Australian news, and some related international items

If Glencore wants cheap energy for Mt Isa, it should go solar

 REneweconomy, By Giles Parkinson on 30 May 2017 International mining giant Glencore is apparently threatening to close its huge copper operations in Mt Isa – with the loss of at least 2,000 jobs – because of the soaring cost of energy, amongst other things.

According to an article in the Australian Financial Review on Tuesday , Glencore’s copper chief Aristotelis Mistakidis has written a letter to the state and federal governments complaining that the price of power has risen 100 per cent in three years and will continue to escalate.

But it only has itself to blame.

Glencore is the biggest miner of coal in the world following its merger with Xstrata, and the biggest mineral commodities trading business.

Back in 2011, Xstrata had a choice of which energy it should choose for the future supply of Mt Isa – between the Copperstring transmission line from Townsville that would deliver wind, solar, biomass and maybe geothermal, or a gas plant supplied by AGL.

It went for the latter, and it has turned out to be be a mighty stupid decision. Gas prices have soared, as many predicted, and the cost of gas generation has likely more than doubled.

The cost of solar and wind, meanwhile, has halved, as many predicted. Glencore would likely be paying half of what it is now had it chosen the renewable energy option……..

If Glencore is really serious about the operations at Mt Isa and reducing energy costs, it would have no hesitation in building a large solar plant to meet at least some of its energy needs. That can be easily incorporated into the gas plant, particularly with the help of storage and smart controls.

Mt Isa has excellent solar resources. It would likely deliver electricity at a cost of $70-$80/MWh, perhaps even less. If it had acted quickly enough, Glencore could have cashed in on the high price of renewable energy certificates.

That would have meant that the cost of electricity would have been free for at least a few years (LGC prices have been trading around $80/MWh).

At the very least, a large portion of its energy costs would be largely hedged for 25 years. It would have guaranteed its earnings and the jobs of 2,000 people, and the future of a major regional city.

May 31, 2017 - Posted by | General News

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