A ground-breaking, $23.4 million project to cut out daytime diesel consumption at Rio Tinto bauxite mine at Weipa could unlock billions of dollars of similar investments in the mining industry – which is weighed down by soaring energy costs.
Mining giant Rio Tinto is to host a $23.4 million solar PV plus storage facility at its Weipa bauxite mine, that is the first of its type and scale in the world and could unleash billions of dollars of similar investment.
Rio Tinto Alcan – with the help of the Australian Renewable Energy Agency – is to install a 1.7MW solar PV array at its Weipa bauxite mine later this year, and then add a further 5MW of solar PV and battery storage.
The Weipa mine (pictured) is located on the Cape York Peninsula at the very northern tip of eastern Australia, and relies on expensive diesel that has to be shipped in.
The first phase of the solar project – to be built with First Solar thin-film modules and constructed by Australian solar firm Ingenero – is expected to reduce daytime diesel demand from the mine’s 26MW diesel generator by up to 20 per cent.
However, the addition of more solar and storage to balance out intermittency could reduce daytime diesel consumption altogether at certain times.
The Weipa project was the first of around 70 submissions – worth several billion dollars of investment – from mining operators in Australia for funding for such ground breaking projects under ARENA’s $400 million remote energy program.
The ending of the commodities boom has made miners more focused on energy costs. Rio Tinto recently announced the closure of the Groote Eylandt mine in Northern Territory because it was being crushed by fuel costs. Solar and other technologies are now emerging as viable alternatives, even with the diesel excise exemption enjoyed by the mining industry.
ARENA, which has been marked for closure by Tony Abbott’s ultra conservative government in Australia, is committing $10.3 million over the two phases of the project.
ARENA CEO Ivor Frischknect said it is critical as part of a “show and tell” exercise that will help make miners understand the technology, accept its reliability, and identify where further cost cuts are made. This will lead to reduced costs in future projects, and ultimately remove the need for any government support.
“We need a few of these projects to show how cost-effective they can be,” Frischknecht told RenewEconomy.
“Transporting fuel long distances for generators is dangerous and subject to variable weather conditions – it is a costly, unpredictable arrangement that doesn’t make good economic sense.
“However, miners need to be confident about the integration of such technology, EPC contractors need to learn about the difficulties of delivering modules in such remote locations, and (sub contractors) don’t know yet what they don’t know.
“I think this is just the tip of the iceberg … energy security is a big deal for miners. ARENA sees mining as a huge potential off-grid user of renewable energy in Australia and congratulates Rio Tinto Alcan for paving the way for other mining operations to adopt renewable energy and offset diesel use through this landmark demonstration project.”
Whether ARENA gets to spend more on its remote mining energy program may depend on support in the Senate, which could reject the repeal bill being prepared by the Abbott government (which had made a pre-election promise to retain ARENA).
Frischknect said it was unclear how many such projects would need to be funded in such a way to unleash further unsubsidized investment from the mining community. “There has been a lot of discussion about that, it could be that we need to sign on all the majors to enable the key internal decision-making.”
Jack Curtis, the head of business development for First Solar in Australia, says there has been a tipping point in the mining community in the last six months, where the big operators have realized that solar can provide an economic alternative to soaring diesel and gas prices.
“We think that this will show that solar can go mainstream,” Curtis said. He expected other large companies to follow, not just in Australia, but in other solar rich mining regions. “Rio Tinto wouldn’t be doing this if it was a one-off effort,” he said.
First Solar modules were used to construct Australia’s first utility-scale solar farm in Australia, the 10MW Greenough River project near Geraldton, and the largest solar farms under construction, the combined 153MW facilities at Broken Hill and Nyngan in NSW.
Miners in Chile have begun to install solar PV projects, and even Australia’s Fortescue Metals recently tendered for a 3MW solar PV project to help power its Christmas Creek mining camp at its large Cloudbreak iron ore mine in the Pilbara. BHP Billion considered a range of renewable technology options, including solar and geothermal, in planning for its now deferred expansion of the Olympic Dam mine in South Australia.
Gareth Manderson, the general manager of operations at Rio Tinto Alcan’s Weipa mine, said the hybrid diesel/PV solution will introduce to the site “a reliable source of electricity, with low maintenance requirements.”
The first phase of the project is scheduled to be completed later this year, with phase two set for 2017. Rio Tinto Alcan will buy the electricity under a 15-year power purchase agreement.
A total of 18,000 modules will be mounted on steel and aluminium structures in the first phase, generating 2,620MWh of electricity each year for use in the mine and the processing plant. The specifications of the storage component have yet to be worked out.
Giles Parkinson is founder and editor of RenewEconomy.com.au, and is also the founder of OneStepOffTheGrid.com.au and founder/editor of www.TheDriven.io. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.