Mining companies in Africa are beginning to realise the full potential of standalone power solutions as they strive to improve operational efficiencies and meet the social obligations governing their ventures in emerging economies, says engineering consultant WSP Africa power director Dinesh Buldoo.
Currently, one of the biggest business opportunities for renewable energy is in powering off-grid mines, he adds. These projects potentially reduce the pressure on national and regional grids, but also offer a more cost-effective solution for establishing independent power plants and microgrids in extremely remote locations – which can be used to power mining activities and small industries in the surrounding communities, he explains.
Buldoo notes that, as the mining sector is one of the largest consumers of electricity, access to reliable, efficient and cost-effective power is imperative. However, the reality is that much of Africa’s infrastructure remains underdeveloped and, as companies expand their mining activities into ever-more remote locations, access to basic services, such as power, becomes more challenging.
He explains that, globally, mines have traditionally relied on fossil fuel-based sources for power generation, favouring whatever is available or can be sourced with relative ease. In Africa, grid supply has, thus, largely been supplemented by large-scale, on-site diesel generators, making the operation of many mines dependent on the available diesel fuel supply. However, as diesel is not readily available in some countries, the need to source fuel has severely impacted on the productivity of mines. Reliance on diesel has, moreover, often influenced the ability of mines to manage the predictability of their costs, owing to fluctuations in fuel prices.
In times of economic volatility, greater focus is placed on the need for efficiency to reduce possible business risks, streamline operating processes and drive possible cost savings. Buldoo stresses that this is particularly relevant in an African context, where business growth is stifled in many countries as mines attempt to adapt to regulatory changes, the requirements for securing a social licence to operate and climate change. There is, thus, mounting pressure in the mining sector to improve production levels significantly while reducing energy and capital intensity.
While the adoption of alternative energy solutions in Africa was initially slow, Buldoo notes that renewable-energy options – including solar and hybrid options, which can incorporate wind, solar and diesel – are quickly gaining popularity as mining companies look for ways to reliably power their activities at a long-term fixed price.
“In addition, mines can potentially provide power for surrounding communities, fulfilling a strategic company approach to stakeholder engagement in terms of reinvestment and driving the socioeconomic development that is integral to their social licence to operate.”
The pursuit of inventive energy solutions can, moreover, provide a mining company with opportunities to commercialise its power assets to generate additional income by selling excess power to supply the regional or national grid. This also helps emerging economies in their endeavours to secure a stable power supply using minimal capital outlay.
Mines Take the Lead
Buldoo highlights that different business models are being explored and used worldwide – with varying degrees of success – to incorporate alternative energy sources at mines. Mines may, for example, fund, build and operate a renewable-energy power plant on site or a group of industrial companies can enter a long-term power purchase agreement and collectively fund, build and operate a shared power plant as part of an industrial pool model.
Alternatively, a local community may be given support from either government or mining companies to construct a transmission line or mines may reach a net metering agreement with governments, allowing them to sell any excess capacity generated by the renewable plant and feed it into the local grid.
With pressure on mining companies in Africa in particular to increase their socioeconomic dividends through reinvestment, Buldoo notes that the most common business models being implemented are those in which a mine takes complete responsibility for the implementation of an alternative power source or supports the surrounding community financially to build a transmission line. Sadly, aged power infrastructure is often insufficient to facilitate safe and reliable net metering, while the viability of industrial pooling options in terms of infrastructure is limited by poor cooperation between industrial companies in terms of the control and operational preferential use rights.
“Mining companies operating in Africa are faced with numerous, compounding and complex issues when it comes to power generation.
“However, what is interesting and commendable is that these companies are taking an active approach to finding solutions that will drive operational efficiencies . . . [and] . . . assist them in meeting their social commitments to stakeholders,” he concludes.