A discussion held recently on an Africa Mining Forum digital event examined why more mines were using renewable energy. The event, which centered on investment in power projects by the natural resource industry, showed that renewable energy has become the most affordable option in generating electricity in bulk. The event also featured a discussion on the various models that were available to mining firms, particularly in the exploration stage.
The growth of renewable energy technology was highlighted in BloombergNEF’s annual New Energy Outlook. The report curated by Bloomberg showed that while energy emissions decreased by nearly 8% as a result of the coronavirus pandemic, those emissions would increase once more with economic recovery. The good news, however, is they should never again reach emissions levels recorded in 2019. Instead, forecasts show that from the year 2027, emission levels would decrease at a 0.7% rate every year till 2050.
Kwasi Ampofo, a metals analyst at BloombergNEF, explained that by 2050, 56% of the electricity generated in the world will originate from PV and wind. This trend has been mirrored in the natural resource industry.
Ampofo also stated that four factors are driving this demand, including:
- A reduction in emissions. Ampofo explained that BloombergNEF’s model showed that if mining firms moved to renewable sources, they could cut down up to 50% of their emissions.
- A growth in appetite for reliability among mining firms. Ampofo explained that most mines were located in remote areas that may not have access to a power grid. This would explain why companies go after renewable sources of energy such as solar.
- The demand for electricity from the natural resource sector grows every day, as more mines are dug up in search for minerals and precious metals.
- Ampofo added that it makes business sense to invest in renewable energy, as it is the cheapest option in bulk electricity generation.
Ghana Infrastructure Investment Fund CEO Solomon Asamoah added that another factor driving more mining companies towards renewable energy adoption is the fact that development finance institutions have made climate financing and renewables essential parts of their criteria for providing financing to mining firms. Many private lenders have followed suit with the Equator Principles. He noted that oil companies will also play a huge role in the renewable energy space.
Ampofo also explained that while including energy storage in power projects from the onset did not make a big difference in the profit of mining firms, storage costs were decreasing significantly annually. He added that in the next few years, up-front fees will be lower and more integration would be observed.
In other jurisdictions, the mining industry is also seeing a boom. For example, Josemaria Resources Inc. (TSX: JOSE) (OTCQB: JOSMF) has a mine-rich property in San Juan Province in Argentina. This property is located in what extractive companies would categorize as an ideal place given that access to grid power, water and other needed amenities are readily available.
NOTE TO INVESTORS: The latest news and updates relating to Josemaria Resources Inc. (TSX: JOSE) (OTC: JOSMF) are available in the company’s newsroom at https://ibn.fm/JOSMF
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