Energy and Mines Issue 6

DECEMBER 01 - ISSUE 6

HYDROGEN IN MINES:

THE MISSING PIECE OF THE POWER PUZZLE

WHY ARE GRID-CONNECTED

MINES TURNING TO RENEWABLES

HYDROGEN IN MINES

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HYDROGEN IN MINES

THE MISSING PIECE OF THE POWER PUZZLE As solar panels and wind turbines become commonplace on mines, hydrogen is poised to become the most talked about clean energy solution of the next decade.

By Melodie Michel, Energy and Mines

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In the past year alone, there have been more industrial-scale hydrogen undertakings than ever before: the world’s first hydrogen-powered train started running in Germany, Hyundai teamed up with Swiss hydrogen firm H2 Energy for the commercialization of 1,000 fuel cell trucks, and initiatives to blend hydrogen into gas power grids popped up in the UK, Australia and the US, amongst others.

Most mining leaders are keeping a close eye on hydrogen-related news, as they should.

But some are going much further than this: Anglo American, which started investing in hydrogen companies back in 2013, this year spun off its venture capital arm in a bid to raise funds specifically for hydrogen investment. Meanwhile, Glencore is piloting a hydrogen electrolyzer as part of its storage system at the Raglan mine in Northern Quebec, and Impala is collaborating with South African hydrogen experts to develop power, processing and transportation solutions for its mines.

sulted from the Anglo American spin-off believes this is the segment that’s showing the most promise. “Big opportunities exist in the form of large trucks, extending the argument that heavy vehicles and heavy cycle vehicles need the sort of power density that hydrogen can provide. The technology could also be applied to other large vehicles such as buses moving people from places of work to places of rest, particularly in geographies like South Africa,” he says.

Fuel cell engines were always more adapted to long-haul routes, since they have a much longer range than batteries: Hyundai’s fuel cell trucks, for example, can run 400km on a single charge. Moreover, vehicles used in a commercial setting have a more predictable route than private cars, and therefore require less refueling infrastructure. “The thing with cars is you never know where people are going to drive them, but if you’re looking at a truck or a bus, you know exactly where they’re going to be, virtually hour by hour. In a For platinum producers, investing into hydrotrucking situation, you would only need one or gen makes sense: platinum is an essential two fueling stations,” explains Robert Stasko, component of fuel cell technology. By betting chairman of the board at the Hydrogen Busion the growth of the hydrogen sector, they are ness Council of Canada (HBCoC). also developing a client base for when diesel cars (currently the number one platinum users) stop being produced. But everywhere in mining, companies are under pressure to provide metals sourced and processed responsibly, and it turns out hydrogen can help on more than one front.

THE MANY PURPOSES OF HYDROGEN Electro-mobility is without a doubt the bestknown use of hydrogen fuel cell technology, and while about 10 years ago, the focus was on the small car segment, now research and development is mostly focused on large, heavy-duty vehicles. Kevin Eggers, partner at AP Ventures, the venture capital firm that re-

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Photo:Courtesy of Siemens Silyzer 300 – Power to Gas in the ten’s of megawatt range

HYDROGEN IN MINES

In South Africa, platinum producer Impala already uses hydrogen as well as natural gas to fuel its refineries in Springs, and recently decided to leverage its existing infrastructure to test other applications, including for electro-mobility. The first product of the company’s research is a fuel cell forklift and refueling station at its base metal refinery in Springs. The prototype was developed in conjunction with the Department of Science and Technology, HySa Systems and the University of the Western Cape, and launched in March 2016.

Fahmida Smith, market development manager at Impala, says: “The idea was to look at niche mobile applications that are greener and cleaner than diesel systems. With a fuel cell vehicle, it’s cleaner, zero emissions, reduced noise, and the vehicle has got increased power, so there’s a number of positives that come out. It is a prototype system, and we try to work with others to develop economies of scale and demand to be able to get to a commercial level within South Africa.”

The company has also completed feasibility studies on fuel cell-powered buses to transport staff around its Rostenburg mines and underground load haul dumping machines.

This is not the first time a mining company has looked into hydrogen to power underground transportation equipment: in 2012, Anglo American trialed a fuel cell locomotive for the underground transportation of metals at its Dishaba mine in Limpopo, South Africa.

Underground applications are seen as particularly attractive, since zero-emissions fuel cell vehicles would reduce ventilation needs, but the flammable nature of hydrogen means miners may be slow to take up the technology.

“We still have safety concerns about utilizing compressed gas within confined spaces,” adds Smith.

“If you look at the cost of bringing a high-voltage transmission line up north [in Canada] and compare it to setting up your own microgrid that includes hydrogen to store energy, it will be cheaper than any other alternative.”

ENERGY STORAGE: HYDROGEN V. BATTERIES Many see hydrogen technology as a good storage option for mines, but how does it differ from batteries? Dmitri Bessarabov, director of the HySa Infrastructure Center of Competence at North-West University (NWU) in South Africa, explains the technical differences: “If compared with batteries, energy in the case of hydrogen is stored in the form of molecules. These molecules, if stored properly, do not ‘discharge’, unlike batteries. Also, with an increase in the number of end users of hydrogen, there is no need to constantly upgrade infrastructure to meet demand. Think of a thick copper cable, which has a cap on its ability to deliver electrical energy: if one needs more energy, copper cables get bigger and bigger. Hydrogen, due to its molecule nature, does not have that issue.”

This means that hydrogen is a lighter way to store energy for longer - justifying its use in the long-haul transportation sector, but also creating innovative avenues for filling renewable energy gaps on remote microgrids.

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“Can the traditional equipment typically used on a mine function on hydrogen? The large diesel generators on board mining trucks could be replaced with hydrogen fuel cell tanks, but no one’s really done that on mining equipment.”

Mid-day sun shining on TUGLIQ’s Energy storage facilities (hydrogen plant, Battery container and Flywheel) photo credit Justin Bulota, Copyright TUGLIQ

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HYDROGEN IN MINES

However, batteries have two advantages: they are more efficient for short-time storage, and they are at a later stage of development and commercialization. This could make competition difficult in the near term, but examples like Glencore’s use of hydrogen for storage - in conjunction with lithium-ion and flywheel batteries - at its Raglan site are encouraging. In fact, many believe hydrogen technology should not be marketed as a standalone product, but as part of a bigger storage solution. “A hydrogen fuel cell paired with a battery gives you the best of both worlds: the battery takes care of the immediate demand, and then as soon as the fuel cell kicks in, it starts supplying electricity at the level that you need to run your mine,” says Stasko.

MINERALS PROCESSING Another area that miners and hydrogen providers are increasingly looking into is metals processing. One recent example is Hybrit, a joint venture between Sweden’s SSAB, LKAB and Vattenfall to replace the coking coal traditionally used for ore-based steel making, with hydrogen. A pilot plant for this type of steel production is currently being built in Northern

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Sweden, with the goal of finalizing the production process for fossil-free steel by 2035.

According to the firm, this solution could reduce Sweden’s CO2 emissions by 10% and Finland’s by 7%.

The ammonia produced during hydrogen processing could also be captured and used instead of sulphuric acid in leaching processes, particularly for copper mining. Recent studies have found that ammonia leaching is a good alternative to acid leaching due to its lower toxicity and cost, and the increased use of hydrogen to power mines could encourage this practice.

THE ECONOMICS OF HYDROGEN The capital cost of hydrogen technology is on a downward trend, but still prohibitive in most cases. In South Africa for example, Smith explains that the reasonably cheap cost of grid electricity produced by the national utility company, Eskom, is limiting the financial viability of hydrogen. “We tried to incorporate the cost reduction from base electrical power as well as the heat that could be captured through the system, and then any reduction diesel dependency, but we haven’t been able to get the models to breakeven point,” she says.

According to Stasko at HBCoC, the capital cost of electrolyzers - the device needed to produce hydrogen - is currently double what it should be for this model to be truly economic. “Having said that, in some applications, it’s probably already economic now. If you look at the cost of bringing a high-voltage transmission line up north [in Canada] and compare it to setting up your own microgrid that includes hydrogen to store energy, it will be cheaper than any other alternative,” he adds.

In Australia too, remote mines can already

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create a business case for hydrogen use depending on the life of mine. “We wouldn’t consider a solution of this type on a mining operation that doesn’t have 20 years of life,” says Warner Priest, business development manager for emerging technologies at Siemens Australia. A 20-year payback period is likely to scare off many miners, who usually aim more towards five, but as the industry moves more and more towards a high capex, low opex model, hydrogen will continue to gain popularity.

Electrolyzers vary greatly in size: Siemens, for example, sells two models: the SILYZER 200, which starts at 1.25MW and goes up to about 20MW, and the SILYZER 300 for 10MW to 100MW capacity. For the Raglan pilot, Glencore is using a Hydrogenics electrolyzer with a capacity of just 350kW. When considering on-site hydrogen production, miners will need to take the time to assess their specific needs to choose the right product.

Since the electrolyzer will most likely be used to capture spilled energy from the power plant, they need to calculate how much energy is likely to go to waste, and chances are, if they plan to use renewables, that number will be very high. “A 50MW power plant would produce about 100MW of wind and over 40MW of solar, there is always overcapacity in renewables, so there could be times where you have 30 to 40MW of spilled energy, and you want to absorb as much of it as you can,” Priest adds.

And the good news is, when the mine life does end, electrolyzers, wind turbines and solar panels can all be repurposed for the production of clean hydrogen, either for local use, or for export: in Australia for example, scientists have identified hydrogen export as a A$1.7bn opportunity by 2030.

HYDROGEN IN MINES

Photo:Courtesy of Impala

“Big opportunities exist in the form of large trucks. Heavy vehicles and heavy cycle vehicles need the sort of power density that hydrogen can provide.”

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SAFETY FIRST Aside from the obvious cost obstacle, oth-er issues are currently blocking progress in hydrogen commercialization. The first one is infrastructure, which is practically non-existent. Koen Langie, senior hydrogen solutions developer, at ENGIE's business unit for hydrogen explains: "Decision-makers are not all aware of technological advancements and the fact that it is getting close to viable largescale deployment. Moreover, they are reluctant to take the next step, as hydrogen infrastructure doesn’t exist today and significant investment must be made to achieve a similar infrastructure level as fossil fuel supply chains. This is why several stakeholders need to share the investment risk."

It’s not just electrolyzers and refueling infrastructure that need to be invested in, but also existing equipment. “Can the traditional equipment typically used on a mine function on hydrogen? The large diesel generators on board mining trucks could be replaced with hydrogen fuel cell tanks, but no one’s really done that on mining equipment,” says Siemen’s Priest.

Another big issue that needs to be addressed is safety: hydrogen is a light gas that escapes and dilutes easily, and at a certain concentration level, if mixed with air, is explosive - a fact mining equipment operators are well aware of. One way to solve this would be to store hydrogen in the form of liquid organic hydrogen carrier (LOHC) - a type of oil - instead of pressurized tanks. This promising new technology is being tested by the Fuel Cells and Hydrogen Joint Undertaking (FCH JU) in Europe, and by HySa in South Africa.

with a project aiming to address these key questions: storage of hydrogen in the form of LOHC, ventilation and hydrogen-detecting requirements and refueling options,” says Bessarabov.

IT TAKES A VILLAGE One thing’s for sure: for hydrogen power technology to reach full commercialization in mines, it will take more than sporadic efforts from individual mines. “Once you get a more concerted effort towards hydrogen technology deployment, it will be easier to bring down pricing. At this point, there is still a fragmented approach, so it’s how do we all come together to create economies of scale,” comments Smith at Impala.

She adds that there is no hydrogen equipment manufacturing in South Africa, meaning that maintenance costs have to include the price of flying engineers over from North America or Europe. To solve this, Impala is spearheading the creation of a Special Economic Zone focused on fuel cell manufacturing within the area adjacent to its refineries.

Permits are in the process of being approved, and the company hopes to begin development there within three years.

In Chile, Codelco has also been exploring hydrogen opportunities, including fuel cell technology for electro-mobility, and hydrogen as a fuel for other mining processes. But Victor López, innovation manager, explains that aside from safety perception and equipment infrastructure, there are also concerns about the availability of hydrogen in the country.

“We also have to work with regards to the supply chain and whether the industry will be able to produce enough hydrogen for our opera“What is needed is to find a safe and econom- tions in a competitive way,” he says. “As we ical way to deliver hydrogen underground, so have an open innovation policy, it is very mining vehicles could use it. HySA is busy important to develop strategic alliances in order to diminish risk exposure and to get something done in the fastest and cheapest way.”

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HYDROGEN IN MINES

Since the majority of the renewable energy for mines is produced by independent power producers (IPPs) and sold through power purchase agreements, it is likely that IPPs will be the first to get comfortable with hydrogen technology and build expertise, before it is more widely adopted by the miners themselves.

Recent initiatives such as the Hydrogen Council, launched at Davos 2017, with 33 leading multinationals and 20 players from the hydrogen value chain as members, show that the need for co-operation is recognized by many in the industry.

A lot of work also needs to be done at government level, as many countries still lack hydrogen safety regulations and usage frameworks.

But arguably, governments’ most important role at the moment is to provide financial incentives for industry to switch to hydrogen for their fuel needs - and stick to them. “One of our members is Goldcorp, which was developing a project in co-operation with several of our other members for the development of a hydrogen facility. But because the Cap and Trade program was amended here in Ontario, that’s been put on hold,” says Stasko at HBCoC. Even policy inconsistencies won’t be able to stop the commercialization of hydrogen technology for mines: the consensus among interviewees for this article is that large-scale implementation in the sector is only five to 10 years away.

“Once you get a more concerted effort towards hydrogen technology deployment, it will be easier to bring down pricing. At this point, there is still a fragmented approach, so it’s how do we all come together to create economies of scale.”

Photo:Courtesy of Siemens. Silyzer 200 – High-pressure efficiency in the megawatt range

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HYDROGEN FOR MINES:

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Photo: Courtesy Juwi Renewable Energies 16

GRID-CONNECTED MINES TURNING TO RENEWABLES

GRIDCONNECTED WHY ARE GRID CONNECTED MINES TURNING TO RENEWABLES? Renewable energy generation is inextricably linked with off-grid mining operations, where the benefits are clear, and the potential cost savings are high. However, in the face of increasing low-carbon legislation, decreasing ore grades, and spiking energy prices, grid-connected mines are embracing renewables as a solution to burdensome cost and logistical concerns.

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As Amiram Roth-Deblon, Head of Global Business Initiatives for juwi Renewable Energies, points out, renewables have transitioned from a PR building exercise in emissions reduction or social licensing into a material opportunity for grid-connected mines to take control of their power costs and safeguard their energy security.

“It is no longer about if renewables work in mining, but how to integrate them and minimize energy cost,” he notes. “Our conversations with the mining industry today center around maximizing renewable contribution, while ensuring a robust and reliable supply of energy.”

COST IS KING The global mining industry is facing a future where falling ore grades are forcing a transition to more energy intensive mining methods. With the energy expenditure predicted to increase to more than 30% of total operational outlay, cost remains the primary driver for grid-tied mines to integrate renewable generation into their energy mix.

“Demand for renewables from mining companies has increased because of increasing financial benefits and improved energy and price security, whereas they were seen formerly as support for carbon emissions reduction and CSR,” Roth-Deblon comments. “As a rule of thumb, cost reductions for renewables and batteries are

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GRID-CONNECTED MINES TURNING TO RENEWABLES

forecast to be 3% to 8% year on year in the coming years.�

In addition to offering the opportunity for reduced operating costs, adopting renewables allows grid-tied mines to shield themselves from volatile energy markets and spiking electricity prices.

Avoiding wholesale electricity increases is a huge motivator for grid-connected mines, and sudden price hikes are not restricted to under-developed power markets. Mining companies in Australia, including Glencore and Rio Tinto, have had to absorb spot prices as high as 14,000 AUD per megawatt-hour (MWh), making viable, self-sufficient energy generation, independent of a national grid, an increasingly attractive proposition.

ENSURING ENERGY SECURITY Security of energy supply is paramount to mines, with sudden outages or mandated curtailments impacting all facets of the operation, from worker safety to production and profit. As the mining industry expands into emerging markets with immature power sectors, the integration of renewable generation offers grid-connected mines the opportunity to secure their energy supply, regardless of the strength of the local energy market.

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As Roth-Deblon points out, the flexibility of renewable solutions enables grid-connected mines to introduce them in a granular and scalable fashion, adding solar or wind to traditional energy generation methods to create a hybrid solution that ensures a consistent energy supply.

“Security of supply is of paramount importance and power station design, construction and operation differs substantially from utility-scale on-grid solar or wind. juwi has therefore developed hybrid systems that enable seamless integration of solar, wind and battery into gas, diesel or HFO power stations or mining grids,” he comments. “An example is juwi’s hybrid SCADA which provides real-time data and monitoring of all generation assets, not just wind, solar or battery. Our solutions can be deployed at new plants or as a retrofit to an existing genset fleet.”

cerns with renewable energy is the idea that the technology is still in its infancy and is therefore unreliable, an idea Roth-Deblon is quick to dismiss.

“Wind turbine technology keeps getting larger, better and cheaper. The world’s largest wind turbine now has 10 MegaWatt (MW) capacity (vestas) while GE has recently announced a 12 MW turbine. To give an idea about the scale of these wind generators, the rotor of these turbines can be up to 220 meters in length. These machines are almost as high as the Eiffel Tower or the Chrysler Building” According to the latest report from Bloomberg New Energy Finance, the cost of solar generation has fallen by 77% to a global average of 70 USD per MWh over the last seven years, while the price of wind has dropped 38% to a worldwide average of 55 USD per MWh.

Alongside the falling cost and increased reliA MATURE TECHNOLOGY ability of solar and wind generation, Roth-Deblon emphasizes the importance of battery One of the mining industry’s traditional con- storage technology to both solve intermittency

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GRID-CONNECTED MINES TURNING TO RENEWABLES

issues and provide added benefits to grid-connected mines.

“Battery energy storage systems really work as a virtual spinning reserve that balances wind, solar and thermal to its optimum point,” he notes. “At grid-connected mines, it would be energy batteries that enable energy shifting, peak shaving or ancillary services.”

The benchmark price for lithium-ion batteries fell nearly 80% from 1,000 USD per kilowatt hour (kWh) in 2010 to 209 USD per kWh in 2017, and Roth-Deblon fully expects prices to continue to fall. “In general, batteries will see the strongest cost reduction trajectory as technology improvements and production upscaling is still in an early phase.”

GLOBAL MARKET TRANSITION

“In general, batteries will see the strongest cost reduction trajectory as technology improvements and production upscaling is still in an early phase.”

In line with its global appeal, renewable energy is gaining traction across the diverse operations of the mining industry.

“Gold and Copper seem to be the trailblazers in off-grid applications at the moment, but we also see demand from a diverse range of resources such as Nickel, Graphite, Cobalt, Mineral Sands or even larger operations such as Iron Ore,” Roth-Deblon comments. “We also believe that Diamond operations could benefit greatly from renewable energy deployment.”

Roth-Deblon is keen to emphasize that, far from being restricted to emergent commodity markets with immature power sectors, mining companies are investing in renewables at a global level, even in countries with established OVERCOMING ROADBLOCKS and reliable national grids.

Despite its apparent benefits and increasing “The market activity ranges from studies at attractiveness to the mining industry, integratPFS stage to international tenders for large ing renewables into a mining operation is not operational mines in places such as Australia, without its barriers to overcome.

Chile or South Africa, to name just a few,” he comments. “It is often about behind the meter “Regulatory hurdles such as grid access, firmsolar and sometimes wind. We believe that this ing power requirements, generation, and powsegment and corporate PPAs for mining are a er trading licenses, and market mechanisms great option for mines to secure their power for battery integration are significant topics,” supply in a cost competitive way without any says Roth-Deblon. “Some of these delay the carbon footprint.” development of projects, and we are glad to be working with IPPs and mining companies to “Australia and Chile stand out and are the ones address these challenges.” to watch for large behind the meter developments,” he continues. “The USA and Canada, For established grid-connected mines looking as well as Africa or even central Asia, could to adopt renewable generation, Roth-Deblon is surprise with projects that might not be that eager to emphasize the benefits of the mine visible today.” working closely with the developer to over-

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come any potential roadblocks and achieve the ideal hybrid solution for their operations.

“The key to success for us has been a thorough understanding of the mine’s power needs and end applications for the design and implementation of a seamlessly integrated mining power solution. juwi have been working with key clients in Australia such as Rio Tinto, BHP, Newcrest and Oz Minerals to design and model large-scale renewable energy mining projects.”

DEGRUSSA’S LEGACY OF SUCCESS As evidence of the value of renewable energy to mining operations, Roth-Deblon points to the success of juwi’s collaboration with Sandfire Resources on the DeGrussa solar project. “juwi’s hybrid system at the DeGrussa has now been running for more than two years at 100% uptime and has been proven to deliver power to even the most demanding Ball/SAG mills and CIL/Leach processing plants.”

DeGrussa’s solar power provides the majority of the mine’s daytime electricity requirements and offsets around 20% of its total diesel consumption annually. Not only

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GRID-CONNECTED MINES TURNING TO RENEWABLES

“It is not easy to combine two or even three different power sources and to deliver 99.8% power station uptime, but we have both achieved and exceeded this in the field for more than two years, at the DeGrussa mine in Western Australia.”

does the project offset approximately 5 million liters of diesel fuel per annum and cut the mine’s emissions by around 12,000 tonnes of carbon dioxide a year, it also serves as an example of how renewables can effectively be integrated into a traditional generation system without loss of reliability.

“What is really new is the advancements in juwi’s integration technology and the high level of renewables that this provides, both day and night,” notes Roth-Deblon. “It is not easy to combine two or even three different power sources and to deliver 99.8% power station uptime, but we have both achieved and exceeded this in the field for more than two years, at the DeGrussa mine in Western Australia.”

In light of the success of the DeGrussa solar plant, Roth-Deblon is confident that the lessons learned can be carried forward to provide that same value to future projects with grid-connected mines.

“One relevant finding has been that wind can work at sites with PPA tenors as short as seven years and compete against pipeline natural gas, even in Western Australia,” he comments. “Another highly relevant area has been behind the meter power in Africa and Australia. We could prove at several mine sites that both on and off-site solar or wind power can reduce cash operating costs and exposure to grid price increases or reliability issues.”

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