Energy and Mines Magazine - Issue 34

Issue

Report - Hydrogen and Mines Virtual Summit 2021 Managing Risks in Hydrogen Mine Projects - Interview Energy Conservation - the Cornerstone of your Low Carbon Objectives

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2021

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Hydrogen and Mines: From Awareness to Adoption MELODIE MICHEL, REPORTER, ENERGY AND MINES

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he third annual Hydrogen and Mines conference, held virtually on September 8-9, 2021, was an opportunity to observe the momentum that is building around green hydrogen applications for mines, and to address the remaining bottlenecks. Attended by over 490 participants around the world, the event explored the various hydrogen initiatives and pilot projects happening in the sector, as well as general price trends and supply chain issues. Overall, it appears that green hydrogen is firmly planting itself as the right decarbonization solution for hard-to-abate parts of the mining process.

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Pod 1: Hydrogen’s role in mine decarbonization

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n the conference’s first content pod, tier one miners and financiers discussed nearterm viable applications, and reminded the audience that in a market as young and dynamic as green hydrogen, remaining flexible is key. In a panel chaired by Jo Garland, Partner at HFW, the main criteria for assessing potential hydrogen projects were laid out. “When we think about analyzing hydrogen options, every mine is different.

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What’s the proximity to renewable energy? Is it via PPA or remote generation? What’s the mine-life? What’s the horizon for emission reduction? What’s the type of mine activity?

Is it easy to electrify? You need to look at the whole of energy problems and solutions,” said Mike McKensey, Division Director at Macquarie Capital. Among other choices, answering these questions will help miners determine whether to produce hydrogen ENERGY AND MINES MAGAZINE

Jo Garland, Parter, HFW (top left) chairs the first panel of the virtual summit - Can hydrogen meet mining’s decarbonisation timescale? The panel included (clockwise from Jo) Deborah Caudle, Managing Director Mining, Metals and Industries, Societe Generale; Mike McKensey, Division Director, Macquarie Capital; Zoe Von Batenburg, Director, Business Development and Transactions, Australian Renewable Energy Agency; and Rachelle Doyle, Hydrogen Technology Lead, Fortescue Future Industries

on-site or get it delivered from a large-scale production hub.

Fortescue Metals Groups arguably has one of the most ambitious decarbonization and green hydrogen strategies in the mining sector: with a target of net-zero emissions by 2040, the company is already trialling full-scale hydrogen equipment, namely a haul truck and buses, with the goal of removing one billion litres of diesel annually from their operations by 2030.

Rachelle Doyle, Hydrogen Technology Lead at Fortescue Future Industries, emphasized the flexibility with which the company approached the process. “There needs to be flexibility over time to get us to our target.

Generation 1 that will get us to our 2030 ENERGY AND MINES MAGAZINE

target isn’t necessarily the same solution that will be implemented post 2030.

We always have a plan A and a plan B to contend with the fast pace of technological development,” she explained.

According to Manuel Costeira da Rocha, Commercial Director, H2 Competence Centre at Smartenergy, local hydrogen production on mine sites with a renewable resource will probably be the most favourable business case, removing transportation costs. However, he advised miners to be mindful of the impact of integrating an electrolyzer into a remote power system, particularly on power quality and stability and balance between generation and demand. “To improve the 5

performance of complex remote power systems, it’s important to combine energy technology and digitalization,” he added.

Lee Levkowitz, Manager Energy, Carbon and Technology Research at BHP noted that the company still sees some considerable cost challenges in using hydrogen for decarbonization. “We’re still a long way away from making enough green electricity to supply the inefficient process that is green hydrogen production. We think it’s unlikely that green hydrogen will achieve competitive cost anytime soon, certainly not for 2030. We can’t stand still and wait for green hydrogen to get cheaper. We need to act today with whatever technology is available,” she said in her presentation.

However, Fitch Solutions analysts expect market parity between blue (natural gasbased) and green hydrogen by 2030 “given the right conditions and incentives,” including a carbon price. They noted that the green hydrogen project pipeline stood at 71 GW in February 2021, but has since grown to 121.2 GW in over 139 projects in

planning and development, showing a rapid pace of growth even in the last few months.

Meanwhile, blue hydrogen projects are highly limited.

There remains a lot of uncertainty around the price curve and supply chain development of green hydrogen. But the first large-scale hydrogen pilot projects will soon come online, and their operational results are expected to give more clarity to the industry, at least on the application side. For instance, Anglo American’s green hydrogen production, storage and refuelling station at the Mogalakwena mine in South Africa is under construction, with the hydrogen fuel cell truck validation trials expected to take place throughout 2022. “We want it to be equivalent to diesel total cost of ownership, able to operate in harsh environments with high utilization and reliability, with the same operational flexibility as we have today,” said Julian Soles, Head of Technology Development, Mining and Sustainability at Anglo American.

Pod 1 Agenda and videos PATHWAYS TO DECARBONISING MINING: THE PROMISE AND CHALLENGES OF GREEN HYDROGEN Lee Levkowitz, Manager, Energy, Carbon and Technology Research, BHP

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CAN HYDROGEN MEET MINING’S DECARBONISATION TIMESCALE? Chair: Jo Garland, Partner, HFW Australia Deborah Caudle, Managing Director - Mining, Metals and Industries, Societe Generale Mike McKensey, Division Director, Macquarie Capital Rachelle Doyle, Hydrogen Technology Lead, Fortescue Future Industries Zoe Von Batenburg, Manager Business Development & Transactions, ARENA

WHAT ROLE WILL HYDROGEN PLAY IN ZERO-EMISSIONS MINING? Aurelia Britsch, Head Of Commodities Analysis, Fitch Solutions Thomas van Lanschot, Senior Power & Renewables Analyst, Fitch Solutions

IMPLEMENTING A GREEN HYDROGEN STRATEGY Rachelle Doyle, Hydrogen Technology Lead, Fortescue Future Industries

INTEGRATING HYDROGEN INTO MINE DECARBONISATION Julian Soles, Head of Technology Development, Mining & Sustainability, Anglo American

HYDROGEN’S ROLE IN REALIZING NET-ZERO MINING Manuel Costeira da Rocha, Commercial Director, H2 Competence Center, Smartenergy

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Pod 2: Hydrogen in

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mining microgrids

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he second content pod focused specifically on green hydrogen applications for power. Lorenzo Ducci, Hydrogen Senior Commercial Officer at Enel Green Power, presented three likely business models for this application: a colocated model, whereby the electrolyzer is placed next to a large-scale renewable power plant, and the hydrogen is then transported to a mine site; a standalone model, whereby the electrolyzer uses green electricity from the grid at the mine site itself; and a hybrid model, which envisages the construction of both the renewable plant and the electrolyzer offgrid on the mine premises. “This is our proposal to date,” he pointed out. “We are in the process of learning by doing, as everyone is in the green hydrogen business. The game changer for green hydrogen is Capex.

Without a strong reduction in Capex, we won’t see these projects materialize. The speed of the learning curve will depend not only on technological efforts to reduce Capex but also on public funding and business models.”

While the predictions on green hydrogen production costs still vary widely, one electrolyzer manufacturer has made an ambitious pledge: Nel Hydrogen targets a cost of US$1.5 per kg by 2025, on par with grey hydrogen, thanks to new largescale manufacturing capability. “Scaling the technology requires working on the entire supply chain, Nel has a key strategic focus on expansion of manufacturing capabilities, standardization and optimization, and procurement,” said Raymond Schmid, Vice President Sales EMEA and Oceania at the company. But for him, the main driver in the cost reduction 10

will be the low cost of green electricity.

In another presentation, David Edwards, Future Technology and Innovation Manager at Horizon Power, shared the details of Australia’s first green hydrogen microgrid in Denham, which will generate about 526 MW/h of electricity per year, powering 100 homes. The project is composed of a 704 kW solar farm, a 348 kW electrolyzer, hydrogen compression and 100 kW of fuel cell storage on site. The hydrogen plant construction is expected to start around October, and the project should be fully commissioned by early 2022. While this is a fairly small and residential project, it is expected to yield a lot of knowledge for the mining industry. “We’re trying to find out how to bring components together to achieve what we want. Once we get it working in the community space, it’s not a great distance to get it working in the mining space, I see it moving quite quickly,” said Edwards.

It will be easier for miners currently using natural gas to switch to green hydrogen than for those who use diesel gensets.

“Last year we commissioned a 1 MW unit in Germany, 100% green hydrogen engine, took it from 100% natural gas to 100% hydrogen and back to test the hardware.

You could buy a natural gas engine today and convert it to 100% hydrogen later so you don’t have a stranded asset like you would with a diesel generator,” said David Mitcheltree, Global Data Center Generation, Hydrogen and Natural Gas at INNIO Group. In fact, all panellists in a discussion on hydrogen-fuelled gensets agreed that mines could theoretically run on 100% green hydrogen, a promising ENERGY AND MINES MAGAZINE

Lorenzo Ducci, Hydrogen Senior Commercial Officer at Enel Green Power: the three likely business models of hydrogen in mining

prospect for when price competitiveness is achieved.

But cost reduction is not the only necessary development to see green hydrogen as a mainstream part of remote microgrids: miners and their financiers need to expand on their skills to get comfortable around the technology. A larger conversation also needs to happen around the storage and transport of hydrogen. For instance, Kevin Peakman, Director of Hydrogen at Energy Estate, noted that for transportation of less than 100 km, storing hydrogen in former gas pipelines is a viable solution.

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In any case, he advised miners to start small, but with a clear end goal: “Introduce it as a small scale project but begin with the end in mind and think about how you want to scale up so you don’t end up with a stranded asset from your pilot,” he said.

The pod included a cautionary note as HFW shared the top 5 potential legal issues in hydrogen projects for mines: risk sharing in partnerships and trials, lack of clear regulatory guidance, offtake agreements, flexibility in risk frameworks, and risky net zero claims with unproven technology.

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Pod 2 Agenda and videos INTEGRATING HYDROGEN INTO MINING MICROGRIDS Chair: Thomas Hillig, Managing Director, THEnergy David Paull, Director, Green Lohc Kevin Peakman, Director of Hydrogen, Energy Estate David Edwards, Future Technology & Innovation Manager, Horizon Power

AUSTRALIA’S FIRST GREEN HYDROGEN MICROGRID David Edwards, Future Technology & Innovation Manager, Horizon Power

HYDROGEN-FUELED GENSETS - WHERE IS THE TECHNOLOGY TODAY? Chair: Emelia Addo-Appiah, Strategic Initiatives Manager, Standards Australia David Mitcheltree, Global Data Center Generation - Hydrogen & Natural Gas, INNIO Group Reetta Kaila, Director, Sustainable Fuels & Environment, Wärtsilä Energy Mark Bargent, Technology and Architecture Planning Director, Cummins

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GETTING YOUR HYDROGEN PROJECT OFF THE GROUND: TOP 5 LEGAL ISSUES Jo Garland, Partner, HFW Australia

THE HYDROGEN HYPOTHESIS - ANALYZING OPTIONS FOR MINING Burkhard Seifert, Transformation Entrepreneur, OZ Minerals

KEYNOTE: THE BUSINESS CASE FOR GREEN HYDROGEN FOR MINES Lorenzo Ducci, Hydrogen Senior Commercial Officer, Enel Green Power

REACHING ECONOMIES OF SCALE AND COST EFFECTIVENESS WITH ELECTROLYSERS Raymond Schmid, Vice President Sales & Marketing EMEA - Oceania, Nel Hydrogen

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Pod 3: Hydrogenpowered mining trucks

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n the third content pod, speakers focused on one of the most near-term applications for green hydrogen in mining: heavy-haulage surface trucks.

According to panellists discussing the latest key developments, the interest of the past few years has turned into activity, with Anglo American moving forward with its hydrogen truck pilot, OZ Minerals looking into hydrogen trucks as part of its Think and Act Differently incubator, and BHP, Rio Tinto and Vale’s Charge On Challenge, which aims to find electrification solutions for large trucks. “The list of available options is starting to be filtered down. It’s widely accepted that mining companies won’t be able to hit their goals without going after haulage quite aggressively.

Everybody thought that in 2019 and in 2020 the maths was done to prove it,” said Robert Schaefer, Director, Mining Accounts, Growth and Innovation at Cummins.

to pit one technology against the other.

“Hydrogen fuel cell trucks come with a battery as part of it, so we have to solve both technologies. Economic analysis is still needed for these large systems,” noted Michael Lewis, Technical Director at Komatsu. To conduct this analysis, the OEM recently launched the Komatsu Greenhouse Gas Alliance, a collaboration with Rio Tinto, BHP, Codelco and Boliden on product planning, development, testing and deployment of the next generation of zero-emission mining equipment and infrastructure.

Everyone in the sector agrees that collaboration between miners, OEMs and the overall green hydrogen supply chain is indispensable to build a solid business case for these vehicles. The International Council on Mining and Metals’ Innovation for Cleaner Safer Vehicles was one of the first industry collaborations to be set up in 2018. After a few years of awareness building, it expects to share an adoptionfocused strategic roadmap early next year.

Another company modelling the different hydrogen fuel truck applications in mines is Ricardo. Michael Davies, Senior ASEAN technical Authority and Business Development Manager at the firm noted that the vehicles’ arduous duty cycles, high loads and minimum down time required were challenges to overcome in decarbonization. However, heavy haul trucks’ repetitive and well-defined duty cycles, in a self-contained site with an opportunity to install refuelling and hydrogen production infrastructure make the business case for fuel cell vehicles more attractive. “Modelling tools enable significant reductions in development time and improve the robustness of early system decisions, delivering optimized vehicle attributes,” Davies added.

Compared to battery-electric vehicles, fuel cell haul trucks present a similar operating and refuelling flexibility to diesel vehicles, but they generate heat and require air filtration in dusty environments. But speakers warned against the tendency

For Kristina Hamernik, Business Development at TUGLIQ Energy Corp, which is preparing to trial both batteryelectric and fuel cell-powered vehicles at Glencore’s Raglan Mine in the Canadian Arctic, any vehicle electrification

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Key Developments in Hydrogen Powered Mines Fleets chaired by Kathryn Horlin and Program Manager, BHP (top left); Michael Lewis, Technical Director, Komatsu; Steve Graham, Business Development Consultant, Ballard Power Systems; Robert Schaefer, Director, Mining Accounts, Growth and Innovation, Cummins; John Feenan, Commercial Director, Hyzon Motors

programme for a remote site isn’t simply about picking a technology: it’s about making sure there’s a clean energy ecosystem in place to support the application. “It’s paramount to look at the operational needs of the mines and whether there is on-site renewable energy generation to support green hydrogen.

There’s also a need for smart dispatch and energy management systems to ensure that hydrogen is generated and vehicles are charged when green power is online,” she advised.

And of course, safety has to be a priority.

Geirmund Vislie, Vice President of Hydrogen Safety at Gexcon, shared recommendations for hydrogen plant design practices, and insisted on the importance of ventilation to avoid fatalities in case of an enclosed explosion. “We ENERGY AND MINES MAGAZINE

recommend that any enclosed hydrogen equipment be subject to analysis to find what kind of venting mechanism should be used to prevent the impact of an enclosed explosion,” he added.

In any case, the time to consider and model the various material movement decarbonization options is now, as purchasing decisions will have to be made in a short few years. In a panel on hydrogen trucks, Mauricio Duarte, Senior Engineer at Vale, explained: “The decision needs to be made in the next five years if we expect material movement to play a significant share in our GHG reduction. We are working with suppliers to know when we can expect those trucks to be available and then working backwards to make sure we have all the infrastructure in place by then.

2030 is just around the corner.”

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Pod 3 Agenda and videos KEY DEVELOPMENTS IN HYDROGEN-POWERED MINE FLEETS Chair: Kathryn Horlin, Program Manager, BHP Michael Lewis, Technical Director, Komatsu Steve Graham, Business Development Consultant, Ballard Power Systems John Feenan, Commercial Director, Hyzon Motors Robert Schaefer, Director, Mining Accounts, Growth and Innovation, Cummins

HYDROGEN VEHICLE TESTING IN GREEN MINING OPERATIONS Kristina Hamernik, Business Development, TUGLIQ Energy Corp Laurent Abbatiello, President and Chief Executive Officer, TUGLIQ Energy Corp

ANALYZING THE FEASIBILITY OF HYDROGEN-POWERED TRUCKS AND HEAVY MACHINERY Michael Davies, Senior ASEAN Technical Authority & Business Development Manager, Ricardo

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TOWARDS GREENHOUSE GAS EMISSIONS-FREE SURFACE MINING VEHICLES Sarah Bell, Director, Health, Safety and Product Stewardship, ICMM

HYDROGEN TRUCKS: THE UNANSWERED QUESTIONS FOR MINES Chair: Rupert Maloney, Head of Hydrogen Investment, Clean Energy Finance Corporation (CEFC) Brad Smith, Lead Innovation Zero Emission Mining Material Movement, BHP Gonzalo Ramirez, Electromobility Specialist, Codelco Mauricio Duarte, Master Engineer, Vale Peter Wan, Lead, Technology & Innovation, Teck Resources

HYDROGEN SAFETY FOR MINING APPLICATIONS Geirmund Vislie, Vice President Hydrogen Safety, Gexcon

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Pod 4: Hydrogen for mid-tier mines 20

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he final content pod of the conference focused on hydrogen applications and approaches for midtier miners. While they may lack the research and development capital that tier one miners have access to, midtier miners cannot afford to let the hydrogen opportunity pass them by, as they too will need to decarbonize their operations soon. Peter Mann, Australia and New Zealand Regional Energy Transition Lead at Partners in Performance, identified three strategies for smaller miners to get involved: Wait and see, which is low-risk but puts them at risk of being left behind; partner with OEMs looking to test applications, which presents a small risk to production; and non-competitive collaboration, whereby miners make modest investments in hydrogen while maintaining flexibility. “There are various pathways available and which one you choose will change over time, but you need to be flexible because this is a very dynamic market,” Mann warned.

One of the mid-tier miners that is actively pursuing green hydrogen opportunities is Blackrock Metals, a critical minerals producer in Quebec, Canada. The company plans to start operations using grey hydrogen made from natural gas in its metallurgical processing plant, but gradually switch to green hydrogen. “This will allow us to become the lowestcost, lowest-carbon iron project worldwide. It will take time, which is why a phased approach makes sense, because green hydrogen has to move to economic viability, but we expect this to happen over the next three to five years,” said Sean Cleary, Chairman and CEO of Blackrock Metals.

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Peter Mann, Partners in Performance presents projections on global demand for hydrogen

Alexandre Meterissian, Vice-President, Government Affairs at the firm, explained that the strategy was driven by the project’s very long mine life, and by the expectation of “draconian” carbon taxes after 2030. “We’re going to have to work with the utilities, gas distributors and other large companies in the natural gas space that have huge amounts of capital and are looking to invest in green hydrogen. This is a long-term game.

If you’re in hydrogen to make a quick buck, you’re going to lose,” he added.

Of course, in mines with shorter lives, it is much more difficult to explore hydrogen options. But speakers advised grouping various operations in project assessments: “Maybe the next operation stands to reap the benefits”, said Jason Floyd, General Manager, Transformation and Effectiveness

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at Evolution Mining. Another attractive option for smaller miners would be in setting up green hydrogen production hubs in mining regions, and transporting the hydrogen locally to various offtakers who would then share the risk.

But once again, time is of the essence.

Andrew Cooper, Energy Specialist at New Gold Inc, encouraged miners of all sizes to start making assumptions. “What are your plans leading up to 2030, that you can implement in the short to medium term?

You can assume that in 2030 there’s going to be a 250-tonne hydrogen-powered haul truck for the mining industry. Once you assume that, have you got your hydrogen supply? Now is the time to start planning for the technology that will be available by 2030,” he urged the audience.

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POD 4 Agenda and videos POTENTIAL HYDROGEN ADOPTION PATHWAYS FOR MIDTIER MINERS Peter Mann, ANZ Regional Energy Transition Lead, Partners in Performance

INTEGRATING GREEN HYDROGEN ON A COMMERCIAL SCALE Sean Cleary, Chairman & CEO, BlackRock Metals

KEY HYDROGEN QUESTIONS FOR MID-TIER MINERS Chair: Bernardene Smith, Associate Director, KPMG Alexandre Meterissian, Vice President, Government Affairs. Blackrock Metals Jason Floyd, General Manager - Transformation and Effectiveness, Evolution Mining Andrew Cooper, Energy Specialist, New Gold

Question Marks

Many question marks remain in the development of the green hydrogen market for mining.

When will production costs be on par with fossil fuels? What is needed to make the solution work for heavy mobility? How and when will regulators catch up to industry developments, and how can miners handle the regulatory risk? These questions will undoubtedly be answered in the coming years, as pilots and industry initiatives share their learnings and reduce hydrogen’s risk profile. But one thing is for sure: by 2030, green hydrogen will be a common fixture in mines’ decarbonization strategies.

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Managing evolving or unknown risks in hydrogen mine projects MELODIE MICHEL REPORTER Energy and Mines

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ncreasing numbers of miners are exploring green hydrogen applications to decarbonise parts of their operations. But in this immature, fast-evolving market, it is important to consider and mitigate risks when structuring projects and contracts. In this interview, Jo Garland, Partner at law firm HFW, shares her insights on what those risks are, and how to manage them from a legal standpoint.

Energy and Mines: Western Australia has become an international hub for green hydrogen, and miners are very interested in hydrogen’s potential for decarbonising mining. As it’s still in its infancy and evolving rapidly, what are some of the challenges with structuring contracts for hydrogen projects?

Jo Garland: Structuring contract documents so the project is

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bankable can be challenging, especially given the untested level of technology and integration risk. Lenders can be reluctant to get on board. Because of that, if your project needs external (nonGovernment) financing, be mindful when you’re setting up your offtake and project contracts. Risk needs to be allocated with the party best placed to manage it, you need to watch out for easy termination rights and payments for delays in commissioning or teething issues (such as liquidated damages). As a mine project proponent, you need to get your OEMs and contractors on the hook in terms of warranties and guarantees, so that the lender has someone to fall back on.

Risk needs to be allocated with the party best placed to manage it, you need to watch out for easy termination rights and payments for delays in commissioning or teething issues (such as liquidated damages).

JO GARLAND PARTNER

Another thing when looking at hydrogen projects is that because it’s very early days, a lot of companies are potentially proceeding on memoranda of understanding or letters of intent, and these are not really full-form (and often are not legally binding) documents. Don’t stay operating on these types of documents for too long. The purpose of this type of document is to make sure that you have a deal, and then you need to get into the proper legal documentation that allocates risk.

And finally, when you do look at risk, it can be challenging to assign risk to particular parties when the project and technology issues are not well understood at the outset. Start off by working out what the known and unknowns are, deal with the risks you’re aware of but also leave some flexibility in your contract to deal with unknown risks. Don’t be afraid to let the document evolve: we’re all quite guilty of entering into a document, signing it, and that being the end of it. But for very new projects with new technologies, you might want to have supplementary arrangements, or agree on principles now that you can develop into more full-form obligations when you get to the next stage of the project.

HFW

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E&M: What are some of the options for structuring hydrogen project contracts with mine offtakers?

JG: The options for structuring a hydrogen project are probably very similar to the options for structuring a renewable power or hybrid power contract. If you’re a miner, you might think about, am I going to build, own and operate my own project? Have I got enough technology in-house? Is there a contractor that can do this for me at a price I’m happy accepting because of the level of risk?

Another option is to contract it out so someone else builds, owns and operates the project and then you just get the offtake from that so it’s completely external. You might also look at breaking your project up into phases and having different contracts and providers for the various phases. So you might have a purely renewable power offtake contract that feeds into the electrolyser and a different contractual arrangement for the hydrogen production, depending on the parties involved and how you want to split up the risk.

The main risk is the technology and integration risk. To address that you need to allow for reasonable commissioning periods and have a small-scale trial rather than going into full scale right away.

JO GARLAND PARTNER HFW

E&M: What are the key areas of risk for these green hydrogen projects and how can they be addressed in financial agreements and contract structures?

JG: The main risk is the technology and integration risk. To address that you need to allow for reasonable commissioning periods and have a small-scale trial rather than going into full scale right away. Another option would be to partner closely with a technology provider so that if anything goes wrong they’re invested in working through any issues with you. In financial terms, if there is a technology risk that delays or impedes the project, you might want to look at a liquidated damage regime, where you can get compensated for the delay (but be mindful of appropriate risk sharing).

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Projects are happening in a regulatory context that’s not purposebuilt for hydrogen, so there’s a risk within the project that there’ll be an inadvertent breach of a regulation, which might have an impact on the project or on one of the partners. To manage that, have a ‘change in law’ or ‘change in regulation’ provision in your contract where, as the regulatory regime evolves, the parties sit down and work out together what that means for the project (including cost and value flows).

Projects are happening in a regulatory context that’s not purposebuilt for hydrogen, so there’s a risk within the project that there’ll be an inadvertent breach of a regulation, which might have an impact on the project or on one of the partners.

JO GARLAND PARTNER HFW

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Finally, because hydrogen projects require the right sizing of renewable energy and storage facilities, you can potentially include an optimisation clause so that, as you know more about the project you can look to optimise the level of the renewable input, the size of your storage, etc. The rate of change in the technology is huge, and miners know that by the time they hit their bigger decarbonisation goals, they may be operating on second or third-generation technology, so you also need to allow for that to happen in your contracts.

E&M: What will assist to simplify and de-risk these contractual arrangements — i.e. improvements in safety and regulatory standards for hydrogen applications?

JG: We need more clarity around how existing electricity, wind, water, emissions and safety regulations will apply to a hydrogen project. There are about 730 relevant pieces of legislation and standards, so that’s difficult to navigate. We need to see some consolidation and guidance around what the regulations mean but also where to find them.

E&M: What types of green hydrogen projects do you see as having the biggest potential in the near term for Australian miners?

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JG: Replacing diesel-fuelled heavy vehicles with hydrogen power does seem to have the biggest potential in the near term. I like to think hydrogen in a microgrid scenario is next, and it’s certainly being explored.

E&M: What advice would you offer a miner or project developer who is beginning to assess the potential for a green hydrogen project?

JG: First of all, think about who you want to work with on your project. It’s important to choose your project partners well and make sure they have the same mindset and goals. Then, think about the resources or expertise you don’t have and what you need to bring in. Third, think about the structuring: do you want the project to be yours? Or do you want to derisk it a bit, and make it someone else’s project that you’re buying the offtake from?

Finally, think about funding early, because it will influence your contract structure and some of the key terms in the contract.

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Replacing dieselfuelled heavy vehicles with hydrogen power does seem to have the biggest potential in the near term.

JO GARLAND PARTNER HFW

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Opinion: Why Energy Conservation should be the Cornerstone of your Low Carbon Objectives.

ANDREW COOPER ENERGY SPECIALIST NEW GOLD

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021 appears to be the year of net zero and carbon neutral position statements. Do you realise that it is going to cost you even more to achieve your low carbon objectives if your strategic plans are not built on a cornerstone of energy conservation?

Why? Because energy conservation eliminates energy waste.

Energy waste is a cunning adversary which slowly, but surely, eats away at your profits.

A little over a month ago, I put an item I planned to return to the store in an “obvious place” where I could not miss it. Guess what?

After a couple of weeks, it became part of the furniture. It was hiding in plain sight and I forgot about it. Energy waste is like that.

From the small and seemingly insignificant, lights left on and compressed air leaks for example, to the large and ignored, like conveyors left running or vehicles idling, energy waste hides in plain sight. Each instance costs you money and these instances add up. In fact, this waste can account for up to 10% of your annual energy expense.

For a mining company, where energy is typically the second biggest expense after employee salaries and benefits, waste

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elimination positively impacts profitability.

As you transition to a low carbon future, there are additional financial benefits. If you are not wasting energy, you reduce the cost of achieving your low carbon objectives. Why? Because you will only install the renewable energy or purchase the carbon offsets you actually need. Why squander your money on wasted energy?

Implementing an energy management system needs to be the first step in your strategic plans for a low carbon future. ISO 50001 and the Mining Association of Canada’s Toward Sustainable Mining (TSM) Climate Change Protocol are two internationally recognised systems. There are many other systems out there. Do your research, pick one that works for you and implement it.

Remember the importance of energy conservation. Without this cornerstone, the transition costs to achieve the low carbon proclamations in your public position statements are going to be greater than they need to be. The bottom line is… Energy Matters!

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