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

The Power of the Mine A Transformative Opportunity for Sub-Saharan Africa Follow the conversation on Twitter with @WBlive and #Power4Africa http://www.worldbank.org/africa/powerofthemine

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

Can mines as anchor consumers be part of the solution? 3 http://www.worldbank.org/africa/powerofthemine

Mining is a key and well-established industry • 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 6,000 Latin America Investment in mining 5,000 Africa accounted for $3.1 billion Canada 4,000 Australia between 2000 - 2012… United States Million 3,000 Pacific region …and will go up to $75 2,000 billion in SSA in pipeline 1,000 projects 0 2002 2004 2006 2008 2010 2012 4 http://www.worldbank.org/africa/powerofthemine

Power needs depend on the type of mineral and level of processing Power requirements Bauxite/Aluminum (t) Processing Nickel (t) Cobalt (t) Refining Copper (t) Platinum Group Metals (oz) Smelting Zinc (t) Iron Ore/Steel (t) MWh 0 5 10 15 20 Crushing Basic and intermediate Smelting Refining http://www.worldbank.org/africa/powerofthemine 5

Mining demand for power can be up to 23 GW in 2020 ~ 23 GW CAGR=5.6% 10.3 ~ 15 GW CAGR=5.5% GW 5.2 ~ 8 GW 2.5 13.1 10 5.6 Pre-2000 2012 2020 South Africa SSA, excluding South Africa Note: CAGR=Compound Annual Growth Rate Highest increase in power demand – South Africa = 3.5% Iron Ore and PGM SSA, excluding South Africa = 9.2% Refining and Smelting http://www.worldbank.org/africa/powerofthemine 6

Mining demand for power can be overwhelming in a few countries Mining and nonmining Mining and residential (residential, commercial, demand industrial) demand 250 Liberia 326% Guinea 294% 3 x 200 Mozambique 135% 150 GWh Sierra Leone 97% 15 x Niger 84% 100 Namibia 74% 50 Zambia 64% Congo, Dem. Rep. of 52% - Residential Mining Residential Mining Congo, Rep. of the 50% 2012 Cameroon 48% 2020* 0% 50% 100% 150% 200% 250% 300% 350% *If all SSA’s population had access to electricity by Mining demand as % of total non-mining demand 2020 with triple level of today’s consumption http://www.worldbank.org/africa/powerofthemine 7

Many models of power sourcing by mines 2 Intermediate 3 1 Self-supply Self-supply + Grid supply + Mines sell Mines serve as + Social Mines invest in Self-supply sell to the self supply collectively to anchor demand Grid supply Responsabi grid grid backup grid for IPP lity Energy requirements 16 15.3 2020 12 2000 GW 8 5.8 5.7 4 2.4 1.3 0.9 0 Self-supply Intermediate arrangements Grid supply 8 http://www.worldbank.org/africa/powerofthemine

Self supply is a loss for all Mines: High cost of electricity Grid-connected Loss of competitiveness customers Mine generation investments in self- supply 2012 – $1.3b Electricity utility: 2020 – up to $3.3b Loss of large customers No electricity 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 No electricity 9 http://www.worldbank.org/africa/powerofthemine

Mining demand for power can unlock clean energy in grid arrangements Source of power generation on grid-based arrangements Including South Africa Excluding South Africa 14,000 6,000 12,000 5,000 MW 10,000 MW 4,000 8,000 3,000 6,000 2,000 4,000 1,000 2,000 0 0 Coal Gas Hydro Oil Coal Gas Hydro Oil 2012 2020 2012 2020 http://www.worldbank.org/africa/powerofthemine 10

Mining demand for power can unlock clean energy in self-supply arrangements - Guinea • 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. 30 Levelized costs per kWh 24.5 • Higher capital costs but lower running 20 costs and economies of scale: cost 10 savings for mines around $640 million 4.9 5.0 • 0 Project cost of $ 1.4 billion – IPP c/kWh Mines Self-supply Shared hydro plant - Shared hydro plant - opportunity Mines supply Mines and towns supply http://www.worldbank.org/africa/powerofthemine 11

Commodity price volatility can destabilize mining demand for power 10,000 Mineral Prices 1983-2014 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 US$ 0 1983 1988 1993 1998 2003 2008 2013 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 12 http://www.worldbank.org/africa/powerofthemine

Policymakers can support an attractive enabling environment Strengthen Strengthen power Transparent and regulatory sector finances efficient pricing mechanisms Support the Mine-financed power Integrate mining operating projects and carefully demand in power environment for IPPs crafted contracts sector planning Use regional Source expertise platforms http://www.worldbank.org/africa/powerofthemine 13

Future can be bright if we use this opportunity carefully 14 http://www.worldbank.org/africa/powerofthemine

Thank You Sudeshna Ghosh Banerjee Senior Economist sgbanerjee@worldbank.org http://www.worldbank.org/africa/powerofthemine 15 http://www.worldbank.org/africa/powerofthemine

The Power of the Mine A Transformative Opportunity for Sub-Saharan Africa Follow the conversation on Twitter with @WBlive and #Power4Africa http://www.worldbank.org/africa/powerofthemine