LNG: Mining fuel of the future?
LNG: Mining fuel of the future?
TheWorldCounts, which sources its data from various organisations, research institutions and news services, notes that the global mining industry accounts for 10% of the world’s total energy consumption – Or the total energy consumption of Australia, Mexico, South Korea, Italy and Canada combined.
According to Matthew Fannin, senior consultant of core business operations at Deloitte (the British multinational professional services network), natural gas – when transformed into liquefied natural gas (LNG) or into compressed natural gas (CNG) – can be used to replace diesel as fuel to power large mining equipment.
In his piece “Mozambique Domgas Mining”, Fannin writes: “By increasing the energy density of natural gas through conversion to LNG or CNG, it becomes ideally suited for this type of machinery. Mining companies looking to reduce costs and greenhouse gas emissions have been left with a difficult challenge.” He notes that open cast mining equipment, for example, is difficult to electrify due to the mobile nature of the operation.
“Powering this equipment takes enormous amounts of energy. For decades, diesel has provided this energy because of its high energy density, perfect for mobile equipment. Until recently, few alternative options were available to provide this power. Switching from diesel to natural gas is beneficial both from a cost perspective and from a greenhouse gas emissions perspective.”
Fannin notes that engines running on LNG have a 15% improved thermal efficiency compared to equivalent diesel engines. “In addition, when comparing the cost of delivered fuel (delivered to the mine), LNG gains an even bigger advantage. Diesel costs around US$11,62 to US$14,11 per gigajoule, while LNG costs between US$1,90 to US$2,84 per gigajoule in global spot markets.
“Our estimates indicate that future prices of LNG delivered to the end client could be between US$5,80 and US$8,74 per gigajoule. Combining efficiency improvements (15% improvement), unit energy cost reductions (50% reduction) and the relative contribution of mining operations overall spend (40% of total operating cost), this presents a significant opportunity.”
He adds that, from an emissions perspective, changing to 100% LNG (from diesel) represents a reduction in tailpipe greenhouse gas emissions, 25% reduction in carbon dioxide (CO2), 80% reduction in nitrogen oxide and a 97% reduction in carbon monoxide.
So, the switch doesn’t only make financial sense – but it provides major benefits to the environment as well. It’s no wonder that Anglo American is adding a low-emissions fleet to its global shipping operations.
In November 2020 the multinational mining company announced the award of a ten-year charter contract for four LNG-fuelled Capesize vessels, introducing LNG into its chartered fleet for the first time. (Capesize vessels are large bulk carriers and tankers typically above 150 000-deadweight tonnage. They are too large to pass through the Panama Canal and must therefore transit via Cape Horn to travel between the Atlantic and Pacific oceans. Before 2009, when the Suez Canal was deepened, these vessels had to take a longer route via the Cape of Good Hope to travel between the Indian and Atlantic oceans.)
The new-build LNG vessels offer significant environmental benefits, including a 35% cut in CO2 emissions compared to standard marine fuel, while also using new technology to eliminate the release of unburnt methane, or so-called “methane slip”.
Peter Whitcutt, CEO of Anglo American’s marketing business, says: “Anglo American is committed to reducing emissions from its ocean freight operations and to playing a leading role in shaping a more sustainable future for the maritime industry. This agreement is aligned with Anglo American’s goal to be carbon neutral across our operations by 2040 – as we work to reduce emissions not only at our production sites but also along our entire value chain.
“LNG is a readily available, commercially viable, lower emission solution which, combined with innovative technology designed to eliminate unburnt methane, will allow these new builds to provide a much improved environmental and more efficient performance.”
LNG marine fuel offers significant environmental advantages over heavy fuel oil – the most widely used fuel by vessels operating along sea trade routes – and is abundantly available through an established global network of existing infrastructure.
Designed to be larger than, but remain as flexible as, a conventional Capesize vessel, the new builds will optimise cargo transport by increasing load and improving overall cost effectiveness. U-Ming Marine Transport will own the newly designed 190 000-deadweight tonne LNG-fuelled bulk carriers. The fleet will be built by Shanghai Waigaoqiao Shipbuilding in China and is expected to be delivered in 2023.
The fleet is expected to carry up to five million tonnes of product per annum, transporting iron ore from Anglo American’s operations in Brazil and South Africa to the company’s global customer base. The new builds will be flagged and registered in Singapore, which will also serve as prime bunkering port, thus avoiding deviations from trading routes for refuelling purposes.
So, with a move to LNG, various mining operations can become more energy efficient and environmentally friendlier across supply chains – which isn’t only great for their bottom lines, but benefits the planet as a whole.