Cost effective hybrid power that lowered gold production costs
Client: Resolute Mining Limited (Resolute)
Location: Mali, Africa
Sectors: Mining
The Challenge
Resolute Mining Limited, an ASX and LSE listed gold mining company has produced over eight million ounces of gold from 10 gold mines
As part of its commitment to delivering a life-of-mine allin sustaining cost of US$746/oz at its Syama Underground Mine in Mali, they needed to define a lower cost power solution relative to its existing source of power.
The Syama Gold Mine was powered by singular diesel generators that were no longer the most efficient compared to newer technology now available. At the mercy of diesel, notoriously a fluctuating high-cost fuel, it has become an expensive solution. Furthermore, the generators had to run constantly to provide system stability that the mine needed.
After investigating the possibility of a grid connection, which was disregarded based on time and cost, Resolute launched a tender with the target of achieving a 40% reduction in the cost of electricity (COE). With Resolute focused on securing a more environmentally friendly solution, the environmental impact of the power solution being offered was a key consideration.
Resolute also wanted a solution which offered low-cost power without needing to make a significant upfront capital investment so that the Company could conserve capital for deployment for growth.
Project fact file
The Solution
As Aggreko had been providing and operating a 28 MW diesel power plant on the site that augmented the existing diesel power station for a few years, we had both the reputation and credibility to step in and offer support the optimisation and hybridisation of their plant.
A vast project needed a vast solution, and we relished the opportunity to work with Resolute to deliver a bespoke cutting edge technical and commercial solution as part of a 16-year Power Purchase Agreement (PPA).
Technical offering
Delivered in two stages, it considered the various project factors with a meticulous level of detail to ensure smooth delivery and zero disruption to the mine’s production activity. Stage one was completed in 2021 and consisted of three 10 MW thermal Wärtsilä Modular Block’s and a 10 MW battery storage system, that provides spinning reserve displacement and outbalance sudden jumps in load.
The second stage will consist of the installation of an additional 10 MW Wärtsilä Modular Block and the addition of 20 MW solar PV power.
There can be some hesitancy to implement solar as mines have short planning horizons and the usual lifespan of a PV park is about 20 years - if not sometimes longer than the operation of a mine itself. This is why the offering Aggreko provides perfectly matches a mine’s needs.
The initial site infrastructure layout includes space to accommodate a fifth 10 MW Wärtsilä Modular Block, enabling the mine to add additional power capacity if needed in the future to support growth or expansion plans.
Once the solar power system is installed, the 10 MW battery storage system will also manage the output of the solar power system, smoothing out fluctuations in PV generation and facilitating integration into the hybrid system.
Commercial Offering
Our pricing was structured with a combination of fixed and variable charges depending on electricity required, and evolving MW installed. It also includes an incentive programme where Aggreko shares between 25% to 50% of the resulting fuel savings if improved efficiencies for key performances indicators in the contract are achieved. This provides us with an incentive to further reduce the cost of power for Resolute, and we share that cost benefit directly with our customer.
During the project engineering phase, we forged a true partnership with Resolute to ensure we use the best site infrastructure, and optimise the civil work and installation of the plant. As an example, the solar array will be constructed on the surface of the existing Syama Tailings Storage Facility (TSF) thereby maximising positive environmental outcomes and augmenting Resolute’s rehabilitation program.
The Impact
$10 million cost savings in the first full year of operation and reduced environmental impact ensuring long term mine sustainability
The energy as a service agreement with this hybrid offering allows Resolute to focus on their core business of Mining while delivering substantial cost savings, estimated at 2 million euros per month on their current total cost of energy – that’s a 40% reduction from current COE.
These savings will flow directly into Resolute’s production cost per ounce and help them operate in any gold price environment, which is crucial for the long-term sustainability of their mining operations.
Once the Solar power plant is integrated into the mine’s energy mix, Resolute will also improve the mine’s environmental impact with a reduction in carbon emissions of approx. 20%.
The ongoing presence of Aggreko at the site, and appetite to adopt a new world leading technology demonstrates the trust and strong partnership in place.