In our previous two blogs (http://bit.ly/1vBHaSU , http://bit.ly/1zxQNwU), we looked at how the Investing in African Mining Indaba event highlighted the key challenges facing the mining industry in Africa, both now and for the future.
One of the key messages we took from the event was, there are clear opportunities within the sector, but investors should be cautious. Many mining professionals expressed a keen interest in cost-saving technologies, and visitors to the UKTI Pavilion were keen to learn how the Bowman Power Group and Powertech ETC Cube solution – a new application of our Electric Turbo Compounding technology – can reduce the operational expenditure associated with power generation for mining.
Graham McDonald, Senior Sales Consultant at Bowman Power Group, who attended Mining Indaba this year, commented; “With the downward pressure on commodity prices and tightening operating margins, the industry is facing increasing pressure to deliver cost-savings. This event gave us an opportunity to present a proven technology for cutting power generation fuel costs within the mining sector, which very quickly shows results.”
Power challenges ahead for mining in Africa
One of the most significant challenges facing the African mining industry is an unreliable power infrastructure. This is a major concern, with approximately 30% of mining operation costs spent on power generation alone, compared to 23% just a few years ago. (http://bit.ly/1AhnClx)
The Financial Times reported; “For some Indaba-goers, this was their first experience of ‘load shedding’— South Africa’s current programme of rolling power outages for a few hours at a time as Eskom, the state utility, struggles to keep the lights on. Not a great backdrop for anyone thinking of investing in a power-hungry mining project, refinery or smelter here. Infrastructure is creaking.” (http://on.ft.com/1E6Zd2B)
Eskom, which provides 95% of nation’s power, uses unplanned power outages to cut back on energy output, with some of the biggest companies being asked to reduce their demand for energy by at least 10%. Many mining companies have already indicated that they’re constrained for energy, with Shaun Nel, a spokesman for the Energy Intensive Users Group of Southern Africa, commenting; “It is definitely impacting production.”
Eskom’s shortage of reliable power supply is primarily due to aging power plants which result in plant breakdowns, with Bloomberg (a global publication) reporting; “Eskom said 37% of its installed generating capacity of 41,995 megawatts was offline on Thursday, the most since it started providing twice-weekly data in January 2012.” (http://bloom.bg/1Dlw19S)
Not only is Eskom’s power supply in Africa undependable and steadily deteriorating, but both the amounts of time and energy it takes for a mine to produce results are gradually increasing. A World Bank report, The Power of the Mine, predicts that mining demand for power will triple to 23 gigawatts by 2020. (http://bit.ly/1DkWi9L)
Cutting operational costs
Our ETC technology has been utilised to handle fluctuating energy costs on multiple occasions. The technology can help high-power mining operations manage their costs, and deliver short payback periods. With ETC technology, a mining operation can reduce power generation fuel consumption by up to 7%, or increase power output with the same amount of fuel.
The value of these savings are more relevant to the mining industry now than they have ever been, with Cape Business News reporting; “Prolonged economic pressure has led to a definite shift in the mining environment, whereby major mining houses are reducing the amount of money being spent on new capital projects in favour of a stronger focus on operating expenses and efficiencies.” (http://bit.ly/1F1kEWt)