Mining firms tap renewable energy to extract gold, gems

The four windmills dug into northern Canada’s tundra that power Rio Tinto’s $5.2 billion Diavik diamond mine are the world’s first designed to work in gusts as cold as 40 degrees below zero.

The mining company has sunk $30 million into wind energy because roads are frozen and closed to dieselfuel deliveries for 10 months a year.

Near the opposite pole, in Argentina, Barrick Gold is testing the highest wind turbine, at 13,450 feet, an elevation almost halfway up Mount Everest. The machine was designed for low air density and provides 20 percent of a mine’s power on windy days.

“All the big mining companies are studying different types of renewables,” said Gil Forer, Ernst & Young’s cleantech head in New York, in a recent interview. They are “very strategic” for an energyintensive industry.

Gold and diamonds oftenare found where no power cables exist, particularly at the planet’s extremes, where winds are stronger. Mining companies are investing in renewable energy faster than other industries and will account for 1.8 percent of global clean-power spending this year, double the 0.9 percent rate in 2010, according to data compiled by Ernst & Young and Bloomberg. At the same time, they’re risking more production on weather, as cloud cover and still days can kill the power supply.

The companies say their alternative power plans are mostly driven by costs. Still, the gamble could improve a corporate image tarnished over decades by worker accidents, fouled rivers and toxic tailings in an industrythat extracts gems and metals formed over millions of years.

“What makes this trend much more convincing is that it’s not a broader altruistic corporate motive” driving investment, said John Drexhage, climate-change director at the International Council on Mining and Metals, whose 22 members include Anglo American Plc, BHP Billiton and Barrick. Instead, it’s regulatory pressures “and also the simple bottom line that renewables are helping to actually work as an effective means of helping to cut down both exposure and costs.”

Clean power provides about a third of the energy consumed by London-based Rio Tinto, the world’s secondbiggest mining company. Rio, like most competitors, backs up the projects with fossil-fuel generation for when winds die and skies cloud over.

Anglo American, which owns 85 percent of De Beers, the biggest diamond producer, has invested about $180 million in low-carbon technologies and gets 23 percent of its energy from clean sources. Newmont Mining Corp., having spent about $171 million on hydropower, biodiesel and geothermal power in 2011, uses clean energy at 10 of its14 mines, spokesman Omar Jabara said.

Explorers will invest about $5 billion in remote alternative-power projects this year and at least $8.4 billion by 2016, compared with $1.88 billion in 2010, Ernst & Young estimated, based on Pike Research data.

Rio Tinto’s Diavik mine, estimated to hold 60 million carats of diamonds, lies 137 miles south of the Arctic Circle in land that’s home to grizzly bears and wolves. Using wind energy there has cut its diesel use 10 percent and the number of tanker trucks braving frozen lakes and ponds by 100 a year, company spokesman David Outhwaite said. The economic payback time is about eight years, he said.

Energy used for crushing, grinding and hauling ores is usually one of the top three operating costs for mines, according to Mike Elliott, global mining and metals leader at Ernst & Young. For gold mines such as those controlled byBarrick and Goldcorp Inc., it could be the largest single expense, he said.

Barrick last year got about 14 percent of its electricity from low-carbon sources. Energy accounts for about a quarter of its operating costs. The company owns a solar farm in Nevada and a 20-megawatt wind park in Chile that cost $50 million to build and provides enough energy to supply 10,000 homes. It’s also introducing solar panels at its mines’ facilities to power kitchens and other camp amenities.

“Competition for secure energy in areas where there is a rising standard of living in thepopulation and therefore rising energy demand, means mining companies may find they aren’t able to access energy,” Elliott said. “In these situations, they would be looking at a partial or fully self-sufficient energy supply from renewables.” Remote mines also provide the biggest opportunity for clean power, he said.

Countries such as South Africa and Chile, where energy grids are stretched to the limit, lend themselves to look at other options, Drexhage said. In the Republic of Congo, one of the largest diamond-producing countries, and in the Canadian Arctic, where Rio operates as well as BHP and De Beers, diesel is relatively expensive, so biofuels are being considered.

As the costs of solar energy come down, large mines present one of the biggest opportunities for solar-panel makers because they use diesel generators on-site, said Tom Werner, president and chief executive officer of SunPower Corp.

Business, Pages 12 on 12/10/2012

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