Canada's gold miners to embrace green energy to control costs
Canadian gold miners are expected to adopt even more alternative energy this year as the sector continues to focus on paring down costs to remain competitive in a volatile gold price environment, a new report suggests.
According to BMI Research, declining ore grades will drive Canadian gold miners costs higher, pushing companies to find fresh ways of improving competitiveness.
Tightening environmental regulations, such as the recently passed carbon tax at Cdn$10 a tonne — the country’s first— will do nothing but accelerate this trend, the report says.
Tightening environmental regulations, such as the recently passed carbon tax at Cdn$10 a tonne — the country’s first— will do nothing but accelerate the adoption of alternative energy sources.
An obvious alternative, the analysts argue, would be integrating alternative energy sources other than diesel to power their operations, as the federal government has put in place economic incentives and favourable policies that would support such decisions.
The use of alternative, greener energy is said to help miners significantly reduce operating costs from consumption of traditional power sources such as diesel, coal, propane and natural gas. It is also considered an efficient way of removing most if not all greenhouse gases associated with the movement of ore and waste rock.
A case in point quoted by BMI is Goldcorp’s (TSX:G) (NYSE:GG) plans to turn its Borden mine into an all-electric operation.
Located near Chapleau, Ontario, about 160 km west of the company’s Porcupine mine, Borden is being built to use electricity and battery-powered underground fleet only, which will eliminate all greenhouse gases (GHGs) emissions equal to roughly 50% of the total GHGs on site, or 5,000 tons of CO2 per year.
Other gold producers, such as Barrick Gold (TSX, NYSE:ABX), have also taken steps towards embracing alternative energy sources other than diesel. In 2015, the Toronto-based miner reported 18.5% of its electrical power came from renewable energy and said it planned to increase that share.
BMI and industry actors agree the sector is in need of bold ideas as the gold price outlook for this year isn’t much better than 2016, when many thought the bull market would return.
That didn’t happen. Gold climbed only 8.5% last year, with most of the gains recorded in the first half and prices closed at around $1,150 an ounce, down 16% from their July peak.