Tuesday, February 16, 2016

Renting power: Keeping mines thriving through volatility

The mining industry is currently in the doldrums. As commodity prices remain stubbornly depressed, and economic recovery remains elusive for developed and emerging countries alike, mining companies are in the midst of challenging times.

Along with stagnant commodity prices, weak demand for products, low levels of economic growth in established markets, increasing stockholder pressures and employment and social issues, power supply deficit is also one of the mining industry’s most pressing hurdles. Many mine operators around the world have been facing numerous production-related challenges, owing to electricity shortages, not helped by the ongoing El Nino weather phenomenon. Mining companies in Africa, for instance, particularly those located in hydropower-dependent areas, have been experiencing consistent output drops as hydroelectric power facilities fail to generate enough electricity to sustain large-scale mine operations. As a result, mining companies in Africa, established and nascent alike, are at present struggling to maintain profitable production, resulting in job cuts, tighter cash flows and limited capital expenditures.

Hiring the services of a temporary power provider can be an immediate solution to the industry’s electricity-related challenges. A continuous supply of reliable electricity is indispensable in mine operations, be it for exploration, production, climate control or site visibility, and rental power plants can instantly provide the necessary electricity as and when it is needed. Temporary power plants are readily available and are rapidly deployed anywhere in the world where electricity is urgently required. Rental power plants can be tailored to any power or voltage, and the capacity can be increased or decreased according to demand, so mine operators will be able to add additional power modules that will increase the rental power plant’s generation capacity as their operations expand and their power requirements increase.

By opting to rent power, mining companies do not need to spend scarce resources on capital purchase, which is usually required when building permanent power stations. They can also pay for the electricity produced by the hired power plants from their operating revenues. The investment that mine operators will make in hiring electricity has proven to be marginal compared to the cost of foregone business opportunities, lost production time or wasted man-hours. This factor can be very significant at the feasibility stage, when mining companies are applying for finance.

Temporary power plants are containerized, so that they can be delivered to and installed in any mining site anywhere in the world, and be operational in a matter of weeks. They are fully able to function even in remote locations and in sites where traditional power infrastructure, like grids and substations, is outdated, damaged or absent. They can be installed and powered on in a matter of days, so power can be immediately supplied or restored.

Rental power plants are fuel efficient, and can run on diesel, natural gas, or on a combination of the two. Modern natural gas generators are also capable of converting coal mine methane to electric or thermal power, which contributes to the reduction of greenhouse gas emissions.

The mining industry, not only in Africa but also in other parts of the world, is going through tough times prompted by natural and economic circumstances. Hiring electricity can give mine operators a sustainable competitive advantage. It can provide operational flexibility, enhance a site’s productivity and help optimize its processes without the need for a long lead time and a sizeable capital expenditure. Instead of acting in exasperation and fear of the future, and getting lost in a web of operational minutiae, mining companies should draw ideas from allied industries, and give premium to innovation and imaginative solutions.


Altaaqa Global
Tel: +971 56 1749505

1 comment:

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