Why are large mining companies embracing Solar Energy?

June 18, 2019Our point of view

Latin America’s embrace of solar energy is enabling mining companies to procure more cost-competitive energy.

Energy Intensive Mining in Latin America

It is estimated that the global mining industry consumes 400 terawatt-hours of energy per year¹, the equivalent of France’s yearly energy demand. A large portion of that energy is consumed in Latin America, home to the world’s largest deposits of copper, silver, lithium, and gold. The mining sector in this part of the world is a multi-billion-dollar industry and has increasingly been turning to renewable energy² to help meet its energy demand³.

The final consumer mining product requires high energy intensive processes⁴ to meet the world’s growing demand. Currently, energy use from mining products accounts for over a third of mining operational costs⁵. However, as the easily accessible ore deposits become exhausted, operational costs are likely to increase and lead to more complex mining techniques, which in turn require greater energy.

Incorporating Renewable Energy into the Mining Process

To alleviate these issues, mining companies are increasingly turning to cheaper solar PV and wind power to meet requirements, reduce greenhouse gas emissions, and lower operating costs. Renewable energy from non-conventional sources in Latin America has been gaining momentum and proving to be a viable alternative energy solution. For example, over the last five years, Chile has increased renewable energy shares from 5% to 18% of total usage. Power generated by solar plants has become increasingly competitive compared to traditional forms of power – especially in Latin America, a region that benefits from excellent levels of untapped solar irradiation. Solar PV technology has seen dramatic cost reductions over the past decade, which combined with efficiency innovations, has led to pricing levels lower than 50% of conventional power costs (e.g. coal and gas). Also, solar PV and wind generation are reaching cost levels at half the cost of conventional hydro power. These changes lead to increased solar energy investment and displace conventional power.

It is estimated the global mining industry consumes 400 terawatt-hours of energy per year¹, the equivalent of the yearly energy demand of France. A large portion of that energy is consumed in the mineral-rich Latin America. Home to the world’s largest deposits of copper, silver, lithium, and gold, the mining sector in this part of the world is a multi-billion-dollar industry and has increasingly been turning to renewable energy² to help meet its energy demand³.

The mining end product required to meet the world’s growing need of these elements consists of highly energy intensive processes⁴. Currently this energy use can account for over one third of the cost⁵ of a mining operation and is likely to increase as the low-hanging-fruit ore deposits become exhausted, leading to more complex mining techniques that have greater energy requirements.

Incorporating Renewable Energy into the Mining Process

In order to alleviate these issues, mining companies are increasingly turning to ever cheaper solar PV and wind power to meet their power requirements, reduce their greenhouse gas emissions, and lower their operating costs.

Renewable energy from non-conventional sources in Latin America has been gaining momentum and proving to be a viable alternative energy solution. For example, over the last five years alone, Chile has increased their renewable energy share from 5% to 18% of their total usage. Power generated by solar plants has become very competitive compared to traditional forms of power – especially in Latin America, a region that benefits from excellent levels of untapped solar irradiation. Solar PV technology has seen dramatic cost reductions over the past decade combined with efficiency innovations, leading to pricing levels that have reached even less than 50% of conventional power costs (e.g. coal and gas). Furthermore, solar PV (and Wind in certain regions) is also reaching cost levels that are half the cost of conventional hydro power. These changes are leading to increasing investment in solar energy to displace conventional power.

Atlas Renewable Energy’s ‘Javiera’ solar plant in the Antofagasta region of northern Chile reflects a prime example of this trend towards renewable energy in mining. The 69 MW PV plant powers the Minera Los Pelambres copper mine, owned by Antofagasta Minerals, the largest private mining company in Chile. This project serves nearly 15% of the mine’s power requirements⁶.

Mining industries in Brazil, Colombia, Mexico, and Peru are also adopting a strategy of incorporating non-conventional renewable energy into their processes. By doing so, they source power at half the cost of conventional power, enhance their environmental credentials and enable business opportunities with organizations that value environmentally sustainable footprints. For example, technology companies relying on the region’s minerals, are increasingly demanding the implementation of carbon reduction measures² from suppliers.

Future Outlook

By 2022, renewable sources will account for 5% to 8% of the global mining industries’ power consumption, with more ambitious targets aimed at 15%¹. This drive towards renewable sources will lead to triple the global capacity by 2027⁷.

Incorporating solar energy offers a unique opportunity for Latin American mining companies to meet their energy needs in a sustainable, reliable, and cost-effective way. Solar is no longer just about being sustainable, it’s a way for mining companies to stay competitive in an industry where cost reductions are critical.

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