Energy and Mines Issue 33

Issue

33

August

2021

Building the world’s greenest iron plant in Quebec – with hydrogen Hydrogen is just one piece of the decarbonisation puzzle Sustainability and profitability are no longer at odds Monitoring resources for efficiency

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Hydrogen is just one piece of the decarbonization puzzle MELODIE MICHEL REPORTER Energy and Mines

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iners need to approach decarbonization holistically, combining solutions such as electrification, energy efficiency, batteries and green hydrogen to leverage their synergies. But where should they start?

Enel Green Power is the world’s largest renewable power operator, with around 49 GW of capacity installed in 21 countries, and offers a range of decarbonization solutions for miners. Energy and Mines asked the company’s Senior Commercial Officer, Lorenzo Ducci, to share his insights on the role of hydrogen in mining decarbonization, and he made it clear that hydrogen should not be approached as a standalone solution.

“For us, hydrogen is a complement to electrification: you need electricity to produce hydrogen, with only 60% efficiency, so it is more logical to use renewable electrons directly. Electrification offers the cheapest and simplest route to decarbonize a large portion of the final energy use, but we also acknowledge that not all processes can be decarbonized through electrification — and that’s where we see the potential of hydrogen,” he said.

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Hybrid plant for mines in Ollagüe, Chile Source: Enel Green Power

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“Hydrogen can be used for its chemical properties to produce green minerals such as steel. This would allow miners that currently export ore to become more vertically integrated, positively expanding their business model.”

LORENZO DUCCI SENIOR COMMERCIAL OFFICER ENEL GREEN POWER

Hybrid plant for mines in Ollagüe, Chile Source: Enel Green Power

According to him, currently the most promising use cases for hydrogen in the mining sector are primarily in processing or as fuel for transportation that cannot be electrified, including mining trucks, excavation machinery, trains to the port and beyond. He noted that green hydrogen’s potential to help produce carbon-free minerals could create new business opportunities for miners. “Hydrogen can be used for its chemical properties to produce green minerals such as steel. This would allow miners that currently export ore to become more vertically integrated, positively expanding their business model,” he added. This possibility is already being investigated by tier 1 miners in Australia and beyond, and in this sense, green hydrogen has the potential to reshape the metals’ supply chains.

PREFERRED BUSINESS MODELS Enel Green Power generally offers two types of hydrogen solutions. The first is a collocated, behind-the-meter option, 4

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whereby the electrolyzer is installed next to one of Enel’s renewable plants, so they are directly connected, avoiding grid charges. The second is a standalone solution where the electrolyzer is built at the grid-connected offtaker’s premises.

This reduces the cost of hydrogen transportation, but can result in high grid electricity costs. “The trade-off is between the transport costs and grid charges,” Ducci pointed out.

However, for mines with enough land availability, the company is thinking about a hybrid solution: building the renewable plant and the electrolyzer together at the offtaker’s site. In this case, the electrolyzer would not be connected to the grid, but to an offgrid renewable plant. And because both would be located at the mine, there would be very little transportation costs.

This solution would provide the shortest time to market, integrating with renewable strategy development, and ENERGY AND MINES MAGAZINE

“The trade-off is between the transport costs and grid charges.”

LORENZO DUCCI SENIOR COMMERCIAL OFFICER ENEL GREEN POWER

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“The big possible limitation we see in this solution is in its scalability, due mainly to the availability of land and resources.”

LORENZO DUCCI SENIOR COMMERCIAL OFFICER ENEL GREEN POWER

therefore could perfectly tie in with a mine’s overall decarbonization strategy.

“The big possible limitation we see in this solution is in its scalability, due mainly to the availability of land and resources,” said Ducci. “That is why I mentioned the other two models at the beginning, because they could be alternatives in the future to have hydrogen supply in larger quantities and at a lower cost,” he added.

ECONOMIES OF SCALE Of course, green hydrogen’s biggest hurdle remains its cost, which is currently far from competitive. “The elements that mostly affect the green hydrogen price are the energy price of the renewable energy and the capex of the electrolyzer. The current energy price is of course an issue, but historical data suggests that the price of renewable electricity will continue to go down, so I don’t see this as the real game changer,” said Ducci.

According to him, what really needs to change to make green hydrogen more competitive is the price of electrolyzers, and that can only be achieved through economies of scale.

He explained: “There is a lot of talk about adding gigawatt hydrogen capacity, but today there are fewer than 100 MW of electrolyzer capacity worldwide. It doesn’t quite add up. So the point here is to work together with electrolyzer manufacturers to allow them to leverage economies of scale. To scale up the technology, we need to start having projects.”

THE IMPORTANCE OF PARTNERSHIPS But for Ducci, the most important element necessary to make green hydrogen a valid decarbonization tool for miners is

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collaboration. “Our approach is to learn the mentality of the miners, to understand what they really need, but also to help them look at the different solutions available to them, since we are a leader in the energy transition. We need to pave this way together,” he says.

This is particularly true in the green hydrogen space, since the market is still far from mature. “We don’t want to consider the miners as simple buyers of hydrogen, because they need to invest in this technology as well. We want to work together, create this partnership within which to build solutions and develop applications.”

Ducci’s advice to miners at the start of their decarbonization journey is to find the right partner, study the portfolio of available solutions, and create a pilot project to understand how all the different elements, including renewables, batteries and hydrogen, work together. “You need to think of the mine as an ecosystem, and show the will to become a green mine,” he concluded.

“We don’t want to consider the miners as simple buyers of hydrogen, because they need to invest in this technology as well. We want to work together, create this partnership within which to build solutions and develop applications.”

LORENZO DUCCI SENIOR COMMERCIAL OFFICER ENEL GREEN POWER

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Building the world’s greenest iron plant in Quebec - with hydrogen MELODIE MICHEL REPORTER Energy and Mines

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lackrock Metals is planning to build an iron, vanadium and titanium (VTM) mine in Chibougamau, Quebec, and plans to use green hydrogen at its metallurgical plant at the Port of Saguenay. With construction about to begin and operations expected to start in 2024, Blackrock Metals CEO Sean Cleary believes that it is very possible that green hydrogen will be integrated into the metallurgical plant from day one, depending on how the cost of this resource evolves. In this interview, he tells Energy and Mines about what led the company to develop such ambitious hydrogen plans and how exactly it will be used.

Energy and Mines: Tell us about your VTM project and how you plan to use green hydrogen?

Sean Cleary: Blackrock Metals is an integrated mining and metals project. We are building a mine in Chibougamau, Quebec, where we’re also installing a concentrator to produce about 1 million tonnes of VTM concentrate per year. We will ship that by rail to our metallurgical complex, which is being built at the port of Grande-Anse in Saguenay, about 350 km from the mine.

At the metallurgical plant, we will pelletize the concentrate and put it through a direct reduction (DR) plant to produce three different products: 500,000 tonnes of nodular iron per year, 120,000 tonnes of commercial titanium slag, and around 40,000

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“Blackrock Metals is an integrated mining and metals project.

We are building a mine in Chibougamau, Quebec, where we’re also installing a concentrator to produce about 1 million tonnes of VTM concentrate per year.”

SEAN CLEARY CEO BLACKROCK METALS

tonnes of vanadium-rich slag used to produce ferro vanadium and vanadium pentoxide — a key ingredient for the production of vanadium flow batteries.

As it is, this is already the greenest iron plant in the world, because our input of materials are very clean. We’ve designed a very modern upgraded DR plant using natural gas instead of coal, we recycle all of our waste gases and waste products back into the system. So we have very low emissions to begin with.

However, we can do better.

The hydrogen element of the process relates to the DR plant, which has been designed by TENOVA. The plant utilizes natural gas to change the chemical composition of the iron pellets: from roughly 60% iron when they go in, they come out of the plant

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at about 94% iron. Part of the DR plant design is a natural gas reformer which separates the chemical components of natural gas, including methane, carbon and hydrogen. Hydrogen is the best chemical reductant for metallizing iron, but at the moment it is produced through natural gas — grey hydrogen is currently the most cost-effective. But the system is designed to be able to take green hydrogen from day one, which will be produced by electrolyzers using electricity. Our plan is to gradually ramp up the use of green hydrogen to around 70%, with 30% of natural gas. This will effectively reduce the CO2 emissions at the Blackrock project to almost zero.

E&M: Would the green hydrogen be produced on site?

SC: This has not been approved at this time, but yes, the goal ENERGY AND MINES MAGAZINE

Hydrogen is the best chemical reductant for metallizing iron, but at the moment it is produced through natural gas — grey hydrogen is currently the most costeffective.’

SEAN CLEARY CEO BLACKROCK METALS 13

“There are two elements to using green hydrogen that are very important: the cost of the equipment to make the hydrogen, as well as the cost to produce the units of hydrogen from electricity. ”

SEAN CLEARY CEO BLACKROCK METALS

would be to have the electrolyzers nearby and to produce large amounts of hydrogen. This is made possible by Hydro Quebec’s green hydro electric production, which is truly unique in the world. There are very few places in the world where you have access to large amounts of clean electricity, which makes the production of green hydrogen possible.

E&M: What are some of the key questions or concerns you needed to address in analysing the business case for green hydrogen?

SC: There are two elements to using green hydrogen that are very important: the cost of the equipment to make the hydrogen, as well as the cost to produce the units of hydrogen from electricity. Today producing green hydrogen is about 10 times more expensive than producing grey hydrogen from natural gas. This is a fundamental challenge, but it is being worked on every day. So we’ve built our project in such a way that, as green hydrogen drops in price over time, we can turn on more and more of it and use less and less natural gas.

The other important aspect is the selection of equipment: making sure that the system would work, being future-focused on green hydrogen. We started the design of this project with TENOVA almost five years ago with the goal of being the greenest facility. Fast forward to today and we now have a fully permitted, shovel-ready project that can take green hydrogen.

There’s a lot of planning and environmental approvals that go into a project like Blackrock. I would say the strategic thinking and foresight of the team was key to be able to pull off such a project.

E&M: Where is the push to deliver green products coming

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from and what has the feedback been like for investors on the planned use of green hydrogen?

SC: The core of our company is focused on ESG, and it has been from day one. The jurisdiction that we’re in is governed by the Canadian government, the government of Quebec as well as First Nations, specifically the Cree Nation government and the Innu Nations of Mashteuiatsh, Essipit and Pessamit. We’ve had a strong partnership with the First Nations groups since the very first day of the project, and they view themselves as stewards of the environment, so we’ve had this strong focus on sustainability and respecting the land. Today, you really can’t do any significant projects without having full social acceptance from communities: you don’t just need them to sign off, you really need their strong endorsement. As a result of where we come from and the type of company we are, that’s been a strong focus.

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“We’re currently in discussion with a number of groups that would be interested in supplying us with green hydrogen, with the idea of forming a partnership.”

SEAN CLEARY CEO BLACKROCK METALS From just a governance perspective, we are a company that has strong government sponsorships, since we are putting some big infrastructure in place for the province. We are also backed by some large private equity groups who are very sensitive to ESG governance considerations. From the very beginning of our project, we had to make sure that we were doing things responsibly. The feedback has been resoundingly positive.

E&M: What are the next steps for this project?

SC: We’re currently in discussion with a number of groups that would be interested in supplying us with green hydrogen, with the idea of forming a partnership. Right now we’re at the assessment stage, entering into confidentiality agreements and sharing information so it’s really an investigative step. We hope to be able to announce our selection of partners within the next six to eight months.

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E&M: What would you advise other CEOs with greenfield sites currently exploring hydrogen options?

SC: I think it really depends where they are. Quebec is a great jurisdiction to have this type of project, because you have an abundance of clean hydroelectric power. If the jurisdiction is set up to provide renewable electricity for the production of green hydrogen, that creates a lot of momentum to get this type of project going. If there has to be additional government investment or private sector investment to be able to produce green energy in the first place, then it becomes a little bit more difficult. To sum it up, I would advise other CEOs who are looking into hydrogen to really analyze the electricity production of where they are located or planning on being located. That will dictate their ability to deploy hydrogen or not.

Hydrogen is the best chemical reductant for metallizing iron, but at the moment it is produced through natural gas — grey hydrogen is currently the most costeffective.’

SEAN CLEARY CEO BLACKROCK METALS ENERGY AND MINES MAGAZINE

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Sustainability and profitability are no longer at odds MELODIE MICHEL REPORTER Energy and Mines

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ctive energy management is one of the fastest ways to begin decarbonizing mining operations. Companies should consider how their business and sustainability goals overlap and map out sustainability risks and rewards, to deliver a strategy that targets tangible outcomes. Schneider Electric works with mining clients all over the world, helping them perform this analysis and leverage technology to achieve their decarbonization goals.

“With the help of modern technology and software, we are able to break down operational silos and find a meeting ground for a viable sustainability strategy, which includes renewable energy, as well as energy efficiency projects and strategic sourcing of materials,” says Jess Maddren, Segment Director, Pacific Region, Mining, at Schneider Electric.

The company recently formed a partnership with Wärtsilä to create the world’s first sustainable, uninterruptible power solution for the most remote

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lithium mines in the world. The power system includes tailored power supply consulting and design, power infrastructure build, equipment delivery, installation, digital microgrids operation and commissioning, and is available to mining operators around the world.

“It unifies and leverages microgrids, thermal power generation, energy storage, and other renewable energy sources to provide a highly cost-effective power solution with a minimal environmental footprint for the mining industry,” notes Maddren.

Based on pilot projects, typical results include an average overall capex reduction of 27%, CO2 reductions of up to 20% and an energy cost reduction of 40% compared to local off-grid dieselgenerated power.

“The benefits will go well beyond lithium mining,” she adds. “To create a net-zero future, electric vehicles and renewable energy storage must become more affordable and accessible. This ENERGY AND MINES MAGAZINE

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“With the help of modern technology and software, we are able to break down operational silos and find a meeting ground for a viable sustainability strategy, which includes renewable energy, as well as energy efficiency projects and strategic sourcing of materials.”

JESS MADDREN SEGMENT DIRECTOR, PACIFIC REGION, MINING

SCHNEIDER ELECTRIC

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solution will enable mining operators to reduce the environmental impact of their sites and reduce the cost of production. It has the potential to power the next generation of technology and ultimately act as the foundation of a net-zero society.”

MINDSET SHIFT Tackling climate change in the mining sector means reimagining the way we think and operate.

The interaction between process and energy usage is key to improving performance, in terms of both sustainability and profitability.

Maddren points out that for mining and minerals assets, the cost of energy is in the range of 2540% of the cost of production, depending on the size of the hauling fleet and the complexity of the processing plant. “With power and process and decarbonized operations, we’ve seen carbon footprint reductions of 7% to 12% are typical for mid to large-scale plants, along with a further 2% to 5% reduction of energy purchase costs through effective contract strategy and implementation of the overall centralized control and optimization concept,” she notes.

According to her, sustainable operations have the potential to be more profitable than traditional operations, as green premium products command higher prices, and lower interest rates are often available for projects that are fully sustainable, supporting the profit margins of mining operations in the longer run.

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She observes that new projects generally already apply the type of sustainability thinking necessary for change, and encourages others to follow: “I see a massive step change in the way mining companies map out greenfield mining operations, with approvals being subject to CO2 emissions and making investment decisions based on value proposition. Today, companies have the possibility to take and claim the ‘green’ position within the industry, not just enabling their social licence to operate and unlocking profitability — but also encouraging more mining companies to think differently. To lead by example.”

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DIGITAL TRANSFORMATION While traditionally in mining, electricity management and process automation have been independent from each other, today’s digital transformation is enabling their unification. “The integration of power and process is a catalyst for operational resilience and improved sustainability across the lifecycle of the plant,” Maddren explains.

I see a massive step change in the way mining companies map out greenfield mining operations, with approvals being subject to CO2 emissions and making investment decisions based on value proposition.”

JESS MADDREN

SEGMENT DIRECTOR, PACIFIC REGION, MINING SCHNEIDER ELECTRIC

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She notes that the integration of power and process creates a value chain through the integration of five functionalities (energy management, operations management, integrated planning, sustainability and maintenance management) to remove silos.

This integrated and digital approach can drive capex reductions and opex efficiencies, improving bottom line profitability by 3 to 5 percentage points. It also allows for the creation of a predictive model connected to the plant or mine to align power, process, and business performance, creating a behavioural model for the life of the asset.

ON THE ROAD TO ELECTRIC TRUCKS Many miners are investigating solutions for haul truck electrification, but this is an area that still requires innovation.

While a 100% renewable tried and tested charging solution for trucks doesn’t exist today, Maddren believes it will be available in five years.

In her mind, the future consists of 100% off-grid modular renewable microgrid charging stations for contactless truck charging — an exciting innovation that is already in proof-ofconcept phase. Thinking outside the box and getting inspiration from adjacent industries is the way to spearhead more groundbreaking innovation, building on the solutions that exist in other segments of the market.

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“I believe that 100% renewable energy-powered mining operations are possible today. Working closely with one of our Australian customers, we are looking into ways to utilize spilled energy — the excess energy that is generated but can’t be stored — including through powering haul trucks and better process optimization,” she explains.

Finally, Maddren believes real change will require true partnerships, and those forming in the fleet electrification space bode well for the industry. “The biggest obstacle for miners is if they try to do it all alone. Climate change is too big an issue to tackle for any single company alone,” she says. “In Australia, we are seeing great momentum in the mining sector, with initiatives such as the Electric Mine Consortium proving successful. This is the right way forward, and the beginning of a real industry change.”

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Monitoring resources for efficiency MELODIE MICHEL REPORTER Energy and Mines

B “Measuring wind and solar resources concurrently makes a lot of sense, enabling you to determine how complementary these resources are and how that will feed into your plant design.”

PAUL COPESTAKE

HEAD OF INTERNATIONAL MARKETS FULCRUM3D

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efore embarking on a renewable power project, it is crucial to know exactly how much and what type of renewable resource is available on site. Fulcrum3D provides wind and solar monitoring solutions for miners to adequately evaluate the resources available to them. Paul Copestake, the company’s Head of International Markets, shares his insights with Energy and Mines on how exactly to conduct the assessment for maximum efficiency, and for how long.

Energy and Mines: What’s changed over the last few months in terms of the level of interest and engagement on the part of mining companies looking to understand the potential for renewable energy?

Paul Copestake: Interest and engagement have been ramping up over the last few months with mining companies readily embracing both the financial benefits and increased energy security that can be achieved through the implementation of high penetration renewables into their energy mix.

E&M: What are some of the key considerations miners should keep in mind early in the process of mapping their renewable energy resource?

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PC: Resource assessment takes time, so the sooner you can deploy resource monitoring, the sooner you can begin planning, designing and developing your project. You cannot speed this up and will require at least one year of data, preferably more.

Early resource monitoring will allow miners to most efficiently select the areas in which it is best to place turbines, and also which areas to potentially move away from.

Measuring wind and solar resources concurrently makes a lot of sense, enabling you to determine how complementary these resources are and how that will feed into your plant design.

“Interest and engagement have been ramping up over the last few months with mining companies readily embracing both the financial benefits and increased energy security that can be achieved through the implementation of high penetration renewables into their energy mix.”

PAUL COPESTAKE

HEAD OF INTERNATIONAL MARKETS FULCRUM3D

E&M: How long does it take to get an accurate picture of the renewable energy resource potential for a site?

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“Wind campaigns need to take into account the seasonality of the resource, whilst six months’ worth of onsite solar data can generally be combined with satellite data for a fairly representative data set.”

PAUL COPESTAKE

HEAD OF INTERNATIONAL MARKETS

PC: Generally, a minimum of 12 months for wind and six months for solar. Wind campaigns need to take into account the seasonality of the resource, whilst six months’ worth of on-site solar data can generally be combined with satellite data for a fairly representative data set. If you have a good, local long-term reference, then it may be possible to confirm expected wind resource earlier.

E&M: Are most miners now looking to understand both wind and solar, or are the majority of projects still aimed at evaluating solar options?

PC: In our experience most are now assessing both resources.

Any project with a mine life of greater than seven years starts to make sense for wind and most of the enquiries we are working on tend to fit that timeframe. They can often be complementary energy sources.

FULCRUM3D

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“Privacy of monitoring locations and security of resource data is of the utmost importance to our clients so we can’t talk about what we’re doing too much.”

PAUL COPESTAKE

HEAD OF INTERNATIONAL MARKETS FULCRUM3D

E&M: Who are you currently working with in terms of mining companies — and can you share any of the details of what you are assessing for these companies?

PC: Privacy of monitoring locations and security of resource data is of the utmost importance to our clients so we can’t talk about what we’re doing too much. However, in terms of users we are carrying out monitoring for the likes of Gold Fields, Rio Tinto, FMG, Province Resources, Infinite Blue Energy and juwi, amongst others. We take a genuine interest in the desired outcomes of our clients and work to support monitoring campaigns as best we can.

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E&M: What are your predictions for the next steps in mining’s energy transition — will large-scale renewables and storage become business as usual in the near future?

PC: Absolutely, the adoption of large-scale renewables and storage is now well and truly entrenched in the industry. The financials just stack up and you are now at a considerable cost disadvantage if you are not integrating them. This is true even without taking into consideration the environmental, social and corporate governance benefits that come with their adoption — they are an added bonus.

“We take a genuine interest in the desired outcomes of our clients and work to support monitoring campaigns as best we can.”

PAUL COPESTAKE

HEAD OF INTERNATIONAL MARKETS FULCRUM3D

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