Energy and Mines Magazine Issue 39

Issue

39

February

2022

Centamin CEO on Renewables and ESG Plans Renewables, Sustainability Strategies and Operational Energy Choices for De Beers The Future of Zero-Carbon Mining in Africa

Sukari Mine image courtesy of Centamin

Centamin CEO on renewables and ESG plans A

frican gold miner Centamin made headlines last year when they announced the commissioning of the largest hybrid solar project at an off–grid mining operation at the Sukari mine in Egypt. Here CEO Martin Horgan provides Energy and Mines with an update on this project, future renewable deployments and their overall ESG strategy.

Energy and Mines: How is the focus on climate change and ESG driving energy decisions for your operations?

Martin Horgan: Climate-related risk is fundamentally challenging the way we generate power at Sukari and the use of fossil fuels. At Centamin we are constantly looking at ways of mitigating all carbon emissions. The planned solar PV plant will be the largest of its kind for an off-grid gold mining operation and will provide 36 MW DC during peak sun hours and is expected to deliver at

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least a 15% reduction in GHG emissions for the Sukari operation.

Under investigation in 2022 are several options to further reduce our reliance on diesel for power generation, including a ‘phase 2’ expansion of the Sukari solar PV, grid connection and LNG conversion of the existing diesel generators. Future capital investment in these such projects are supported by the recent update to our Life of Asset review which confirms at least 12 years operating mine life.

We also see substantial opportunities to use energy (and diesel)

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y

e y e

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more efficiently through optimisation of our operations. In 2021 (and ongoing) this has included optimisation of fleet with the introduction of ‘high production truck trays’ which are larger and lighter; optimisation of our processing facility including modified operational controls in the ultrafine grinding circuit, allowing intermittent shutdown of the vertical mill, and introduction of MillStar process optimisation software.

a

E&M: How are plans evolving for solar and storage at Sukari and what are your key takeaways so far?

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MH: Good. Construction commenced at the end-2021 and we remain on track to commission phase 1 Sukari solar PV towards the end of the first half of 2022. New power control systems to 4

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Image courtesy of Centamin

support integration have already been commissioned leading to optimised operation of the existing thermal power plant. The additional 7.5 MW battery–energy storage system will help us to maintain a sustainable supply of power, backing up the plant during the times of power transitioning from solar to diesel and vice versa.

Substantive increase in the unit costs of fossil fuel through 2021 makes an investment in renewables even more attractive.

Furthermore, in the case of Egypt, but relevant more broadly, there is increased competition and capacity of the local supply chain to support, fabricate and install renewable energy infrastructure.

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E&M: Do you see opportunities for further renewable energy and storage integration for Centamin’s other African projects?

MH: The options available for investment in renewable energy are location dependent and can be expected to vary from country to country (region to region). Egypt, for example, has abundant solar resources and wind in various coastal areas.

New projects provide the best opportunity to set aggressive targets for GHG reduction and allocate capital for renewable energy. Renewable energy options (and climate-related risk) should be integrated into pre feasibility decision-making for new projects to confirm if the project can meet longterm GHG reduction targets.

In the case of our Doropo Project in Cote d’Ivoire, this is currently under investigation. West African gas resources are increasingly a real consideration as an alternative to diesel and/or fuel oil power generation and being considered at early study phases to be incorporated into project planning.

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Image courtesy of Centamin

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Renewables, Sustainability Strategies and Operational Energy Choices in De Beers

D

e Beers Group is the world’s leading diamond company, with expertise in diamond exploration, mining, grading, marketing and retail. Together with their joint venture partners, they employ more than 20,000 people across the global diamond pipeline, with many of these people located in the source countries of Botswana, Canada, Namibia and South Africa.

The company has been very forward thinking and ambitious with environmental and emissions targets. In advance of her presentations at the Energy and Mines Africa Virtual Summit, Head of Carbon Neutrality Kirsten Hund provides details on these bold strategic initiatives, how these corporate goals translate to operational changes, and the implications for a shifting energy mix.

Energy and Mines: What role do you see for renewables in meeting De Beers’ climate and ESG goals?

Kirsten Hund: As part of our Building Forever 2030

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Goals, our blueprint for creating a positive and sustainable impact that will endure well beyond the discovery of our last diamond, De Beers Group has committed to be carbon neutral across all our operations under the Protecting the Natural World pillar focusing on three key areas – climate change, water, and biodiversity.

We will address our own Scope 1 and 2 Emissions through our ‘Reduce, Replace, Remove’ Strategy. Firstly, we are committed to Reduce Energy Intensity across our business by capturing efficiencies through breakthrough technology and digitalisation by 2030. This programme will change the way we mine, making it more effective, efficient and sustainable.

Secondly, the focus of much of my work is around Replace, which consists of two pillars – replacing fossil fuels and replacing fossil electricity with renewable alternatives. By 2030 we will replace most of our fossil fuels with green alternatives. For example, ENERGY AND MINES MAGAZINE

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Image from presentation by Kirsten Hund at Energy and Mines Africa 2021

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we have partnered with Anglo American to develop Hydrogen Fuel cell trucks. The first truck will be launched at our Platinum operation in South Africa this year. The second pillar, which is replacing fossil electricity with renewable alternatives, is a crucial part of our strategy as most of the power we get from the grid in Southern Africa is coal-based, and responsible for about half of our emissions. We are very lucky that in these countries the potential for renewable energy is plenty. We are therefore working, in close collaboration with Anglo American and our Joint Venture Partners in Namibia and Botswana, on developing a solar and wind infrastructure to harness this potential. With Anglo American, we plan to partner with the government and communities in South Africa in developing a regional renewable energy ecosystem. The ecosystem would not only help us reduce our Scope 2 emissions but would also provide the foundation for green hydrogen production, facilitating the roll-out of our hydrogen powered haul trucks across South Africa. We also believe that the provision of new sources of clean, reliable and affordable energy could provide a stimulus for wider socioeconomic benefits for businesses and communities across Southern Africa.

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As an option of last resort, our last strategic thrust is about Removing remaining carbon emissions from the atmosphere.

By 2030 we will remove all remaining, hard to abate carbon emissions through innovative nature-based and technical solutions, removing carbon from the atmosphere through, for example, reforestation and regenerative agriculture in the landscapes in which we operate.

E&M: What would assist mines in making the energy transition to affordable, reliable and sustainable energy?

Kirsten Hund: Creating strong alignment between different stakeholders on a green, reliable and just transition to renewable energy is crucial. Within our area of work, diverse country and company agendas, priorities and regulatory environments are

Image from presentation by Kirsten Hund at Energy and Mines Africa 2021

OUR CARBON NEUTRAL APPROACH | STRATEGIC THRUSTS

ST1

Reduce Energy Intensity (Scope 1 & 2)

8%

ST2

Replace Fossil Fuels (Scope 1)

35%

ST3

Replace Fossil Electricity (Scope 2)

45%

ST4

Recover/Remove Carbon Emissions

12%

REDUCE Energy

REPLACE Fossil fuels REPLACE Fossil electricity RECOVER Emissions

(30% from 2016 base by 2030 – Anglo and De Beers target)

(Replace with Electricity and/or Green fuels- Hydrogen )

(Replace with Renewable Electricity and Storage) (Carbon Vault, CCUS, Carbon Offsets/insets)

100% ST5

Reduce, Replace, Recover Scope 3 Emissions (strategy by 2021)

ST6

Engage Stakeholders along the value chain (Regulators, Shareholders, Suppliers, Consumers, Employees, Communities, Society)

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Impact

(Scope 1 & 2 by 2030)

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creating a highly complex environment. The goals of different stakeholders vary significantly and do not consistently align to a ‘Carbon Neutrality by 2030’ outcome. The world is running out of time, so we do need to hurry up to make this transition happen and keep global warming below 1.5 degrees. For this, we need an enabling environment that allows us to get there, while also making sure that we bring everybody along. This is not just a renewable energy transition; it also requires a transition of jobs and skills, and very new and different partnerships. We do need all hands on deck for this.

ST3

E&M: How are you benchmarking your energy decarbonisation strategy - what are some of the best resources and tools to measure progress in this area?

Kirsten Hund: As we progress on our carbon neutral journey, reporting becomes more important. We do see an increasing interest from a wide range of stakeholders in our carbon footprint, and the steps we are making to reduce it. We are currently in the process of testing different tools to effectively, and easily, measure and monitor our carbon footprint for Scope 1, 2 and 3. At the same time, we also need to find more effective ways to tell our story, that go beyond just the numbers. The Climate debate is too often reduced to a discussion about emissions figures. Yes, it is crucial to bring those emissions down to zero. But, notably in Africa, this can’t be achieved overnight. Reducing our Scope 2 emissions, for example, is not a matter of switching energy providers. At our operations, we need to develop a 14

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REPLA

T he S o

ACE FOSSIL ELECTRICIT Y (SCOPE 2) The Strategy

ource

1

2

3

The Output

The Outcome

No regrets on-site Solar PV to displace daytime load

Maximise wheeled wind to supply additional energy with best profile

Develop storage to supplement solar and wind energy to meet full load 6

renewable energy infrastructure from scratch, and that takes time. It also offers massive opportunities for real sustainable development in those countries, for the creation of jobs, skills and new business opportunities in the green economy space. And that is a story we are not telling when we reduce a sustainability debate to a review of carbon footprint data.

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Image from presentation by Kirsten Hund at Energy and Mines Africa 2021

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The Future of Zero-Carbon Mining in Africa A

frica has ambitious plans to become the continent with the lowest carbon emissions by 2030 and its mining sector is also setting ambitious carbon targets. To reach their decarbonisation goals, African miners are looking for the right solutions to both save energy and reduce carbon emissions. Martin Schlecht, Chief Operating Officer at Suntrace, discusses what can be done to accelerate the renewable energy transition in Africa’s mining industry.

Energy and Mines: Why renewables, why now: what are the drivers for assessing hybrid options for African mine sites?

Martin Schlecht: The main driver is already manifested in the decarbonisation announcement from the mining companies to reach certain CO2 reductions over the coming years. Most of them have quite ambitious targets for 2030. Defining it on a corporate level is rather easy, but then you have to break it down to the level of each mine and understand which aspects can help achieve the highest savings at a cost-competitive rate.

Implementing renewables for electricity generation

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Suntrace Project Manager, Lukas Haack at the Fekola Solar Hybrid Project of B2Gold in Mali.

Picture is courtesy of B2Gold

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The electricity generation cost of renewables is more competitive compared to fossil fuel generation. For off-grid mines,the business case is easy, because diesel and heavy fuel oil are expensive and often come with supply and price risk.

Aerial view of Fekola PV array.

MARTIN SCHLECHT CHIEF OPERATING OFFICER SUNTRACE

Picture courtesy of B2Gold

as the first stage provides typically an easy to achieve economic benefit by reducing power generation costs, which at the same time reduces the all-in mineral production cost. So there is a double benefit of saving CO2 - contributing to CO2 emission reduction targets - and reducing production costs. There is also an increasing pressure from shareholders and capital markets to decarbonise and deliver on ESG commitments.

The electricity generation cost of renewables is more competitive compared to fossil fuel generation. For off-grid mines,the business case is easy, because diesel and heavy fuel oil are expensive and often come with supply and price risk. The share of renewables implemented in the first projects is usually

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less aggressive, still relying on fossil power generation and not too much renewables; how much you want to rely or trust the renewable power generation to not sacrifice your energy security, for example when clouds are passing over. So the fossil generation is the backbone for energy supply, and renewables will be a fuel saver in the first place. This can result in some 20% to 30% penetration in the case of solar. If a higher renewable penetration is required, you may need to add batteries, shut down more engines during the day and be more aggressive in terms of reducing the generation from the engine side.

If you look at grid-connected mines, which is particularly the case in South Africa, and in a few other countries that’s a ENERGY AND MINES MAGAZINE

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South Africa is also struggling from the unreliability of Eskom’s power supply and the load shedding that’s happening in the country. They’re a threat to operations.

These are a significant issue affecting reliable operations

MARTIN SCHLECHT CHIEF OPERATING OFFICER SUNTRACE

different story. If the grid would function very nicely, then the problem is only the carbon footprint in the energy mix of the country and that’s quite carbon black in most African countries.

The renewables share in the national grids is still at low levels across the whole continent. So grid connected mines are usually dependent on coal-fired generation, particularly in South Africa.

South Africa is also struggling from the unreliability of Eskom’s power supply and the load shedding that’s happening in the country. They’re a threat to operations. So, South Africa actually is a specific case where renewables for mines are also 20

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When you install renewables, they will not go up in cost. So

gaining traction not only because of decarbonisation but also from an energy security perspective. Mines can secure some energy during the day from renewable assets. That makes them independent of the load shedding schedule from the grid. It will also create some hedge against price increases that are always on the horizon with Eskom as a result of their expensive coalfired power plants. When you install renewables, they will not go up in cost. So once you have invested in the project, your cost is basically fixed at that rate for the time frame the technology is running.

once you have invested in the project, your cost is basically fixed at that rate for the time frame the technology is running.

MARTIN SCHLECHT CHIEF OPERATING OFFICER SUNTRACE

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It would be better to have a positive cost effect on mining operations so that the cost for the minerals that are extracted is reduced.

MARTIN SCHLECHT CHIEF OPERATING OFFICER SUNTRACE

Grids will however decarbonise over time because governments are going to implement renewable generation in their networks.

So over time the energy mix will become greener and greener. But maybe that’s not fast enough for the mines to deliver to their CO2 reduction targets.

Those are the main drivers for African mine sites; to decarbonise; to optimize your power supply, either in terms of cost or in terms of reliability. There are always the two aspects that create benefits for mining operations. I don’t think anyone at this moment will invest in renewables when they increase the cost. So they will look for opportunities where they can actually save on the cost side significantly. This would definitely change with the introduction of carbon taxes, but also this perspective is not clear for global markets.

E&M: What key questions need to be addressed to get management approval for new hybrid projects?

MS: They need to fit into the decarbonisation strategy, provide an economic benefit and at least be cost-neutral in terms of power supply. It would be better to have a positive cost effect on mining operations so that the cost for the minerals that are extracted is reduced.

It’s also a question of how the mines are going to implement it. Are they doing it on balance? Are they investing their own money?

Then they need to have the funds ready to invest into the projects, if it’s not all full equity, they would need to care for the financing aspects as well. Or if they’re signing up with a developer and have an IPP building and investing in the project, they need to commit to a power purchase agreement and provide some sort of offtake guarantee to the project.

Those are the key questions; Is the CO2 reduction sufficient to

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deliver to the targets? Is it economic? And how will it be funded?

The management needs to address these key aspects and maybe if they invest their own cash, then, of course, they will also look into the profitability and the returns on investment for this specific investment into the renewable asset.

E&M: What solutions are mining companies exploring to address life-of-mine vs. project payback challenges?

MS: That’s very different if you have a life-of-mine that is just a few years. I don’t think this would be a priority project at this point because there may be younger mines or mines with a longer life-of-mine that allow for longer operating periods and increase the payback. It’s more beneficial the longer you can operate the renewable project. If your life of mine is just five years and it’s closed down after that, a mine may not invest in that project today.

An off-grid solar project has a fairly short payback period due to the high savings against the fuel cost. It can look different for grid connected mines, depending on the actual electricity tariff for the mine.

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An off-grid solar project has a fairly short payback period due to the high savings against the fuel cost.

MARTIN SCHLECHT CHIEF OPERATING OFFICER SUNTRACE

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It’s important to get a holistic view of the mining operations.

Renewables can cause issues, and there are operations that always have to be prioritized.

MARTIN SCHLECHT CHIEF OPERATING OFFICER SUNTRACE

However, it could be a benefit to leave the renewable generation to the public as a legacy asset and supply green electricity to the communities around the mine by building a network connection.

The renewable energy project becomes the mine’s legacy instead of leaving only the pit and the remainders from the mining operations.

E&M: What do miners need to think about in the early stages of hybrid solution development?

MS: It’s important to get a holistic view of the mining operations.

Renewables can cause issues, and there are operations that always have to be prioritized. So it is important to figure out the most efficient way to integrate renewables without affecting the mining operations.

If there are large shares of renewables to be integrated, then you need to analyze your mining operations to make sure that you have your safety net; backup measures, storage, weather forecasting systems, and good planning.

How you integrate the management and operation of the renewable project with the mining operations is where the specifics are. It’s different for each of the mining projects. So it’s not that you just go and buy one type of project, connect it to the mining network, and then you’re done. It’s tailor-made in the details of this interconnection on the electric system, on the control, and on the power supply balancing. Also, each location will have a different profile, some will be in the desert so basically, clouds are a rare occurrence. While, in other cases, maybe you have a rainforest, where there are different patterns of clouds and fewer sun hours. If there are more clouds then the management of the renewables and fossil-fired power plants is more complicated.

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E&M: What mistakes have been made early in the project evaluation phase?

MS: I’m not sure if I would call them mistakes. At times some elements can be underestimated. So if you just install a solar project for your off-grid mine, then it creates some fuel savings.

But if for example, the weather forecasting is not properly integrated, then the fluctuation of the solar energy can impact your engine operation because the engines always have to cycle their load up and down.

So, if there’s no solar, the engines need to pick up and be prepared. You need to have engines running at a lower load, which actually costs more fuel, and their efficiency goes down to be prepared for balancing the solar. If you know when the clouds are coming in, then you can put one more engine online but if you don’t have the time to focus on the clouds constantly, you don’t want to be hit by a surprise. If there’s a sudden big cloud and your load drops from the solar and your engines cannot compensate quickly, then maybe your mill will go offline leading to some disruption in your mining operations. So you would rather pay more for the fuel. That’s maybe one example where storage wasn’t really considered in the early stages.

Another aspect where that can be improved is making a plan for the integration of the project early. Once you know what you need, you go to the market and request bidders to supply you either as an EPC or IPP, or just as an equipment supplier. If you know what kind of plant you want to purchase, you get better competition.

Several miners hesitate when it comes to spending some money or time carrying out detailed feasibility or in-depth assessment.

However, in the end, I think it’s the faster way and it will save time and money, much more than you have to pay for the upfront study. So in my view, it’s really helpful to analyze the specific ENERGY AND MINES MAGAZINE

If there’s a sudden big cloud and your load drops from the solar and your engines cannot compensate quickly, then maybe your mill will go offline leading to some disruption in your mining operations.

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Aerial view of the solar plant array, part of the 36MWp / 15.5MWh PV&Battery Fekola solar hybrid power plant, in operation since early 2021.

Picture courtesy of B2Gold

The success is defined when the renewable integration works well, and the anticipated renewable share, be it fuel savings or CO2 savings against the grid supply meets the predictions, and your investment case proves to be working.

MARTIN SCHLECHT CHIEF OPERATING OFFICER SUNTRACE

situation, and then go to the market and ask for the right supply.

If you sign up for a contract with somebody without being clear on the scope, then you’re on the hook with this supplier. Of course, the supplier will be able to fix it, but you will always pay extra.

E&M: How do miners and renewable energy experts define hybrid project success - what are some of the similarities and differences?

MS: The success is defined when the renewable integration works well, and the anticipated renewable share, be it fuel savings or CO2 savings against the grid supply meets the predictions, and your investment case proves to be working.

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The renewable energy experts would also see this as a success, just as the miners. The miners will of course, not only look at the share of renewables but at their stability of operations. For example, if you have a solar project that gives you 30% renewables, but your mine goes offline every time a cloud arrives, then, of course, it’s not a success.

It also wouldn’t be a success for the renewable energy expert, because the purpose of the project is to deliver on the objectives of the plant. The objective will always be to ensure energy security for the mining operation.

E&M: What do you see as some of the benefits of taking an ENERGY AND MINES MAGAZINE

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There are so many renewables that are being implemented across the planet and a lot of energy storage will be required to be produced for cars, solar home systems, and large-scale gridconnected batteries that the mining projects will benefit from this.

MARTIN SCHLECHT CHIEF OPERATING OFFICER SUNTRACE

incremental approach to renewables over the life of the project?

MS: If you start with a smaller scale, and you scale up the renewable fraction in the coming years after that, it has different benefits. One is that renewable energy costs will go down over time. Even though we do see a counter situation currently with module prices, steel prices, and other pricing going up due to energy shortages in China, a logistics crunch, and other challenges. Currently, the trend of PV becoming cheaper every year has seen a set-back, but surely it will recover. Also batteries are becoming cheaper every year, and their boom has just started.

I see the current market development as a kind of interruption, but that doesn’t mean that we’re at the end of the cost reductions.

There are so many renewables that are being implemented across the planet and a lot of energy storage will be required to be produced for cars, solar home systems, and large-scale gridconnected batteries that the mining projects will benefit from this. When economies after COVID and after this supply chain crunch have recovered, it will go back to the lower costs. However, building renewables at these higher prices right now may still be beneficial in some cases. When it delivers an economic benefit, you can build a bigger scale next year. For others it may make sense to wait a year or so. But always calculate the lost time in saving on production cost into the equation.

Another benefit from a smaller size first project is to convince miners that the integration of renewables and move away from fossil energy is actually a beneficial thing. Our experience shows that mining operators are usually conservative and when they’re used to engines they’re not really keen to change to solar energy.

However, when solar is proven to work, and they see that it comes with cost benefits for the production of their minerals, and it’s

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reliable, then they will be more likely to consider the shift. The success of the first project will make miners more confident and interested in aiming for the next phase of integration.

Another aspect is that decarbonisation is not only about the electricity, it’s also about the vehicles and the operations, either underground or in open pit. Usually, those vehicles are driven by diesel. There are also discussions on whether hydrogen could be used or if it’s better to be electrified. It needs to be green hydrogen, so that needs a renewable source for the electrolyzers but also electricity for the trucks needs to be generated. So this fuel that is currently going into the trucks at some point in the future will also be coming from renewable energy. That will help to scale up and the batteries that are required will be storage elements so you can oversize the renewable energy plant. Then with this oversupply, you can store it into the vehicles’ batteries, and you can also store it into hydrogen. Hydrogen at least is just a carrier of energy. So you can use the renewable excess that you don’t use during the day, put it to hydrogen, and fuel the trucks with that. It can also be done with electric vehicles. It is my guess that trucks will rather be electric than using hydrogen as a fuel, but we will see how it all develops.

Mines are testing electric trucks, but they may not consider switching all trucks to electric supply in the short term. However, in the future, it will happen. This is in line with the timeline for a bigger scale of renewables at a mine with a high penetration, because this would result in an oversized generation during the day that will provide “excess” for storage and the electrical (or hydrogen) consumption of the vehicles. This will be a good element in the electrification strategy for the mine.

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