These additional pressures make operational optimisation more important than ever. Fortunately, there are many methods of mitigating the operating cost impacts through improving energy efficiencies across all areas of operations.

The majority of emissions from mining are generated by the combustion of fuels for electricity generation and off-road vehicle and equipment use, which produce greenhouse gases (GHG), or carbon emissions (CO2-e). Starting at a fixed carbon cost of $23 per tonne carbon dioxide equivalent, the national Carbon Pricing Mechanism (CPM) is affecting miners directly or via supply chain pass-through costs.

Miners directly hit, meaning those consuming a large quantity of gas, are required to purchase a carbon permit for each tonne of CO2-e emitted from liable facilities. Mines using diesel fuel pay an equivalent carbon price through the fuel tax credits system for each litre of fuel consumed in lieu of a direct carbon permit.

This requirement is subject to change with the opt-in option when the flexible price period starts on July 1, 2015. The opt-in option will allow organisations to decide whether to continue paying an equivalent carbon price through the fuel tax credit system or opt-in to rely on market conditions to set the price. Opting-in will also allow the organisation to manage their fuel-based carbon liability through purchase of offsets.

While the purchase of offsets reduces the company’s carbon permit purchase requirements, there are significantly greater benefits if mining companies are able to reduce their energy consumption in the first instance. Improving energy efficiency directly results in reduced GHG emissions, and in most cases, reduced operational costs.

Improved energy efficiency includes improved energy management, consideration of renewable energy supply options and alternative fuels for transport of people and goods.

Golder works closely with mining organisations to identify opportunities to help reduce energy consumption and carbon emissions and include technical solutions, management practice improvements and productivity improvements.

In the area of energy supply, this includes using renewable energy, alternative fuel trials and full-scale fuel replacement programs, such as biodiesel for haul trucks and hydrogen fuel cells for staff transport buses and light vehicles.

For mining activities, energy efficiencies can be achieved through optimising drill and blast operations, optimising haulage road routes to reduce travel or replacing truck haulage with conveyor systems. Other areas include maximising direct tipping and optimising payload management.

Milling and processing efficiencies can be achieved through optimising circulating loads in mills; selecting energy efficient technology in design; and in-pit crushing and locating equipment to reduce distances to be covered by trucks, conveyors and pipework.

For vehicle and equipment movement, energy efficiency options include selecting vehicles with lower body weight; using electric-driven vehicles and regenerative braking; providing ongoing driver and operator training; using an auxiliary battery for operating the haul truck cab’s air-conditioner during idle times; and regular vehicle maintenance.

Efficiencies are also possible in support services, such as optimising and maintaining compressed air systems; automating mine pit lighting; sustainable building and mine camp operational systems; and adopting integrated energy management practices.

Liable entities and those with indirect impacts through supply chain cost changes or fuel tax credit changes should gain a clear understanding of their reporting obligations and how to use these to assist with improving energy performance. For example, as part of the government’s CPM some mining companies are eligible for assistance in the form of free emissions units under the Jobs and Competitiveness Program, i.e. those who are classified as providing an Emissions-Intensive Trade-Exposed (EITE) activity.

Furthermore, the mining industry could benefit from certain incentive schemes including the Carbon Farming Initiative (for eligible carbon offset activities) and the Renewable Energy Target and, in some states, improved energy performance is incentivised through the creation of energy savings certificates for eligible activities. The Australian government is currently investigating the merits of expanding the energy saving certificates program into a national initiative, which could provide significant benefits to the mining sector.

Companies should stay informed of how legislative requirements and funding opportunities are evolving, and identify possible mechanisms that can support and co-fund their energy and GHG management initiatives.

Improving energy and GHG management performance makes good business sense over all stages of company projects – from integrating renewable energy supply and technology options into the feasibility and design stages, through to identifying and implementing energy efficiency improvement opportunities during operations. The net result of these activities is to decrease operating costs and enhance the reputation of mining companies as responsible corporations.

For further information, contact Kate van Namen, senior energy specialist, Golder Associates on (08) 9213 7421 or via email at kvannamen@golder.com.au