The Future of the Energy and Mining Industry

Mining and energy issues are increasingly intertwined.

With the expansion of mining operations, both open pit and underground, the demand for energy is increasing.

1. Mining and the energy industry are closely intertwined, resulting in miners trying to make the mines bigger and bigger so that the energy costs pay off.

The mining industry is particularly dependent on the energy industry, as energy costs are one of the largest cost components for the miners. Most mines are located far away from urban agglomerations, which means that large geographical distances have to be covered just to get to the location of the mines.

With every kilometre the costs for mining increase. This leads to the fact that many miners try to tap into their own energy sources to supply themselves with energy produced near the mine, which is often very difficult due to the terrain and the fact that in many instances the mines can not be connected to the electricity grid. Consequently, many generators use oil to generate electricity, which is a problem. The whole mining industry is therefore dependent on fossil fuels for its existence to operate profitably, and are worried about energy costs, which is part of OPEX.

2. Why it is so important for mining companies to identify where there are high concentrations of metal ores and what this has to do with energy costs.

A crucial point why some mineral resources are exploited and others are not is the concentration of mineral ores in certain geological formations, in some circumstances ores can be found soon after the first analysis was taken, or it has been found that the exploitation of these resources is not economically viable enough to operate there.

If it turns out that the raw material deposits are economically viable for the operator, the raw material concentration in the rock often decreases further over the years, provided that the raw material deposits were easy to reach at the beginning of the production cycle. This leads to rising costs and at the same time the concentration of ores to be mined continues to decrease year after year. That is why it is important to keep an eye on OPEX, to try to limit OPEX because it would decrease the profitability of the mine.

Over the years it becomes more and more difficult to find new mines that can replace the old mines and at the same time have a sufficiently high concentration of ores in geologically interesting geological formations. In many cases, however, these strata are deeper because the easily accessible geological formations have already been exploited. The deeper the formation, the higher the extraction costs, and the higher the energy costs. As a result, OPEX increases and profitability continues to decline.


3. Location, location, location. The location determines how much you will pay for energy.

Depending on the exact location of the mine, the cost for mining rights can be very high. At certain locations, they can greatly reduce the profitability of the project. The time horizon for prospecting is limited, and there are special environmental requirements to fulfill. The areas where it is easier to get the mining rights, where prices are lower, are often far away from urban agglomerations. As soon as it turns out that significant deposits of raw materials are available in a region, the costs may rise as a result. Reducing energy costs are a proven means to increase the profitability of a mine.

4. Nuclear power could be the key to providing the mines with enough power to operate.

One solution that is hotly debated is the use of small nuclear power plants to meet the energy supply in opencast mining. These plants can be set up independently of the power grid to secure the energy supply. However, there is still the problem of how to dispose of the residual materials that have to be stored as radioactive waste for years afterwards. Furthermore, it must be considered that one needs safe storage and cooling of the residues of the nuclear process due to the overheating of the material many years after the material has been used, and one needs energy to cool down the spent fuel.

Many thanks for the shared interest in the energy world!


This article is just meant to inform the reader of recent developments in the energy industry at large and to share knowledge and insights with a wider audience. The author does not put forth investment recommendations. This article should not be taken as investment advice and the author cannot be held to account for investments made. For more information, please refer to the Legal Disclosure and Privacy Policy, which you can click on or find at the top of this page in the menu bar. 

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