EMWC-2016-Interview-GoldFields-web-7

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EMWC-2016-Interview-GoldFields-web-7

20% Renewables for New Mining

Projects: A look inside Gold Fields’

Energy and Carbon Strategy

By Adrienne Baker, Director, Energy and Mines


20% Renewables for New Mining Projects: A look inside Gold Fields’ Energy and Carbon Strategy

“IN 2015, THE DATA

SUGGESTED A MARKED

REDUCTION IN COST FOR

CERTAIN RENEWABLE

ENERGY TECHNOLOGIES

AS WELL AS INCREASING

FUNDING FOR THESE

RENEWABLES. THIS IS

SOMETHING MINING

COMPANIES COULD

AND ARE TAKING

ADVANTAGE OF.”

Tsakani Mthombeni

Group Head of

Carbon & Energy,

Gold Fields

The economics of renewables and emerging

funding support for these technologies is

something the resource sector should benefit

from, says Tsakani Mthombeni, Group Head of

Carbon & Energy for Gold Fields. “In 2015, the

data suggested a marked reduction in cost for

certain renewable energy technologies as well

as increasing funding for these renewables,”

he notes. “This is something mining companies

could and are taking advantage of.”

Johannesburg-headquartered Gold Fields

is quickly emerging as a world leader in lowcarbon,

sustainable energy for mines with its

upcoming 40 MW solar project for South Deep

and its robust global energy security and carbon

reduction plans.

As Group Head of Carbon & Energy, Mthombeni

sets the gold leader’s energy strategy and

supports his operational colleagues at the

company’s eight operating mines across four

countries (South Africa, Ghana, Peru and

Australia). His key focus is maintaining energy

security for these operations and constantly

evaluating low-carbon, renewable energy

options to plug emerging energy security gaps.

Energy costs, which accounted for US$311

million in 2015, 22% of operating costs, require

a group-wide strategic approach to curtail

these costs.

Energy and Mines spoke with Mthombeni

about Gold Fields’ energy strategy, the

South Deep PV project and the next steps for

evaluating renewables options for new and

existing sites, including the Salares Norte

project in northern Chile. On Nov 21-22 at

Energy and Mines World Congress in Toronto,

Mthombeni will open the Africa-focused

session with a keynote presentation on the role

of renewables in delivering energy security and

power cost stability for mines.

“ONE OF THE FUNDAMENTAL

CHALLENGES FOR THESE PROJECTS

IS TO ENSURE AFFORDABILITY AND

SECURITY OF ENERGY SUPPLY OVER

THE LIFE-OF-MINE, ESPECIALLY FOR

REMOTE OPERATIONS WITH WEAK

AND LIMITED GRID CONNECTIVITY.”

Energy and Mines: Can you give us an update

on the RFP for a 40 MW PV system for South

Deep?

Tsakani Mthombeni: In partnership with the

environmental business NGO the Carbon War

Room, we sent the initial expression of interest

to more than 75 international developers, and

received 28 positive expressions. Then by 31

December 2015, we narrowed this down to

10 proposals. Out of those 10 proposals, we

have selected the preferred bidder and have

entered into PPA negotiations. Once these are

concluded the bidder will begin construction

which we hope will be completed and in

commercial production by Q4 2018.

E&M: Why do you think it is important for

mines to begin integrating renewables now?

TM: In 2015, the data suggested a marked

reduction in cost for certain renewable energy

technologies as well as increasing funding for

these renewables. This is something mining

companies can take advantage of.

One of the fundamental challenges for these

projects is to ensure affordability and security of

energy supply over the life-of-mine, especially

for remote operations with weak and limited

grid connectivity. The fundamental question is

“how to make a business case for renewables

to meet energy needs over the life of mine?”

E&M: What other renewables options are you

exploring for your operations?

TM: As part of our five-year regional energy

security plans, developed in 2015, all our

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20% Renewables for New Mining Projects: A look inside Gold Fields’ Energy and Carbon Strategy

“ONE OF THE

FUNDAMENTAL

CHALLENGES FOR THESE

PROJECTS IS TO ENSURE

AFFORDABILITY AND

SECURITY OF ENERGY

SUPPLY OVER THE

LIFE-OF-MINE, ESPECIALLY

FOR REMOTE OPERATIONS

WITH WEAK AND LIMITED

GRID CONNECTIVITY.”

regions regularly evaluate suitable renewable

or low-carbon energy options. Where serious

energy insecurity is identified, we will explore

renewable and alternative energy options.

We see energy security in two parts. Firstly,

there is the physical availability of power and the

potential for power disruptions. Then there is the

cost aspect. If there are rises in energy costs that

are high and unsustainable, then we will look at

alternative, more cost-effective, options.

For example, in Ghana, we have installed gas

turbines on site as that is the most economically

feasible option in the region. This will help reduce

our carbon footprint but we are also looking for

other feasible renewables, such as biomass,

there to provide a solution to the power issues

we are facing.

We are also committed to 20% renewable

energy for new projects; for our Salares Norte

site in northern Chile, at some 4 500 metersabove-sea-level,

we are busy evaluating a

“NEXT YEAR WE PLAN TO FOCUS ON

CLIMATE CHANGE, MONITORING CARBON

PRICING AT A REGIONAL LEVEL AND

LOOKING AT A SHADOW CARBON PRICE.”

number of options. It is early days, but exploring

renewables is entrenched in our pre-feasibility

assessment.

E&M: How is the price recovery for gold

affecting the energy strategy for your

operations?

TM: Our strategy is affected more by changes

in the oil price, as a lower oil price erodes the

value proposition of renewables. The gold price

recovery will, in the medium to long-term,

improve the feasibility of certain energy and

carbon reduction initiatives.

E&M: Why is carbon becoming more of a driver

for mines to consider renewables options?

TM: Post COP21, a lot of multinational companies

are expected to support their host governments’

regulatory and policy instruments, such as

carbon taxes, emissions trading and compulsory

greenhouse gas reporting requirements. We also

have to demonstrate good corporate citizenship

by reducing our carbon footprint in the regions

where we operate. There is also a growing investor

sentiment towards better understanding of the

financial impacts of climate change.

Carbon pricing alone will not make the business

case for renewable energy usage by mines,

as renewables are already becoming more

cost-effective, but carbon pricing could help in

enhancing the value proposition of renewables.

E&M: How does your carbon strategy fit with

your energy strategy?

TM: Clearly these days it is impossible to

separate energy strategy from climate change

considerations. A large share of our energy is

derived from coal and oil, significant carbon

emitters. Increasing the share of renewable

energy in our end-use energy mix has an

obvious benefit of significantly cutting our

carbon emissions. At the same time, our

regions continuously identify and implement

energy efficiency initiatives that improve our

energy productivity and thus reduce our carbon

footprint.

We have implemented a Group integrated

energy and carbon management strategy

linked to ISO 50001 principles. We have also

been working with the International Council on

Mining and Metals to pilot a climate viewer tool

which is a repository of some 15 global climate

models. This will give us insight into climate

changes, including temperature, precipitation

and water stress levels, and will enable us to

develop adaptation plans for our operations in

accordance with the science.

E&M: What are the next steps for Gold Fields’

energy strategy?

TM: Our group energy and carbon strategy

is an ever-evolving one, taking cognisance of

latest technological, operational and regulatory

developments. Next year we plan to focus on

climate change, monitoring carbon pricing at a

regional level and looking at a shadow carbon

price. South Africa and Chile, for example,

will be implementing carbon taxes over the

next two years, though they are also looking

at implementing market offset mechanisms

similar to the Emissions Reduction Fund in

Australia, which we used earlier this year.

2


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Hear from leading mining and energy experts including:

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