Mt. Isa Mines (CC BY-ND 2.0). Photo by densbin, via Flickr.Mining magnate Glencore is rattling sabers about shuttering its copper mines at Mt. Isa in Queensland, largely due to the soaring cost of energy. If it follows through on its threat, the company will be scuttling at least 2,000 local jobs.
But the firm’s woes may be of its own making. Glencore became the world’s largest coal miner after its 2012 merger with Xstrata. Just a year before that, Xstrata had the opportunity to choose the future power supply for Mt. Isa — either the Copperstring transmission line from that would deliver a range of increasingly affordable renewables such as wind, solar, and biomass, or a natural gas plant supplied by AGL. Despite tumbling costs for renewables and ominous projections for gas, Xstrata stuck with fossil fuels, and is now paying the price for its mistake.
The company ignored the advice of Windlab, BIS Shrapnel, Deutsche Bank, and the then-Queensland Labor government of Anna Bligh, who all agreed that Copperstring was a “once in a generation opportunity.” Rather than taking the long view and connecting to the national electricity market, Xstrata chose short-term savings from a local monopoly. Since then, the cost of solar and wind have halved, while gas prices have nearly doubled.
Glencore can still reduce energy prices and keep the lights on at Mt. Isa by following the lead of competitors like Sun Metals and Telstra and building a large solar plant to power its operations there.
Read more on Xstrata’s decision and its fallout for Glencore in RenewEconomy.