Energy costs and availability across the African continent continues to be one of the driving infrastructure concerns for mining companies looking to establish viable businesses across the continent.
For this reason alone, the industry needs to consider total cost of ownership energy solutions – as opposed to upfront capital expenditure. In so doing it will realise significant project lifecycle cost savings.
LAURA CORNISH recently spoke to Zest WEG Group’s newly appointed CEO SIEGFRIED KREUTZFELD and integrated solutions executive ALASTAIR GERRARD about the need to consider energy from this perspective.
This article first appeared in Mining Review Africa Issue 4, 2019
The success of any mining operation today is defined by its ability to reduce its capital and operating expenditure as much as possible in order to deliver a financially viable and profitable business.
In Africa, this has created an environment where products and solutions are being determined primarily by their upfront cost savings in order to deliver investor-attractive feasibility studies and project cost requirements.
“Generally, more focus is applied in the development of the power generation solution - to ensure that the upfront energy source will be the most cost effective.
"Less of a focus is placed on reviewing the complete operational energy requirements from a holistic perspective, which reduces the opportunity for greater overall energy savings,” Gerrard starts.
While this may deliver early cost savings, the benefits realised are short lived as the costs to run all processes that form part of a mining operation are high.
“Since the cost of energy required to run mining operations is one of the most significant costs incurred, this ultimately has a negative impact on the bottom line over the lifecycle of the operation,” Gerrard continues.
As a result of this situation, Zest WEG Group is intensifying it efforts to educate the market on the financial necessity to consider holistic energy solutions, determined by total energy demand and optimised to incorporate high efficiency technologies that reduce cost of ownership.
“While upfront costs for smart solutions may require larger capital outlays, the payback period is reduced and this must be considered.”
According to Kreutzfeld, Zest WEG Group was the first company to introduce tier 1 energy-saving products and solutions to the mining sector in Africa.
Within the WEG Group, the South Africa-based company offers the most diverse range of products suited to delivering energy efficient solutions. In his new position as CEO, which became official in January this year, Kreutzfeld is focused on driving the energy solutions the company has to offer with greater intensity into the local industry.
“It should in turn reap growth benefits for the company,” he adds.
Having spent 40 years within the WEG Group, which most recently included five years establishing and growing WEG China from a US$50 million business to a $200 million business, he is the ideal person to deliver on the company’s strategic objective.
Delving into one aspect of the solutions offering, Gerrard highlights that while the majority of the mining industry in Africa typically has an install base of older, less efficient motors, clients can achieve a 1 to 2% improvement in efficiency when upgrading from an IE1 to an IE2 motor and another 1 to 2% when upgrading to an IE3 motor.
“A 2 to 4% improvement from an IE1 to IE3 motor is quite substantial when considering the volume of motors and therefore scale across an operation.”
To help the industry best understand the value behind such a motor upgrade, the company makes use of a fully equipped demonstration unit at its Johannesburg-based facilities to help educate the market on the benefits of enhancing their motor products.
Because Zest WEG Group understands the financial constraints the mining industry is operating within, it has reduced the cost of its IE3 motors and has for some time already, been offering IE3 motors at the same price as IE2 motors – this as part of its effort to help support the industry in allocating cash to implement high-level energy solutions.
Renewable energy makes sense
Incorporating renewable energy solutions is without doubt another answer to help reduce the total cost of power ownership and is something more and more mining houses should consider – especially as costs continue to drop on the back of increased demand.
Breaking into the renewable energy market in Africa is part of Zest WEG Group’s 2019 strategic drive to offer smart energy solutions that are suited to the hot and often windy African environment.
“Here our intention is to leverage off of WEG’s extensive renewably energy experience and track record which includes the installation of high efficiency gearless drive wind turbines and multiple large-scale (30 to 60 MW) solar plants in Brazil,” Kreutzfeld states.
Having catered to the more energy-mature mining markets in regions such as South America, Zest WEG Group is fully equipped to deliver similar energy solutions in Africa.
“Our immediate focus will be to provide 5-10 MW complementary wind and solar energy solutions to clients looking to power their operations exclusively off the national grid.
"We believe there are extensive opportunities in South Africa from which we’ll naturally springboard into the rest of Africa,” Gerrard concludes.