Energy and Mines Magazine Issue 31 - plus Africa Report

Issue

Mining’s Role in Accelerating the Hydrogen Economy

31

June

2021

Multiplying Benefits with Hybrid Projects

SPECIAL SUPPLEMENT Energy and Mines Africa Report

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Mining’s role in accelerating the hydrogen economy MELODIE MICHEL REPORTER Energy and Mines

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nce seen as a utopian solution that would take decades to materialize, hydrogen is now firmly planted at the centre of the global decarbonization agenda — and it is time for miners to get in on the action.

The first few times green hydrogen was discussed at Energy and Mines conferences less than five years ago, the response was mixed: the audience recognized the technology’s full decarbonization potential, but thought it would take decades for equipment and production to become commercially competitive.

Today, this timeline has been reduced to just 5 to 10 years, with many seeing 2030 as the tipping point when hydrogen will become the cheapest clean solution for many power and mobility applications.

In January 2020, the Hydrogen Council — an international advisory body that went from 13 to 60 members since its creation in 2017 — published a study on the path to hydrogen’s cost competitiveness, and predicted that hydrogen production and distribution systems at scale would unlock hydrogen’s competitiveness in many applications sooner than previously anticipated. Specifically, the analysis

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found that hydrogen’s total cost of ownership (TCO) would reach parity with other low-carbon alternatives by 2030 in 22 different applications.

“All three big electrolyzer companies have recently commented that they will have electrolyzers in the market within five years at half the current price, and that’s mainly off the back of economies of scale that they will realize through moving to manufacture-based equipment rather than project-based.

KEVIN PEAKMAN HYDROGEN DIRECTOR ENERGY ESTATE

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GOVERNMENT-LED EXPANSION In the year since the publication of this study, several electrolyzer manufacturers have announced plans to build large-scale production plants: ITM Power has started operations at its new factory in Sheffield, England, starting with a production line of 350 MW but with the ambition to increase it to 1 GW or even 2 GW as orders come in.

Earlier this year, Nel also went public with its plan to build a fully automated electrolyzer factory in Norway, cutting their price by 75% and bringing green hydrogen production prices down to the level of grey hydrogen (produced using fossil fuels) by 2025 — around US$1.50/kg.

Kevin Peakman, Hydrogen Director at Energy Estate, comments: “All three big electrolyzer companies have recently commented that they will have electrolyzers in the market within five years at half the current price, and that’s mainly off the back of economies of scale that they will realize through moving to manufacturebased equipment rather than project-based. Today, most of them make that equipment to order, but within five years, most of it will be coming off the shelf.”

This bullishness in the electrolyzer industry is mainly driven by government ambitions for hydrogen: as of January 2020, 18 governments, representing about 70% of global gross domestic product, had developed a detailed roadmap to kickstart their domestic hydrogen economy.

“What we’ve seen lately is an acceleration on the part of ENERGY AND MINES MAGAZINE

governments,” notes Julien Colas, Global Partnerships and Solutions at Engie’s Hydrogen Business Unit. “In Europe and Australia, they are putting money on the table to kickstart the hydrogen economy, which will enable the orders for 100 MW scale projects. This in turn will enable the electrolyzer suppliers to invest in new automated plants, ramping up production and lowering costs. ” PILOTS COMING TO FRUITION The other element prompting electrolyzer manufacturers to make plans for gigawatt factories is the expectation that pilot projects under construction today will lead to large-scale orders in the coming years. For example, Anglo American is in the process of piloting a hydrogen-powered heavy-haul truck at the Mogalakwena mine in South Africa, with the hope of switching entire fleets to hydrogen in the future.

“To date, this will be the largest hydrogen-powered vehicle that you would see on any road,” says Jan Klawitter, Head of International Policy at Anglo American. “If you think about the bigger vehicles that you have at the moment, they’re buses consuming about 15 kg of hydrogen a day. The amount of hydrogen that we expect the truck to use in the mine is up to a tonne of hydrogen per day. It’s a multiple of what you have at the moment, and that goes along with refuelling requirements. We’re expecting to get useful insights on all of that, in order to then ramp up and roll this out across our operations,” he adds.

“The bigger vehicles (buses) are consuming 15kg of hydrogen a day. The amount of hydrogen that we expect the truck to use in the mine is up to a tonne of hydrogen per day” JAN KLAWITTER

HEAD OF INTERNATIONAL POLICY ANGLO AMERICAN

At the time of writing, construction was underway at the site for all the basic infrastructure required for renewable generation and the electrolyzer, and Anglo American expected the hydrogen power plant module to be fitted into the prototype truck by the end of 2021. Of course, these projects take time, and even

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“We expect this pilot project, because of its sheer size, to have a positive impact on the cost curve of hydrogen and fuel cell equipment, especially if it is successfully deployed across our operations but potentially more widely in the industry, since other companies also need to decarbonize their operations.”

JAN KLAWITTER HEAD OF INTERNATIONAL POLICY ANGLO AMERICAN

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if the Mogalakwena truck performs well, more pilots will need to happen in other countries to test the prototype in different circumstances and environments. But considering the amount of hydrogen needed for just one truck, and the number of trucks that could be converted to hydrogen in the mining sector, Anglo American’s pilot alone is seen as a potential catalyst for the hydrogen economy.

“We expect this pilot project, because of its sheer size, to have a positive impact on the cost curve of hydrogen and fuel cell equipment, especially if it is successfully deployed across our operations but potentially more widely in the industry, since other companies also need to decarbonize their operations. In terms of the amount of hydrogen produced, electrolysis and fuel cell capacity, if you put these trucks in place just in one mine, you

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immediately have more hydrogen consumption and capacity on the mine roads than you currently have in entire countries in the mobility sector,” says Klawitter.

In fact, heavy mobility is expected to be the first hydrogen application to reach cost parity with current solutions. Alfred Wong, Asia Pacific Managing Director at fuel cell provider Ballard Power Systems, believes that the industry is just “four or five years away from getting to TCO parity for heavy-duty trucks on mines that have to bring diesel to site by ship or truck.”

In terms of the amount of hydrogen produced, electrolysis and fuel cell capacity, if you put these trucks in place just in one mine, you immediately have more hydrogen consumption and capacity on the mine roads than you currently have in entire countries in the mobility sector”

JAN KLAWITTER HEAD OF INTERNATIONAL POLICY ANGLO AMERICAN

ORDER BOOKS LAG BEHIND However, all the excitement and ambitious announcements coming from the hydrogen sector have yet to materialize in electrolyzer and fuel cell providers’ order books. In the mining ENERGY AND MINES MAGAZINE

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industry, for instance, many have expressed interest, but only Anglo American and Fortescue Metals Group are actually installing electrolyzers on site to test out hydrogen applications.

“There’s a lot of interest and mining companies are developing plans, but right now, funding could be a challenge in some of these projects,” explains Alan Kneiz, Global Business Development Director at Cummins.

At the time of writing, the largest electrolyzer in operation in the world was 20 MW — a Cummins electrolyzer system installed at the Air Liquide hydrogen production facility in Bécancour, Québec.

“There’s a lot of interest and mining companies are developing plans, but right now, funding could be a challenge in some of these projects.”

ALAN KNEIZ

GLOBAL BUSINESS DEVELOPMENT DIRECTOR CUMMINS.

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While predictions indicate that manufacturers will benefit from economies of scale in the next five years, there is still a chance that this won’t happen, particularly if project developers continue to hold off on placing orders.

“For prices to come down, people need to place orders so manufacturers can convert their fabrication process from madeto-order to a manufacturing process, where they have all the necessary items to build the units on the shelf. Based on the forecast that the electrolyzer companies are seeing, they are predicting that they’ll be able to reduce the cost of electrolyzer by half by 2025, but obviously if the forecasts don’t materialize, they won’t do that,” warns Peakman.

MORE EXPERIENCE NECESSARY The truth is, while the green hydrogen economy is undeniably accelerating, it is still nascent. Electrolyzer manufacturers themselves need to gain experience before they can deliver the promised gigawatt facilities. “The focus now should be on scale.

As we think about the 20-100+MW scale projects on the horizon ENERGY AND MINES MAGAZINE

we need to take learnings from the 2-5MW projects that have already been commissioned,” notes Kneiz.

Hydrogen is almost certainly going to play a part in the mining sector’s decarbonization — whether it is used for power in microgrids, in mobility, or in processing. Most likely, green hydrogen will be produced on site and used in more than one application. But equipment providers need to test their products in a variety of mining environments before they reach commercial maturity.

“The mining environment being fairly remote, there’s still a lot that we need to learn,” admits Wong at Ballard. “There are specific operating conditions at mine sites but a lot of that can be learned from the on-road experience we’re gathering from our heavyduty trucks and buses. The fundamental technology is all there, it’s really about gathering real-life experience operating in these types of environments.”

People who work in the hydrogen space agree that all the elements needed to make green hydrogen applications a reality in the mining sector are already there: the ability to generate cheap wind and solar power, the ability to convert that electricity into hydrogen, store it and convert it back to electricity when required.

“All the components are there, but what hasn’t been done even at pilot scale is integration. That’s the key piece that’s missing: the integration process is what needs to take place. It’s the willingness and preparedness to invest in doing some trials,” notes Peakman.

“All the components are there, but what hasn’t been done even at pilot scale is integration.

That’s the key piece that’s missing: the integration process is what needs to take place. It’s the willingness and preparedness to invest in doing some trials” KEVIN PEAKMAN

HYDROGEN DIRECTOR

ENERGY ESTATE

SMALL IS BEAUTIFUL If mining companies want to see hydrogen opportunities materialize by the time they aim to hit their decarbonization targets, now is the time to get involved. Any pilot project, no matter how small, will support the development of the ENERGY AND MINES MAGAZINE

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“Small is beautiful, and pilot projects are not only about the technology; they’re about prepping your organization and working on the cultural change that’s needed.”

hydrogen economy and — perhaps more importantly — prepare organizations for the transition.

JULIEN COLAS

One of the low-hanging fruits miners could explore for hydrogen implementation is mine camps, a good testing ground where potential errors don’t have a very high impact. “Between a solar system and a hydrogen system, you could get to a point where you could power those camps completely on hydrogen and take them off grid. I think camps offer the best opportunity and are the perfect size for doing some very good early installations around some of those hydrogen mechanisms,” says Peakman.

GLOBAL PARTNERSHIPS AND SOLUTIONS ENGIE’S HYDROGEN BUSINESS UNIT

“Small is beautiful, and pilot projects are not only about the technology; they’re about prepping your organization and working on the cultural change that’s needed. When you’re talking about integrating renewable hydrogen in a mining ecosystem to provide electric power, but also to fuel heavy mobility, you are breaking silos, and that might not feel very natural at first for a large mining company. You need to change little things, but these small cultural challenges will allow you to co-create an optimized and integrated energy ecosystem,” advises Colas at Engie.

Another area of interest to miners could be rail applications.

Various companies, including Alstom and Talgo, are planning to roll out fuel cell locomotives in Europe in the next couple of years, and trains are considered to be a natural match for hydrogen, since predefined routes lower the requirement for refuelling infrastructure.

John Schellenberg, Mining Product Manager, Trucks, Global Mining at Hitachi Trucks, explains: “Thinking of some of the mine sites that I’m aware of that run their own rail systems to port, if they were able to generate hydrogen locally, the rail segment is a no-brainer. If you have a 100-150 km rail segment going to 10

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the port, that’s an easy run for rail. All you’d really have to do is change your locomotive and have your fuel system, and you’ve just decarbonized your entire rail system.”

Hydrogen’s potential in decarbonizing the mining sector is widely recognized. In power, storing renewable energy as hydrogen would allow for time shifting, bringing renewable penetration in microgrids to 100%. In mobility, while battery-electric vehicles may become the preferred solution underground, hydrogen’s versatility and flexibility make it the stronger contender for openpit heavy-haulage. And with current developments around rail and shipping applications, hydrogen could even allow miners to tackle some of their scope 3 emissions. So while the technology may take another few years to become commercially competitive, it is not too early for miners to jump on the bandwagon.

“In 2020, you had a lot of institutional players that started to forecast the installation of electrolyzers in the world. We went from a moment of visionary companies advocating for hydrogen, to it being a consensus within governments and the full ecosystem,” reminds Engie’s Colas. “Even though the electrolyzer and fuel cell production is not there yet today, it will be growing exponentially in the coming years. So, now is the time to develop the projects that will enable the pathways to net-zero mining operations.”

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Multiplying benefits with hybrid projects MELODIE MICHEL REPORTER Energy and Mines

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ave Manning, Director of Global Hybrid at juwi Renewable Energy, tells Energy and Mines about the company’s latest projects, how combined environmental and cost benefits are set to bring mining’s energy transition further, and what he expects the next milestones to be.

Energy and Mines: What are the next steps for constructing the 13.6 MWp solar farm for APA at the Gruyere Gold Mine?

“By reprocessing waste rock and tailings to remove gold left behind after the initial mining process we reduce environmental impact while maintaining tailings dams.”

DAVE MANNING DIRECTOR OF GLOBAL HYBRID JUWI RENEWABLE ENERGY

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Dave Manning: The EPC contact was recently signed and juwi is currently finalising design and procurement. On-site construction will commence in a few months for overall project completion by the end of the year.

E&M: You are also realizing a solar project for Pan African Resources in South Africa. What makes this project special?

DM: Three things stand out really. Firstly, the solar photovoltaic plant at the Evander Mines of Pan African Resources is one of the first projects in South Africa to move forward with a generation license for renewable energy. Secondly the 9.975 MW solar farm will provide an estimated 30% of the power needed by the Elikhulu Tailings Retreatment Plant and materially reduce electricity costs and carbon emissions by an estimated 26,000 tonnes per year.

Thirdly as Kobus Loots, the CEO of Pan African Resources states: “By reprocessing waste rock and tailings to remove gold left behind after the initial mining process we reduce environmental impact while maintaining tailings dams.” I think this is a great example of a triple win and can be a blueprint for the future of mining: renewable energy, plus environmental improvement, ENERGY AND MINES MAGAZINE

We are very excited indeed about the solar battery hybrid project for Sukari. Centamin has contracted us to design, build and integrate the world’s largest solar hybrid project at an off-grid mine.

while reducing costs at the same time.

E&M: In addition to Gruyere and Pan African Resources you have just signed another landmark hybrid for Centamin’s Sukari Gold Mine in Egypt. Can you tell us more about this project?

DAVE MANNING DIRECTOR OF GLOBAL HYBRID JUWI RENEWABLE ENERGY

DM: We are very excited indeed about the solar battery hybrid project for Sukari. Centamin has contracted us to design, build and integrate the world’s largest solar hybrid project at an off-grid mine. The 36 MW PV power plant and its 7.5 MW battery system maximise solar power with bifacial solar modules and a single axis tracking system. With this and the seamless integration of juwi Hybrid IQ, Centamin will be able to take full advantage of the very high irradiance at site. juwi Hybrid IQ micro-grid technology will also support the operation of the existing power station and

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provide Sukari’s operation and management teams with data to track their KPIs. The benefits of the hybrid power solution at Sukari include: • Reducing heavy-fuel oil consumption by an estimated 22 million litres-e per year; • Lowering carbon emissions by an estimated 60,000 tCO2-e per year; • Reduction of all in sustaining costs; • Reduced exposure to fuel price volatility; • Increased reliability of the power system.

This global flagship project highlights significant benefits that African mines can unlock with solar battery hybrid solutions powered with juwi Hybrid IQ. E&M: In addition to these three projects you have another three utility-scale hybrid projects currently under construction in Australia including: Esperance (Horizon Power), Jacinth Ambrosia (Iluka Resources), and Jabiru (NT Government). For Australian mines in particular, what would you say is driving this acceleration in renewable energy hybrids?

DM: Certainly, first and foremost price is driving the acceleration in new projects. In addition however, we feel that reference projects like Degrussa and Agnew are giving our clients the confidence that not only is the concept a reality, but also that it is now proven and reliable. ESG is also becoming more of talking point, and hybrid projects are delivering on the 16

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requirement for decarbonization.

E&M: How are gold mines addressing the issue of life-of-mine vs. project payback as this can often be the stumbling block for renewable hybrids?

DM: This indeed requires a fresh approach. For more and more gold mines, the benefits of solar hybrids are compelling even when they only have a confirmed mine life of 7 to 10 years. In Africa, EPC remains the preferred solution and often unlocks the lowest cash operating costs. We also work with independent power producers that can offer flexible tenors or even leasing options for power purchase agreements.

E&M: Solar has always been the technology of choice for Australian mines but, with Agnew, for example, we’re starting to see more interest in wind — why do you think wind is finally gaining traction for mining hybrids in Australia?

DM: Solar has indeed been the first choice, but when we look at

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a mine site we also analyse the wind potential. We often find that the lowest cash operating costs can be achieved by combining solar, wind and battery. This brings CO2 savings to a whole new level.

As we showed at Energy and Mines last year, solar and wind often complement each other during night and day and throughout the seasons. Agnew Gold has proven that 50% coverage from renewable energy is profitable and reliable.

With juwi Hybrid IQ, we help mines push these boundaries even further. Dependable hybrid power systems can now be built where solar, wind and battery cover 70%, 80% or even more of a mine’s electricity demand. With the ever increasing electrification at mines, solar and wind will become the pillars of the future energy supply of mines.

E&M: What would you like to see as the next milestone for renewable energy hybrids for Australian mines?

DM: The next milestone we would like to see is a megawatt project with more than 70% of the electricity coming from wind or solar.

Alternatively a hybrid project where we deploy our solar or wind solution with energy stored for four or more hours. This can be in batteries, with hydrogen or other storage solutions.

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Energy and Mines Africa Virtual Summit 2021 Event Report Authored by MELODIE MICHEL REPORTER Energy and Mines

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TABLE OF

CONTENTS 01

CONTENT POD 1: Business case for renewables in mines............................................................ 22

02 CONTENT POD 3: 03 Off grid mine case sudies......................... 36 CONTENT POD 4: 04 Renewables for South African mines................................................................. 42 CONTENT POD 2: Mine renewable strategies....................... 30

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CONTENT POD 5: Commercial structures for project success............................................................. 48

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CONTENT POD 6: Aligning ESG and energy strategies..... 51

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Miners take renewable energy procurement to the next level in Africa

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bundant renewable resources, unstable or expensive national grids and an increasingly favourable regulatory environment are placing Africa at the forefront of the mining energy transition.

The Energy and Mines Africa Summit, held virtually on May 4-6, 2021, brought together miners, IPPs, financiers and renewable energy experts to discuss recent projects, remaining barriers and development opportunities.

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CONTENT POD 1: BUSINESS CASE FOR RENEWABLES IN MINES 22

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CONTENT POD 1: BUSINESS CASE FOR RENEWABLES IN MINES

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enewable energy procurement in Africa is growing steadily, according to Kwasi Ampofo, Metals and Mining Analyst at Bloomberg NEF. “Even with Covid 19, 40 MW of renewable energy was procured in 2020 in Africa,” he said. This trend is supported by the continuous price drop in renewable power, which is currently the cheapest form of new electricity generation in many African countries, where grid power prices are particularly high.

Among the latest projects to be implemented in Africa, Martin Horgan, CEO of Centamin, announced the construction of a 36 MW solar farm and 7.5 MW battery storage system at the Sukari gold mine in Egypt. “We are constructing the world’s largest offgrid hybrid diesel-solar farm, which will deliver between US$9mn and US$13mn of savings per year,” he noted.

While the aforementioned savings made the business case quite clear, Horgan took the audience through the company’s decision process: as an offgrid mine, Sukari currently uses 100 million litres of diesel a year, representing about 12 to 14% of operating expenditure. The 12-year mine life (with potential to be extended), and a strong balance sheet made it possible for Centamin to invest in a renewable solution through an engineering, procurement and construction (EPC) contract with juwi and Giza Systems,

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with a 10-year payback.

De Beers is another miner committed to decarbonisation, with a global carbon neutrality target set for 2030. In its operations in southern Africa, the company expects to require about 350 MW of renewable projects to replace fossil fuels. While the company is still in the research and pre-feasibility phase, Kirsten Hund, Head of Carbon Neutrality at DeBeers Group, pointed to the need to address the full lifecycle of renewable energy solutions.

“Every solution creates new problems, and we need to think about the potential negative impacts of green energy. We need to think circular and make sure we are not going to create big hazardous waste piles,” she warned.

Rio Tinto also expects renewable energy to play a fundamental role in mine decarbonisation, but warned that there is no one-size-fits-all algorithm, and that miners need to secure the appropriate skills and capability in the project team. “The most challenging part is developing an overall credible business case. Assessment criteria including location resources available, existing infrastructure and technologies and permitting requirements must all be considered together,” advised Owen Lofthouse, Study Lead at Rio Tinto.

Because of the complexity of energy projects, miners tend to prefer a phased approach to

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renewable implementation. Bruce Anderson, CEO of modular solar and thermal battery system provider 247Solar, suggested starting with just one battery, and then phasing out diesel generator sets as they reach their end of life.

Storage is also expected to play a key role in further decarbonisation. Dave Manning, Director of Global Hybrid at juwi Renewable Energy, explained: “Lithium-ion batteries are taking the stage at the moment. Hydrogen is the buzzword with its ability to transport and store energy for a long time, but thermal energy storage is also being explored.” juwi is currently working on a 9.8 MW hydrogen

storage solution, as well as a thermal energy storage system (TESS).

Finally, an important business case consideration in Africa is the regulatory environment. Many miners pointed to the immaturity of regulatory frameworks around renewable energy generation on the continent.

“In the countries where we operate there are very early discussions but evolution is slow, so there is a lack of regulatory incentives. In many countries, the local content preference can also be a challenge if there are no suppliers available in that country,” noted Jessica Volich, Group General Manager, Sustainability, at Perseus Mining.

SPONSORS’ CORNER Azelio presented its combined heat and power (CHP) solution for longduration storage, whereby electricity from renewables is transformed into high-temperature heat and stored for up to 13 hours.

JA Solar gave a presentation on its proprietary solar panel innovation, which has attracted 33,000 customers and 11% of the global solar PV market.

Fulcrum3D talked about the importance of good baseline renewable resource data before getting started on energy projects.

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CONTENT POD 1: BUSINESS CASE FOR RENEWABLES IN MINES

Opening Welcome and Keynote: Analyzing the Strategic Value of Solar Martin Horgan, CEO, Centamin

Supporting Mining’s Energy Transition in Africa Dave Manning, Director Global Hybrid, juwi Renewable Energies (Pty) Ltd

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CONTENT POD 1: BUSINESS CASE FOR RENEWABLES IN MINES

The Role of Renewables in Reaching Carbon Neutrality Kirsten Hund, Head of Carbon Neutrality, De Beers Group

Assessing Renewable Energy Options for African Operations Owen Lofthouse, Study Lead, Rio Tinto Andre Botha. Engineer Energy Management, Richards Bay Minerals 26

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CONTENT POD 1: BUSINESS CASE FOR RENEWABLES IN MINES

The Essentials of Energy Storage for Mines Felipe Gallardo, Business Development Manager, Azelio

Solar for African Mines Ravin Singh, Senior Technical Manager, JA Solar ENERGY AND MINES MAGAZINE

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CONTENT POD 1: BUSINESS CASE FOR RENEWABLES IN MINES

The Energy Shift: How is Mining’s Appetite for Renewables Changing?

Simon Rigling, Business Development Manager, Fulcrum3D

The Changing Economics of Renewables for African Mines Kwasi Ampofo, Metals and Mining Analyst, BloombergNEF 28

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CONTENT POD 1: Business case for renewables in mines

A Clean Alternative to Gensets for Off-Grid Mines Bruce Anderson, CEO, 247Solar

Analyzing the Business Case for Renewables for Mines Niveshen Govender, COO, SAPVIA Mohamed Omer, Chief Strategy Officer, RIDA Group Jessica Volich, Group General Manager Sustainability, Perseus Mining Julio Costa, Chief Operating Officer, Syrah Resources ENERGY AND MINES MAGAZINE

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CONTENT POD 2: MINE RENEWABLES STRATEGIES

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CONTENT POD 2: MINE RENEWABLES STRATEGIES

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o kick off the second content pod, representatives of Ivanhoe Mines, Centamin and Orion Minerals took part in a panel to discuss the integration of renewable energy development into overall mining strategies. All of them agreed that the mindset change has to come from the top, and while it can be difficult for miners to raise the capital needed for energy projects on top of their capital-intensive core business, the emergence of CO2 calculations per tonne of metal produced could help to steer the industry in the right direction.

implementation could bring tremendous commercial and GHG reduction benefits, and advised the audience to look for independent guidance. “There are a lot of solutions on the market, which are difficult to compare.

Commercial restrictions need to be taken into account as well: do you invest your own cash, or ask an IPP to invest and sell you electricity across the fence? What are the cost savings and profitability of such an investment? The guidance of an independent technical expert

“Companies that embed ESG in their decisionmaking process are often demonstrated to outperform their peers, so if done correctly, it makes great commercial sense as well,” noted Martin Horgan, CEO at Centamin.

Again, presenters insisted on the benefits of a phased approach. Barry Naicker, Group ESG Manager at Pan African Resources, outlined a case study on a 10 MW solar project at the Evander Mine in South Africa, and explained that lessons learned from this project would be used for further expansion. “From a management perspective, any cost reduction is beneficial to the operations, it gives us an opportunity to be more sustainable as a gold producer,” he added.

Martin Schlecht, Chief Operating Officer at Suntrace, also stressed that phased

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CONTENT POD 2: MINE RENEWABLES STRATEGIES

can be very helpful in the process,” he said.

It can sometimes be beneficial for miners to choose a partner that can deliver turnkey solutions, particularly when it comes to shorter mine lives. “It is tough to commit renewable capital for short-term projects, but we’re looking at mobile and modular solar and wind options. We’re able to take renewable assets onto our balance sheet and offer that to customers on a short-term contract,” pointed out Rod Saffy, Global Head of Mining at Aggreko.

Build, own, operate and transfer (BOOT) contracts can be an attractive solution for miners looking for long-term cost reduction, but Jason de Carteret, Head of Development at Solarcentury Africa, recommended acting fast to get projects implemented. “Especially with a BOOT system, the quicker you install it, the quicker you can pay the capex off and own it, that will drop your power cost down to half a cent a kW/h, and for a long mine life that’s great,” he said.

In a panel of renewable and finance experts, speakers talked about the importance of the commercial viability of renewable energy projects. “None of this should be a corporate social project, profit is still important, these projects should stand on their own feet,” said Marco Lotz, Sustainability Carbon Specialist at Nedbank.

SPONSORS’ CORNER ENGIE Impact is working to kickstart the hydrogen economy, and expects total cost of ownership for hydrogen mining trucks to become competitive before 2030, due to the increased efficiency compared to internal combustion engines.

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CONTENT POD 2: MINE RENEWABLES STRATEGIES

Mining’s New Energy Opportunities, Responsibilities, and Strategies Yassine Belkabir, Managing Director, AB Mining Consultants Marna Cloete, President and CFO, Ivanhoe Mines Martin Horgan, CEO, Centamin Errol Smart, Managing Director and CEO, Orion Minerals

How and When to Integrate Hydrogen? - Towards Zero-Emissions Mining Jasper Schrijvers, Consultant, ENGIE Impact ENERGY AND MINES MAGAZINE

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CONTENT POD 2: MINE RENEWABLES STRATEGIES

Renewables and ESG - Mining for a Future Barry Naicker, Group ESG Manager, Pan African Resources

Renewables for Mines – Finding the Best Path for Implementation Martin Schlecht, Chief Operating Officer, Suntrace 34

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CONTENT POD 2: MINE RENEWABLES STRATEGIES

Lessons Learned from Hybrids for Mines Rod Saffy, Global Head of Mining, Aggreko

Renewables Experts: Weighing Opportunities with African Mines Adrienne Baker, Director, Energy and Mines Jason de Carteret, Head of Development, Solarcentury Africa David Manning, Director Global Hybrid, juwi Renewable Energies (Pty) Ltd Marco Lotz, Sustainability Carbon Specialist, Nedbank ENERGY AND MINES MAGAZINE

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CONTENT POD 3: OFFGRID MINES CASE STUDIES 36

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CONTENT POD 3: OFFGRID MINES CASE STUDIES

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n the third content pod of the conference, miners presented their offgrid hybrid projects across Africa — some with very interesting business synergies. For instance, vanadium miner Bushveld Minerals is implementing a proprietary vanadium battery at its Vametco mine in South Africa.

“The challenge of a mine is about the quality of the grid connection, the need for a stable power supply over a 24 hour period. Solar PV didn’t offer that for us, since solar has a very specific curve, so our challenge was to figure out how to integrate a battery into this process, and it became apparent to us that we had an opportunity to develop a vanadium battery around our own mine use case,” said Peter Oldacre, the company’s Head of Project Origination. Bushveld is now setting up a 3.5 MW solar plant and 1 MW vanadium (VRFB) battery that can be discharged four times a day for four hours, with no degradation.

consumption, this is the largest energy storage project in Africa banked using non-recourse finance. “The lesson learned is that the South Africa commercial banking sector is still at an early stage of understanding this type of project,” Oldacre added.

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CONTENT POD 3: OFFGRID MINES CASE STUDIES

David Kelly, Chief Operating Officer at Resolute Mining, presented the progress achieved in the Syama mine power project in Mali. After an extensive feasibility study, Resolute settled on an integrated power station comprising HFO engines instead of LFO (for 30% extra fuel efficiency and emissions benefits), a battery for spinning reserve, a solar penetration of 30%.

The company also decided to use the current tailing storage facility, once decommissioned, to house solar.

“HFO and LFO present immediate opportunities, but you also need to look at your commodity and how a hybrid solution can support the continuation of your production,” said Alex Caldwell, Head of Mining at Vivo Energy in his presentation. “Across Africa, some countries have got power interruptions, so there are good opportunities there,” he added.

project on its own balance sheet can be a good way to circumvent the lack of support from commercial banks. “When you’re negotiating the PPA, it’s with Vivo, not with the bank. This is a long-term partnership, so we’re happy to take some of the commercial risk, and in doing that it’s critical that we align our interests,” Caldwell noted.

Speakers also stressed the value of hybrid power systems for mines: reliability, predictability, cost reduction and ESG benefits.

Additionally, Wilco De Villiers, Business Development Manager, DRA Global, compared hybrid projects to insurance. “One aspect that’s often neglected is how the mine is affected by downtime. Investing in a hybrid is almost like buying insurance: how do you get the hybrid solution to add value and reduce downtime and the loss in revenue that goes with it? It’s almost an insurance policy,” he said.

Working with a provider that can finance the

SPONSORS’ CORNER Scatec presented Release, its plug and play PV and BESS rental solution, which can allow mines with short lives to embrace renewables through a short-term rental contract.

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CONTENT POD 3: OFFGRID MINES CASE STUDIES

Optimizing Mine Power with Hybrid Solutions Peter Oldacre, Head of project origination, Bushveld Minerals

Partnering on Sustainable Energy for Mines Alex Caldwell, Head of Mining, Vivo Energy Alistair Jessop, Head of Power, Vivo Energy ENERGY AND MINES MAGAZINE

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CONTENT POD 3: OFFGRID MINES CASE STUDIES

Taking an Incremental Approach to Hybridization David Kelly, Chief Operating Officer, Resolute Mining

Integrating a PV-battery System with an Existing Power Plant 40

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CONTENT POD 3: OFFGRID MINES CASE STUDIES

Release: The Plug-and-Play PV & BESS Rental Solution Roberto Berardo, Senior Business Developer, Scatec

How Can Mines Add Real Value to their Operations by Adding Renewables?

Wilco De Villiers, Business Development Manager, DRA Global ENERGY AND MINES MAGAZINE

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CONTENT POD 4: RENEWABLES FOR SOUTH AFRICAN MINES

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CONTENT POD 4: RENEWABLES FOR SOUTH AFRICAN MINES

S

outh Africa’s regulatory changes around energy generation were mentioned throughout the conference, but the fourth content pod was entirely dedicated to new opportunities in the country. In his presentation, Roger Baxter, CEO of the Minerals Council South Africa, explained that the government is looking to phase out roughly 11 GW of coal-fired power over the next decade, leading to enormous capacity pressure for the national utility, Eskom. “We’re of the view that it’s critical to bring new private energy generation onto the network. We need to fast-track the addition of renewables to the network through REIPPP [the Renewable Energy Independent Power Producer Programme, a national tender process for adding renewables to the public grid],” he said.

Eskom’s operating and capital structure is currently being unbundled to separate generation from transmission, allowing for private generation to be distributed through the national grid. According to Baxter, there are currently plans for 2.4 GW of mining self-

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generation projects in South Africa, of which 1.6 GW are renewable projects. However, these are slowed down by red tape and a lack of clarity around wheeling costs.

“The wheeling framework with Eskom needs to be analyzed early in the project. If you’re looking at a long project, the cost of wheeling is not very clear over an extended period of time,” pointed out Vusumuzi Dlamini, Principal Engineer, Electrical, Control and Instrumentation at Anglo American.

For instance, any project above 10 MW requires a license from the National Energy Regulator of South Africa (NERSA), but most speakers at the conference said they were pushing for this threshold to be lifted to 50 MW to streamline smaller projects.

Gold Fields was recently granted a NERSA licence for a 40 MW solar project at the South Deep mine, but Martin Preece, Executive Vice President, Gold Fields South Africa, explained that the project also had to go through an approval process with Eskom, which is still 43

CONTENT POD 4: RENEWABLES FOR SOUTH AFRICAN MINES

ongoing. “Relations with the regulator and licensing authority are important: you need to be close to those people and build those relationships,” he said.

Some speakers wished for a one-stop shop for regulatory approval, to simplify the process they have to go through. “We are becoming very good administrators, but a big barrier for us is getting all of this together: there are so many different departments and licenses and other aspects we have to go through. If there was a one-stop shop, it would greatly help self-generation,” said Henning Visser, Area Manager Energy at Columbus Stainless.

Sitting at the crossroads between its mining and energy businesses, Exxaro shared insights on its Grootegeluk mine project, reducing up to 36% of scope 1 and 2 emissions with an 84

MW PV solution behind the fence, which was optimized for Eskom peak tariff to reduce the cost of electricity to the mine.

The company is also exploring the possibility of bringing groups of mines together to create economies of scale on South African power projects. “Mines often occur in clusters, and a single mine’s energy project may not be project financeable around 4-5 MW, but it could produce more savings if we could increase that to 15 MW. We know our neighbours and we are seeing if we could work together to all benefit from cost savings, rather than each procuring their own solution,” said Roland Tatnall, Managing Director, Energy, Exxaro.

SPONSORS’ CORNER Heliogen presented its Sunlight Refinery, a modular concentrated solar plant (CSP) system that can be configured to produce heat, power and fuel on demand, and uses AI to reach higher accuracy.

Global Affairs Canada reminded the audience of Canada’s track record in clean technology, and offered to help connect African miners interested in developing projects with Canadian companies.

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CONTENT POD 4: RENEWABLES FOR SOUTH AFRICAN MINES

Supporting Cleantech Business Opportunities with South African Mines Chris Cooter, Acting High Commissioner in South Africa, Global Affairs Canada

Energy Challenges and Self-Generation for South African Mines Roger Baxter, CEO, Minerals Council South Africa ENERGY AND MINES MAGAZINE

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CONTENT POD 4: RENEWABLES FOR SOUTH AFRICAN MINES

Unlocking Renewables for South African Mines Fanele Mondi, CEO, EUIG Adrienne Baker, Director, Energy and Mines Vusumuzi Dlamini, Principal Engineer: Electrical, Control and Instrumentation, Anglo American Nontokozo Nkosi, Head of Commercial Office, Enel Green Power RSA Jevon Martin, Manager - Energy and Decarbonisation, Sibanye-Stillwater Henning Visser, Area Manager Energy, Columbus Stainless

Reaching New Milestones with 40 MW of Solar Martin Preece, Executive Vice President, Gold Fields South Africa 46

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CONTENT POD 4: RENEWABLES FOR SOUTH AFRICAN MINES

Driving Down Cost & Emissions in South Africa’s Mining Sector Roland Tatnall, Managing Director, Energy, Exxaro

Harnessing Concentrated Solar for South African Mines Dolf Joekes, Vice President of Sales, Heliogen ENERGY AND MINES MAGAZINE

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CONTENT POD 5: COMMERCIAL STRUCTURES 48

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CONTENT POD 5: COMMERCIAL STRUCTURES

The different commercial structures available to miners pursuing renewable energy projects were a recurring topic at the conference: EPC (where the miner contracts a provider to build a plant on the mine’s balance sheet), PPA (where the IPP owns the plant and sells electricity to the miner via a long-term agreement) and BOOT (where the IPP builds and owns the plant, but transfers ownership to the mine once a return on investment is obtained) were the most commonly cited models.

In the fifth content pod, miners, IPPs and financiers discussed the benefits of each commercial structure. Chester Goodburn, Group FM and CIO of Caledonia Mining Corporation, explained that the EPC structure worked better for the company’s 12 MW solar project at the Blanket gold mine in Zimbabwe.

“Ownership provides more flexibility and future expansion possibilities,” he said.

Still, the company solicited both types of proposal (EPC and PPA) when it first went to the market, which allowed it to get a cost comparison and consider the availability and quality of local service providers. “The EPC structure also allowed us to ensure local labour participation,” Goodburn added.

In a panel on the bankability of these projects according to their commercial structures, Clément Faure, Head of Business Development at Total Eren, noted that there are benefits and downsides to every structure, but getting ENERGY AND MINES MAGAZINE

clarity on the chosen option as early as possible is a good idea. “PPA and EPC structures pull very different strings in terms of project development. Maintaining several options in parallel can leave options open but it can create complexity in the development as well. The most challenging parameter is to try and set up a phased and pragmatic approach in addressing complexity,” he said.

At the end of the day, lenders explained that the structures are all about clear risk allocation and who the offtaker is. “The first question is: do we have appetite for the offtaker and the underlying sector, in this case the mining sector?” said Rentia von Tonder, Head of Power, Corporate and Investment Banking at Standard Bank.

Among the elements included in lenders’ due diligence is the commercial structure, company and project ownership, OEM arrangements, and increasingly, ESG safeguards. Lungile Mashele, Energy Specialist, Development Bank of Southern Africa (DBSA), warned: “One of the key things lenders are looking for is how you as the mine are going to evolve and address environmental and social issues in your entire value chains. We look at everything from community ownership to gender equality, across the entire mining operation. This is why it is much easier to look at operational mines.

The time it takes to do all the stakeholder consultations is very long and growing longer by the day.”

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CONTENT POD 5: COMMERCIAL STRUCTURES

EPC vs IPP: A Mine’s Perspective Chester Goodburn, Group FM and CIO, Caledonia Mining Corporation

Commercial Structures and Project Bankability Ashen Jugoo, Partner, Fasken Lungile Mashele, Energy SpecialistDevelopment, Bank of Southern Africa Rentia van Tonder, Head: Power, Corporate and Investment Banking, Standard Bank Clément Faure, Head of Business Development - Mining & Hybrids, Total Eren Makole Mupita, Principal, Mahlako a Phahla Investments 50

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CONTENT POD 6: ALIGNING ESG WITH ENERGY STRATEGY

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CONTENT POD 6: ALIGNING ESG WITH ENERGY STRATEGY

The last content pod in the conference focused on investors, shareholders and customers’ environmental, social and governance expectations, and how these could be integrated within mines’ energy strategies. A recent BMO Capital Markets survey of mining executives found that 45% of respondents identified ESG as the main risk to the industry in 2021, with CO2 emissions as the most scrutinized element.

“At the moment, getting scope 1 and scope 2 in order is the first thing, but as we go forward, scope 3 will be a bigger area of focus. Water use and sustainable water management is also something investors are quite concerned about,” said Colin Hamilton, Managing Director, Commodities Research at BMO Capital Markets. He added that while the social aspect of ESG, including community involvement, was generally well managed within mines, greater focus is now being placed on governance, including board diversity and management pay justification, for instance.

But the focus on climate also represents an opportunity for the mining sector, as renewable energy generally requires a lot more metals, driving investments in the industry.

For Giyani Metals for instance, decarbonizing manganese production makes business sense, since clients are mostly in the battery-electric vehicle market.

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Still, implementing decarbonization initiatives can often be an uphill battle for miners. “Governments may not understand the benefits of supporting green initiatives and may miss opportunities for development projects due to unfair taxing schemes, and shareholders may not understand the cost implications of demanding a net zero solution to an area that desperately needs infrastructure development,” pointed out Bill Lytle, Senior Vice President, Operations at B2Gold. He added that when considering the triple bottom line of people, planet and profit, renewable energy projects like B2Gold’s Fekola plant in Mali and Otjikoto in Namibia could bring tremendous commercial and ESG benefits, even after mine closure.

Detailed analysis of the sector and its environmental footprint can also help refine miners’ ESG strategy. For instance, the World Gold Council has conducted research in recent years to quantify gold’s carbon footprint, 99% of which comes from mining. This is helping gold miners to go into energy projects with confidence, knowing that scope 1 and 2 emissions are their most impactful area of focus. Harmonization of ESG certification and reporting schemes such as the Global Reporting Initiative (GRI) or the ClimateRelated Financial Disclosures (TCFD) would also be helpful, according to the speakers.

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CONTENT POD 6: ALIGNING ESG WITH ENERGY STRATEGY

Many miners are hoping for a green premium to level the playing field between those who invest more in cleaning up their production, and those who don’t — and therefore benefit from lower production costs. But according to Hamilton at BMO, a premium is unlikely in the near future. “As of yet, there’s no evidence the customer is going to pay more for that. The smarter way, and what we’re seeing more of is the producer asking their customer to add a specification, just like you would do for quality,

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about carbon. So rather than a premium, it becomes a qualification process, pressuring the whole industry towards a green base,” he said.

While mine decarbonization is still far from an easy road in Africa, the number of recent projects announced or completed, as well as miners’ increasing focus on ESG performance and the alignment of their carbon targets with their business strategies, bode well for net-zero mining on the continent.

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CONTENT POD 6: ALIGNING ESG WITH ENERGY STRATEGY

The Role of Renewables in Sustainable Mining Bill Lytle, Senior Vice President, Operations, B2Gold

Gold and Climate Change: The Energy Transition John Mulligan, Director and Climate Change Lead, World Gold Council 54

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CONTENT POD 6: ALIGNING ESG WITH ENERGY STRATEGY

Investor Demand for ESG Colin Hamilton, Managing Director - Commodities Research, BMO Capital Markets

Meeting Demand for Sustainable Materials Robin Birchall, CEO, Director, Giyani Metals ENERGY AND MINES MAGAZINE

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CONTENT POD 6: ALIGNING ESG WITH ENERGY STRATEGY

How is ESG Shaping Mining’s Corporate Strategy?

Daf Davies, Partner, SAFE Stewart Bailey, EVP - Corporate Affairs & Sustainability, AngloGold Ashanti Danny Callow, Chief Executive Officer, African Gold Group Catharine Farrow, Chair of the Sustainability Committee of the Board, Centamin Ricus Grimbeek, President and CEO, Trevali Mining Corporation

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