Digging for Power: Mining’s Future in Age of Sustainable Energy

The mining industry is one of the most energy-intensive sectors in the world, using vast amounts of energy to power operations, transport materials, and process raw ores. As global demand for minerals continues to rise, the industry is not only focused on securing a reliable and cost-effective energy supply but also on reducing its carbon footprint and embracing more sustainable energy solutions.

Mexico is one of the world’s leading producers of metals, including silver, gold, copper, zinc, and lead, exemplifying the crucial role mining plays in its national economy. According to the Mexican Mining Chamber (Camimex), the industry contributes approximately 8.5% of Mexico’s GDP and hosts over 1,100 producing mines. However, the Mexican mining industry grapples with energy consumption, emissions reduction, reliability, and sustainability challenges.

Energy Consumption 

Energy is required at every stage of the mining process, from exploration to transportation, and refining. For instance, copper mining in northern Mexico (notably in Sonora and Zacatecas) demands significant energy during smelting and electro-refining, where furnaces and equipment are powered by electricity. Similarly, gold and silver production requires substantial energy input, particularly during chemical processes to extract metals from ores. These processes traditionally rely on grid electricity, natural gas, and renewable sources.

The energy demands of mining operations translate into considerable greenhouse gas emissions. In fact, a single mining operation can rival the energy consumption of small countries. For example, the world's largest copper mine in Chile consumed around 9 terawatt-hours per (TWh) of electricity in 2020, equivalent to the annual energy use of Portugal or Greece. Globally, the mining and metals sector accounts for approximately 4-7% of greenhouse gas emissions (GHG). In countries like Chile, copper mining alone contributes 30% of national emissions; mining in Australia results in about 10% of Australia’s total emissions. Similarly, South Africa’s reliance on coal-based electricity for mining operations accounts for 30-40% of the country’s total emissions.

Reducing Carbon Footprint 

The sector´s carbon footprint is largely driven by Scope 1 (direct emissions from mining operations) and Scope 2 (indirect emissions from electricity consumption). Scope 3 are indirect emissions coming from supply chain, product life cycle, transportation and end-of- life disposal, which present challenges in accurately calculating and reporting due to the need for data across multiple supply chains, products, and stages of the mining life cycle.

Many mining companies worldwide, including Mexican companies, have committed to ambitious sustainability goals. These range from achieving carbon neutrality by 2040 to reducing operational emissions by 30% by 2030. Others pledge to concentrate only on Scope 1 and 2 emissions reductions by 2030 and net zero by 2050. Companies focusing on Scope 1 and Scope 2 emissions often find it easier to control actions and measure results.

Achieving these goals requires sophisticated energy strategies to ensure a reliable, cost- effective, and sustainable energy supply.

Energy Procurement Strategies for Sustainability 

Energy procurement strategies vary depending on the company’s location, size, and operational model, but they generally revolve around Power Purchase Agreements (PPAs) and on-site generation. In Mexico, the carbon intensity of the national grid, which relies heavily on fossil fuels, has led many companies to seek alternatives.

As a trend, companies in Qualified Supply typically sign PPAs for a three- to five-year period. However, mining and other specific industries often opt to sign longer term deals ( 10-20 years, for example) to provide a financial hedge against fluctuating energy prices while enabling companies to source renewable energy. Current PPAs in Mexico offer cost savings of approximately 15% compared to regulated tariffs, aligning with both financial and sustainability objectives. 

For remote mining operations, on-site generation projects are becoming increasingly important. Historically reliant on diesel generators, mining companies are now investing in renewable energy sources like solar and wind, along with energy storage systems, to enhance energy security. In some cases, green hydrogen projects are also being explored to further reduce reliance on fossil fuels. 

Globally, renewable energy PPAs for mining operations account for about 32TWh annually, with only 1.9TWh generated through on-site installations. While PPAs and on-site solutions offer distinct benefits, combining the two often provides the best strategy. However, these projects require detailed regulatory and financial analysis to mitigate risks. 

Challenges in Energy Procurement 

Energy procurement for mining operations involves navigating complex considerations, including labor strikes, evolving regulations, and variable costs. For instance, labor disputes in Mexico’s mining sector have disrupted operations, potentially affected financial returns, and exposed companies to penalties. Furthermore, contracts must address market nuances, supplier alternatives, and carbon credit specifics. Despite these complexities, well-executed procurement strategies offer substantial savings and sustainability benefits. 

Mining’s Role in the Clean Energy Transition 

As we transition to cleaner energy, the mining industry’s role becomes increasingly significant. Minerals like lithium, nickel, and graphite are essential for technologies such as electricity transmission, energy storage, and electric vehicles. According to the International Energy Agency, more than one-third of global electricity will come from renewables by 2025. To meet this growing demand, the World Bank estimates that production of critical minerals could increase by 500% by 2050.  However, increased mineral demand intensifies the pressure on mining companies to adopt responsible and sustainable practices. This includes investing in renewables, technological innovations, electrification, and efficiency initiatives. Balancing these efforts with the need to meet rising demand will require collaboration, innovation, and significant investment. 

Conclusion 

Sustainability is no longer optional for mining companies. As governments, investors, and consumers demand greater transparency and action on emission reductions, energy strategies must prioritize both reliability and environmental responsibility. Mexico’s mining sector stands at a pivotal moment, with opportunities to shape its future operations and contribute to the transition to sustainable energy. By embracing innovative strategies and clean technologies, the industry can reduce its environmental footprint while continuing to power the global and local economy.