Renewables push silencing miners’ diesel generators

Australia’s mining industry is turning green. Diesel generators are falling silent as miners roll out renewable energy projects.

Australia’s mining industry is turning green. Diesel generators at remote sites are falling silent as miners roll out renewable energy projects spurred on by both the falling cost of technology as well as pressure from investors to reduce their carbon footprint.

West Australian copper miner Sandfire Resources was regarded as one of the mining pioneers in renewable energy when in 2014 it outlined plans to partly power the processing plant at its remote DeGrussa mine, 900km northeast of Perth, with a 10.6 megawatt solar array to supplement a diesel-fired power station.

In a deal backed by a $21 million loan from the federal government’s Australian Renewable Energy Agency, Sandfire agreed to buy solar power from a plant ­installed by French renewable ­energy firm Neoen.

More than 34,000 solar panels were installed over 20ha of red desert dirt and connected to a 6MW lithium battery and its processing plant in what was, at the time, the largest integrated off-grid solar and battery storage ­facility in Australia.

It now supplies about 20 per cent of DeGrussa’s annual power needs and Sandfire is hardly an ­orphan now, as more miners — and some of the biggest players in the world — look to renewables as a way of keeping costs down.

Rio Tinto chief executive Jean-Sebastien Jacques told shareholders in the global mining giant last week that Rio planned to roll out trials of solar generation at 20 of its global operations, which include some of the biggest mines in the world.

Rio already operates a small solar plant at its Weipa bauxite mine in Queensland, and a 9.2MW wind farm at its Diavik diamond mine in Canada’s remote northwest.

Its fellow Pilbara iron ore miner, Fortescue Metals, is also running the numbers over the use of solar at its operations. Fortes­cue has not yet outlined a timeline for the introduction of renewable energy sources, but CEO Elizabeth Gaines said the company’s feasibility study on solar projects was nearing completion.

“We are continuing to look at opportunities to introduce renewables, particularly solar, into our energy mix and there’s quite a lot of activity on that at the moment,” Ms Gaines said.

“Late last year we entered into a partnership with the CSIRO for hydrogen technology, technology the CSIRO has developed (and) we’re going to help fund some additional research to understand whether it can be developed on a commercial scale. That certainly has potential for us both as a commercial opportunity, but also as a contributor to lowering our energy costs.”

Ms Gaines said Fortescue was considering the use of renewables as part of the energy mix at its power-hungry $US2.6 billion ($3.6bn) Iron Bridge magnetite project.

Emily Alford is a principal consultant at Oakley Greenwood, which helps miners and manufacturers source power solutions, including renewable generation for their operations.

She has previously worked as an energy buyer for mining major South32, and at Rio.

Ms Alford says an initial push to justify installation of renewable energy generation on the grounds of pure carbon abatement, as part of the miner’s social licence to ­operate, has been overtaken by the cost benefits of adding solar or wind generation to the mix.

“We’ve got to a stage now with renewables where the commercial benefit outweighs any social licence consideration. Renewable generation is becoming a commercial no-brainer from a cost and economic point of view,” Ms Alford said. “If you’re burning diesel you’re burning cash, and on the east coast if you’re burning gas you’re burning cash.”

Ms Alford told The Weekend Australian that solar generation cost about $200 a megawatt hour five years ago, and had dropped to about $70-$80 now.

“That has had a significant impact on economic evaluations of renewable power options,” she said.

South African gold-mining major Gold Fields will begin construction this month of an 8MW solar power generation system, and battery system, at its Granny Smith gold mine, east of Laverton in WA. The company says the system will eventually cut fuel use by 10-15 per cent, saving money as well as cutting carbon emissions.

And other mid-tier miners are also joining Sandfire, with Independence Group planning to add a 7MW solar array to the diesel power plant at its high-grade Nova nickel mine in WA’s south.

Ms Alford said co-generation power plants — where a renewable source operates alongside a thermal (usually diesel or gas) plant to ensure continuous delivery of power through the night — would probably become the norm at remote mining operations in the future, as the economic case for renewable generation grew.

“We’ve done a number of evaluations now looking at power supply options for off-grid mining projects and every time a thermal plus renewables mix is cheaper than just thermal,” she said.

Ms Alford said the main barrier to the installation of solar power was no longer cost, it was outdated procurement processes that did not take changes in the power industry into consideration.

“Part of the problem is that some miners are still in the habit of treating the procurement of a power station as engineering project,” she said.

“They’ll go to an engineering house, who will design what they think a power station should look like, and the miner will go out to market and price the design.”

Ms Alford said the process was being run the wrong way round.

“That stops vendors being able to offer options that may be better for the miner, and which bring new technologies into the frame,” she said.