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ENERGY MANAGEMENT IN THE EXTRACTIVE INDUSTRY GHANA Edmund Yaw Hassan Torkornoo and Associates Limited (TAL) Accra Ghana www.torkornoo.com [email protected] ¾Extractive industries (mining, oil and gas) are very closely associated with large energy (fuel and electricity) use. ¾15% and 7% of electricity production in South Africa and Ghana respectively goes to the mining companies. ¾There are significant environmental and financial benefits from ensuring that the use of energy is optimized. ¾In developing countries like Ghana, development of mineral resources directly correlates to the abundance or otherwise of energy resources. ¾The supply of energy to the extractive industries of Ghana and South Africa has been greatly hampered in recent years and mining companies have had to act decisively. INTRODUCTION EXTRACTIVE INDUSTRIES OF GHANA The extractive industries of Ghana are dominated by mining companies. Oil and gas industries are just in the offing. Among the mining industries such as manganese, bauxite, limestone and diamond, gold mining companies dominate. MAJOR GOLD MINING COMPANIES OF GHANA The four major gold mining companies account for over 90% of national gold output. They are: ¾Goldfields Ghana Limited (696,149 oz) ¾AngloGold Ashanti (527,000 oz) ¾Newmont Gold Ghana Limited (445,600 oz) ¾Golden Star Resources (246,278oz) Based on 2007 results ELECTRIC ENERGY INSTALLED CAPACITY Total Hydro MW 1,180 Share (%) 68 Total Thermal 550 32 TOTAL 1,730 Based on 2006 figures Energy Commission ELECTRIC ENERGY GENERATION CAPACITY Hydro Shares (%) GWh 5,619 67 Thermal Shares (%) 2,811 33 Total Generation Based on 2006 figures Energy Commission 8,429 ENERGY NEEDS OF MINING COMPANIES Mining companies use energy very intensively. Energy is required from exploration, mining, through processing and refining. In terms of electrical energy, the gold mining companies in Ghana require in excess of 120MW of energy from the nation’s electricity supplies. NEWMONT GHANA GOLD LIMITED Newmont is currently the third largest gold producer in Ghana. Newmont is the first large scale mine in the Brong Ahafo Region of Ghana, a region hitherto not known for its gold mining prowess. Ashanti and Western Regions Newmont have been the gold mining powerhouses Goldfields of Ghana. AngloGold Ashanti ENERGY POLICY - NEWMONT Newmont’s energy policy is based on the four pillars of ¾Carbon policy planning & development ¾Green house emission and accounting ¾Market & regulatory knowledge ¾Energy planning and management Newmont feels that it has an obligation to act to minimize its carbon footprint. But Newmont also sees an opportunity in doing so. One of the most effective ways to reduce carbon emissions is to utilize energy more efficiently, which in turn reduces costs. Beyond The Mine – 2007, Newmont STRATEGIC ENERGY PLAN OF NEWMONT ¾Newmont’s Energy policy is informed by increased global warming risks. ¾Legislation on carbon emissions, such as a cap and trade system in US and Australia, including the imposition of a "carbon tax“ on resources such as diesel fuel and electricity. ¾Looking inward, physical and environmental changes due to climate change are also a risk to Newmont. Predictions of the Intergovernmental Panel on Climate Change (IPCC), raise health and welfare concerns for workforce and members of the communities in which Newmont operates. Exposure to extreme conditions of weather would lead to the spread of diseases such as malaria. ¾Climatic changes could also bring communities to face other hardships brought on by changes in the environment, such as shortages in water supply and impacts on agriculture ELECTRICAL ENERGY NEEDS OF NEWMONT Newmont currently requires a maximum of 40MW of electrical energy for operations at full capacity and normal power draw of approximately 32MW at their operating plant in Ahafo. Electric power is supplied Newmont, by the Volta River Authority (VRA) and the Electricity Company of Ghana (ECG) from the national grid. However, the power crisis in Ghana of 2007 meant that mining companies needed to somehow secure the supply of power for their operations after supply was curtailed to all industries. POWER CRISIS IN GHANA The inadequacies of Ghana’s energy infrastructure and supply were brought to the fore in 2007, throwing the entire nation into darkness. Industry was the hardest hit, with power supply not even enough to run on half capacities. The mines were obviously hit hard too. They responded by putting together a consortium of the four biggest gold mines to install a diesel fired power plant to generate 80MW of power. Goldfields Ghana Ltd, Anglo Gold Ashanti, Newmont Ghana Gold and Golden Star Resources were to receive 20MW of electric power each. NEWMONT MEETS ENERGY NEEDS Newmont Gold Ghana Ltd has its own facility to generate 12MW of power at its Ahafo Mine. 20+12=32 Emergency power to run plant ACCOUNTING FOR ENERGY Newmont Ghana is in the process of accounting for their energy usage. As a new mine, Newmont is currently developing a robust inventory management plan to account for its greenhouse gas emissions in consonance with World Business Council on Sustainable Development and the Greenhouse Gas Protocol of the World Resource Institute. The use of resources, such as energy, efficiently is the key to energy management. And this can only be achieved when energy use is adequately accounted for. In efficiency terms, it should be possible to determine how much energy is required for the production of an ounce of gold. ENERGY EFFICIENCY At AngloGold Ashanti, 4.69 gigajoules of energy was needed to produce an ounce of gold in 2006. This figure increased to 4.96 in 2007. At their Ghana operations in Obuasi and Iduapriem, energy efficiency figures were 6.90 and 4.81 gigajoules per ounce of gold produced respectively. Obuasi is underground, and Iduapriem is surface, explaining the higher intensity of energy for Obuasi. Enormous amounts of energy are needed for ventilation and refrigeration underground. ENERGY EFFICIENCY AND R&D AT NEWMONT ¾Hybrid Underground Loader – Hydrogen based fuel cell and Nickel metal-hydrite batteries ¾The design emits none of the particulate, carbon monoxide or other emissions common with diesel engines. It emits water under load. ¾This results in reduced ventilation requirements and a more safer and healthier workplace environment for employees SOLAR AND THERMAL PUSH Both Newmont and AngloGold Ashanti are looking at the possibilities of augmenting their energy mixes with solar power. Newmont is experimenting with thermal energy from their Carlin operations in Nevada to dry ore. Instead of natural gas, an engineered recirculation of hot air from underground is recycled and vented to the atmosphere. This could result in annual energy savings of over $700,000 per year and reduced CO2 emissions of 5,393 metric tons per year. EFFICIENT USE OF ENERGY ¾Carry out energy efficiency audits ¾Identify opportunities and implement appropriate measures for energy use reduction and efficiency e.g. Use of Variable Speed Drives ¾Consult with the electricity supplier in relation to tariff management and use of off-peak electricity. ¾Provide regular maintenance for processing plant, pumps, and boilers, etc. ¾Use photosensors to control and optimize use of outside lighting ¾Provide insulation to storage bins ¾Optimise layout and design of internal haulage routes and processing plant ENERGY OUTLOOK FOR GHANA ¾Construction of Bui Hydro electric dam – 400MW ¾Oil find in Cape Three Points – recoverable resource of 500mbo ¾Private Sector construction of thermal plants - 200MW of 560MW from Asogli ¾Construction of gas pipe line from Nigeria to Ghana These developments are part of the government’s grand scheme to ensure energy security for Ghana Energy security means Ghana can develop other mineral resources such as processing of the nation’s vast amounts of bauxite and some iron ore. ENGAGEMENT AND REPORTING ON ENERGY As member of the International Council on Mining and Metals (ICMM), Global Reporting Initiative (GRI), and the United Nations Global Compact, the major gold mining companies in Ghana are committed to executing superior business practices in sustainable development, and are committed to implementing and measuring performance against ICMM's Sustainability Framework and its supporting 10 Principles of Sustainable Development. Through the GRI, energy use and efficiency by energy source are captured to help ensure efforts towards sustainability. INVESTMENTS IN THE ENERGY SECTOR Private sector investments in the energy sector is allowing consumers such as the mines to negotiate energy mixes and prices in an expected competitive market. ENERGY PRICING AND REGULATION - PURC Mines are in discussion with the PURC to determine the true cost of electricity. Even though mines are prepared to pay competitive prices, they will prefer a good knowledge of the energy mix sold to them. Since June 2007, cost of electricity increased by 240% , from 5 US Cents to 17 US cents CONCLUSION Extractive industries are intense users of energy. They consume large proportions of national electricity productions. Mining industries are beginning to be aware of their carbon footprints, and they are making efforts to face up to this. They are looking at the issue of global warming with a business sense as well, preparing to take advantage of carbon trading. To meet their energy needs, some mining firms in Ghana have come together to install thermal capacity for their specific needs. Issues of energy efficiency ought to be important for mining companies in Ghana. One can only truly succeed with global warming and climate change when energy efficiency is incorporated into the operations of industry. Thank you!!! Danke SchÖn!!! www.torkornoo.com [email protected]