Driving Energy Efficiency in the Mining Sector – the business case and beyond

16 Dec 2010Archived News Climate Change Matters

A guide produced by the Department of Resources, Energy and Tourism

The case for pursuing energy efficiency measures has become increasingly strong. For the mining industry the business case is more compelling for a number of reasons:

  • While the mining industry is accustomed to historically low energy prices, electricity prices are likely to rise due to increases in fuel costs for both coal and gas generators. Old coal contracts are expiring and being replaced at much higher prices, while the price of natural gas will increase as it achieves parity with world prices.
  • In addition, business needs to plan for a price on carbon within two years. A carbon price may begin focused on the electricity generation sector and as such will largely be another pass-through price increase.
  • Electricity network prices are also rising very substantially due to the need to rebuild and replace aging infrastructure.
  • Even if power only constitutes a comparatively small component of a business' total costs, most resource companies sell at prices set by global markets and therefore lack the ability to pass energy price increases to customers. A substantial increase in power costs leads directly to an equivalent reduction in profits.
  • Electricity security of supply will become tighter. Gas supply may be a problem at peak times. Business needs to prepare for a situation where power supply and gas supply are restricted on peak days.
  • Opportunities are likely to exist to achieve energy efficiencies where mining operations were developed or extended to rapidly increase production in order to meet market demand, with little consideration given to energy efficiency.1

In 2010 a guide was developed specifically for the mining industry by the Department of Resources, Energy and Tourism in collaboration with the Minerals Council of Australia (MCA), to help in their efforts to obtain management support and resources for energy efficiency measures. To give weight to the recommendations made, the authors consulted widely across the mining sector to gather examples and obtain practical advice.

The consultation process was conducted with senior climate change and energy efficiency managers and asked the question: "What have you done that has made your business case proposals for energy efficiency programs and projects successful?"

In their answers, seven main steps could be derived from the responses gathered. To quote the report:

  1. "Understand your business, its priorities, risks and opportunities, and make sure your energy efficiency projects are aligned to these.
  2. Understand who makes decisions within your organisation and how best to gain their support
  3. Keep site management informed about your energy efficiency program so they are well prepared when you seek support for a specific project.
  4. Work with an energy management team that involves key decision-makers.
  5. Be creative in identifying potential funding sources.
  6. Draft winning proposals that quantify the whole-of-business costs and benefits and link the project to existing business objectives.
  7. Build and maintain momentum by achieving and promoting successful outcomes and by building energy efficiency into 'business as usual'".2

Many companies are also not aware that NGER and EEO reporting provides a wealth of data about a company and its energy usage. Extrapolating information from these reports will further support a business case for an energy efficiency project.

The guide (attached below) will step you through the issues and real world examples of compelling business cases successfully arguing the case for energy efficiency.

1 McPherson, C:“Strategic energy management”: (http://www.energetics.com.au/newsroom/energy_newsletter/addressing-energy-and-carbon-)

2 Department of Resources, Energy and Tourism: Driving Energy Efficiency in the Mining Sector – the business case and beyond, 2010, pg.3.

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