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Miners turn to alternative on-site power supply


For mining companies, energy consumption is a major expense, comprising approximately 30% of total cash operating costs. Standard practice is for mine site operators to seek convenient power purchase agreements (PPAs) with local utilities, but a trend is emerging towards miners investing in decentralised on-site power supply.

GlobalData has collected information for around 3,000 mine sites – there are around 10,000 globally – and found that just under half (1,250) have invested in on-site power infrastructure. Many are in Australia, where huge land mass and limited access to the grid make on-site power attractive and necessary. However, mines in other regions are also investing in on-site power supplies due to other factors: namely, decarbonisation and affordability.

On-site renewables and emissions reduction

At present, nine of the top ten publicly listed mining companies have set scope 1 and 2 net-zero goals for 2050, with reduction ambitions to meet in the interim. BHP, for example, wants to reduce scope 1 and 2 emissions by at least 30% by 2030 from a 2020 baseline.

“When it comes to reducing their emissions, mining companies have really only got a couple of levers to pull – one is shifting to renewable power,” says David Kurtz, director of mining & construction at GlobalData.

The data shows that miners are investing in natural gas, as opposed to diesel or other heavy fuel, and in renewables, which are becoming increasingly affordable. For example, the cost of solar power has dropped by nearly 90% over the last decade and the cost of batteries is also steadily falling.

“Our data doesn’t cover the whole market, but it gives an indication that new on-site power under development on mines is much more weighted towards natural gas and solar power,” says Kurtz. 

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