Battery metals may pave the way to a cleaner and greener future - but if mining them unleashes more carbon than they abate, then what’s the point? James McGrath investigates.
Mining, despite what a glossy industry brochure may tell you, is a dirty business. It involves digging minerals out of the ground, hauling them around on fume-spewing trucks and processing them using harmful chemicals.
According to the numbers from the Australian Bureau of Statistics¹, diesel creates up to 41 percent of emissions from the sector. The energy intensity of a metal operation, meanwhile, can reach between 10-55kWh per tonne² -- which can make it more energy intensive than coal extraction.
More broadly, consultancy EY estimates that the Australian mining sector uses a whopping 10 percent of the country’s total energy to power up its operations around the land.
The end use of minerals such as lithium, graphite or cobalt may help decarbonise the grid and reduce emissions, but getting them out of the ground isn’t exactly environmentally friendly. However, there are signs that both miners and OEM players are coming to the party and mining may not be a dirty word for too much longer.
The Twin Attack on Mining Site Emissions
The release of carbon emissions from mining sites comes from two main culprits - the emissions from mining trucks and equipment fuelled by diesel and the electricity needed to run on-site operations.
So it’s no surprise that the carbon mitigation efforts from the sector centre on these two offenders.
The effort to move to diesel-free operations by embracing the brave new world of electric batteries is not only being driven by miners’ desire to do just that but also the willingness of OEM players to create solutions which go beyond technology.
Powering Up a New Generation of Tech
A slew of OEM players, such as ABB, Epiroc, Komatsu, and Caterpillar, have developed electric mining equipment, hoping to take advantage of a decreasing appetite for diesel generation. For example, last year Epiroc released its second generation of electric equipment - including a 14-tonne and 18-tonne Scooptram Battery loader, an E2 Battery drill and 42-tonne Minetruck MT42 Battery. Epiroc has also worked with miners to come up with a ‘battery-as-a-service’ pricing model - which could be more important than any individual piece of kit.
While miners may baulk at the upfront cost of shiny new battery powered machinery, Epiroc realised that miners may be more inclined to make the leap if at least some of the cost was baked into OPEX budgets. Accordingly, Epiroc is planning on letting miners use their batteries for a monthly or yearly fee which reduces (or removes) the upfront cost.
“We decided to use that model for our battery machines,” Epiroc business line manager Shaiful Ali told Australian Mining³ earlier this year.
“Our service will provide the battery at a monthly nominal fee where Epiroc will be responsible for the management of the battery, the model advances of the batteries and the disposal of the battery.
“By doing that it reduces the capital significantly but we have also duplicated that OPEX model for the battery.”
It’s not the only OEM player to play in the financing space -- but this kind of thinking is a sign that the industry is not only thinking about the tech, but the conditions needed to get this tech onto site as well.
It was a point backed by Epiroc senior executive vice president, mining and infrastructure, Helena Hedblom: “The bigger mining houses often have the capacity to buy it all but for the smaller and mid-sized customers the capital expenditure (of battery electric machinery) could still meet resistance,” Hedblom said.
“We believed if we could find a way to turn the batteries into OPEX we would have customers wanting to try this, especially as we expect the technology to improve every year.”
Meanwhile, progress is also being made on cleaning up the electricity supplied to mining sites from the grid.
In Australia, a swathe of miners have jumped aboard the renewables train to integrate their mining grids with renewable sources of power. The likes of BHP spin-off South 32, OZ Minerals, New Century Resources and Gold Fields have all announced renewable energy projects within the last couple of years.
The latter has announced a partnership with Aggreko to install a hybrid solar and battery storage system at its Granny Smith gold mine in Western Australia.
Power generators and miners are also working together on regional solutions - like Alinta, which earlier this year announced plans to build a 60 megawatt solar farm near the Christmas Creek mine, owned by Fortescue Metals.
The plan was to have multiple mines in the area connected to the farm through a transmission line running alongside mines such as Roy Hill and Cloudbreak - another possible model for the industry to consider. Sadly, Alinta’s operations have recently been shuttered although certainly not due to their renewable energy foresight.
The rationale for switching to renewables comes from both a pricing and reliability viewpoint - with mines in remote areas often finding clean and reliable power hard to come by. For example, Zambia’s dispute with Glencore over the pricing of hydroelectric power supplied to the mine threatened 4,700 jobs at the latter’s Mopani Mines operation⁴.
Not depending on state-owned grids has long been a dream for miners in remote jurisdictions, but it’s only in recent years that the price curve for the technology has reached a point where miners can look into their own grids.
This is partly down to economies of scale kicking in, but Fitch Solutions says increasing environmental regulation will leave miners little choice but to look into the technology. Fitch observes that Canada and Chile have adopted a $US5 per tonne and a $US10 per tonne carbon price respectively - and subsequently miners in those two jurisdictions have piled into renewables⁵.
The rush to integrate new sources of power and the increasing electrification of mine operations (displacing diesel) is something consultancy behemoth EY has picked up on.
Why Miners have Electric Dreams
EY commissioned a study⁶ through the University of Queensland and the University of British Columbia to look at how miners were currently dealing with the electrification of their mining operations.
EY’s global metals and mining leader Paul Mitchell told New-Energy Resources that the rationale for conducting the study was relatively simple.
“We did the study because we were starting to get the question from mining executives, particularly those with underground operations, about where electrification was going,” he said.
“They were starting to see the cost-curve come down, particularly with renewables, and I think we’re now at a point where, for new mines, electrification makes sense.”
He said while retrofitting mines with electric equipment wasn’t quite feasible from an economic viewpoint, as more new mines started to go all-electric the cost curve would invariably come down.
It reflects the path being taken by renewable energy and battery power more broadly, with the International Energy Agency predicting⁷ that of the 5285GW of energy to be added to the grid by 2040, about 4000GW will be added by renewables, significantly driving down the cost of those renewables.
When it comes to switching out diesel generation with electric, expect a similar path to be trodden as the technology being applied to the automotive sector starts to scale up. EY thinks the potential for replacing diesel with electric could even lead to greater cost savings for miners over time - crucial, as average grades have halved over the past 30 years.
Mitchell also thinks that miners are starting to think smaller, which may provide another boost to the efforts to decarbonise mining sites.
“We’re going to see a lot more operations operate like bauxite operations, in that they’ll be more spread out - and that could be a game-changer for electrification,” he said.
He thinks if operations are more spread out and smaller in nature, they’d be better served by smaller mining trucks which could be conceivably powered by a battery - instead of a 500 tonne monstrosity which is just too big to shift.
“I think the industry has had a ‘bigger is better’ mentality for the better part of 50 or 60 years, but that conversation is shifting a bit more - miners are starting to think about how they can be a more nimble, smaller, but ultimately more profitable.
“So you think about that and the work being done with renewable microgrids, you can definitely start to see the possibilities for smaller scale operations being powered by renewables.”
But Mitchell said the conversation around electrification of mines and a broader push to power mine sites with more renewable sources of energy didn’t entirely centre around cost - it’s much more about the social license to operate.
“The fact miners can’t work it into their modelling scares them”
Mitchell explained that an increasing part of the wish to decarbonise came from an increasing recognition that obtaining and maintaining a social license to operate is a crucial piece of the puzzle.
“I think the conversation has turned in the last two or three years from social license being handled by an EHS officer or an external party into something that is very present in the boardroom, “ Mitchell said.
“I think just the uncertainty around license to operate and the fact that miners can’t work it into modelling scares them. Miners are scared of what they may miss in terms of community sentiment guiding conversations around how much in royalties they should pay, what sort of environmental regulations will be levelled on them - so they’re trying to do everything they can to get ahead of community sentiment.”
In fact, EY listed it as the number one issue facing miners in 2019-20 in a study⁸ released late last year: up from the seventh most important just a year before.
Increasingly, the community simply won’t abide by dirty operations in their backyard, and digitally empowered citizens are spreading the word and starting to reach all parts of the value chain for miners - from consumers to the relatively faceless money men fueling the industry.
Mitchell pointed to the case of X2 Resources, which fell short in its quest to acquire Rio Tinto’s coal assets for $2 billion back in 2016 because the pension funds fuelling X2 simply didn’t want the carbon on their books.
“I think we’re starting to see a lot of the fund managers, particularly in North America, make a many more public pronouncements around the need for miners to reduce their carbon footprint - so capital markets are demanding it,” Mitchell said.
“They see that the carbon footprint of an operation is having a huge factor on social license to operate, and that has a real cost for individual mines.”
So now social license is much broader than the community directly affected by individual mines. Investors are asking about the carbon footprint of mining operations on the other side of the planet, recognising that carbon doesn’t adhere to lines on a map.
It’s thinking that’s affecting all miners, but it has unique potential to impact battery metal miners.
”We’re seeing that if you don’t cut it on ESG, the rest of the conversation isn’t worth having”
The question of the clean credentials of battery metal miners is a much more vexing one.
While they blow up chunks of earth and leach rocks with acid to get what they’re after, they’re producing materials that could genuinely save the planet by allowing more renewables to come to the fore.
For example, Australian Ethical Super specifically calls out lithium mining as a possible exception to its ‘no mining’ portfolio rationale…with a significant caveat.
“We could invest in lithium mining companies which appropriately manage their social and environmental impacts because of the crucial role lithium plays in expanding battery energy storage needed for the transition from fossil fuel to renewable energy,” it says.⁹
The great philosophical debate around battery metal investment is also something CEO of ASX-listed ioneer, Bernard Rowe, is asked about on a regular basis from both shareholders and potential investors.
“We’re seeing a much heightened degree of interest around green credentials and ESG issues. In some of our meetings, they’re a top of the list priority,” he told New-Energy Resources.
He says that he is quizzed by existing and potential investors on a raft of environmental issues, from the company’s use of water; management of tailings; carbon-dioxide management and, increasingly, transport.
“We’re seeing that if you don’t cut it on ESG, the rest of the conversation isn’t worth having. I haven’t seen that in my 30 year career, to the level that I’m seeing now.”
Ioneer is in the early phases of getting its lithium-boron Rhyolite Ridge project in Nevada up and running, with a plan to produce 20,000 tonnes of lithium carbonate and 200,000 tonnes of boric acid per year.
Lithium’s use in the clean energy future is well-established, but boron is playing a role too - particularly in its use in the permanent magnets which power wind turbines.
Its main carbon abatement efforts from an operational level come from a plan to use steam generated from an on-site acid production facility for evaporation, with the steam to also power the acid plant itself.
It was a decision made on the back of the difficulty in transporting sulphuric acid safely, preferring to make its own on site using sulphur prill which is significantly easier to transport to site.
The process of turning the prill into acid will create heat and steam to drive a turbine, which will effectively power the entire site, with 38MW of excess power will be sold onto the local grid: something which Rowe thinks could unlock further clean energy in the area.
Rowe said there were potential third-party geothermal projects within 20km of the Rhyolite Ridge site which could get a boost as well from ioneer putting 38MW onto the grid.
“If we can get transmission lines run out to Rhyolite Ridge, it becomes easier for those other geothermal projects to get up,” he said.
“Knowing there’s a transmission line there means the developers can take the risk of developing the project without having to entice a power company to build a line in the first place.”
The fact that a junior is thinking about not only getting a commodity to market but also simultaneously unlocking a regional clean energy project speaks volumes about where the industry’s head is at.
Again, this conversation is not only being had by investors and project proponents but also end users.
“There are some large corporations who we’re talking to that, if we didn’t have those ESG characteristics with our project, we wouldn’t get in the room,” he said.
Consumers now, more than any other point inhistory, are aware of what’s going on up and down the supply chain - and they’re asking questions.
“We’re in a world where people are picking up a phone with a battery in it, and they want to know where the minerals to make that battery were dug out of the ground. They want to know what the process was, and the social impact of the operation to get those minerals,” Rowe said.
“And that’s flowing through the chain.”
They’re asking questions of the companies they’re invested in, the pension funds who invest in projects, equipment manufacturers and the project proponents themselves.
The mining industry is finding that it’s not just enough to produce a metal to help in the clean energy fight - it must also be mined in a sustainable fashion.
Otherwise, what’s the point of mining them in the first place?
1. Australian Bureau of Statistics, 2017, Energy Account Australia 2014-2015 (4604.0).
2. BCS Incorporated, 2007, Mining Industry Energy Bandwidth Study, U.S. Department of Energy Industrial Technologies Program. Estimates are based on data from the United States of America.
3. Epiroc electrifies the future of battery machines https://www.australianmining.com.au/features/epiroc-electrifies-the-future-of-battery-machines/
4. Glencore Zambia Unit May Fire 4,700 Workers -- Bloomberg, https://www.bloomberg.com/news/articles/2017-08-22/glencore-says-zambia-power-dispute-could-impact-4-700-workers
5. Shift To Renewables To Become A Growing Trend In Mining -- Fitch Solutions, https://www.fitchsolutions.com/corporates/metals-mining/shift-renewables-become-growing-trend-mining-31-08-2018
6. Will electrification spark the next wave of mining innovation? EY, 2019
7. International Energy Agency World Energy Outlook, 2018
8. 10 business risks facing mining and metals -- EY, 2018, https://www.ey.com/en_gl/mining-metals/10-business-risks-facing-mining-and-metals
9. Australian Ethical Super’s “Position on topical issues”, https://www.australianethical.com.au/super/our-position-on-topical-issues/