Mining energy costs

5 ways mining energy costs can be managed

5 ways mining energy costs can be managed

February 12, 2024

As rising fuel and power costs continue to affect miners, reducing business costs has become more critical than ever. Mining is one of the energy-intensive sectors where energy costs represent a significant portion of operational expenses, particularly in South Africa, where the average Eskom tariff has consistently exceeded headline inflation by a substantial margin. However, amid these challenges lie opportunities to control costs and drive efficiency and sustainable growth.

According to the research of over 1,500 global energy decision-makers conducted by Centrica Business Solutions, organisations that effectively manage their energy are more efficient and more likely to achieve strong financial performance. A 20% cut in energy costs can represent the same bottom-line benefit as a 5% increase in sales.

Among businesses that are leading the charge in managing their energy, Centrica identified five proven methods to manage energy costs and enhance business performance:

1. Use data to drive energy efficiency

According to Centrica, 45% of sustainable businesses are transforming energy data into specific, actionable improvements, and 76% are utilising data collected from sensors and smart devices to improve decision-making. There’s no doubt that data is the cornerstone of effective energy management. By leveraging technologies like THOHO Energy’s wireless sensor technology and Centrica’s PowerRadar™ analysis platform, mines can monitor energy consumption in real-time and gain granular visibility into usage patterns. This insight allows for informed decision-making, leading to optimised performance, reduced costs, and improved operational efficiency.

2. Unlock revenue opportunities from your mining energy estate

Innovative approaches to energy management can turn energy from a cost centre into a revenue generator. By implementing distributed energy solutions and participating in Virtual Power Plants (VPPs), mining businesses can capitalise on flexibility in energy usage and market demand, reducing costs while creating new revenue streams and enhancing overall financial performance.

3. Generate your own power and create energy independence

In an era of rising energy costs and grid instability, ensuring a resilient energy supply is paramount. There has been much excitement in the mining sector since the revised Schedule 2 to the Electricity Regulation Act was released on 26 March 2020. This legislation allows mining companies to generate their own power, the bulk of which will be from renewable sources or capturing energy produced by beneficiation processes. Distributed energy technologies such as Combined Heat and Power (CHP) and solar offer mining businesses the opportunity to generate their own secure on-site energy supply, increasing resilience and reducing costs and carbon emissions in alignment with sustainability goals.

4. Gain a competitive advantage by becoming a sustainable business

Centrica’s global research reveals that 61% of the most successful businesses are also clean energy leaders. In South Africa, mining companies need to leverage new energy resources to reduce their reliance on Eskom and its rapidly escalating energy costs. Investing in low-carbon energy technologies not only helps mining businesses reduce costs, but also enhances brand reputation and attractiveness to environmentally-conscious consumers. Embracing sustainable energy solutions like solar power empowers mining businesses to improve their environmental credentials while enjoying cost savings and operational efficiencies.

5. Invest in new energy technology with flexible finance

For businesses with capital constraints, flexible finance solutions offer a pathway to invest in sustainable energy technologies without significant upfront costs. Leveraging funding options and bundled solutions allows businesses to deploy new energy solutions while maintaining cost predictability and mitigating financial risk, making the transition more feasible and affordable.

Good decisions can only be made with intelligent information

Proactive energy management is essential for businesses looking to control costs, drive efficiency, and enhance performance. By leveraging data-driven insights, embracing innovative technologies, and adopting alternative energy sources, mining businesses can reduce energy costs and position themselves for long-term success.

THOHO Energy understands the challenges large mining organisations face in accessing better energy monitoring tools and systems to manage their consumption, which is why they’ve partnered with Centrica, a leading FTSE 100 listed company, to bring a proven energy insights solution to Africa. Centrica’s cloud-based platform, PowerRadar™, provides businesses with real-time visibility and intelligence to make informed decisions that drive bottom-line savings and contribute to a more sustainable future for the mining industry.