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Mining Firms Hurt by ‘Ridiculously High’ Energy Prices in Australia Mull Renewables

Mining Firms Hurt by ‘Ridiculously High’ Energy Prices in Australia Mull Renewables
June 07
11:53 2017

(pictured: Dr. Arnoldus Mateo van den Hurk Mir, general manager of the Renewable Energy and Mining International Observatory)

Glencore’s response to soaring energy costs in Australia has sparked calls for more renewables in mining. Last month, copper division head Aristotelis Mistakidis complained to regulators about the 100% spike in energy prices over the last three years, and threatened to shutter operations at the Mt. Isa mines as a result. Mining firm Rio Tinto also cut production at its Boyne Island aluminum smelter by 14 percent in March due to high energy costs. Chemical magnate BASF and the Tomago Aluminium Company may also follow suit with production cuts.

Clean energy may be part of the answer for the mining sector, which lags behind other industries in uptake of renewables. The current situation is surprising to Dr. Arnoldus Mateo van den Hurk Mir, general manager of the Renewable Energy and Mining International Observatory. This “seems [like] nonsense,” he told GreenTech Media. “Usually mining doesn’t have one of the big problems for renewables: lack of space.”

While low commodity prices have been partly responsible for the delay, things may be starting to change. Mining companies have installed roughly 943 megawatts of renewable energy worldwide, according to figures released at the Energy and Mines World Congress last November.

Much of this capacity has been built in Latin America. The companies leading the way, such as Chile’s Antofagasta Minerals, Mexico’s Industrias Penoles, and Australia’s Sandfire Resources, stand to benefit in more ways than one.

“There is a ‘hidden’ mining valuation increase, in the view of many analysts,” van den Hurk Mir said. “When an activity reduces opex and uncertainty and risks, this provokes a double increase of business valuation, both for the mine and for the mining company.”

These valuations will become more widely recognized “once analysts learn how to convert renewable kilowatt-hours into dollars per ton and dollars per share of value,” van den Hurk Mir predicts.

Read the full story at GreenTech Media.



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Kate Dougherty

Kate Dougherty

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