The Power of the Mine - World Bank Group and... · Mining demand for power can unlock clean energy in grid arrangements Including South Africa Excluding South Africa 0 2,000 4,000

A Transformative Opportunity for Sub-Saharan Africa

The Power of the Mine

http://www.worldbank.org/africa/powerofthemine

Follow the conversation on Twitter with @WBlive and #Power4Africa

2

Africa’s power deficit is crippling despite

huge energy resources

Hydro potential: 400GWGeothermal potential: 16GWNatural Gas reserves: 329 tcf

Currently, about 1-2 GW of new installed capacity deployed a year. Africa needs 6-7 GW a year


3

Can mines as anchor consumers be part

of the solution?


4

Mining is a key and well-established

industry

Investment in mining accounted for $3.1 billion between 2000 -2012…

0

1,000

2,000

3,000

4,000

5,000

6,000

2002 2004 2006 2008 2010 2012

Mill

ion

Latin America

Africa

Canada

Australia

United States

Pacific region

…and will go up to $75 billion in SSA in pipeline projects

• Mining exports represents over 20% of exports in 18 countries and over 40% in 14 countries.

• Mining fiscal revenues over 20% in total revenues in Botswana, DRC, and Guinea


5

Power needs depend on the type of

mineral and level of processing

Refining

Power requirements

Smelting

Processing

Crushing

0 5 10 15 20

Iron Ore/Steel (t)

Zinc (t)

Platinum Group Metals (oz)

Copper (t)

Cobalt (t)

Nickel (t)

Bauxite/Aluminum (t)

MWh

Basic and intermediate Smelting Refining


6

Mining demand for power can be up to 23

GW in 2020

South Africa = 3.5%SSA, excluding South Africa = 9.2%

Note: CAGR=Compound Annual Growth Rate

5.6

1013.12.5

5.2

10.3

Pre-2000 2012 2020

GW

South Africa SSA, excluding South Africa

CAGR=5.6%

CAGR=5.5%

~ 15 GW

~ 23 GW

~ 8 GW


Highest increase in power demand –Iron Ore and PGM Refining and Smelting

7

Mining demand for power can be

overwhelming in a few countries

Mining and nonmining(residential, commercial,

industrial) demand

48%

50%

52%

64%

74%

84%

97%

135%

294%

326%

0% 50% 100% 150% 200% 250% 300% 350%

Cameroon

Congo, Rep. of the

Congo, Dem. Rep. of

Zambia

Namibia

Niger

Sierra Leone

Mozambique

Guinea

Liberia

Mining demand as % of total non-mining demand

Mining and residential demand

-

50

100

150

200

250

Residential Mining Residential Mining

GW

h

20122020*

15 x

3 x

*If all SSA’s population had access to electricity by 2020 with triple level of today’s consumption


8

Many models of power sourcing by mines

2020

Self-supply

Self-supply + Social

Responsability

Self-supply + sell to the

grid

Grid supply + self supply

backup

Mines sell collectively to

grid

Mines invest in grid

Mines serve as anchor demand

for IPPGrid supply

Intermediate1 3

2

0.9 1.3

5.8

2.4

5.7

15.3

0

4

8

12

16

Self-supply Intermediate arrangements Grid supply

GW

2000

Energy requirements


http://www.google.es/url?sa=i&source=images&cd=&cad=rja&uact=8&docid=90ZRZyJCtgczZM&tbnid=2b7FPkOtCNpW9M:&ved=0CAgQjRw4yAE&url=http://www.gridmoms.com/electricity-information-pages/&ei=HcmIU7n8O9bJsQS1_4GwDw&psig=AFQjCNFP8uWEl-8JVARKiFZcOpEds1cnOQ&ust=1401559710101236

http://www.google.es/url?sa=i&source=images&cd=&cad=rja&uact=8&docid=90ZRZyJCtgczZM&tbnid=2b7FPkOtCNpW9M:&ved=0CAgQjRw4yAE&url=http://www.gridmoms.com/electricity-information-pages/&ei=HcmIU7n8O9bJsQS1_4GwDw&psig=AFQjCNFP8uWEl-8JVARKiFZcOpEds1cnOQ&ust=1401559710101236

9

Self supply is a loss for all

Mines: High cost of electricity

Loss of competitiveness

Electricity utility:Loss of large customers

Loss of steady revenue

Loss of opportunities of economies of scale for large investments

Country:Reducing possibilities for access to electricity

Drop in exports and tax revenues

Negative impact on GDP, and fewer jobs

Grid-connected customers

No electricity

Mine generation investments in self-

supply 2012 – $1.3b

2020 – up to $3.3bNo electricity


Source of power generation on grid-based arrangements

10

Mining demand for power can unlock

clean energy in grid arrangements

Including South Africa Excluding South Africa

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Coal Gas Hydro Oil

MW

2012 2020

0

1,000

2,000

3,000

4,000

5,000

6,000

Coal Gas Hydro Oil

MW

2012 2020


• Five gold mines in North East Guinea: Siguiri, Kiniero, Lefa, Tri-K, and Kouroussa

• Three scenarios:

– Mines self-supply (diesel)

– Shared 150MW hydropower plant (HPP) among mines

– Shared 300MW HPP plant also serves neighboring communities Siguiri and Kankan

• Electrification for community 5% of total population.

• Higher capital costs but lower running costs and economies of scale: cost savings for mines around $640 million

• Project cost of $1.4 billion – IPP opportunity

24.5

4.9 5.0

0

10

20

30

Mines Self-supply Shared hydro plant -Mines supply

Shared hydro plant -Mines and towns supplyc/

kWh

Levelized costs per kWh

Mining demand for power can unlock clean

energy in self-supply arrangements - Guinea

11http://www.worldbank.org/africa/powerofthemine

Commodity price volatility can destabilize

mining demand for power

12

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

1983 1988 1993 1998 2003 2008 2013

US$

Mineral Prices 1983-2014

Aluminum, $/mt, nominal$ Copper, $/mt, nominal$ Gold, $/toz, nominal$ Lead, $/mt, nominal$Nickel, 10$/mt, nominal$ Silver, cents/toz, nominal$ Tin, cents/kg, nominal$ Zinc, $/mt, nominal$Platinum, $/troz Iron ore, cfr spot $/dry mt


13

Policymakers can support an attractive

enabling environment

Strengthen power sector finances

Strengthen regulatory

mechanisms

Transparent and efficient pricing

Support the operating

environment for IPPs

Mine-financed power projects and carefully

crafted contracts

Integrate mining demand in power

sector planning

Use regional platforms

Source expertise


14

Future can be bright if we use this

opportunity carefully


Thank You

15

Sudeshna Ghosh BanerjeeSenior [email protected]://www.worldbank.org/africa/powerofthemine



A Transformative Opportunity for Sub-Saharan Africa

The Power of the Mine


Follow the conversation on Twitter with @WBlive and #Power4Africa

Documents

The Power of the Mine - World Bank Group and... · Mining demand for power can unlock clean energy in grid arrangements Including South Africa Excluding South Africa 0 2,000 4,000