Sun-Drenched Miners Look to the Skies to Cut Fuel Costs in Half

  • Solar-power market for mining forecast to reach $2 Billion
  • Industry seeking to cut emissions and costs with renewables

Miners Turn to the Sun to Cut Costs

The DeGrussa copper and gold mine in Australia’s sun-scorched outback is getting a solar farm, the latest example of the industry embracing clean energy.

The plant will replace about 5 million liters (1.3 million gallons) of diesel a year, a fifth of the mine’s energy needs. Energy generated by the system may eventually cost about half that of diesel-generated power, according to Sandfire Resources NL, the deposit’s owner.

Miners including Rio Tinto Group are installing new solar plants from Chile to South Africa, betting they’ll deliver long-term savings even as tumbling oil prices cut power costs. The global solar-power market for mining companies may grow to about $2 billion a year by 2022 from about $42 million in 2013, according to Navigant Consulting Inc.

“Solar-power providers are specifically targeting mines right now and it’s about replacing diesel,” Dexter Gauntlett, a senior research analyst at Navigant said by phone from Portland, Oregon. With lower costs, “it becomes a no-brainer,” he said.

Miners are joining chemical producers, steelmakers and others in seeking to replace traditional power sources with renewable energy. ArcelorMittal, the biggest steelmaker, said last month it plans to use waste gases to produce low-carbon fuel for vehicles. Explosives maker Incitec Pivot Ltd. has experimented with solar-powered offices at remote sites.

In the southern Indian state of Kerala, Cochin International Airport is the world’s first to be run exclusively on solar energy, according to Bosch Ltd.

Rio Tinto, the second-largest mining company, is completing the construction of a demonstration solar farm at its Weipa bauxite operation in the Australian state of Queensland with Arizona-based First Solar Inc. and Ingenero Pty.

Barrick Gold Corp. has solar-power generation at a mine in Nevada, while Newmont Mining Corp. is investigating solar options at its Tanami gold mine in Australia’s Northern Territory. In Chile, Abengoa SA has installed a 10-megawatt solar project at an Antofagasta Plc copper mine in the Atacama Desert, and said in March it’s in discussions with mining companies to add more plants.

Mining industry forecast to use more renewable energy

“We’ve got an amazing opportunity with the sun power that’s generated,” Sandfire Chief Executive Officer Karl Simich said in an interview. The 20-hectare, 10.6 megawatt solar farm, will have 34,000 modules when installed by February at the site 900 kilometers (560 miles) north of Perth.

The mining industry consumes about 400 terawatt hours of electricity a year, Navigant estimates. Renewables including solar may supply as much as 8 percent of the mining industry’s energy consumption by 2022, it forecasts. Barrick has wind turbines in Argentina and Chile, while Rio installed a turbine farm at Canada’s remote Diavik diamond mine, 220 kilometers south of the Arctic Circle.

Both Sandfire and Rio’s solar installations are being aided by government funding, while the cost of developing solar farms means it’s probably not suitable for smaller mines, according to gold producer Doray Minerals Ltd.

“With the capital investments up front, a short mine life doesn’t really pay it back,” Doray Managing Director Allan Kelly said. “If we had a 10-year mine life, we’d definitely look at it. The technology is improving.”

At DeGrussa, where there’s a daily average of 9 to 10 hours of sunshine a day, Sandfire sees its solar farm cutting carbon dioxide emissions by about 12,000 metric tons a year, as it also delivers savings to energy costs.

“We do appreciate that in the finite mining industry we are extracting resources which don’t get replenished and there’s a consequence of the work that we do,” Sandfire’s Simich said. “Anything we can do to reduce our footprint is something we aspire very, very aggressively for.”