Canadian miners using renewable energy to cut energy costs at mines – Barrick, Rio Tinto & Teck leading the way

Mining companies use huge amounts of energy to build and operate a mine. Energy represents about 25% of production costs for mines and many mining companies are making huge long-term investments in wind, solar and other renewable energy projects to cut expenses and clean up their operations. Companies such as Barrick Gold Corp., Teck Resources Ltd. and Rio Tinto PLC have ambitious wind-farm projects under way at their mining sites that will reduce energy costs and provide the much-needed social benefit of showing the communities where they work that progress is being made to reduce their environmental footprint.

Barrick Gold Corp, the world’s largest gold miner, is pushing ahead with alternative energy projects and has just commissioned its $70 million CAD Punta Colorada wind operation, the first wind farm built by a mining company in Chile. The site has 10 turbines generating 20 MW, with capacity to expand to 18 turbines and produce 36 MW. The operation connects to a power substation that supplies energy to Chile’s national power grid. Barrick is credited for the power it contributes to the system. Barrick also has a $8.5 million CAD wind turbine in Argentina that provides up to 20% of electricity needs for its Veladero mine. The wind projects come alongside smaller solar and biodiesel projects Barrick is working on.

Diavik Diamond Mines Inc. just announced this month that it will construct a wind farm at the site of its Diavik Diamond Mine in the Northwest Territories, said to be the largest wind farm at an operating mine when the turbines start up later next year. It will be the first large-scale wind farm in the Northwest Territories in Northern Canada and special technology was created to allow the wind farm to operate in –40 C temperatures on the site on East Island at Lac de Gras. Diavik, which is owned by Rio Tinto and Harry Winston Diamond Corp., said it will build four 2.3 MW turbines with a capacity of 9.2 MW. The mine currently relies on diesel fuel, and the wind farm is expected to reduce that consumption by 10%. The wind farm will cost up to $30 million CAD to build, but is expected to save the company about $5 million CAD in diesel costs each year, according to Corey McLachlan, Diavik’s superintendent of government and external relations.

Teck, Canada’s largest diversified mining company, made its first investment in wind energy last year by partnering with Suncor in the Wintering Hills development, an 88 MW wind project with 55 turbines near Drumheller, Alberta, Canada. Operations are set to begin in January, 2012. Teck’s share of the energy generated represents more than 1.5 times the annual power consumption at its Cardinal River coal operations in Alberta, according to the company’s latest sustainability report. Teck will also receive carbon credits to offset emissions from the mine under the emissions offsets program in place in Alberta. Saskatchewan also has emissions offset trading legislation similar to that in Alberta which the government can bring into effect anytime. It is clear from the Teck project in Alberta, this is an important regulatory piece of the puzzle to allow miners to both cut their costs and generate clean energy to power their mines. I’m hopeful the government in Saskatchewan will understand this and implement the Greenhouse Gas Emissions Act in the near future.

According to the Government of Saskatchewan there are currently 38 operating mines in Saskatchewan, none of which have yet undertaken renewable energy projects to cut their production costs. There are another 10 large mining projects under development in the province, including the BHP Billiton Jansen project which will be the world’s largest potash mine. BHP Billiton has said informally they have plans for another 4 or 5 potash mines in the province. Claude Resources is also working on developing a large gold mine in North-East Saskatchewan near the city of Flin Flon, Manitoba. As the price of building renewable energy drops and energy costs increase, mining companies are now realizing that they can save considerable amounts of money, reduce greenhouse gas emissions and reduce their environmental footprint in local communities by building renewable generation at their mine sites. The additional generation will also be welcome by SaskPower, the provincial utility in Saskatchewan, where demand is rapidly increasing. I am not a mining executive (though that would not be a bad gig) but it seems like an obvious win-win-win situation for the mining company, local communities and the utility. Given the increasing strength of the mining industry in Saskatchewan, I am looking forward to seeing which mining company is the first to develop a renewable energy project at their mine site in the province.