Mining Companies Can Help Turn On The Lights Across Sub-Saharan Africa, Says World Bank

February 11, 2015

In its report, entitled Power of the Mine: A Transformative Opportunity for Sub-Saharan Africa, the Bank calls on the mining industry to work more closely with electricity utilities in the region to meet their growing energy demands. Rather than supplying their own energy on site, mines can become major and reliable customers for electricity utilities or independent power producers (IPPs) which can then grow and develop better infrastructure to bring low-cost power to communities. Power is critical to mining companies operations and, by becoming anchor customers for electricity utilities, mines can save hundreds of millions of dollars in supplying their own power. Sub-Saharan Africa, as a region, only generates 80 gigawatts of power each year for 48 countries and a population of 1.1 billion people. Two-thirds of people in the region live entirely without electricity and those with a power connection, suffer constant disruptions in supply. Without new investment and with current rates of population growth, there will be more Africans without power by 2030 than there are now. The report finds that minings demand for power in Sub-Saharan Africa will likely triple between 2000 and 2020 to reach over 23,000 MW. This could be higher than non-mining demand for power in some countries. Yet, many mining companies are still opting to supply their own electricity with diesel generators rather than buy power from the grid often because of shortcomings in national power systems in the region. According to the report, another 10 gigawatts of electricity will be added to meet mining power demand by 2020 from 2012 levels and a part of this is projected to come from self-supply arrangements costing mining companies up to $3.3 billion. But new models of power supply for mines are emerging across Sub-Saharan Africa including mines self-supplying and selling to the grid or serving as anchor consumers for IPPs. The report estimates around $6 billion in potential public-private partnership opportunities for new power generation from clean energy sources (including natural gas and hydropower) in Guinea, Mauritania, Tanzania and Mozambique countries with strong expected growth in power demand from the mining sector. Find the author's presentation here. Power-mining integration can bring substantial cost savings to mines, electrification to communities and investment opportunities to the private sector. But to be successful, we need governments, power utilities and mining companies to work together,said the World Banks Vice President for Africa Makhtar Diop. Lack of energy stunts the economic growth thats needed to reduce poverty and boost prosperity for all Africans. Integrating mining demand into national and regional power systems especially in mineral rich and energy-poor countries can bring enormous benefits to countries and communities.

The report cites the example of Guinea, where mining contributes more than half of the countrys total exports and provides more than 20 percent of all fiscal revenues but where national electrification rates are among the lowest in Africa. For instance, by joining a number of mines together and contracting an independent power producer to generate and transmit electricity to the mines through a high voltage mini-grid, the mining companies would save an estimated $640 million in self-supply costs while bringing affordable and reliable energy to at least 5 percent of Guineas peopl

By choosing grid-based and cleaner power sourcing options, which are typically priced lower than self-supplied electricity from diesel or heavy fuel oil, mining companies will be able to meet their electricity needs while also helping to light up the community,said Anita George, Senior Director of the World Banks Energy and Extractives Global Practice. In turn, countries will benefit from improved competitiveness of the mining companies, greater tax revenues from mines and more job opportunities for local people. The report states that though there are risks associated with power-mining integration for example from falling commodity prices or a shortage of transmission links regulatory and financial solutions can help mitigate these risks. A key element is for countries across Sub-Saharan Africa to continue with their power sector reforms and create an attractive operating environment for IPPs, including renewable energy developers. The report: The Power of the Mine: ATransformative Opportunity forSub-Saharan Africa was funded by the Energy Sector Management Assistance Program (ESMAP) and the South African Fund for Energy, Transport and Extractives (SAFETE).