Thought Leadership presentation January 2014 Contents Mining in Africa: Overview Power Consumption in Mining: Key requirements and trends Power Solutions by Sterling & Wilson Sterling & Wilson and SP Group: Overview 2 Mining in Africa: Overview (1/2) Introduction Distribution of select minerals in Africa . Africa has the largest or 2nd largest reserve worldwide for minerals like bauxite, industrial diamonds, manganese, phosphate rock, platinum . In early 1990s, Africa was receiving only ~5% of the global exploration and mining development investment . However due to changes like a need for infrastructure, stable legal systems, profit repatriation guarantees etc., in 2012, Africa received 15% (USD 99 bn)of the global exploration and mining investment 3 Mining in Africa: Overview (2/2) . Mining and quarrying of ~60 minerals represents around 20% of Africa’s economic activity . Minerals are the continent’s second-largest export category (~10% of the continent’s total exports) Summary: The immense ore deposits and the continually improving political and economic environment implies that the future is bright for mining in Africa 4 Contents Mining in Africa: Overview Power Consumption in Mining: Key requirements and trends Power Solutions by Sterling & Wilson Sterling & Wilson and SP Group: Overview 5 Mining is a significant consumer of energy; Electricity costs have increasing at much faster rate than other cost items in the mining industry Power Consumption . Mining sector is a large consumer of electricity in South Africa, taking about 15% of Eskom’s annual output1 . For minerals like gold & coal, electricity account for ~8%-10% of the total mining costs Cost inflation affecting South African mining industry, average annual increase in costs (2007-2012)2 1 ‘Towards and energy efficient mining sector’ (Eskom) 2 ‘Cost control and margin protection in the South African mining and metals industry’ (E&Y) 6 Requirements for power (incl. temporary power) in mining Power requirements . During mine construction . Grid supply is unavailable / unreliable (remote areas) . Before grid supply or power plant is installed . Supplemental power during expansion of mine . Emergency breakdown 7 Key trends mining related to power in Africa TRENDS IMPLICATIONS ON POWER REQUIREMENTS/ SOLUTIONS • Mines are getting deeper and resources • Increase in power requirement are becoming more difficult to find • Production at the mine is being started • Use of temporary power supply for a few years while it is still at small operation and then until full-scale operations; development of own working up to full-scale mining power plant later on • Need for flexibility while mining certain • Need for temporary power, as it is not worth commodities like nickel, gold and copper their while to build a power plant that will not be (mining operations undertaken only when used all the time. trading price reaches a certain level and • Ability to move power generators in and out at shut when price reduces) a customer’s request 8 Options available for mining companies Advantages Challenges 1 Purchase from grid . Low cost . Not available in areas without grid connectivity; may be irregular 2 Outright purchase of power . Ownership; Tax incentives . High capital expenditure equipment / own captive plant . Assured connectivity 3 Rental power . Assured connectivity . No ownership . Speed of deployment . Scalability . Lease payments are tax deductible . Flexible terms . Reduced capital outlay Solutions offered by Sterling & Wilson 9 There is tremendous potential for solar energy generation in Africa due to high solar irradiation. Mining sector can leverage the opportunity available Global solar radiation map (figures in kWh/sq.m./day Source: ‘The rising sun’ (KPMG 2011) 10 Contents Mining in Africa: Overview Power Consumption in Mining: Key requirements and trends Power Solutions by Sterling & Wilson Sterling & Wilson and SP Group: Overview 11 Power Solutions by Sterling And Wilson Technical solutions by S&W for power requirements in mining 1 1. Co-gen with Diesel (cooling or heating loads, if required) 2 2. Conventional Diesel based solution 3 3. Hybrid Diesel + Solar S&W’s Value Proposition 1) Joint investment in energy plant (partnered energy supply) 2) Fuel sourcing jointly 3) Temporary power solutions (containerised) 4) Conceptualizing energy optimization 5) Maintenance solutions 12 1 Co-generation • Co-generation is simultaneous production of Power and heat / cooling from a single fuel source being burnt in a Diesel / Gas engine / Turbine. • While the engine will deliver power for mining, exhaust can be used to generate cooling / hot water requirements of the campus. • This would result in reduced power demand for cooling / fuel savings on hot water. • For power demand in excess of 5 MW, heat can be also utilised for additional power generation through ORC / combined cycle Co-generation technology options Technology • Gas Turbines from 4 MW onwards (Dual fuel) • Reciprocating engines from 0.4 MW onwards Fuel Options • Natural gas • Diesel • Heavy oil / Crude oil • Bio-gas (from waste) 14 2 Conventional Diesel based solutions • Supply of Diesel engines from xxx to 3000 KVA • Full turnkey solutions with power on tap • Proven and tested for continuous operation • 400 / 6300 / 10500 KV options • Containerised 1 MW gen sets • Day tank / Radiator within container • Additional container for electrical / HT systems 15 Product Drawing of Containerized DG Product Drawing of Containerized DG 3 Hybrid Diesel + Solar Diesel Gen-Set Solar PV Module Inverter Station Fuel AMF Panel Saver Inverter/Transformer/HT Panel etc. Compact Sub-Station Load 11KV Solar PV Power System• Solar PV Power system consists of Solar PV module which converts Incident solar radiation to DC power. • The no of Array strings will be connected to Solar Inverter which converts DC to AC power. • AC switchgear units will be sized to supply maximum reliable power according to load. Solar PV Solar AC Switch Load Module Inverter gear Some of Technology Partners: PV Module(Tier-1): Canadian Solar, Hanwha-Qcells, Jinko etc Solar Inverters: SMA, ABB, AEG, Power-One etc. AC Switchgear: ABB, SCHNEIDER, SIEMENS etc. Typical Case Study 5 MW Hybrid Solution with 3 MWp PV Solar Case Study: Assumptions • Location: Sample Africa • Radiation (kWh/m2): 2210.9 • DC Capacity of PV : 3MWp • AC Capacity: 3 MW • PV Module: 300W-Poly • Inverter : 1000kW • Mounting: Ground Mounted, South facing ,Shadow free • D.G Capacity • 5*1550 KVA + 1550 KVA ( Spare ) • Power Factor 0.8 Assumptions • System: Solar PV +D.G hybrid system • Operation time : 24hours • 6am to 6pm ( Solar PV +D.G @100% load) • 6pm to 6am (D.G runs at constant load i.e, 2MW (Part load) Sample Day • The Max. PV load sharing for sample day will be approx. 48% Load Sharing Pattern for a sample day Load sharing pattern for sample day 120% 100% 80% 60% 40% 20% 0% 0:00 4:48 9:36 14:24 19:12 0:00 4:48 % LOAD sharing of DG % LOAD sharing of PV Load Sharing Pattern DATE TIME % LOAD sharing of DG % LOAD sharing of PV 00:00 100% 0% 01:00 100% 0% 02:00 100% 0% 03:00 100% 0% 04:00 100% 0% 05:00 100% 0% 06:00 92% 8% 07:00 79% 21% 08:00 66% 34% 09:00 58% 42% 10:00 53% 47% 11:00 52% 48% 12:00 53% 47% 13:00 56% 44% 14:00 62% 38% 15:00 72% 28% 16:00 85% 15% 17:00 98% 2% 18:00 100% 0% 19:00 100% 0% 20:00 100% 0% 21:00 100% 0% 22:00 100% 0% 23:00 100% 0% Assumptions • System: Solar PV +D.G hybrid system • Operation time : 24hours • 4157hours, 6am to 6pm ( Solar PV +D.G @100% load) • 4603 hours, 6pm to 6am (D.G only @50%, 2MW) • The minimum DG load sharing for a year will be approx. 50% (day time) • The Max. PV load sharing for a year will be approx. 48% Commercial: Diesel Base Case Parameter Assumption Size 6 MW ( 6*1500 kVA)-5 W+ 1 S Capex 2 MUSD Spares cost /year 0.3 MUSD average over life cycle O & M Cost/year for the system 0.15 MUSD Fuel consumption (1 MW base load) 242 lit/hour Fuel Consumption- 5 working 29040 lit /day sets/day Fuel consumption (75% of base 237 lit/day load) Fuel consumption (50% of base 162 lit/day load) Lub oil consumption and refill- 5 118 lit/day working sets/day Commercial: Solar Base Case Parameter Assumption Size 3 MW Capex 4.8 MUSD Interest Rate 12% Loan Duration 10 Years Salvage Value 25% De-mob Cost 5% PLF 18% Details of Diesel Consumption Annual Diesel consumption at continuous load in 93,78,425 litre Diesel consumption after installing 3 MW Solar in 74,79,493 litre Diesel Saved in litre 18,98,932 Per Litre Diesel Cost 1.5 USD Diesel Saved 2.84 MUSD Capex for 3 MW Solar ( USD) 4.8 MUSD Payback ( Years) 1.7 Year Co-Generation Business : Illustrative projects Alausa Power Limited, Nigeria Shoreline Power Company Limited, Nigeria Neptune Magnet Mall, Bhandup - Mumbai Sri Venkatramana Paper Mills Pvt. Ltd., Tamil Nadu 29 Diesel Generators Business: Illustrative projects (1/3) Income Electrix, Sierra Leone, Africa – 8 nos. 2000 Angelique International, Mali –7 nos. 2750 kVA & 3 kVA nos. 2000kVA 30 Diesel Generators Business: Illustrative projects (2/3) 8 nos 2750Kva, 6.6 Kv Gensets Supplied , Installed and commissioned at Mali , Africa Diesel Generators Business: Illustrative projects (3/3) 12 Mva , 1Kv, 50 Hz Power Plant at International Housing Group Doha Solar EPC: Illustrative projects (1/3) 25MW - Visual Percept, Surel, 125 MW Solar Thermal – Areva, Rajasthan Gujarat Scope: Electrical Work 5.5MW – NW Energy Rajasthan 1MW – NDPL, Delhi 3MW – Tata Power, Mulshi Best Performing Plant in India Largest Roof Top Project 33 Solar EPC: Illustrative projects