of economic stakeholders. It is the duty of the suppliers and service providers of the mines to assist in providing alternative solutions to the challenges faced by the mines. In this particular case, reference is made to the suppliers of electrical products and service providers. This may be through extensive research and development into the current industry trends and searching for ways to improve them through innovation. This, coupled with the fifth revolution, can be a way for the mines to implement measures in their operations to minimise their procurement budget.
There are several well-known players in this industry that the mines can turn to in order to reach this goal. Local service providers include the likes of Electrosales, Polmore Electrical, Belmont Electrical, Cafca, Techold Engineering, and many others. Negotiations of rates and payment plans could assist in spreading out the energy costs over longer periods of time, presenting an opportunity for channelling cash flows further and maximising opportunity costs. This would then allow further investments into energy-efficient technology.
Engagements with the national supply authorities, such as ZPC and ZETDC, to improve on the rates allocated to mines may lead to revised rates being charged. This could result in a drop in the rates from the US$0.14 per kWh, for example. Selling back excess energy from the mines to the supply authorities could help with the level of power factor a mine can have. These collaborations could address the challenges faced by both sectors.
Virtual Power Plant (VPP)
This is a new concept currently being used in Australia in areas such as through the Australian Renewable Energy Agency (ARENA) and Tesla’s Virtual Power Plant in South Australia. The mines convert energy from a cost centre to a revenue generator through innovative energy management approaches. It consists of a network that integrates several distributed energy sources, including batteries and panels, enabling efficient catering to energy demands. Through the combination of renewable sources, the VPPs are enabled to leverage the increase in renewable sources and merge them with smaller scale generators, thus providing a reliable supply. The demand response systems become better structured by encouraging varied energy consumption by users between peak and off-peak periods.
The active participants in the VPP can enjoy financial incentives, such as lower energy bills or payments for providing energy back to the grid during peak times. The main benefits are the environmental impact, pushing sustainable mining practices, a grand reduction in energy costs, new revenue streams, and energy independence as most mines will rely less on the already existing sources.
Other factors to consider would be to further support the renewable energy source, such as solar, with wind farms as well as generators. This would ensure a more steady supply of energy. Using all of these opportunities would be at the discretion of the mines, depending on levels of required energy consumption at a time. Requesting assistance from the government, which may be able to support the local mines with incentives for mines opting for renewable energy sources, could ease the extremely high initial costs associated with this. It would also be a possibility to form collaborations amongst mines to support one another by sharing the costs and resources associated with renewable energy projects.
By considering and implementing the strategies indicated above, miners will be able to cut down on energy costs and achieve the goal of overall sustainable mining.
Kundiso Chimbima is a young entrepreneur and currently the Managing Director of Polmore Electrical. She writes in her personal capacity. For any inquiries, Kundiso can be contacted at [email protected].