Open-Pit-Mines-1939B-Eng

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BENCHMARKING THE ENERGY CONSUMPTION OF

C

ANADIAN

O

PEN

-P

IT

M

INES

PREPARED FORMININGASSOCIATION OFCANADA ANDNATURALRESOURCESCANADA

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Library and Archives Canada Cataloguing in Publication

Main entry under title :

Benchmarking the energy consumption of Canadian open-pit mines Issued also in French under title: Analyse comparative de la consommation d’énergie des mines à ciel ouvert du Canada.

ISBN 0-662-39538-7 Cat. No. M144-70/2005E

1. Strip mining – Energy consumption – Canada. 2. Strip mining – Energy conservation – Canada. 3. Energy consumption – Canada.

4. Energy conservation – Canada. 5. Energy auditing – Canada.

I. Canadian Industry Program for Energy Conservation. II. Mining Association of Canada.

TN291.B46 2005 622’.292’0682 C2005-980101-8 © Her Majesty the Queen in Right of Canada, 2005

For more information or to receive additional copies of this publication, write to:

Canadian Industry Program for Energy Conservation c/o Natural Resources Canada

580 Booth Street, 18th Floor Ottawa ON K1A 0E4 Tel.: (613) 995-6839 Fax: (613) 992-3161

E-mail: [email protected] Web Site: oee.nrcan.gc.ca/cipec Or

Mining Association of Canada

350 Sparks St. Suite 1105 Ottawa ON K1R 7S8 Tel: (613) 233-9391 Fax: (613) 233-8897 Web Site: www.mining.ca

Recycled paper 1939B_OEE_OpenPit-c4 4/1/05 3:14 PM Page 4

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BENCHMARKING THE ENERGY CONSUMPTION OF CANADIAN OPEN-PIT MINES

FOREWORD

I

FOREWORD

On behalf of the Mining Sector Task Force of the Canadian Industry Program for Energy Conservation (CIPEC), the Mining Association of Canada (MAC) retained Corporate Renaissance Group to work with mining companies to establish energy benchmarks for open-pit mines. Companies that participated in this project paid for the on-site services of the consultancy and have received individualized reports on the findings.

CIPEC consists of 26 task forces, representing the various industrial sectors in Canada, and is a partnership of industrial associations and the Government of Canada, represented by Natural Resources Canada’s Office of Energy Efficiency. The Mining Sector Task Force comprises members of MAC’s Energy Committee. CIPEC task forces act as focal points for identifying energy efficiency potential and improvement opportunities, establishing sector energy efficiency targets, reviewing and addressing barriers, and developing and implementing strategies to meet the targets.

This publication is one of a series of MAC publications demonstrating the mining industry’s commitment to energy conservation and the reduction of greenhouse gas emissions – a commitment essential to our common well-being. Among our members, good energy practices are simply accepted as being good business practices.

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TABLE OF CONTENTS

III

INTRODUCTION

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2

1 INTRODUCTION

1. INTRODUCTION

1.1 Background

Energy costs represent a significant component of the total costs of operations for Canada’s mining sector. Directly and indirectly, the energy use in the mining sector is also a significant contributor to Canada’s greenhouse gas emissions. Improving energy efficiency reduces greenhouse gas emissions that contribute to climate changes. There are, therefore, compelling economic and environmental reasons for mining and milling operations to examine their energy consumption comprehensively.

The Mining Association of Canada (MAC) has sponsored this energy benchmarking project. The focus is a detailed comparison of the energy consumption for open-pit mining and concentration activities. The Office of Energy Efficiency of Natural Resources Canada (NRCan) has provided assistance for this study, which is a part of NRCan’s ongoing efforts to promote more efficient energy use in Canada.

1.2 Focus

The focus of this analysis is the mining and concentration operations of open-pit mines of MAC members. Nine mining/milling operations participated in the project, and the sample specifically included the operations of gold, oil sands and iron ore establishments.

The project involved a detailed inter-facility comparison of the energy consumed in mining (drilling – transport) and concentration (crushing – tailings disposal). Approximately 25 categories of energy cost and usage information were examined.

Given the significantly different nature of the milling/concentrator operations for gold and iron ore operations, energy comparisons for these aspects of the operations have been aggregated into larger groupings where feasible. The oil sands operations are compared only with regard to their mining activities.

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INTRODUCTION 1

3 1.3 Layout of Report

We begin by outlining our methodology in Section 2. We describe our approach for developing energy cost comparisons ($/kilotonne mined; $/kilotonne milled) to analyse the operations of the study participants.

Section 3 presents the results of the detailed benchmarking of energy costs and usage for

the nine participating establishments. Inter-establishment comparisons are presented at the mine and mill levels, as well as at the various stages of production.

Section 4 presents results on the potential savings generated by achieving benchmark

standards. Comparing the costs for each participant with those for the lowest-cost operations produces the estimated potential savings.

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METHODOLOGY

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6

2 METHODOLOGY

2. METHODOLOGY

2.1 Boundaries of the Analysis

The focus of the analysis of comparative energy costs and usage was as follows:

2.1.1 Gold and Iron Ore

The gold and iron ore energy analysis focused on mining and milling/concentration operations.

2.1.2 Oil Sands

The oil sands energy analysis focused on the mining operations. FOCUS OF ANALYSIS Ongoing Exploration Mining Concentration Smelting, Refining, Etc. FOCUS OF ANALYSIS Overburden Removal Mining HydroTransport

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METHODOLOGY 2

7 2.2 The Mining Association of Canada (MAC) Sample

A total of nine establishments participated in this project. Each case study included an open-pit mining facility. For seven of the nine mines, energy information was provided for milling/concentrator operations. These included four gold recovery operations producing gold bars and three iron ore operations producing concentrates.

2.2.1 Analysis: Overview

The objective of the analysis is to provide a detailed inter-facility comparison of the cost per kilotonne mined and processed, split into costs per unit of energy and energy consumed per kilotonne for the following:

Open-Pit Mining

Nine mining operations will be compared – all operations, including the transport of ore to the crusher.

Milling/Concentrator Operations (Gold Recovery and Iron Ore Concentration)

The analysis will reflect comparisons of energy consumption and costs for the four gold recovery facilities and three iron ore facilities and will include crushing, grinding and the aggregate of all production stages beyond grinding to loadout, plus process water, tailings disposal and support services.

A more detailed process comparison would not be meaningful due to the radically different processes followed by the companies. However, a more detailed analysis of each company’s milling/concentrator processes was presented to the individual companies involved in the study.

In all cases, energy consumption will be based on kilowatt hour equivalents (kWhe). The

conversion factors for other categories of energy are illustrated below. These conversions are derived from energy content factors reported in Canada’s Energy Outlook 1996–2000, Natural Resources Canada, April 1997, page D-3.

Open-Pit Operations (9 facilities)

Mill/Contractor Operations

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8

2 METHODOLOGY

Table 2.1 – Conversion Factors (kWhe)

Energy Units kWhe/Unit

Diesel L 10.74

Gasoline L 9.63

Natural Gas m3 10.31

Explosives kg 1.06

Light Fuel Oil L 10.40

Bunker C Oil L 11.59

The inter-facility comparisons are based on the following unit costs and disaggregation into components for open-pit mining and milling/concentrator facilities.

Open-Pit Mining (Gold, Iron Ore and Oil Sands)

Milling/Concentrator (Gold and Iron Ore)

Total Complex

For the total complexes, the unit energy costs and consumption will be based on a roll-up of the above. Given that some milling/concentrator operations process ore from more than one open pit and that certain operations use different processes for different qualities/types of ore, the data for the total complex is based on:

a. the average mining energy costs and usage for the facility in the study; and b. actual costs and usage for the energy used in milling/concentrator operations.

Given the above assumptions, the total energy costs can be subdivided to calculate the cost per kilotonne milled for both gold and iron ore.

=

X

kilotonne ore mined $ kWh_e $ kilotonne ore mined kWh_e

[

=

X

kilotonne ore milled

Note: One kilotonne = 2.204623 million pounds $ kWhe $ kilotonne ore milled kWhe

[

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METHODOLOGY 2

9

2.2.2 Comparative Energy Costs

Not surprisingly, average energy unit costs by source vary among the nine open-pit mines.

Energy source (e.g. electricity)

2.2.3 Analysis: Open-Pit Mining Operations

The open-pit mining operations were subdivided into 10 stages of production and three support activities. These categories are illustrated below.

1 9 $/kWh Drilling Blasting Excavating Transportation

Waste Rock Disposal Waste Rock Removal Stages of Production Drilling Blasting Excavating Ore Transport Pit Dewatering Ore Extraction Support Activities Road Maintenance Service Equipment Mine Support Equipment

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2 METHODOLOGY

The total energy costs for open-pit mining operations for the nine operations were compared.

These energy costs were, in turn, subdivided into two components: $/kWh_eand kWh_e/kilotonne of ore mined.

Similarly, energy costs and consumption were compared for each of the nine operations by stage of production.

2.2.4 Analysis: Milling Operations – Gold Recovery

The gold recovery milling operations were subdivided into the following stages of production and support activities.

1 9 $/kilotonne ore mined 1 9 1 9 $/kWhe kWhe /kilotonne ore mined Crushing Grinding

Additional Processing of Milled Ore Stages of Production Support Activities Process Water Tailings Disposal Plant Services

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METHODOLOGY 2

11

The total energy costs for the milling process in the four gold recovery operations were compared.

These energy costs were, in turn, subdivided into two components: $/kWh_e and kWh_e/kilotonne ore milled.

The total energy costs were compared for each of the milling gold recovery production stages (crushing, grinding and additional processing through to tailings treatment and disposal). In each case, the total energy costs/kilotonne milled, $/kWheand kWhe/kilotonne

milled were compared as illustrated above for the mining operations.

1 4 $/kilotonne milled 1 4 1 4 $/kWhe kWhe/kilotonne milled

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2 METHODOLOGY

2.2.5 Analysis: Concentrator Operations – Iron Ore

The iron ore concentration facilities were subdivided into the following stages of production and support facilities.

* NOTE: STUDY PARTICIPANTS FOLLOWED MATERIALLY DIFFERENT PROCESSES FOR PRODUCTION STAGES RELATED TO SEPARATION, FILTRATION AND DRYING. TO ACHIEVE MEANINGFUL COMPARISONS OF ENERGY CONSUMPTION FOR THESE STAGES, IT WAS NECESSARY TO AGGREGATE THE DATA UNDER THE HEADING“ADDITIONAL PROCESSING” EVEN THOUGH ENERGY CONSUMPTION FOR THESE STAGES WAS REPORTED TO THE INDIVIDUAL COMPANIES.

As in the case of the gold operations, the total energy costs per kilotonne for the three concentrator operations were compared. These energy costs were, in turn, divided into their two subcomponents: $/kWh_eand kWh_e/tonne processed.

The above comparisons were made for each stage of production in the concentration process: crushing, grinding and separation through to tailings treatment and disposal.

2.2.6 General and Administrative

The costs for general and administrative activities were compared separately for both gold and iron ore mining. As in the case of the mining and milling/concentrator analysis, the total energy cost for general and administrative activities per kilotonne mined was deter-mined. This number, in turn, was broken down into its cost per kilowatt hour equivalent and the kilowatt hour equivalent per kilotonne mined.

Crushing Grinding Separation Filtration Drying Loadout Stages of Production Support Activities Tailings Treatment Process Water Plant Services Additional Processing *

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RESULTS:

BENCHMARKING

PARTICIPATING

MINES

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3 RESULTS: BENCHMARKING PARTICIPATING MINES

3. RESULTS: BENCHMARKING PARTICIPATING MINES

As mentioned above, the nine participants in the study included three iron ore mines, four gold mines and two oil sands operations (for which only mining energy data were collected). In all cases, the mine operations reported their energy consumption and costs for the full calendar year 2000.

For the nine mines, total energy expenditures of $228 million were incurred for the calendar year 2000. The most heavily used fuels were diesel (235 million litres) and electricity (2265 gigawatt hours). Together, these two energy sources accounted for more than 75 percent of the total energy (kWhe) consumed at the mines.

The mines in the sample collectively produced over 260 million tonnes of ore during 2000 and removed a comparable amount of waste rock. The volume of ore mined during the year varied from less than 4 million tonnes to over 60 million tonnes at the largest mine. Total material removed (ore plus waste rock) ranged from just under 20 million tonnes to over 120 million tonnes. Stripping ratios (waste rock : ore tonnage) varied considerably, from 0.04 to 6.05. This variation has a significant influence on the costs and energy consumption per tonne of ore mined that is reported in Sections 3.2 and 3.3 of this study. In Section 3.4, however, we compare the mining operations on the basis of total tonnage removed (ore plus waste), a comparison that removes the influence of the stripping ratios on the comparisons.

The energy benchmarking results will be presented as we compare:

1. the costs across the participants for the individual energy sources; 2. the mining operations for the nine establishments; and

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RESULTS: BENCHMARKING PARTICIPATING MINES 3

15 3.1 Comparative Unit Costs for Energy

There are very significant differences between the lowest and highest unit costs reported for the sources of energy used at the mining operations in the study sample. As illus-trated below, the range of unit costs for each energy category is very wide (from 118 to 3 849 percent). The unit energy costs are compared in the figures below.

Figure 3.1 – Range of Unit Energy Costs

Figure 3.2 – Comparative Unit Energy Costs (CAN$)

Highest as % of Lowest 118 177 208 225 341 3 849 0 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 Bunker C Oil

Gasoline Diesel Blasting Propane Electricity Fuels Electricity ($/kWh) $/kWh 1 2 3 4 5 6 7 8 9 Diesel ($/litre) 1 2 3 4 5 6 7 8 9 $/litre 0.002 0.004 0.035 0.039 0.039 0.042 0.057 0.083 0.092 0.23 0.33 0.37 0.38 0.39 0.40 0.43 0.43 0.48 0.00 0.02 0.04 0.06 0.08 0.10 0.00 0.10 0.20 0.30 0.40 0.50

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Figure 3.2 (cont.) – Comparative Unit Energy Costs (CAN$)

1 2 3 4 5 6 7 8 $/litre Gasoline ($/litre) Propane ($/litre) $/litre 1 2 3 4 5 6

Blasting Fuels ($/kg of explosive)

1 2 3 4 5 6 7

$/kg

1 2 3

$/litre Bunker C Oil ($/litre)

0.38 0.45 0.57 0.59 0.59 0.59 0.65 0.67 0.28 0.29 0.33 0.44 0.54 0.94 0.32 0..33 0.44 0.49 0.50 0.67 0.72 0.20 0.20 0.24 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.00 0.20 0.40 0.60 0.80 1.00 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.00 0.05 0.10 0.15 0.20 0.25

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17 3.2 Inter-Mine Comparative Energy Costs – Total Operations

Sufficient information was received from seven open-pit mining operations to make compar-isons at the “total operations” level (mining and milling/concentrating costs and energy consumption per kilotonne of ore mined or processed) and for each of the stages of pro-duction (drilling, blasting, loading/excavating, hauling, crushing, grinding, etc.). For the two oil sands projects in the sample, only mining data was collected. For heap leach gold mines in the sample, costs were separated for ore destined for the milling process versus ore treated on leach pads, and the “mill ore” costs are reported here.

In all cases, the energy costs were compared based on Canadian dollars per kilotonne (million kilograms1_{) of ore mined. These unit costs, in turn, were subdivided into an energy}

cost component (dollars per kWh equivalent) and a usage component (kWh equivalent per kilotonne of ore mined). The energy costs for total operations represent the average cost per kilotonne of ore mined plus the average cost per kilotonne of ore milled/concentrated. This concept is captured using the phrase “$ per kilotonne of ore processed” (i.e. processed in the mining and the concentrating operations). The figure below summarizes the total energy costs per kilotonne of ore mined and ore milled/concentrated for the seven mines that reported all data for this study.

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Figure 3.3 – Energy Costs: Total Operations

Energy Cost $ per kilotonne of ore processed 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Energy Consumption kWhe per kilotonne of ore processed $ per kWhe

Unit Energy Cost

639 888 1 266 2 106 2 855 4 165 4 482 26 917 31 414 33 065 46 274 53 301 62 387 71 104 0.019 0.020 0.047 0.054 0.063 0.064 0.067 0 1 000 2 000 3 000 4 000 5 000 0 10 000 20 000 30 000 40 000 50 000 60 000 70 000 80 000 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08

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Figure 3.4 – Average Costs by Stage of Production

Drilling Blasting Excavation Handling Drilling _Blasting Excavating Transport Dewatering Crushing

Grinding Other Processing

Transport Mine Support Tailings Process Water Other Plant G&A

Total Mill/Concentrator Operations

Total Mining Ore

Excavation

Waste Rock Removal

13.15 170.52 26.52 116.43 21.38 348.00 5.71 182.78 24.38 88.75 301.62 24.46 46.07 720.15 34.91 174.41 163.17 33.75 24.85 18.52 449.61 19.57 1 189.33

Weighted Average $/kilotonne

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Figure 3.5 – Average Energy Consumption by Stage of Production

Excavation Transport Transport Process Water Other Plant G & A Total Operations Total Mill/Concentrator Operations

Total Mining

Waste Rock Removal

Weighted Average kWh e /kilotonne 1 647 20 989 366 504 693 3 492 636 5 691 271 453 784 2 793 4 301 355 1 419 11 766 1 320 5 269 9 473 1 754 1 527 752 33 507 Ore Excavation Drilling _Blasting Excavating Dewatering Crushing Grinding Other Processing Mine Support Tailings Drilling Blasting Handling

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21 3.3 Inter-Mine Comparative Energy Costs – Mining Operations

3.3.1 Total Mining Operations

The total energy costs for open-pit mining for the nine operations are shown below. As illustrated, the energy costs vary from $170 per kilotonne of ore mined to $3,120 per kilotonne. The range of costs and efficiencies is as follows:

Range High : Low

High : Low Percent

Energy Cost ($/kilotonne of ore mined) 3 120 : 170 1 830 Energy Consumption (kWhe/kilotonne of ore mined) 42 474 : 7 006 606

Unit Energy Cost ($/kWhe) 0.073 : 0.022 331

The total costs shown here cover drilling, blasting, excavating, hauling, pit dewatering, and mine support equipment, road maintenance and service equipment. Any in-pit crushing or rehandling of ore from stockpiles is excluded.

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Figure 3.6 – Total Energy Costs: Mining Operations

Energy Cost $ per kilotonne of ore mined 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 Energy Consumption kWhe per kilotonne of ore mined $ per kWhe

Unit Energy Cost

170 231 527 534 552 817 1 793 1 821 3 120 7 006 7 694 8 949 10 321 11 264 13 322 26 884 33 855 42 474 0.022 0.033 0.049 0.052 0.053 0.059 0.061 0.068 0.073 0 500 1 000 1 500 2 000 2 500 3 000 3 500 0 10 000 20 000 30 000 40 000 50 000 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08

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3.3.2 Waste Rock Operations – Stages of Production Drilling (Waste Rock)

The cost for waste rock drilling energy varied from $0.08 to $144.00 per kilotonne of ore mined for seven drilling operations. The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of ore mined) 144.00 : 0.08 179 800 Energy Consumption (kWhe/kilotonne of ore mined) 3 618 : 35 10 439

Unit Energy Cost ($/kWhe) 0.045 : 0.002 1 858

Figure 3.7 – Drilling (Waste Rock) Energy Costs

Energy Cost $ per kilotonne of ore mined Energy Consumption 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 kWhe per kilotonne of ore mined $ per kWhe

6.00 8.00 44.00 81.00 144.00 0.43 0.08 35 103 177 200 1 208 1 806 3 618 0.002 0.004 0.034 0.037 0.039 0.040 0.045 0 30 60 90 120 150 0 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 0.00 0.01 0.02 0.03 0.04 0.05

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Blasting (Waste Rock)

The blasting energy costs for waste rock varied from $79 to $1,255 per kilotonne of ore mined. The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of ore mined) 1 255 : 79 1 588 Energy Consumption (kWh_e/kilotonne of ore mined) 1 845 : 203 909 Unit Energy Cost ($/kWh_e) 0.680 : 0.186 366

Figure 3.8 – Blasting (Waste Rock) Energy Costs

Energy Cost $ per kilotonne of ore mined 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Energy Consumption kWhe per kilotonne of ore mined $ per kWhe

0 300 600 900 1 200 1 500 0 500 1 000 1 500 2 000 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 79 84 101 205 239 516 1 255 203 217 425 535 1 221 1 383 1 845 0.186 0.196 0.373 0.384 0.415 0.466 0.680

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Loading/Excavating (Waste Rock)

The energy costs for loading/excavating waste rock varied from $5 to $277 per kilotonne of ore mined. The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of ore mined) 277 : 5 5 213 Energy Consumption (kWh_e/kilotonne of ore mined) 6 209 : 332 1 868 Unit Energy Cost ($/kWh_e) 0.054 : 0.016 341

Figure 3.9 – Excavating (Waste Rock) Energy Costs

Energy Cost $ per kilotonne of ore mined Energy Consumption 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 kWhe per kilotonne of ore mined $ per kWhe

0 50 100 150 200 250 300 0 1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 0.00 0.01 0.02 0.03 0.04 0.05 0.06 5 11 14 18 21 40 61 175 277 332 336 380 424 658 1 089 1 140 3 750 6 209 0.016 0.025 0.032 0.037 0.037 0.045 0.047 0.053 0.054

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Waste Rock Transport

The energy costs for hauling waste rock varied from $18 to $887 per kilotonne of ore mined. The range of costs and efficiencies is as follows:

Figure 3.10 – Waste Rock Transport Energy Costs

1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 18 54 69 75 114 126 338 579 887 442 1 461 2 421 3 211 3 229 3 670 7 577 15 817 22 307 0.021 0.031 0.034 0.035 0.037 0.037 0.040 0.040 0.045 0 200 400 600 800 1 000 0 5 000 10 000 15 000 20 000 25 000 0.00 0.01 0.02 0.03 0.04 0.05 Energy Cost $ per kilotonne of ore mined Energy Consumption kWhe per kilotonne of ore mined $ per kWhe

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Waste Rock Handling

The energy costs for handling waste rock after transport varied from $7 to $78 per kilotonne of ore mined. The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of ore mined) 78 : 7 1 076 Energy Consumption (kWh_e/kilotonne of ore mined) 1 743 : 298 586 Unit Energy Cost ($/kWh_e) 0.045 : 0.021 208

Figure 3.11 – Waste Rock Handling Energy Costs

1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 7 10 13 19 23 29 32 39 78 298 337 345 538 567 736 1 036 1 079 1 743 0.021 0.031 0.034 0.035 0.037 0.037 0.040 0.040 0.045 0 10 20 30 40 50 60 70 80 0 500 1 000 1 500 2 000 0.00 0.01 0.02 0.03 0.04 0.05 Energy Cost $ per kilotonne of ore mined Energy Consumption kWhe per kilotonne of ore mined $ per kWhe

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3.3.3 Ore Mining Operations – Stages of Production Drilling (Ore)

The drilling energy costs varied from $0.13 to $29.00 per kilotonne of ore mined for seven drilling operations. The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of ore mined) 29.00 : 0.13 21 969 Energy Consumption (kWhe/kilotonne of ore mined) 641 : 54 1 191

Figure 3.12 – Drilling (Ore) Energy Costs

1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 2.00 7.00 7.00 10.00 24.00 29.00 0.13 54 185 217 281 385 599 641 0.002 0.004 0.034 0.037 0.039 0.040 0.045 0 5 10 15 20 25 30 0 100 200 300 400 500 600 700 800 0.00 0.01 0.02 0.03 0.04 0.05 Energy Cost $ per kilotonne of ore mined Energy Consumption kWhe per kilotonne of ore mined $ per kWhe

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Blasting (Ore)

The energy costs for blasting ore varied from $56 to $208 per kilotonne of ore mined. The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of ore mined) 208 : 56 374 Energy Consumption (kWh_e/kilotonne of ore mined) 520 : 284 183 Unit Energy Cost ($/kWh_e) 0.680 : 0.186 366

Figure 3.13 – Blasting (Ore) Energy Costs

1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 56 97 164 183 186 202 208 284 305 353 482 488 492 520 0.186 0.196 0.372 0.386 0.415 0.466 0.680 0 50 100 150 200 250 0 100 200 300 400 500 600 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 Energy Cost $ per kilotonne of ore mined Energy Consumption kWhe per kilotonne of ore mined $ per kWhe

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Loading/Excavating Ore

The energy costs for loading/excavating ore varied from $10 to $98 per kilotonne of ore mined. The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of ore mined) 98 : 10 954 Energy Consumption (kWh_e/kilotonne of ore mined) 2 201 : 407 541 Unit Energy Cost ($/kWh_e) 0.053 : 0.014 378

Figure 3.14 – Excavating (Ore) Energy Costs

1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 10 17 22 22 29 34 35 62 98 407 461 621 726 857 938 1 061 1 658 2 201 0.014 0.026 0.033 0.037 0.037 0.037 0.045 0.047 0.053 0 20 40 60 80 100 0 500 1 000 1 500 2 000 2 500 0.00 0.01 0.02 0.03 0.04 0.05 0.06 Energy Cost $ per kilotonne of ore mined Energy Consumption kWhe per kilotonne of ore mined $ per kWhe

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Ore Transport

The energy costs for hauling ore to the crusher or stockpile varied from $50 to $162 per kilotonne of ore mined. The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of ore mined) 162 : 50 327 Energy Consumption (kWh_e/kilotonne of ore mined) 4 432 : 2 020 219 Unit Energy Cost ($/kWh_e) 0.045 : 0.021 208

Figure 3.15 – Ore Transport Energy Costs

1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 50 63 88 89 120 121 135 135 162 2 020 2 231 2 316 2 359 2 687 3 417 3 933 4 106 4 432 0.021 0.031 0.033 0.034 0.035 0.037 0.037 0.040 0.045 0 50 100 150 200 0 1 000 2 000 3 000 4 000 5 000 0.00 0.01 0.02 0.03 0.04 0.05 Energy Cost $ per kilotonne of ore mined Energy Consumption kWhe per kilotonne of ore mined $ per kWhe

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Mine Dewatering

The energy costs for mine dewatering varied from $0.00 to $454.00 per kilotonne of ore mined. The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of ore mined) 454.00 : 0.00 n/a Energy Consumption (kWh_e/kilotonne of ore mined) 4 920 : 0 n/a Unit Energy Cost ($/kWh_e) 0.092 : 0.000 n/a

Figure 3.16 – Mine Dewatering Energy Costs

1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 0 100 200 300 400 500 0 1 000 2 000 3 000 4 000 5 000 0.00 0.02 0.04 0.06 0.08 0.10 5.00 6.00 12.00 454.00 1.02 0.99 0.00 0 73 131 247 301 414 4 920 0.000 0.002 0.004 0.039 0.039 0.083 0.092 Energy Cost $ per kilotonne of ore mined Energy Consumption kWhe per kilotonne of ore mined $ per kWhe

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Mine Support Equipment and Services

This category includes energy consumption reported by participants for mine support equipment, road maintenance and service equipment and facilities. The energy costs for various mine support equipment and services ranged from $12 to $280 per kilotonne of ore mined. The range of costs and efficiencies is as follows:

Figure 3.17 – Mine Support Equipment and Services Energy Costs

1 2 3 4 5 6 7 8 9 12 29 46 46 56 70 86 97 280 0 50 100 150 200 250 300 1 2 3 4 5 6 7 8 9 0.017 0.021 0.029 0.034 0.038 0.043 0.043 0.047 0.048 1 2 3 4 5 6 7 8 9 549 689 1 211 1 347 1 815 2 014 2 408 3 365 6 463 0 1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 Energy Cost $ per kilotonne of ore mined Energy Consumption kWhe per kilotonne of ore mined $ per kWhe

0.00 0.01 0.02 0.03 0.04 0.05

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34

3.3.4 Comparisons Based on Total Material Removed Drilling

The drilling energy costs varied from $0.13 to $29.00 per kilotonne of material removed (ore plus waste rock) for seven drilling operations, as illustrated below. The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of material removed) 29.00 : 0.13 21 969 Energy Consumption (kWhe/kilotonne of material removed) 641 : 55 1 173

Figure 3.18 – Drilling Energy Costs

1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 0 5 10 15 20 25 30 0 100 200 300 400 500 600 700 800 0.00 0.01 0.02 0.03 0.04 0.05 2.00 7.00 7.00 10.00 24.00 29.00 0.13 55 184 217 281 468 598 641 0.002 0.004 0.034 0.037 0.039 0.040 0.045 Energy Cost $ per kilotonne of material removed Energy Consumption kWhe per kilotonne of material removed $ per kWhe

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35

The influence of the size of the mining operation on energy consumption in drilling activities is explored in the figure below. There appears to be a very strong relationship between the drilling energy per kilotonne of material removed (i.e. rock broken) and the total volume of material removed at the mine. The largest operations consume less than one half of the energy per kilotonne in drilling operations that is reported by the smaller mines in the study sample.

Figure 3.19 – Scale Economies: Drilling

Blasting

The energy costs for blasting varied from $56 to $275 per kilotonne of material removed (ore plus waste rock). The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of material removed) 275 : 56 494 Energy Consumption (kWhe/kilotonne of material removed) 662 : 284 233

0 250 500 750

0 100

Millions of Tonnes of Material Removed

kWh

e

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36

Figure 3.20 – Blasting Energy Costs

We examined the relationship between the size of the open-pit mining operations and the price paid for blasting fuels. As indicated in the figure below, the larger operations tend to be able to leverage their substantial requirements for blasting fuels into lower prices from suppliers.

Figure 3.21 – Economies of Scale: Purchase Price of Blasting Fuels

1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 56 97 164 183 187 208 275 284 305 352 486 491 520 662 0.186 0.196 0.373 0.385 0.415 0.466 0.680 0 50 100 150 200 250 300 0 100 200 300 400 500 600 700 800 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 Energy Cost $ per kilotonne of material removed Energy Consumption kWhe per kilotonne of material removed $ per kWhe

$0.00 $0.20 $0.40 $0.60 $0.80 0 100 $ per kWh e

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37

Material Loading/Excavating

The energy costs for loading/excavating ore and waste rock varied from $15 to $98 per kilotonne of material removed. The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of material removed) 98 : 15 657 Energy Consumption (kWh_e/kilotonne of material removed) 2 202 : 389 566 Unit Energy Cost ($/kWh_e) 0.053 : 0.015 364

Figure 3.22 – Excavating Energy Costs

1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 15 17 18 18 22 29 35 36 98 389 407 455 620 702 969 1 018 1 061 2 202 0.015 0.026 0.033 0.037 0.037 0.045 0.047 0.047 0.053 0 20 40 60 80 100 0 500 1 000 1 500 2 000 2 500 0.00 0.01 0.02 0.03 0.04 0.05 0.06 Energy Cost $ per kilotonne of material removed Energy Consumption kWhe per kilotonne of material removed $ per kWhe

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38

The excavating/loading operations at open-pit mines would appear to generate significant economies of scale. Larger mines are able to deploy extremely large and expensive (electric) shovels that would not be cost-efficient in smaller mining operations. The figure below examines the economies of scale reported in loading operations at the nine mines in the study. Perhaps surprisingly, the energy consumption (kWh_eper kilotonne of material removed) reported for excavating operations is not much higher at the smaller mines participating in this study.

Figure 3.23 – Economies of Scale: Excavating

Hauling

The energy costs for hauling material from the pit to the crusher, stockpile or dump varied from $65 to $158 per kilotonne of material removed (ore plus waste rock). The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of material removed) 158 : 65 243 Energy Consumption (kWhe/kilotonne of material removed) 4 591 : 2 359 195

0 1 000 2 000 3 000

0 150

kWh

e

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Figure 3.24 – Transport/Hauling Energy Costs

Hauling is another mining operation that can generate economies of scale since the largest mines are more able to use very large trucks (over 200 tons). On the basis of the data illus-trated in the figure below, however, the larger mines do not appear to be realizing any savings in energy consumption per kilotonne of material removed compared with the smaller open-pit mines in the study.

Figure 3.25 – Economies of Scale: Hauling

1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 65 75 88 112 120 138 138 147 158 2 359 2 403 2 687 3 028 3 175 3 483 3 759 4 360 4 591 0.021 0.031 0.034 0.034 0.035 0.037 0.037 0.040 0.045 0 50 100 150 200 0 1 000 2 000 3 000 4 000 5 000 0.00 0.01 0.02 0.03 0.04 0.05 Energy Cost $ per kilotonne of material removed Energy Consumption kWhe per kilotonne of material removed $ per kWhe

0 1 000 2 000 3 000 4 000 5 000 0 150

kWh

e

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40

Mine Dewatering

The energy costs for mine dewatering varied from $0.00 to $86.00 per kilotonne of material removed. The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of material removed) 86.00 : 0.00 n/a Energy Consumption (kWh_e/kilotonne of material removed) 928 : 0 n/a Unit Energy Cost ($/kWh_e) 0.002 : 0.000 n/a

Figure 3.26 – Mine Dewatering Energy Costs

1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1.00 3.00 6.00 86.00 0.98 0.61 0.00 0 34 40 144 236 256 928 0.000 0.002 0.004 0.039 0.039 0.083 0.092 0 20 40 60 80 100 0 200 400 600 800 1 000 0.00 0.02 0.04 0.06 0.08 0.10 Energy Cost $ per kilotonne of material removed Energy Consumption kWhe per kilotonne of material removed $ per kWhe

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41

Mine Support Equipment and Services2

The energy costs for various mine support equipment and services ranged from $6 to $44 per kilotonne of material removed. The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of material removed) 44 : 6 684 Energy Consumption (kWh_e/kilotonne of material removed) 2 078 : 301 691 Unit Energy Cost ($/kWh_e) 0.048 : 0.017 288

Figure 3.27 – Mine Support Equipment and Services Energy Costs

2 THIS CATEGORY INCLUDES ENERGY CONSUMPTION REPORTED BY PARTICIPANTS FORMINESUPPORTEQUIPMENT, ROAD

MAINTENANCE ANDSERVICEEQUIPMENT ANDFACILITIES.

1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 6 16 16 25 26 34 35 40 44 301 342 373 527 666 917 1 150 1 291 2 078 0.017 0.021 0.029 0.034 0.038 0.043 0.043 0.047 0.048 0 10 20 30 40 50 0 500 1 000 1 500 2 000 2 500 0.00 0.01 0.02 0.03 0.04 0.05 Energy Cost $ per kilotonne of material removed Energy Consumption kWhe per kilotonne of material removed $ per kWhe

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42

Total Mining Costs per Kilotonne Removed

The total energy costs for mining operations ranged from $89 to $483 per kilotonne of material removed. The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of material removed) 483 : 89 510 Energy Consumption (kWh_e/kilotonne of material removed) 8 035 : 3 231 249 Unit Energy Cost ($/kWh_e) 0.074 : 0.022 334

Figure 3.28 – Total Mining Costs

1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 0 100 200 300 400 500 0 2 000 4 000 6 000 8 000 10 000 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 89 107 312 322 324 381 439 456 483 3 231 4 030 5 924 5 982 6 108 6 161 6 441 6 581 8 035 0.022 0.033 0.048 0.052 0.054 0.060 0.062 0.069 0.074 Energy Cost $ per kilotonne of material removed Energy Consumption kWhe per kilotonne of material removed $ per kWhe

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43

The effect of economies of scale on the energy consumption in total mining operations within the nine mines in the study is shown in the figure below. The two largest opera-tions, the oil sands operaopera-tions, which have no drilling or blasting operaopera-tions, recorded the lowest energy consumption per kilotonne of material removed. There was, however, little evidence of any economies of scale for energy consumption among the seven “hard rock” open-pit mines in the study.

Figure 3.29 – Economies of Scale: Total Mining Energy

3.4 Inter-Mine Comparative Energy Costs –

Mill/Concentrator Operations

3.4.1 Total Mill/Concentrator Operations

The total energy costs for open-pit mining for seven operations are shown below. As illus-trated, the energy costs vary from $105 per kilotonne of ore processed to $2,367 per kilotonne. The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of ore processed) 2 367 : 105 2 254 Energy Consumption (kWh_e/kilotonne of ore processed) 35 701 : 13 144 272 Unit Energy Cost ($/kWh_e) 0.083 : 0.005 1 681

0 3 000 6 000 9 000

0 150

kWh

e

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44

The total costs shown here cover crushing, grinding, all other concentration, extraction and recovery operations, tailings treatment, process water supply, and other plant energy. Any in-pit crushing has been included with the primary crushing operations at the mill.

Figure 3.30 – Total Energy Costs: Mill/Concentrator Operations

1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 105 353 431 960 1 209 1 523 2 367 13 144 21 229 21 298 23 811 24 540 28 449 35 701 0.005 0.010 0.033 0.039 0.051 0.072 0.083 0 500 1 000 1 500 2 000 2 500 0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 0.00 0.02 0.04 0.06 0.08 0.10 Energy Cost $ per kilotonne of ore processed Energy Consumption kWhe per kilotonne of ore processed $ per kWhe

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45

3.4.2 Mill/Concentrator Operations – Stages of Production Crushing

Energy costs for crushing ore varied from $2 to $160 per kilotonne of ore processed for seven operations. The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of ore processed) 160 : 2 8 126 Energy Consumption (kWhe/kilotonne of ore processed) 2 804 : 253 1 110

Figure 3.31 – Crushing Energy Costs

1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 2 3 39 46 60 79 160 253 427 561 1 065 1 945 2 358 2 804 0.003 0.008 0.025 0.041 0.057 0.083 0.092 0 50 100 150 200 0 500 1 000 1 500 2 000 2 500 3 000 0.00 0.02 0.04 0.06 0.08 0.10 Energy Cost $ per kilotonne of ore processed Energy Consumption kWhe per kilotonne of ore processed $ per kWhe

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46

Grinding

Energy costs for grinding ore varied from $6 to $1,507 per kilotonne of ore processed. The range of costs and efficiencies is as follows:

Figure 3.32 – Grinding Energy Costs

1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 6 21 139 582 603 698 1 507 2 639 3 620 4 957 7 280 12 232 14 930 16 320 0.002 0.004 0.039 0.039 0.057 0.083 0.092 0 500 1 000 1 500 2 000 0 5 000 10 000 15 000 20 000 0.00 0.02 0.04 0.06 0.08 0.10 Energy Cost $ per kilotonne of ore processed Energy Consumption kWhe per kilotonne of ore processed $ per kWhe

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47

Crushing and Grinding Combined

Energy costs for crushing and grinding combined varied from $10 to $1,547 per kilotonne of ore processed. The range of costs and efficiencies is as follows:

Figure 3.33 – Crushing and Grinding Energy Costs

1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 10 23 199 649 661 859 1 547 3 704 5 210 5 978 7 842 15 035 16 747 16 874 0.003 0.005 0.033 0.039 0.057 0.083 0.092 0 500 1 000 1 500 2 000 0 5 000 10 000 15 000 20 000 0.00 0.02 0.04 0.06 0.08 0.10 Energy Cost $ per kilotonne of ore processed Energy Consumption kWhe per kilotonne of ore processed $ per kWhe

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48

All Other Mill/Concentrator

This category of mill/concentrator costs aggregates energy consumed in the separation, filtering and drying processes for iron ore mines, and included in the separation are carbon-in-leach (CIL) and carbon-in-column (CIC) circuits, stripping, electrowinning and refining operations at gold mines. These costs varied from $45 to $753 per kilotonne of ore processed. The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of ore processed) 753 : 45 1 668 Energy Consumption (kWh_e/kilotonne of ore processed) 26 105 : 2 744 951 Unit Energy Cost ($/kWh_e) 0.070 : 0.005 1 334

Figure 3.34 – Energy Costs: All Other Processing

1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 45 107 129 170 327 623 753 2 744 4 480 4 650 8 666 9 331 10 827 26 105 0.005 0.013 0.029 0.037 0.039 0.067 0.070 0 100 200 300 400 500 600 700 800 0 5 000 10 000 15 000 20 000 25 000 30 000 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 Energy Cost $ per kilotonne of ore processed Energy Consumption kWhe per kilotonne of ore processed $ per kWhe

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49

Tailings Treatment

Energy costs for tailings treatment varied from $5 to $100 per kilotonne of ore processed. The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of ore processed) 100 : 5 1 844 Energy Consumption (kWh_e/kilotonne of ore processed) 2 261 : 245 924 Unit Energy Cost ($/kWh_e) 0.092 : 0.002 3 849

Figure 3.35 – Energy Costs: Tailings Treatment

1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 5 9 23 49 58 85 100 245 1 023 1 261 1 503 1 751 2 049 2 261 0.002 0.004 0.039 0.039 0.057 0.083 0.092 0 20 40 60 80 100 0 500 1 000 1 500 2 000 2 500 0.00 0.02 0.04 0.06 0.08 0.10 Energy Cost $ per kilotonne of ore processed Energy Consumption kWhe per kilotonne of ore processed $ per kWhe

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Process Water Supply

Energy costs for process water supply varied from $5 to $90 per kilotonne of ore processed. The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of ore processed) 90 : 5 1 671 Energy Consumption (kWh_e/kilotonne of ore processed) 2 249 : 79 2 864 Unit Energy Cost ($/kWh_e) 0.092 : 0.002 3 849

Figure 3.36 – Process Water Supply Energy Costs

1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 0 20 40 60 80 100 0 500 1 000 1 500 2 000 2 500 0.00 0.02 0.04 0.06 0.08 0.10 5 7 8 20 30 46 90 79 518 523 1 089 1 182 1 978 2 249 0.002 0.004 0.039 0.039 0.057 0.083 0.092 Energy Cost $ per kilotonne of ore processed Energy Consumption kWhe per kilotonne of ore processed $ per kWhe

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Other Plant Energy

Other plant energy costs varied from $5 to $123 per kilotonne of ore processed. The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of ore processed) 123 : 5 2 254 Energy Consumption (kWh_e/kilotonne of ore processed) 3 326 : 552 603 Unit Energy Cost ($/kWh_e) 0.069 : 0.004 1 745

Figure 3.37 – Other Plant Energy Costs

1 2 3 4 5 6 1 2 3 4 5 6 1 2 3 4 5 6 5 20 38 51 76 123 552 1 382 1 852 2 013 3 143 3 326 0.004 0.006 0.027 0.038 0.039 0.069 0 30 60 90 120 150 0 500 1 000 1 500 2 000 2 500 3 000 3 500 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 Energy Cost $ per kilotonne of ore processed Energy Consumption kWhe per kilotonne of ore processed $ per kWhe

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52 3.5 General and Administrative

The total energy costs for general and administrative operations for seven operations are shown below. As illustrated, the reported energy costs vary from $1 per kilotonne of ore mined to $153 per kilotonne. The range of costs and efficiencies is as follows:

Energy Cost ($/kilotonne of ore mined) 153 : 1 15 504 Energy Consumption (kWhe/kilotonne of ore mined) 4 818 : 83 5 819

The total costs shown here cover energy consumed in operating guardhouses, parking lots, assay laboratories, camps, etc.

Figure 3.38 – General and Administrative Energy Costs

1 2 3 4 5 6 7 1 2 3 4 5 6 7 0 50 100 150 200 0 1 000 2 000 3 000 4 000 5 000 0.00 0.01 0.02 0.03 0.04 0.05 0.06 5 7 17 30 74 153 1 83 252 451 503 1 236 1 877 4 818 0.004 0.006 0.032 0.039 0.039 0.055 0.059 Energy Cost $ per kilotonne of ore mined Energy Consumption kWhe per kilotonne of ore mined $ per kWhe

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POTENTIAL

SAVINGS:

ACHIEVING

BENCHMARK

STANDARDS

4

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4 POTENTIAL SAVINGS: ACHIEVING BENCHMARK STANDARDS

4. POTENTIAL SAVINGS: ACHIEVING BENCHMARK STANDARDS

4.1 Context

In this section, we present some general estimates of potential energy savings from attaining the performance of the most energy-efficient operations. To determine the related potential cost savings, we used weighted average costs for each source of energy.

It should be noted, however, that the potential savings identified may not be realizable for a number of practical reasons. For example, savings may be related to economies of scale or the nature of the ore body, or customer requirements may dictate the use of a particular technology precluding the use of a more energy-efficient technology.

At the same time, there may be some offsetting arguments regarding the size of the potential savings when considering the following:

• There are opportunities for improvement in the lowest-cost, most efficient facilities. The fact that different firms lead in different stages of production provides even more evidence of the potential.

• There could be operations outside the study sample that have lower-cost, more efficient operations.

In light of the above observations, we present below a simplistic estimate of the potential savings achievable if each participant were to attain the most efficient level of energy con-sumption for each stage of production, using average energy source prices.

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POTENTIAL SAVINGS: ACHIEVING BENCHMARK STANDARDS 4

55 4.2 Potential Energy Savings: Mining

Mining Operations (Material Removed)

Weighted Lowest Savings Average Total Total

Average kWhe/kt kWhe/kt $/kWhe kt Savings kWhe ($M) Drilling 291 55 236 0.031 326 2.4 Blasting 448 284 104 0.034 326 18.2 Loading 707 389 318 0.036 533 6.1 Transport 3 258 2 359 899 0.033 533 15.8 Support 704 301 403 0.032 533 6.9 Total 49.4 (36%)

With respect to mining operations, potential identified energy savings represent a cost saving of about $49 million, or approximately 36 percent.

4.3 Potential Energy Savings: Milling

Iron Ore Concentration

Average kWhe/kt kWhe/kt $/kWhe kt Savings kWhe ($M) Crushing 1 282 253 1 029 0.021 95 018 2.0 Grinding 3 983 2 639 1 344 0.017 95 018 2.2 Further 10 008 4 480 5 528 0.013 95 018 6.8 Processing Tailings 1 857 1 503 354 0.015 95 018 0.5 Process Water 1 692 1 182 510 0.014 95 018 0.7 Other 2 730 1 382 1 348 0.006 55 101 0.4 Total 12.7 (47%)

With respect to iron ore concentration operations, potential energy savings identified are about $13 million, or approximately 47 percent.

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4 POTENTIAL SAVINGS: ACHIEVING BENCHMARK STANDARDS

Gold Milling

Average kWhe/kt kWhe/kt $/kWhe kt Savings kWhe ($M) Crushing 1 549 427 1 122 0.054 15 783 1.0 Grinding 13 009 7 280 5 729 0.063 15 783 5.7 Further 6 248 2 744 3 504 0.058 15 783 3.2 Processing Tailings 1 131 245 886 0.057 15 783 0.8 Process Water 538 79 459 0.063 15 783 0.5 Other 2 029 552 1 477 0.038 15 783 0.9 Total 11.9 (53%)

With respect to gold milling operations, potential energy savings identified are in the order of $12 million, or approximately 53 percent.

To sum up, potential annual energy savings identified with the most efficient operation for each production stage as the benchmark are about $74 million (about one third of total energy costs), as applied to the nine study participants.

On a cautionary note, we should point out that these savings are hypothetical and may not be achievable owing to circumstances faced by each mine, i.e. the nature of the ore body, technology employed, long-term contractual obligations, etc.