The Power of the Mine A Transformative Opportunity for Sub-Saharan - - PowerPoint PPT Presentation

A Transformative Opportunity for Sub-Saharan Africa

The Power of the Mine

http://www.worldbank.org/africa/powerofthemine

Follow the conversation on Twitter with @WBlive and #Power4Africa

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Africa’s power deficit is crippling despite huge energy resources

Hydro potential: 400GW Geothermal potential: 16GW Natural Gas reserves: 329 tcf

Currently, about 1-2 GW of new installed capacity deployed a

• year. Africa needs 6-7 GW a year

http://www.worldbank.org/africa/powerofthemine

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Can mines as anchor consumers be part

• f the solution?

http://www.worldbank.org/africa/powerofthemine

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Mining is a key and well-established industry

Investment in mining accounted for $3.1 billion between 2000 -2012…

1,000 2,000 3,000 4,000 5,000 6,000 2002 2004 2006 2008 2010 2012 Million

Latin America Africa Canada Australia United States Pacific region

…and will go up to $75 billion in SSA in pipeline projects

• Mining exports represents over 20% of exports in 18 countries and over 40% in

14 countries.

• Mining fiscal revenues over 20% in total revenues in Botswana, DRC, and Guinea

http://www.worldbank.org/africa/powerofthemine

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Power needs depend on the type of mineral and level of processing

Refining

Power requirements

Smelting Processing Crushing

5 10 15 20

Iron Ore/Steel (t) Zinc (t) Platinum Group Metals (oz) Copper (t) Cobalt (t) Nickel (t) Bauxite/Aluminum (t)

MWh Basic and intermediate Smelting Refining

http://www.worldbank.org/africa/powerofthemine

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Mining demand for power can be up to 23 GW in 2020

South Africa = 3.5% SSA, excluding South Africa = 9.2%

Note: CAGR=Compound Annual Growth Rate

5.6 10 13.1 2.5 5.2 10.3

Pre-2000 2012 2020

GW

South Africa SSA, excluding South Africa

CAGR=5.6% CAGR=5.5%

~ 15 GW ~ 23 GW ~ 8 GW

http://www.worldbank.org/africa/powerofthemine

Highest increase in power demand – Iron Ore and PGM Refining and Smelting

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Mining demand for power can be

• verwhelming in a few countries

Mining and nonmining (residential, commercial, industrial) demand

48% 50% 52% 64% 74% 84% 97% 135% 294% 326% 0% 50% 100% 150% 200% 250% 300% 350% Cameroon Congo, Rep. of the Congo, Dem. Rep. of Zambia Namibia Niger Sierra Leone Mozambique Guinea Liberia Mining demand as % of total non-mining demand

Mining and residential demand

• 50

100 150 200 250

Residential Mining Residential Mining

GWh 2012 2020*

15 x 3 x

*If all SSA’s population had access to electricity by 2020 with triple level of today’s consumption

http://www.worldbank.org/africa/powerofthemine

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Many models of power sourcing by mines

2020

Self-supply Self-supply + Social Responsabi lity Self-supply + sell to the grid Grid supply + self supply backup Mines sell collectively to grid Mines invest in grid Mines serve as anchor demand for IPP Grid supply

Intermediate 1 3 2 0.9 1.3 5.8 2.4 5.7 15.3

4 8 12 16 Self-supply Intermediate arrangements Grid supply

GW

2000 Energy requirements

http://www.worldbank.org/africa/powerofthemine

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Self supply is a loss for all

Mines:

High cost of electricity Loss of competitiveness

Electricity utility:

Loss of large customers Loss of steady revenue Loss of opportunities of economies of scale for large investments

Country:

Reducing possibilities for access to electricity Drop in exports and tax revenues Negative impact on GDP, and fewer jobs

Grid-connected customers

No electricity

Mine generation investments in self- supply 2012 – $1.3b 2020 – up to $3.3b

No electricity http://www.worldbank.org/africa/powerofthemine

Source of power generation on grid-based arrangements 10

Mining demand for power can unlock clean energy in grid arrangements

Including South Africa Excluding South Africa

2,000 4,000 6,000 8,000 10,000 12,000 14,000

Coal Gas Hydro Oil

MW 2012 2020

1,000 2,000 3,000 4,000 5,000 6,000

Coal Gas Hydro Oil

MW 2012 2020

http://www.worldbank.org/africa/powerofthemine

• Five gold mines in North East Guinea:

Siguiri, Kiniero, Lefa, Tri-K, and Kouroussa

• Three scenarios:

– Mines self-supply (diesel) – Shared 150MW hydropower plant (HPP) among mines – Shared 300MW HPP plant also serves neighboring communities Siguiri and Kankan

• Electrification for community 5% of

total population.

• Higher capital costs but lower running

costs and economies of scale: cost savings for mines around $640 million

• Project cost of $1.4 billion – IPP
• pportunity

24.5 4.9 5.0 10 20 30 Mines Self-supply Shared hydro plant - Mines supply Shared hydro plant - Mines and towns supply c/kWh

Levelized costs per kWh

Mining demand for power can unlock clean energy in self-supply arrangements - Guinea

11 http://www.worldbank.org/africa/powerofthemine

Commodity price volatility can destabilize mining demand for power

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1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 1983 1988 1993 1998 2003 2008 2013 US$

Mineral Prices 1983-2014

Aluminum, $/mt, nominal$ Copper, $/mt, nominal$ Gold, $/toz, nominal$ Lead, $/mt, nominal$ Nickel, 10$/mt, nominal$ Silver, cents/toz, nominal$ Tin, cents/kg, nominal$ Zinc, $/mt, nominal$ Platinum, $/troz Iron ore, cfr spot $/dry mt

http://www.worldbank.org/africa/powerofthemine

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Policymakers can support an attractive enabling environment

Strengthen power sector finances Strengthen regulatory mechanisms Transparent and efficient pricing Support the

• perating

environment for IPPs Mine-financed power projects and carefully crafted contracts Integrate mining demand in power sector planning Use regional platforms Source expertise

http://www.worldbank.org/africa/powerofthemine

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Future can be bright if we use this

• pportunity carefully

http://www.worldbank.org/africa/powerofthemine

Thank You

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Sudeshna Ghosh Banerjee Senior Economist sgbanerjee@worldbank.org http://www.worldbank.org/africa/powerofthemine

http://www.worldbank.org/africa/powerofthemine

A Transformative Opportunity for Sub-Saharan Africa

The Power of the Mine

http://www.worldbank.org/africa/powerofthemine

Follow the conversation on Twitter with @WBlive and #Power4Africa