[How To] Save on Operational Costs with Solar Power
Mining precious metals is a costly business. While the process can be extremely lucrative, mining companies face an array of expensive challenges like maintaining productivity, safety, equipment, and profitability. Couple that with uncertain commodity prices and mining can be downright astronomical.
Mining companies are fighting back though. Companies are finding ways to cut operational costs through innovative measures and doing more with less. Rio Tinto for example, one of the largest mining companies in the world, has recently partnered with one of the larger solar-panel makers in the United States to help save on fuel costs. First Solar and Ingenero Pty have agreed to provide solar power to Rio Tinto’s Weipa bauxite mine in Queensland state, which will allow the company to not only receive an Australian tax break, but provide a more efficient and cleaner solution in almost all aspects of its business.
“Having a company like Rio go into this space sends a pretty strong message to the rest of the industry,” Jack Curtis, First Solar’s Sydney-based vice president of business development for the Asia-Pacific, said in an interview. “We’ve already seen a good uptick in interest in these projects from companies like Rio, and we think that will accelerate on the back of this announcement.”
First Solar is seeking to develop as much as 200 megawatts of capacity for the mining industry over three years. The company is also talking to other mining companies to provide additional hybrid projects that will provide reliable energy supply to operations trough solar technology.
The project between Rio Tinto and First Solar will start with 1.7 megawatts and could potentially add an additional five megawatts. The first phase of the project will generate enough electricity to offset as much as 20 percent of the daytime demand while also reducing the company’s diesel use.
The project “is the first one of any meaningful size that is being done globally with a company of Rio’s prominence and size, so there’s a real potential to export this as a pilot to a much broader global audience,” Curtis said.
Lithium producers bullish as EV revolution ramps demand
Rising demand for lithium is stoking prices for the electric vehicle battery metal, fueling long-delayed expansions that still may not produce adequate supplies that automakers need to meet aggressive production plans.
Growing industry optimism from higher lithium prices is a change from last year when funding for mines and processing plants dried up during the pandemic.
Albemarle Corp, Livent Corp and other producers are scrambling to make more lithium, but some analysts worry the recent price jump will not spur a big enough expansion to meet a planned wave of new EV models by mid-decade.
Since January, General Motors Co, Ford Motor Co LG Energy Solution and SK Innovation Co, along with other automakers and battery parts manufacturers, have said they will spend billions of dollars on EV plants.
U.S. President Joe Biden has proposed spending $174bn to boost EV sales and infrastructure. The European Union has similar plans, part of a rush to catch up with global EV leader China.
Those moves have helped an index of lithium prices jump 59 percent since April 2020, according to data from Benchmark Mineral Intelligence, a commodity pricing provider.
The rising demand “reflects what feels like a real and fundamental turning point in our industry,” said Paul Graves, chief executive of Livent Corp, which supplies Tesla Inc. On Monday, it said it would more than double its annual lithium production to 115,000 tonnes.
Graves warned, though, that “it will be a challenge for the lithium industry to produce sufficient qualified material in the near and medium term.”
Albemarle, the world’s largest lithium producer, aims to double its production capacity to 175,000 tonnes by the end of the year when two construction projects are complete. Albemarle's Q1 profit beat expectations thanks to rising lithium prices. Chile’s SQM, the No. 2 producer, said its goal to expand production of lithium carbonate by 71 percent to 120,000 tonnes should be complete by December.
Australia’s Orocobre is paying $1.4 billion for smaller rival Galaxy Resources, a strategy designed to boost scale and help it grow faster in regions closer to customers.
“The next few years are going to be critical in terms of whether there’s enough available lithium supply, and that’s why you’re starting to see commodity prices start to ramp,” said Chris Berry, an independent lithium industry consultant.
The price gains helped Albemarle and other major producers, including China’s Ganfeng Lithium Co and SQM, post big gains in first-quarter profit and boost forecasts for the year.
Even China’s Tianqi Lithium Corp, saddled with debt due to years of low lithium prices, signaled that recovering demand should help it swing to a profit this year.
Forecasts call for demand for the white metals to surge from about 320,000 tonnes annually last year to more than 1 million tonnes annually by 2025, when many automakers plan to launch new EV fleets, according to Benchmark.
Still, demand is expected to outstrip supply in 2025 by more than 200,000 tonnes, so lithium prices may need to rise to encourage producers to build more mines. That could boost the prices consumers pay for EVs. “Companies across the lithium-ion supply chain are in the best position they’ve been in for the last 5 years,” said Pedro Palandrani of the Global X Lithium & Battery Technology ETF , which has doubled in value in the past year.