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Energy and Water Challenges - How Strategic Thinking Can Help Mining Companies Reduce Risk, Lower Costs

Energy and Water Challenges - How Strategic Thinking Can Help Mining Companies Reduce Risk, Lower Costs

   Subject Matter Experts:
Dennis Gibson: GibsonDB@bv.com
   Jason Abiecunas: AbiecunasJP@bv.com
   Brady Hays: HaysBF@bv.com

Energy and Water Challenges: How Strategic Thinking
Can Help Mining Companies Reduce Risk, Lower Costs

Over the past few years, low commodity prices have forced mining companies to take a hard look at how they run their operations – particularly their use of energy and water.

“Energy is one of the biggest costs for mining companies," said Dennis Gibson, Chief Technical Officer for mining at Black & Veatch. “In some cases, energy use can account for as much as 50 percent of a mine's operating costs."

Most energy is used for crushing, grinding and processing, but a fair amount is devoted to obtaining, moving and treating water, which could make water an important component of operational costs. Mining companies must address water and energy risks to their businesses, including reliability of supply and potential scarcity, as well as excess water and flood risk, Gibson said.

Energy Challenges

With increasing demand on energy resources in developing and less developed countries, the chance of energy supply disruption is increasingly forcing mining companies to create their own sources of on-site power generation to supplement grid resources.

Gibson points to the problems of load shedding by electrical utilities in places like Ghana and South Africa, which has impacted production. It's an example of a trend that is forcing the mining industry to look for ways to generate its own power.

Because of their often remote locations, and the need for reliable power, many mining operations are forced to rely on diesel generators to power their operations when not connected to the grid. These generators may be reliable, but running them is expensive and produces significant carbon emissions.

For these reasons, a growing number of mining companies are incorporating on-site or locally produced renewable energy into their operations. According to Gibson, “In many locations, where environmental factors are favorable, there is significant wind and solar potential to provide far more than token power to mining operations."

Gibson recommends a “portfolio-level mix" for resilient power solutions, including renewables such as solar, wind, geothermal and hydropower, which take into account local factors and opportunities.

Microgrids for Resilience

A microgrid is a small-scale electrical grid with its own power system that usually incorporates a group of distributed energy sources, said Jason Abiecunas, Project Manager for Black & Veatch's power business.

Often microgrids are connected to larger grids for power sharing. Microgrid energy sources can include renewable energy as well as small-scale conventional generation, and usually incorporate sophisticated smart grid demand management for efficiency. "Microgrids enable you to optimize your energy use around power quality and reliability," Abiecunas said. This can be especially important for mines that have expensive, voltage-sensitive equipment.

Water Challenges

For mines, the possibility of unexpected water scarcity from drought or environmental depletion poses an equally serious challenge as energy. Unfortunately, Gibson said, when it comes to miners and drought, “the traditional approach has been reactive and in response to an emergency," rather than proactive and forward-thinking.

When drought does come, it can have huge impacts on not just a single company, but the entire mining industry. Chile, for example, has long been the top copper-producing nation in the world. However, changes in legislation relating to water rights enacted to protect aquifers in the northern region of the country have led to growing tension between mines and other large water users such as farmers. In addition, there is uncertainty about continued water availability from underground sources.

As a result, the Chilean government has been pushing mines to acquire a much larger share of their water from alternative sources, such as the sea. The northern part of Chile is the driest dessert in the world and the location of 90 percent of Chile's copper mines.

The Escondida Water Supply project in Chile, scheduled for completion in 2017, will deliver 57 million gallons of treated seawater per day to the Escondida mine, the largest copper mine in the world.

“Mining companies really need to think about diversifying their water sources as a way to manage risk," not just as a function of cost, said Brady Hays, Black & Veatch's Project Director for Escondida. “The advantage of water desalination," Hays said, “is that it takes water from a source that is uncorrelated with hydrologic cycle risk."

But whether the specific solution to a particular water or energy challenge involves renewable energy, microgrids, water treatment or other technology, the key is for mining companies to look beyond the immediate problem and toward a holistic integrated solution.

Editor’s Note: This is the first part of a five-part series on mining that can be found in the Solutions Online library on bv.com.

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Escondida Water Supply Project
Photo: Construction at the Escondida Water Supply project in Chile.