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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
2
Africa’s power deficit is crippling despite
huge energy resources
Hydro potential: 400GWGeothermal potential: 16GWNatural 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
3
Can mines as anchor consumers be part
of 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…
0
1,000
2,000
3,000
4,000
5,000
6,000
2002 2004 2006 2008 2010 2012
Mill
ion
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
0 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
1013.12.5
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
overwhelming 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
GW
h
20122020*
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
Responsability
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 IPPGrid supply
Intermediate1 3
2
0.9 1.3
5.8
2.4
5.7
15.3
0
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 $3.3bNo electricity
http://www.worldbank.org/africa/powerofthemine
Source of power generation on grid-based arrangements
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Mining demand for power can unlock
clean energy in grid arrangements
Including South Africa Excluding South Africa
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Coal Gas Hydro Oil
MW
2012 2020
0
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 $1.4 billion – IPP opportunity
24.5
4.9 5.0
0
10
20
30
Mines Self-supply Shared hydro plant -Mines supply
Shared hydro plant -Mines and towns supplyc/
kWh
Levelized costs per kWh
Mining demand for power can unlock clean
energy in self-supply arrangements - Guinea
11http://www.worldbank.org/africa/powerofthemine
Commodity price volatility can destabilize
mining demand for power
12
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1983 1988 1993 1998 2003 2008 2013
US$
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 operating
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
opportunity carefully
http://www.worldbank.org/africa/powerofthemine
Thank You
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Sudeshna Ghosh BanerjeeSenior [email protected]://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