Column: Miners are embracing renewables both for cost and image

Chichester Hub, located in the heart of the iron ore-rich Pilbara region. (Image courtesy of Fortescue Metals Group.)

(The opinions expressed here are those of the author, Clyde Russell, a columnist for Reuters.)

One of the unintended side effects of Russia’s invasion of Ukraine is it’s helping drive an accelerated transition to renewable energy solutions in Australia’s vast resources sector.

Diesel prices are close to record highs in Australian dollar terms, and unlikely to ease soon given shortages of the transport fuel created by Europe’s decision to move away from Russian supplies as part of efforts to punish Moscow for its Feb. 24 attack on its neighbour.

Diesel has been the dominant source of power for Australia’s mines, which are often located in remote areas and not connected to major power grids.

Australia is the world’s largest exporter of iron ore, lithium, gold and coking coal, ranks second in thermal coal, fifth in copper and is also a major shipper of nickel and alumina, the base material for aluminium.

It used to be that switching mine sites from diesel to renewable energy solutions was a process largely driven by the increasing need to be seen to be doing something to reach the goal of net-zero carbon emissions, with many mining companies having a target of achieving this by 2050.

But at the IMARC conference in Sydney this week, it was increasingly clear that one of the main drivers for switching to clean energy solutions was their relative cost effectiveness when compared to fossil fuels such as diesel or natural gas.

What mining companies are realising is that there is a rare opportunity to score wins on multiple fronts by moving to renewable energy solutions, such as solar, wind and battery back up.

Firstly is the cost advantage, with renewable power solutions cheaper over the longer term than fossil fuels.

Renewable energy also provides a more fixed cost than fossil fuels, which can suffer from periods of high and sustained volatility, such as the world is currently experiencing.

Secondly, there is the reduction in carbon emissions from mining, which does help companies reach net-zero goals.

It’s worth noting that switching to renewable energy on mine sites really only helps with what are termed Scope 1 emissions, which are those associated with primary production.

Scope 2 emissions involve the supply chain and Scope 3 are those created by end users, such as power plants and steel mills.

Scope 3 emissions are the biggest contributor to most mining companies’ emissions profile, but even reducing Scope 1 emissions will help them in their net-zero goals.

More than image boost

There are also other benefits in embracing renewable technologies.

One example is the reduced need for ventilation in underground mines if the vehicles used to extract ore are battery powered, rather than using diesel engines.

The other benefits include an ability to argue that the industry is moving beyond greenwashing and is actually achieving emission reductions.

This may not be enough to sway mining’s most ardent critics, but it may be enough to help convince skilled young graduates and technicians that there is a future in mining, which is currently battling labour shortages in Australia.

Several participants at IMARC said they were struggling to attract young workers, who cite mining’s poor reputation as something that puts them off joining the industry.

Improving the image of mining as the champion of the energy transition is vital to attracting new entrants to the industry, making a genuine change of attitude and action among mining companies all the more important.

There are some caveats to the Australian experience in powering new mines, and switching older operations, over to renewable power solutions.

The first is that it’s currently extremely hard to go 100% renewable, given the cost in building enough renewable capacity and battery storage to overcome the small number of days when there is insufficient solar, wind and battery back up to keep a 24-hour mining operation going.

James Harman, chief executive officer of renewable energy solutions company EDL, told the conference that the industry needs to “recognise that 100% renewable doesn’t work currently,” but that achieving 80% is both feasible and cost effective.

In practice, this means many mines will operate mainly on renewables, but still maintain diesel generators as back up.

It’s possible to take the figure to 100% renewable if the mine sources sustainable diesel fuels, such as biodiesel, or uses carbon offsets to mitigate any fossil fuel consumption.

Harman also said that his company’s experience is that the pace of switching to renewables is accelerating, and it’s possible that most mines in Australia could be using mainly renewable power within five years, well ahead of those 2050 targets.

(Editing by Kim Coghill)

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