Mining’s Megawatt Future: Opportunity and Imperative
March 11, 2022

GMM panel GMM panel GMM panel
  • 5 Minute Read Clock
  • Listen Listen
  • Stop Listen
  • Text Bigger | Smaller Text Bigger | Smaller

For the mining industry to decarbonize by ‘electrifying everything’, companies must collaborate with peers, push governments for support and work more closely with their supply chains to evolve technologies including battery-electric vehicle fleets.

Those were some of the main takeaways from the Mining’s Megawatt Future? panel at BMO’s 31st Annual Global Metals and Mining conference that was hosted by the BMO Climate Institute.

The panel, moderated by Simon Fish and Susan McGeachie, Chair and Head of the BMO Climate Institute respectively, saw leading experts examine the opportunities for electrification and transformation in the mining industry in the face of climate change and the transition to a net-zero world. Panelists Richard Florizone, president and CEO of the International Institute for Sustainable Development, Jody Kuzenko, president and CEO of Torex Gold Resources, and Mark Travers, past CEO of Vale Base Metals explored the role of electrification in climate change mitigation, and the transformation of mining in the transition to a low carbon economy.

Opportunity and Imperative

There is no question that electrification represents both an opportunity and imperative for the mining industry, but, said Torex Gold’s Jody Kuzenko, a lot still needs to happen before the sector can make that transition. Firstly, she said, miners must start sharing knowledge with one another – including technologies, innovation and ideas – as the energy transition is too complex for companies to go it alone. “We have a long history of not sharing successes and failures with one another, which makes the industry notoriously slow to innovate,” she noted.

Mark Travers agreed, adding that collaboration is in everyone’s best interest, especially because the industry must move faster if it’s going to succeed in achieving net zero over the next 30 years. “Mining companies test technologies all the time. If we approach this as a collaboration, sites can test different technologies, such as mechanical cutters in underground mines, change of battery packs or trolley systems, and share the results with their peers”.

Miners must also work more closely with original equipment manufacturers (OEMs) to develop electric fleets for the sector, said Kuzenko. For instance, Torex is talking to manufacturers about having a battery electric–enabled fleet at its Media Luna deposit in Mexico. While battery electric is more capital intensive – though the total cost of ownership is better than diesel – miners and OEMs can work together to bring costs down. “If we ask for it as miners, it will get built,” she said.

Partnering with Government

Partnering with governments to create pro-energy transition policies is also important, given that electrification requires a doubling or tripling of clean energy supply. However, that’s easier said than done.

In Canada, there’s no national energy strategy, with every province charting its own path. It’s a similar story in the U.S., said Richard Florizone. Add to that political uncertainty, as well as a divide between states on the importance of clean energy, and it can be challenging for governments to adopt better energy practices.

Florizone, whose International Institute for Sustainable Development has spent more than 30 years working to shape and inform international policy on sustainable development governance, said he was, however, optimistic that the mining industry and government could find common ground. How? In part by showing how renewable energy and electrification are good not only for the environment, but also for jobs. “If we can paint a picture of where this transformation needs to go, and do some good planning between civil society organizations, mines and government, then we can chart the right way forward,” he said.

No Stopping Electrification

While companies need to continue to figure out how best to increase collaboration between businesses, OEMs and governments, there’s no question that electrification is coming, with all three panelists agreeing that miners have both an opportunity and an imperative to go electric.

To Florizone, electrification just makes sense, as it offers companies what he calls a “double dividend” of emissions and efficiency. Not only are businesses reducing the level of emissions produced, but they can become more efficient operators by, say, removing heat loss that comes with burning fossil fuels.

“Electrification is one of the most certain roads to net zero because of that double dividend,” he said. “It can’t be stopped.”

Electrification also presents an opportunity to cut costs, at least over the long term, he added.  A lot of what’s needed to electrify – solar and wind energy and battery technology – is coming down in price. “The cost curves keep dropping and it’s quite remarkable,” said Florizone. “CFOs need to keep looking at this.”

Worker health and safety is going to drive electric adoption, too, added Kuzenko. There’s already a talent shortage in this industry, and it’s going to get worse with younger people choosing other professions than mining to go into. If miners are going to attract workers they must electrify, not only because people want to work for a company that cares about the environment – no different than in other industries – but also because it’s better for people’s health.

“Employees over time are going to stand up and demand electrification. And I do constantly hear from people who say, ‘I would never go back to work in a diesel mine,’” said Kuzenko. “If you believe like I do that over the next 10 to 15 years there will be a war for talent, and that we’ll need to go to get our employees to run the mines and produce the critical minerals, then you’re best to build a mine that workers want to work in.”

While Travers is also excited about the business case for electrification – there is a positive net present value on these projects, he said – the sector ultimately has no choice but to do all it can to reduce its carbon footprint. Climate change is coming, and so far, the world is not doing enough to keep temperatures below 1.5 degree Celsius.

“There’s now a laser-like focus on not only the climate pledges being made but also what’s in them; how they’ll be implemented,” said Travers. “There's going to be intense scrutiny on scope 1, 2 and 3 emissions. And so, there’s no hiding – you have to adopt it (climate solutions) and run.”