Understanding What is at Stake

  • An opportunity assessment of a country’s institutional gaps and infrastructure status is important in order to identify the most realistic scenarios for power-project synergies and the steps needed to achieve them.
  • Power requirements depend on the commodity and, even more, on the processing involved.
  • Power costs can constitute between 10% and 25% of a mine’s operational costs.
  • The more power-intensive the operation, the more companies will look to source inexpensive power.
  • The diagram below outlines what factors influence an extractive industry site to choose self-generation or grid-sourced power.

Key Resources

Topic Briefing

An important first step is to assess how a proposed or existing extractive industry site is powering their operations, and why they chose that particular arrangement. At the two opposite ends, extractive industry companies are either completely self-sufficient or conversely source all their power from national infrastructure. An opportunity assessment of the country’s infrastructure situation and institutional gaps is important in order to identify the most realistic scenarios for power-project synergies and the steps needed to achieve them.

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The type of power sourcing arrangement will also be influenced by the type of extractive industry operation. Power requirements depend on the commodity and, even more, on the processing involved. Aluminum smelting is a very power-intensive operation whereas coal, iron-ore, platinum, or gold mining requires less power. Power costs can constitute between 10% and 25% of a mine’s operational costs, and the more power-intensive the operation, the more companies will look to source inexpensive power.

The diagram below outlines what factors influence an extractive industry site to choose self-generation or grid-sourced power. With an understanding of the needs of an extractive industry project, a government can consider what opportunities may exist.

Figure 1: Factors that influence extractive industries to choose self-generation or grid-sourced power, reprinted from Toledano et al., A Framework to Approach Shared Use of Mining-Related Infrastructure, (New York: Columbia Center on Sustainable  Investment, 2014)