The shift to renewable sources of energy will be the very reason for the emergence of the new supermajors in mining.
The use of renewable energy in the mining sector is a strong argument for renewable energy. Renewable energy is already being used by major mining companies to realize a cost reduction of more than 40% in remote locations, which are relatively less connected to the grid. Such transitions lead to a decrease in emissions, a stabilization of costs, and an increase of the value of stakeholders in view of the fact that diesel costs are rising and ESG pressure is mounting.
A single large copper mine spends $200 million yearly on fuel only. Renewable energy not only reduces cost exposure but also helps in meeting the investors’ demands for reducing Scope 1 emissions.
1. Scope 1 Emissions and ESG Premium2. Operational Resilience and Water Savings
3. Green Capital Mobilization
4. Supply Chain and Community Multipliers
5. Technology Trailing Beyond Hybrids
6. Risk Mitigation: Weather and Reliability
7. First-Mover’s Advantage
Conclusion
1. Scope 1 Emissions and ESG Premium
The move of the mining sector to renewable energy brings to the table not only reduced costs but also better environmental and social impacts. Direct mining processes are the biggest contributors to total operational emissions, and on the other hand, solar power has far lower CO₂ equivalents per unit of energy as compared to diesel generators. Among the key players, Newmont has been able to bring down emissions significantly by employing hybrid power plants, which are in line with science-based 1.5°C climate pathways.
Companies that achieve higher ESG scores are taking the lead, and they are getting 15% higher valuation premiums when compared with non-ESG companies (MSCI data).
2. Operational Resilience and Water Savings
Remote locations are subjected to two main challenges: fuel logistics, which account for 40% of their operating expenses, and water scarcity. The use of renewable energy in the mining sector results in the elimination of 10M-liter diesel deliveries per site every year, and at the same time, it brings down the water consumption by 90%—the solar plant does not require any cooling, while the diesel plant has an evaporation of 3L/kWh.
The reliability of solar power exceeds that of diesel during the rainy season when fuel trucks cannot reach the sites.
3. Green Capital Mobilization
The utilization of renewable energy in mining is growing rapidly thanks to the new, innovative financing mechanisms that make these projects more available and more attractive. Green bonds provide a lot of money at a low rate, which goes directly to the renewable infrastructure. The miners act as off-takers for long terms by having power purchase agreements that last for decades, thus not showing large capital expenses on their financial statements. At the same time, very sharp reductions in the total costs of the projects have made the payback periods very short, turning renewables from a sustainability goal to a financial necessity that is a lot clearer.
4. Supply Chain and Community Multipliers
The advantages of the use of renewable energy in the mining sector are, in this case, a connecting link to the other sectors. According to the local content mandates, there will be 2,000 people employed in the construction industry for every 100 MW project. Besides that, there are also training programs that will annually upskill 500 workers per site.
The development of community solar farms has provided the power for 50,000 households in the vicinity of the mines, which is a big plus for the social license. The cutting down on diesel transportation has resulted in a 70% decrease in road accidents while at the same time causing the pollution of nitrogen oxides, which affect the health of the local community, to be cut down drastically.
5. Technology Trailing Beyond Hybrids
The upcoming ten years have set a goal of making renewable resources the only source of energy. The usage of long-lasting iron-air batteries capable of storing energy for 100 hours would result in the complete phase-out of diesel power. In areas with volcanic activity, geothermal energy will serve as the main power source. Small modular reactors (SMRs) will be used to regulate the energy supply for the smelting industry, which requires a lot of power and is prone to receiving an intermittent energy supply. AI manages hybrid dispatch, forecasting equipment loads one day in advance for an additional reduction of 15% in the total energy consumed. The use of blockchain technology ensures that the green characteristics are authenticated for the premium offtake markets.
6. Risk Mitigation: Weather and Reliability
Skeptics sometimes refer to the unreliable supply as a problem, but, on the other hand, renewable energy systems are still considered to be the most reliable ones, along with storage and diesel backup. These companies that are into mining have very strong N+2 redundancy because they have extra turbines ready for the main failures, which means there would be no break in production.
For the sites where renewables are used, the insurance companies are charging much lower premiums since they do not have to deal with the fire hazards that come with diesel tanks. The state-of-the-art microgrid operators are able to react in a matter of milliseconds, which is much quicker than the conventional grids, thus providing a flow of power without interruption and a very high uptime.
7. First-Mover’s Advantage
Early adopters take advantage of the nice price on PPAs before land restrictions appear. Green companies are in a better position to lure high-quality employees, reduce hiring costs, retain workers, and stimulate creativity, thus becoming more appealing, particularly as the industry expands and there is a need for skilled workers in areas such as engineering, project management, and technician roles.
Renewable energy usage in the mining sector is not just for show but an actual practice of sustainability. The mining operations themselves get—inevitably—disposed of along with the gradual establishment of the competitive advantage. Among such benefits, the resilience to financial shocks, the lead role in ESG (Environmental, Social, and Governance), and the harmony with the stakeholders all play a part in the decision to go ahead with the investment in the renewable energy sources in the mining industry.
The mining firms that are adopting renewable energy are envisioning a future in the 2030s, when emission of carbon will be highly constrained. The ones that are slow in adapting will be left with unused diesel assets leading to questionable positions with the stakeholders. The shift to renewable sources of energy will be the very reason for the emergence of the new supermajors in mining.
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