Consider this statistic. An average size off grid mine with a 30MW power plant will likely burn about $1.4 billion of diesel fuel over a 20-year period, at current prices. That’s about one third of the total cost of the mine.

Now, the Australian mining industry has suddenly discovered that there is a cheaper, cleaner and smarter way to power their operations, and the sector is now emerging as the unlikely source of the next boom in renewables investment.

I used the word unlikely, because the Australian mining industry is not usually regarded as the go-to cohort for the push into clean energy and emissions abatement, if their lobbying groups and peak bodies are anything to go by.

But while the likes of the Minerals Council of Australia spend enormous resources pushing for new coal generators and even nuclear, and promoting these ideas through their close links with the government, the industry itself now find themselves at the forefront of the transition to renewable energy.

Which makes the principal theme at this week’s Energy and Mines conference in Perth all the more extraordinary. If there was consensus among the 300-strong people in attendance, it could possibly be best summed this way: More than 50 per cent renewable share at Australian mine sites should now be considered the norm, and 100 per cent renewables will follow soon enough.

ARENA CEO Darren Miller, in announcing support for two ground-breaking projects combining wind, solar and batteries at the Agnew gold mine and the GMA garnet mine near Kalbarri, says the cost reductions in renewables are game changing.

“It is not a case of whether we replace fossil fuels with renewables, but how we integrate them.” And he says the opportunity goes beyond stationary energy, thanks to the emergence of batteries and hydrogen, and into transport as well.

“We will see rapid and ongoing cost reductions in battery costs, and mining companies moving to battery vehicles and hydrogen.”

All the more striking was the mood that this was more than just a change in electricity supply. It could preface a fundamental re-think about the nature of mining in australia.

Low cost renewable electricity means mining companies will no longer just shovel ore into shipping containers to export it for value-adding overseas, they will now look at establishing refining, processing and smelting industries considered impossible up to now.

“I think there is a huge opportunity for industry, and for the refining and processing of copper, lead, zinc, and manganese. says Justin Brown, the executive director of Element 25, which is looking to source a minimum 50 per cent and up to 90 per cent renewables for the 100MW supply needed at it Butcherbird manganese project in the Pilbara.

The Butcherbird project is looking to export value-added manganese plate, now that wind and solar has provided cheap power to enable Australian companies to compete with Chinese producers. And the Australian project will have the added advantage of being low-carbon.

“It can be a viable alternative to just shipping the ore out,” Brown says, suggesting that the renewable hydrogen export story should be supplement by the side of exporting zero carbon products such as steel, alumina and others. “Why not?” he asks.

It’s not exactly what I expected when I took the plane in Sydney to cross the Nullabor. The political and mainstream media talk in the eastern states is dominated by scare stories that renewables will be the death of Australia’s economy, kill manufacturing and destroy jobs.

The mining industry here think that sort of talk is just nuts. Luckily for them, they can pretty much ignore the federal government and its neanderthal approach to energy and emissions.

It has taken the mining industry a while to get to this point, however, as they are conservative bunch. This five-year old graph (above) – produced for an ARENA report – highlights the fact that solar PV has been beating diesel costs since around 2012.

Miners and other off grid users pay a whopping $250-$400/MWh for electricity, and solar PV prices have slumped even further than that assumed in this graph, to well below $100/MWh.

Part of the problem was that miners were not convinced that solar, or wind, could be absorbed easily into an off-grid location without affecting reliability.

Numerous pilot projects have proved this is not the case, and the rapid improvement in battery technologies, integration and control system has now given the confidence that this technology is both cheaper and more reliable than what they have now.

Having recognised the opportunity, the mining industry is unlikely to muck around. After all, on off grid sites, they don’t have to stuff around with policies, and regulators and rule makers can’t get in their way.

Consider the potential. According to Juwi, the global mining industry consumers around 400TWh of electricity a year, about twice the consumption of Australia’s entire grid.

Stephen Hanson, the chief operating officer of Juwi, which built the ground-breaking solar and battery storage facility at the Degrussa copper mine in W.A. says the global mining industry consumes around 400TWh of electricity a year, about twice the consumption of Australia’s entire grid.

Yet, at the moment, just 0.1 per cent of that supply comes from wind and solar, with just 2,240MW of wind and solar PV installed in mining sites. That’s up from just 77MW in 2013, but it remains a tiny fraction of the opportunity.

“I see a tremendous opportunity here,” Hanson says.

Will Rayward-Smith, the general manager of Sunshift, says Australia’s off-grid mining sector’s demand is around 12TWh a year, about six per cent of Australia’s total consumption.

“I think it is realistic to expect that these mines will transition to 50% renewable energy contribution over the next 10 years – similar to the Agnew project that we see being announced today,” Rayward-Smith says.

“This therefore requires more than 6TWh to come from renewable energy. If we were to assume a ratio of wind:solar of 80:20 (in-line with the Agnew project) and capacity factors of 36 per cent for wind and 23 per cent for solar, then this would require more than 400MW of solar PV and more than 1.6GW of wind.

“That’s likely to be more than $3 billion of capital works to address this market.”

That’s a view supported by EDL, which has been delivering 70 per cent renewables to the off-grid mining town of Coober Pedy in South Australia, and which will build the Agnew mine project with a mix of wind, solar and batteries to provide 60 per cent of its power needs.

“Fifty per cent renewables will be considered the norm, and 100 per cent renewables will be attainable with more battery storage and hydrogen,” says Todd Gordon, the business development manager, renewables, at EDL. And this will be done without the heavy subsidies that supported the initial Coober Pedy project.

It’s not just off grid mines turning to renewables. BHP has put out its energy contracts to tender, including the Olympic Dam mine in South Australia, and expects offers including renewables to “change the game” for its electricity supply.

It is also looking at adding wind and or solar to its W.A. mines, and Alinta has already revealed plans to add 60MW of solar to help power huge mines operated by Gina Rinehart and Fortescue Metals.

And the emergence, after decades of promise, of the so-called hydrogen economy could take things to a different scale altogether.

Warner Priest, a hydrogen expert and head of emerging technologies at Siemens, says at the smaller level, hydrogen storage could be used to take smaller off grid locations to 100 per cent renewables, and then to use hydrogen for transport fuel – another cost burden for mines and remote communities.

Indeed, electrification of transport, and particularly getting rid of diesel vehicles in underground operations, is a main priority for just about every miner – for cost, health and safety reasons, as well as security of fuel supply.

This takes us back to that 30MW diesel power plant cited at the start of this story. Priest says that is equivalent to around 38c/kWH – or $380/MWh for diesel.

Under a whole different bunch of scenarios that he presented, that remote site could be “hybridised” with around 42MW of wind, say 17MW of solar, and with the excess going into a 12MW/4MWh battery. There was the option of also spilling that excess capacity using an 8.75MW electrolier with 1.5MW of fuel cells to electricity the transport.

Broadly, under a couple of different scenarios using a mix of wind, solar and batteries, or with the hydrogen addition, the cost of power could be slashed to just 23c/kWh.

“Any new greenfield mine in 10-100MW size and greater today would be considering integration of hydrogen in production – because there is so much uncertainty about gas prices and diesel,” Priest says. “There is the potential to go 100% renewables.”

And that is exactly what CWP Renewables, along with Macquarie Group and Vestas, intend to do on another scale, with their 11GW of wind and solar planned for the Pilbara, to underpin local manufacturing and value added industries of the sort planned by Element 25, and also to export “green hydrogen” to Asia.

“Our project will be 2/3 wind and one third solar,” CWP’s Andrwe Dickson told the conference. “By combining the two and over building cheap generation, we can deliver capacity factor of 70%.”

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