Energy risks in the mining sector mean real impacts on the bottom line

Energy risks, including security of supply and pricing are hot topics at present. And in some cases, they are impacting mining with real impacts on the bottom line.

While releasing the BHP Billiton half year results in February, Andrew MacKenzie CEO referred to the performance of their Olympic Dam site located in South Australia saying, "We have lost $US100M in this period because of the intermittency of power in South Australia, and also we are facing more expensive electricity, frankly, than we budgeted for at this time last year." 

While the majority of these losses are associated with well documented black outs in the South Australian grid, MacKenzie refers to current energy price rises in Australia as also representing a significant challenge. The challenges of rising energy prices and surety of supply are not specific to Australia and will impact the global mining sector in the short term (International Energy Association, World Energy Outlook 2016 http://www.iea.org/media/publications/weo/WEO2016Factsheet.pdf).

Mary Stewart, CEEC Director and General Manager and Executive Director at Energetics, stated "2016 ended with a near 50% increase in the total cost of electricity in Australia's eastern states" (Energetics, source here). She said "the main reasons for these increases are the difference between supply and demand and the availability of both gas and coal generators. These factors are driving the business case for energy efficiency in Australia."

Energy efficiency will be critical in delivering almost half of the emissions reductions required for Australia's commitment to the Paris Accord. And globally the IEA estimates almost half of emissions reductions will be delivered by energy efficiency. More details and commentary by Energetics and links to reports can be found here.

 

 

SIGN UP FOR OUR MONTHLY NEWSLETTER