Download 20% Renewables for New Mining Projects: A

20% Renewables for New Mining
Projects: A look inside Gold Fields’
Energy and Carbon Strategy
By Adrienne Baker, Director, Energy and Mines
20% Renewables for New Mining Projects: A look inside Gold Fields’ Energy and Carbon Strategy
“IN 2015, THE DATA
SUGGESTED A MARKED
REDUCTION IN COST FOR
CERTAIN RENEWABLE
ENERGY TECHNOLOGIES
AS WELL AS INCREASING
FUNDING FOR THESE
RENEWABLES. THIS IS
SOMETHING MINING
COMPANIES COULD
AND ARE TAKING
ADVANTAGE OF.”
Tsakani Mthombeni
Group Head of
Carbon & Energy,
Gold Fields
The economics of renewables and emerging
funding support for these technologies is
something the resource sector should benefit
from, says Tsakani Mthombeni, Group Head of
Carbon & Energy for Gold Fields. “In 2015, the
data suggested a marked reduction in cost for
certain renewable energy technologies as well
as increasing funding for these renewables,”
he notes. “This is something mining companies
could and are taking advantage of.”
Johannesburg-headquartered Gold Fields
is quickly emerging as a world leader in lowcarbon, sustainable energy for mines with its
upcoming 40 MW solar project for South Deep
and its robust global energy security and carbon
reduction plans.
As Group Head of Carbon & Energy, Mthombeni
sets the gold leader’s energy strategy and “ONE OF THE FUNDAMENTAL
supports his operational colleagues at the CHALLENGES FOR THESE PROJECTS
company’s eight operating mines across four
countries (South Africa, Ghana, Peru and IS TO ENSURE AFFORDABILITY AND
Australia). His key focus is maintaining energy SECURITY OF ENERGY SUPPLY OVER
security for these operations and constantly THE LIFE-OF-MINE, ESPECIALLY FOR
evaluating low-carbon, renewable energy
REMOTE OPERATIONS WITH WEAK
options to plug emerging energy security gaps.
Energy costs, which accounted for US$311 AND LIMITED GRID CONNECTIVITY.”
million in 2015, 22% of operating costs, require
a group-wide strategic approach to curtail
these costs.
Energy and Mines spoke with Mthombeni Energy and Mines: Can you give us an update
about Gold Fields’ energy strategy, the on the RFP for a 40 MW PV system for South
South Deep PV project and the next steps for Deep?
evaluating renewables options for new and Tsakani Mthombeni: In partnership with the
existing sites, including the Salares Norte environmental business NGO the Carbon War
project in northern Chile. On Nov 21-22 at Room, we sent the initial expression of interest
Energy and Mines World Congress in Toronto, to more than 75 international developers, and
Mthombeni will open the Africa-focused received 28 positive expressions. Then by 31
session with a keynote presentation on the role December 2015, we narrowed this down to
of renewables in delivering energy security and 10 proposals. Out of those 10 proposals, we
have selected the preferred bidder and have
power cost stability for mines.
entered into PPA negotiations. Once these are
concluded the bidder will begin construction
which we hope will be completed and in
commercial production by Q4 2018.
E&M: Why do you think it is important for
mines to begin integrating renewables now?
TM: In 2015, the data suggested a marked
reduction in cost for certain renewable energy
technologies as well as increasing funding for
these renewables. This is something mining
companies can take advantage of.
One of the fundamental challenges for these
projects is to ensure affordability and security of
energy supply over the life-of-mine, especially
for remote operations with weak and limited
grid connectivity. The fundamental question is
“how to make a business case for renewables
to meet energy needs over the life of mine?”
E&M: What other renewables options are you
exploring for your operations?
TM: As part of our five-year regional energy
security plans, developed in 2015, all our
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20% Renewables for New Mining Projects: A look inside Gold Fields’ Energy and Carbon Strategy
“NEXT YEAR WE PLAN TO FOCUS ON
CLIMATE CHANGE, MONITORING CARBON
PRICING AT A REGIONAL LEVEL AND
LOOKING AT A SHADOW CARBON PRICE.”
number of options. It is early days, but exploring
renewables is entrenched in our pre-feasibility
assessment.
“ONE OF THE
FUNDAMENTAL
CHALLENGES FOR THESE
PROJECTS IS TO ENSURE
AFFORDABILITY AND
SECURITY OF ENERGY
SUPPLY OVER THE
LIFE-OF-MINE, ESPECIALLY
FOR REMOTE OPERATIONS
WITH WEAK AND LIMITED
GRID CONNECTIVITY.”
regions regularly evaluate suitable renewable
or low-carbon energy options. Where serious
energy insecurity is identified, we will explore
renewable and alternative energy options.
We see energy security in two parts. Firstly,
there is the physical availability of power and the
potential for power disruptions. Then there is the
cost aspect. If there are rises in energy costs that
are high and unsustainable, then we will look at
alternative, more cost-effective, options.
For example, in Ghana, we have installed gas
turbines on site as that is the most economically
feasible option in the region. This will help reduce
our carbon footprint but we are also looking for
other feasible renewables, such as biomass,
there to provide a solution to the power issues
we are facing.
We are also committed to 20% renewable
energy for new projects; for our Salares Norte
site in northern Chile, at some 4 500 metersabove-sea-level, we are busy evaluating a
E&M: How is the price recovery for gold
affecting the energy strategy for your
operations?
TM: Our strategy is affected more by changes
in the oil price, as a lower oil price erodes the
value proposition of renewables. The gold price
recovery will, in the medium to long-term,
improve the feasibility of certain energy and
carbon reduction initiatives.
E&M: Why is carbon becoming more of a driver
for mines to consider renewables options?
TM: Post COP21, a lot of multinational companies
are expected to support their host governments’
regulatory and policy instruments, such as
carbon taxes, emissions trading and compulsory
greenhouse gas reporting requirements. We also
have to demonstrate good corporate citizenship
by reducing our carbon footprint in the regions
where we operate. There is also a growing investor
sentiment towards better understanding of the
financial impacts of climate change.
Carbon pricing alone will not make the business
case for renewable energy usage by mines,
as renewables are already becoming more
cost-effective, but carbon pricing could help in
enhancing the value proposition of renewables.
E&M: How does your carbon strategy fit with
your energy strategy?
TM: Clearly these days it is impossible to
separate energy strategy from climate change
considerations. A large share of our energy is
derived from coal and oil, significant carbon
emitters. Increasing the share of renewable
energy in our end-use energy mix has an
obvious benefit of significantly cutting our
carbon emissions. At the same time, our
regions continuously identify and implement
energy efficiency initiatives that improve our
energy productivity and thus reduce our carbon
footprint.
We have implemented a Group integrated
energy and carbon management strategy
linked to ISO 50001 principles. We have also
been working with the International Council on
Mining and Metals to pilot a climate viewer tool
which is a repository of some 15 global climate
models. This will give us insight into climate
changes, including temperature, precipitation
and water stress levels, and will enable us to
develop adaptation plans for our operations in
accordance with the science.
E&M: What are the next steps for Gold Fields’
energy strategy?
TM: Our group energy and carbon strategy
is an ever-evolving one, taking cognisance of
latest technological, operational and regulatory
developments. Next year we plan to focus on
climate change, monitoring carbon pricing at a
regional level and looking at a shadow carbon
price. South Africa and Chile, for example,
will be implementing carbon taxes over the
next two years, though they are also looking
at implementing market offset mechanisms
similar to the Emissions Reduction Fund in
Australia, which we used earlier this year.
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