Because of the huge amount of work, heat and processing required to produce metals, mining is one of the most energy-intensive industries in the world and accounts for an estimated 5% of global electricity consumption.
In all mining countries, the industry typically represents a significant – and sometimes the largest – slice of national energy consumption.
In Chile, the world’s largest copper producer, mining accounts for more than 20% of total power consumption; in South Africa, the proportion is about 15%; in Australia, it is 9% in Zambia, it is more than 50% – reflecting Zambia’s small installed electrical energy base compared to that of larger, more diversified economies.
“A typical mine easily spends several million dollars a month on electricity”
The United States has a huge mining industry, which produced nearly $110 billion of coal, metals and industrial metals in 2015. Yet, because of the country’s large installed energy base, mining takes under 10% of total energy usage.
“You could say that energy is the price the world pays for the metals that the mining industry unearths,” says John Dean, Commercial Manager at First Quantum Minerals’ Sentinel Mine in North-Western province. “Without the industrial metals which Zambia and other mining countries produce, there would be no homes, buildings, factories, cars, airplanes, cellphones, computers, hospitals, medical equipment and the million and one other things which enable society to function.”
Mining consumes lots of energy (both electricity and diesel fuel) for the simple reason that it involves a lot of work. Explosives are used to blast open the earth, releasing millions of tonnes of ore which have to be crushed and ground into smaller pieces. It then undergoes various chemical and heat-treatment processes before emerging at the other end as finished metal ready for export. Ore grades worldwide – and not just for copper – are getting lower; this means more work has to be done to produce a given quantity of metal. And mining is not a nine-to-five business where everything shuts down at the end of the day; it operates around the clock and throughout the year.
The global mining industry’s energy consumption is so high that it is difficult to comprehend for the average domestic residential user, for whom using a lot of electricity means running the oven, the kettle and the washing machine at the same time.
Take FQM’s high-tech $2.1-billion Sentinel Mine, in North-Western province. It uses the world’s largest rope shovels, which can lift up to 120 tonnes (120 000 kg) of ore in a single scoop. This $25-million electrically powered machine is manufactured by mining-equipment supplier Caterpillar, and is one of a fleet of three. It operates 20 hours a day, filling haul trucks which take the ore out of the open pit for processing.
The rope shovel’s average power requirement is 11 000 kW – by comparison, the power demand of an average household oven is 2.4 kW. Just one of these giant machines consumes twice as much electricity in the course of a single day as the average home in the United States consumes in an entire year.
“If you think your household electricity bill is big, consider this: a typical Zambian mine easily spends several million dollars a month on electricity,” says FQM’s Dean. “The mining industry generates most of Zesco’s income.”
An additional cost factor for Copperbelt mines is the presence of underground water: KCM’s Konkola Deep copper mine is one of the wettest in the world, and pumps 450 million litres of water to the surface every day – the equivalent of 180 Olympic-size swimming pools. The power requirements of the huge underground pump stations dwarf those of Sentinel’s gigantic rope shovels.
Mopani Copper Mines has a similar problem. “The pumping of underground water to the surface is the single largest component of our energy costs,” says John Chiwele, the company’s Chief Financial Officer.
In the current load-shedding environment, Zambia’s mines are playing their part. They have cut back on energy usage in non-essential areas, and optimised as far as possible the usage of energy-intensive machinery and equipment. But ultimately, given the energy-intensive nature of mining, this can only be pushed so far before it begins to affect production levels.
Access to energy (and water) is one of the top 10 business risks facing the global mining industry, according to a 2014 report by Ernst & Young. That’s why mining companies are stepping up efforts to secure affordable, reliable power for their operations – and the communities which surround them.
Swiss mining and trading company Glencore has invested $368 million and more than four years building a 450-MW hydroelectric plant in the Democratic Republic of Congo; in Chile, the Gabriela Mistral copper mine has installed one of the world’s largest solar projects in the middle of the Atacama Desert, and it supplies about 85% of the mine’s energy needs; and here in Zambia, FQM has built 600 km of powerlines, at a cost of nearly $100 million, to bring power from the national grid to its Sentinel mine, and the new town of Kalumbila. New energy infrastructure is driven by each country’s particular circumstances. So while solar might make sense for certain Chilean mines in remote, desert-like locations far from the national grid, it is less of an option in Zambia: despite good sunshine, solar would still require expensive diesel-generator back-up, and would not deliver the stable, uninterrupted supply the mines need for their machinery and equipment.
Energy infrastructure for mining projects is hugely expensive, and can easily double the capital cost of a new project. It is therefore typically factored into the initial investment decision to build the mine. The most important factor driving the decision to invest in energy infrastructure is whether or not there is power available in the first place, for no mining company would ever choose to make such a huge non-core investment if there was already an accessible and affordable power source available.
This was the case at the time of privatisation in Zambia nearly 20 years ago, when the country had large amounts of surplus power that needed utilisation. Indeed, the fact that Zesco was prepared to offer low tariffs in order to achieve some revenue from its surplus power was seen by investors as a major competitive advantage for Zambia at the time.
That was a long time ago, and the burgeoning economic growth Zambia – and the world – has seen since then has dramatically changed the power equation for the global mining industry. In fact, its need for reliable, affordable energy comes at the worst possible time, for there is a shortage looming on the horizon.
The International Energy Agency, which is made up of 29 member countries, estimates in a 2014 study that the world needs some $48 trillion of investment in new energy infrastructure to head off a power crunch by 2035.
“We are in a period of unprecedented expansion of energy demand,” says a 2014 report, Better Growth, Better Climate. “Energy use has grown by more than 50% since 1990, fueling a global economy that has more than doubled in size.”
Mining has been an integral part of the economic growth the world has seen in recent decades. It has provided the vital supply of industrial metals, such as copper, without which no industrialisation and development is possible. This dependence on the global mining industry will continue, and energy will be an integral part of it.
As Alberto Salas, president of Chile’s National Mining Society told the Latin American Herald Tribune in August 2016: “Without electricity, there is no mining”.