In South Africa, a recent episode of the entrepreneurial television series ‘The Growth Engines’ highlighted the Palabora Mining Company’s partnership with local energy efficiency solutions company Ensight Energy Solutions to overcome energy costs.
The mine produces about 60,000 tonnes of copper a year for international markets with an annual electricity bill of approximately ZAR500 million ($40 million).
Kobie Naude, General Manager: Asset Management at Palabora Mining Company said: “… We cannot control the market or the prices. All we can control is costs. With energy being the second-largest cost in our business, we had little option but to take action on this front.”
The decision to appoint Ensight Energy Solutions has seen the mining company save ZAR95 million ($7.6 million) through energy efficiency interventions to date.
According to a company statement, Palabora Mining Company is looking forward to total savings of close to ZAR200 million ($16 million) over the next three years.
Energy efficiency and the environment
A dedicated Ensight team, working with Palabora employees, generated energy efficiency ideas and projects to save electricity. Instead of just recommending actions, Ensight also became involved with the task of delivering projects and results.
Rod Welford, CEO of Ensight Energy Solutions, said: “We work for companies that generally have energy costs of around ZAR500 million ($40 million) to ZAR1.5 billion ($120.3 million) a year.
“Our objective is not only to save energy, but also to improve the environmental outcomes of the mining companies concerned.”
The contract between the two parties states that payment is only made as a basis of the overall percentage in energy savings achieved by the customer through the energy efficiency programmes.
According to Welford, there is a ‘perfect storm’ happening in South Africa when it comes to oil and gas, mining, chemical production and steel manufacturing. From 2011 to 2015 the cost of energy has trebled for every tonne of ore mined or produced.
It is this ‘perfect storm’ – associated with increasing energy costs, deeper mines and the uncertain costs of commodities that created an opportunity for specialist services designed to intervene in these sectors.
Technology neutral energy efficiency
Making changes does not mean changing technologies midstream, Welford says: “We are technology neutral. We believe that by using existing technologies better, you can transform the way you operate to save energy and costs.”
This is a ‘people process’ which concentrates on examining and changing the way things are done, before retrofitting new equipment and technologies. As such, buy-in from management is essential.
A side-benefit is identifying other opportunities for energy efficiency in transport, logistics and a range of other ways that can improve the productivity of the companies concerned.
Ethel Nyembe, Head of Small Enterprise at Standard Bank says of the venture: “In the case of Palabora and Ensight, the obvious benefit is energy savings. Not so obvious, but just as important, is the impact these programmes have on the company being able to adopt other efficient practices and achieve further savings.”