Feature in S&P Global
Author: Anthony Barich
Australian miners on the path to net-zero face severe delays in renewable energy equipment and the challenge of retooling their operations to cater to renewables’ intermittency. Western Australia, which produces 57% of global iron ore exports, has multiple-gigawatt renewables projects under construction, but “[Australia is] not the only country that’s decarbonizing,” Adam Gangemi, managing director of sustainability consultancy Super Smart Energy, told S&P Global Commodity Insights. “Most of the renewables demand is going into North America and Europe. So you need to plan now to have them installed in two years’ time.” Lead times for big megawatt commercial batteries are about 60 weeks, and hydrogen haul trucks will not be available until 2028, Gangemi said. The executive cited talks with original equipment manufacturers on behalf of miners seeking to comply with new federal emissions limits that will get stricter each year.
Fortescue Metals Group Ltd. can do little to alleviate these delays other than by setting a 2030 net-zero target – earlier than most miners – so “we don’t become part of the bottlenecking beyond 2030,” Sasha Pendal, community and government engagement group manager, said during a June 15 panel at the Energy and Mines Australia Summit in Perth.
“I’m not sure, truthfully, that even our organization, governments [or] communities yet really understand the kind of supply chain constraints that we will have to work through over the next 10-plus years,” Pendal said, adding by way of example that Western Australian ports cannot currently handle imports of large wind turbines
Renewables are ‘changing the way we mine’
The decarbonization challenge is about “changing the way we mine on a fundamental level,” Michelle Ash, BHP Group Ltd.’s vice president of growth, said during a June 14 panel at the summit.
Cutting fossil fuel use is still “a massive risk-reduction exercise,” as it limits miners’ exposure to volatile energy prices, particularly since the onset of the Ukraine war, Christiaan Heyning, head of decarbonization at Fortescue unit Fortescue Future Industries Pty. Ltd., told the summit on June 14. Supply risks will rise as oil and gas investment dries up.
“We assume energy is there when we need it, and if we need more energy, we get more. In the future, that will no longer be the case,” Heyning said.
“That means we can no longer mine exactly what we want to mine at the moment we want to mine it.
“So [we] will need to be able to swing the way we operate based on our energy availability. If you think that through, that is massive – every single thing that you do actually changes,” including mine design, operations and the type of equipment used, Heyning said.
Miners would be loath to “compromise production and expectations from shareholders,” Daniel Martinez, project manager for professional services firm Stantec Inc., told Commodity Insights.
But as legislation and investors push to decarbonize the sector, miners are now looking to build more capacity into plants to allow them to use more renewables when available and ramp down production during periods of low renewable energy penetration, according to Jason Dickfos, head of growth for distributed energy producer EDL Energy.
“It’s a huge change, and it needs to be done on greenfield mine sites because they need to be able to allow that design in the mining operations to be oversized, to be able to ramp up and down. That design philosophy hasn’t really found its way yet [into planning a mine] until now,” Dickfos told Commodity Insights. “From an overall production standpoint, over the year, it will be the same; you’re just getting a better use of energy,” the executive said.
Bellevue’s ‘new benchmark in the sector’
“A new benchmark in the sector” will be set by Zenith Energy Operations Pty. Ltd.’s 88-MW hybrid power station, which aims to meet up to 80% of the power needs of the Bellevue gold project in Western Australia, Bellevue Gold Ltd. CEO Darren Stralow told the summit.
The power station is “four ti mes the size of what we need to deal with the day-to-day power requirements,” Stralow said. When you look at the installed power [that] you actually have to install to get to 80% renewable energy penetration, it’s a lot more that’s required to get to that level than by just installing gas or diesel generation,” Luke Gleeson, Bellevue’s chief sustainability officer, told Commodity Insights.
Bellevue could boost its renewable energy penetration to 90% in the future if the technology emerges to capture the excess “spilled energy” from wind and solar, Stralow said.
Bellevue is also building a 1 million metric ton-per-year plant at its namesake project after installing a 1.7-MMt/y crushing circuit, which Gleeson said gives the twofold benefit of “creating a building block to organic growth and allows us to utilize any renewable energy that exists on site. “During periods of low renewable energy, “we can turn the plant off, carry out maintenance activities and make the crushing circuit better, then focus on crushing with sprint capacity during times when there is renewable energy available,” Stralow said. Bellevue aims to produce its first gold in the December quarter and to reach net-zero by 2026.
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