Mining groups involvement in power generation
Mining groups are increasingly moving into the power sector, with some forced to build their own electricity plants for mining operations while others have created own power units that behave like utilities.
A selection of companies and details of their involvement in power are below:
MINING GROUPS WITH POWER DIVISIONS
Kazakhmys, the world’s 10th biggest copper producer, is the largest power provider in Kazakhstan, providing over 13 percent of national electricity. Its copper division has three power stations supplying its mining and processing facilities.
A separate power division owns the Ekibastuz GRES-1 power station, one of the largest coal-fired power plants in the world. That plant is undergoing refurbishment to increase annual capacity to 4,000 megawatts. The power division is 50 percent owned by a government investment fund.
ENRC, one of the world’s biggest producers of ferrochrome — a key ingredient in stainless steel — is also a major power provider in Kazakhstan. Its energy division owns the Vostochny coal mine and the Aksu power station, but its third-party sales have declined this year as its own operations demand more power.
Indian-focused mining group Vedanta has a series of power plants to supply its aluminum smelters, surplus of which is sold commercially. The group also has around 5,000 megawatts of capacity under construction, the largest in the Indian private sector. It recently launched the first 600 MW unit of its Jharsuguda independent power producer. Vedanta plans an initial public offering of its Sterlite Energy division.
POWER PROJECTS WITHIN SOME OTHER MINING GROUPS
Rio Tinto’s Alcan aluminum division owns or is a partner in 12 power stations generating more than 5,040 megawatts each year, meeting about half of the unit’s electricity needs. Alcan has signed an agreement with Cameroon to consider building a 1,000 MW hydroelectric plant to supply power to a new smelter.
Xstrata is another major producer of ferrochrome, but its expansion plans in South Africa have run up against a power shortage there. The group is working on a project to use waste coal it produces in a power plant. Once the project was approved, the plant could produce 750 MW within four years at a cost of about $750 million.
Xstrata also has plans to install a coal-fired power station for its Kniambo nickel plant in New Caledonia and is working on a power project for its copper division in Chile, spokesman Mike Bartlett said. The group was not interested in creating a separate power division, he added. “Any such plans are focused on ensuring we have supply of energy for our projects in remote areas or where there are power shortages.”
Anglo, which has extensive operations in South Africa, including coal mines, is also looking into making use of low-quality coal that cannot be sold and ends up in waste heaps. A feasibility study has been completed and a tender has been issued to find a partner to build and manage the power plant.
Before the merger that created the world’s biggest mining group, BHP owned a power generating business, which it sold in 1999 for A$509 million to Duke Energy International.
Its expansion of the Worsley alumina refinery in Australia included a A$500 million cogeneration power plant owned by Griffin Energy, with capacity to export excess power.
The group has also signed an agreement with the Democratic Republic of Congo to investigate a $3 billion aluminum smelter, which would use power from Inga 3 hydropower station. BHP agreed to fund a feasibility study for Inga.
South African junior miner Jubilee Platinum Plc recently agreed to buy a majority stake in power generation company Power Alt Ltd. The deal would provide power for its new smelter plus allow the development of a stand-alone, gas-fired power generation business, the company said.
INTERNATIONAL FERRO METALS
South African ferrochrome producer International Ferro Metals said this month it had commissioned a co-generation plant, which uses waste gas from its smelter to produce electricity.
The plant will produce 11 percent of the company’s total requirement at cost much lower than state-owned utility Eskom, lowering power costs by 10 percent. The plant should also qualify for carbon credits, providing potential annual income of 1.4 million euros ($1.96 million)