SA-based mining company signs a 230 MW PPA

From the newsletter
Richards Bay Minerals (RBM), a heavy mineral sands producer, has signed a 230 MW power purchase agreement (PPA) with independent power producer Red Rocket South Africa. This is  RBM's third PPA bringing their total renewable energy capacity to 500 MW as pressure for sustainable mining keeps growing.

• The PPA will provide electricity generated by the Overberg Wind Farm, construction of which is expected to begin in the first half of 2025, with the first energy flow targeted for December 2026. In 2022, RBM signed a 130 MW PPA for solar PV, and in 2024, a 140 MW PPA for wind power.

• Together, these three PPAs will reduce RBM’s Scope 1 and 2 emissions by approximately 60%, or 1.4 million tonnes of CO2 equivalent. The company aims to achieve net-zero targets by 2050 and is pursuing additional renewable energy sources.

More details

• Mining companies in South Africa account for approximately 15% of the country's electricity consumption and 16% of its revenue. They are key customers of Eskom, the national utility, second only to industrial customers, who account for 21% of Eskom's revenue. However, electricity sales to this customer category have declined in the last 10 years, from 30,667 GWh to 28,072 GWh, due to load shedding, high price increases, and customers moving away from the grid.

• Mining is a highly energy-consuming activity, so companies are looking to cut energy costs to improve revenue. In South Africa, over 10 mining companies have signed PPAs with IPPs, and some have established their own energy-generating plants.

• One of the latest mining companies in South Africa to do so is Manganese Metal Company (MMC), custodian of the world’s largest manganese reserves. MMC has entered into an energy supply agreement with the NOA Group to secure 70% of its electricity from NOA’s portfolio of wind and solar facilities, which have a combined capacity of 86 MW. Manganese is used in batteries for electric vehicles.

• Several renewable energy projects are underway in Africa's mining sector. In Senegal, Eramet Grande Côte, a subsidiary of the French multinational mining and metals company Eramet, and German-based JUWI Renewable Energies have reached financial close for a solar PV and battery storage project. This 20 MW solar array, coupled with 11 MWh battery storage, will supply 20% of the mine's power and cut its emissions by 25,000 tonnes per year.

• In Zambia, First Quantum Minerals, a Canadian mining company, is committing $500 million to a 430 MW renewable energy project. Working with Total Eren and Chariot, they're building a 230 MW solar plant and a 200 MW wind farm. These are slated for completion in 2026 and 2027, respectively, and are projected to decrease First Quantum's carbon footprint by 30% by 2025.

• The Democratic Republic of Congo is also seeing investment in clean energy for mining. Chinese firm CMOC has teamed up with Lualaba Power to develop a 200 MW hydropower and floating solar project. This Nzilo II project, announced in July 2024, will provide both baseload and peak power to support CMOC's copper production targets.

• The trend of mining companies adopting renewables is picking up in Africa. With the EU's Carbon Border Adjustment Mechanism (CBAM) expected to take effect next year, mining companies are positioning themselves to meet stricter environmental standards and maintain access to European markets. The CBAM will impose a carbon tax on imports, meaning that goods produced with high carbon emissions will face additional costs.

Our take

• Rising electricity prices are a key factor driving mining companies to switch to renewable energy sources. As traditional power costs continue to climb, renewables offer a more economically viable and predictable alternative.

• Solar power, in particular, is becoming increasingly affordable, making it an attractive option for mining operations. The declining cost of solar technology, coupled with its ease of deployment, positions it for widespread adoption across the mining sector.

• Global pressure for sustainable mining practices is also a significant catalyst for the shift to renewables. With Eskom's grid predominantly coal-based, mining companies are under increasing scrutiny to reduce their carbon footprint. Renewable energy offers a pathway to meet these sustainability targets.