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To stimulate economies globally, governments are committing huge amounts of money. The U.S just signed off on another $900B spending bill and Joe Biden wants to commit another $2T to infrastructure spending when he becomes president. The EU also approved a $2.2 T budget for digital and energy investments. There are similar investments and commitments globally.

The mining sector is hugely important to our economies as well as to the success of the planned infrastructure development and energy transition. The metals and minerals produced by the mining sector are essential to the global supply of the materials and equipment required for us to create a more sustainable future.

VECKTA Ages of Energy

Infographic Source: Zepf V, Reller A, Rennie C, Ashfield M & Simmons J, BP (2014): Materials critical to the energy industry.

Meanwhile, mining companies are coming under increasing scrutiny with an expectation that they need to create both economic and societal benefits through their operations.

The pressure is coming from multiple angles:

  • Capital providers have begun to green their portfolios and invest in long term sustainable assets.
  • Investors expect mining companies to scrutinize capital investments in alignment with sustainability targets.
  • Regulators and investors globally are assessing and setting carbon reduction targets and/or taxes.
  • Local communities are demanding greater engagement, social responsibility and legacy.
  • Consumers want access to low carbon and green products.
  • Employees want to work for companies with values that align with their own and are increasingly expecting to work for those that want to create a more sustainable future.

It is estimated that the global mining industry consumes up to 10% of the world’s power and as such has an incredible opportunity to make a positive impact on global energy use and emissions, while facilitating the energy transition through greener resource extraction.

There is a huge opportunity for the mining companies to embrace digitization, electrification, environmentally responsible mining, focus on emission reductions and engage more proactively with consumers and communities to build a brand focused on collective success. Energy and emissions are a key aspect of this complex but exciting puzzle.

Energy & Mines

Energy can account for about 15 percent of mining costs, and up to 40 percent for metal mines.

“Following wages, energy is the second highest operational cost in mining. The primary challenge for the sector is a decrease in ore grade, which leads to an increase in energy intensity (MWh per tonne, ounce or carat). To produce the same amount of mineral/metals miners need more energy in daily, monthly and yearly basis,” explains Arnoldus Mateo van den Hurk Mir, General Manager, Renewable Energy and Mining International Observatory.

According to a report by Deloitte, ‘miners have the opportunity to drive down energy costs by up to 25% in existing operations and 50% in new mines through an effective energy management program, of which renewables are a major component. In addition to cost savings, the ability to reduce emissions and preserve the mine’s social license to operate increases the size of the prize even more.’ At VECKTA, through our assessments for mining companies, we have seen similar statistics with the ability to realize cost savings typically ranging from 30-50% over business as usual practices with CO2 reductions of 50-70% and higher driving payback periods as low as 3 years.

There are currently a number of mining sites across the world that are utilizing renewable energy to support their operations. As mining companies focus on minimizing operational costs, distributed energy systems (DES), microgrids and their use of renewable energy is becoming an attractive alternative to traditional practices.

There are many factors that feed into what makes an optimal energy solution for a mine site; the mining operation and process, current and projected energy load profile, location, existing energy solution, business priorities etc. For many mining companies the priority is resource extraction and sale to market in the most optimal way, energy is an operational input.

At a macro level there are several primary drivers for considering alternative energy systems, which will benefit the mining operation bottom line as well as their operations more holistically, social license to operate and the image of the sector in the consumer’s eye, which can all create an advantage in the market.

Mining And The Energy Transition - VECKTA

Energy Security & Reliability

Most mining companies have endured high electricity costs over the years due to their remote location (typically being at the end of a vulnerable power distribution line or being reliant on fossil fuel-fired generators). Global energy costs have also continued to fluctuate. In the mining industry, energy security remains absolutely essential when it comes to controlling the operating costs. Mines require consistent power availability in order to keep the company’s operations going. An over-reliance on power grids or complex logistics required to deliver traditional fuels, have frustrated many companies and impacted their bottom line.

Well designed alternative energy systems such as microgrids can operate independently from the centralized grids, and this offers greater resilience potential. By adopting microgrids with the right mix of technologies, mining companies can achieve resilience via the microgrid’s capability to island itself from the main grid and be self-sufficient. This offers mining companies energy independence, reliability and resiliency from an operational and budget perspective.

Operational Flexibility

We often see mine site operations that will grow and contract over time as the resource is developed and expanded. An advantage of DES is the ability to plan the solution around the lifecycle of the mining asset such that it can meet the operational needs at any given time. This is particularly important with renewable technologies where we are seeing significant cost reductions across the technology spectrum (PV, wind, storage, hydrogen and more). With DES we have the ability to design a solution to commercially and operationally meet the immediate needs today while considering the design for future mine site evolutions. Meanwhile, we can also consider externalities (carbon pricing, costs of fuel and technology prices over time to name but a few) over the life of the asset to best manage capital expenditures for the greatest return on investment.

Environmental Sustainability

Mining companies have been accused of producing high levels of greenhouse gases over the years. This is due to their over-reliance on fossil fuels, such as the use of diesel generators as primary and backup energy options. Government and climate change organizations have been campaigning for the adoption of renewable energy sources. Renewable energy microgrids produce zero to minimal amounts of carbon emissions as well as minimizing local pollution.

VECKTA - Mining and the Energy Transition

Improved environmental sustainability of mining site can aid in obtaining operational permits from the government. The use of renewable energy microgrids can also help mining companies to improve their relationships with local communities and stakeholders. Particularly, energy systems can be planned more holistically to also provide power to a local community, or at the end of the mine life the asset can be given to the community. The utilization of renewable energy microgrids can help many mining companies reduce environmental pollution and build a carbon-free future. Reducing emissions also cuts down the direct costs associated with them.

Reduces Mining Costs

For mining companies that utilize fossil fuels, prices can be volatile. Fossil fuels have continued to increase operating costs, and some mining companies are facing potential operational risks. On the other side, renewable energy sources offer companies a consistent operational cost profile. Many mining companies have access to significant renewable energy sources as well as inexpensive land for deploying wind and solar farms due to their remote location. Some may even have access to significant geothermal resources, which can further diversity a renewable generation portfolio and provide a non-carbon emitting source for baseload.

In regions where renewable energy can easily be generated, microgrids offer lower costs than diesel generators. Microgrids also provide a competitive cost option when compared to grid-supplied power.

The cost advantage of renewable microgrids will continue to improve with the increase in fossil fuel prices and central power costs. Meanwhile, mining companies can manage and mitigate the risks associated with future fossil fuel costs and associated emissions potentially making their assets unviable in the future.


Fossil fuel prices are volatile and unpredictable. The main grid power generation that typically feeds a mine site is also extremely volatile because it depends on factors controlled by external parties other than the mining company themselves. Once a microgrid project is completed, the costs of renewable energy generation are predictable and stable when both self-financed or via an energy as a service contract (energy procured over a long term power purchase agreement and 3rd party financing). This makes it possible for mining companies to future-proof their operations with the knowledge that their energy solution is predictable in terms of operational performance and cost.

Mining companies are essential to the energy transition and today there is both a growing community desire for them to adopt DES and a material competitive advantage opportunity.

Photo credits: (Pixabay) (Tom Fisk / Pexels)

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