The mining industry has always faced the challenge of ensuring reliable power in remote areas. As the number of tier 1 and 2 discoveries diminish, miners will increasingly be forced to look deeper and in even more isolated areas for orebodies, exacerbating the energy challenge.
Traditionally, off-grid sites have been powered by diesel generators, which are reliable but heavy emitters of carbon emissions. As pressure mounts from governments, investors and society to decarbonise operations, the search for alternatives to diesel is gaining momentum.
Renewable energy is now competitive with traditional fossil fuels on a levelised cost of energy basis, particularly in remote sites, but their uptake is undermined by fluctuations in availability, both perceived and real. Until this is overcome, potentially through cheaper storage technologies, renewables will not be regularly relied upon as baseload power sources for remote mines.
In comparison, a single nuclear plant can provide power 92% of the time and is currently the only baseload energy source that produces zero carbon emissions. Whilst nuclear has recently surged to the top of our news feeds, our State of Play data suggests the industry believes it will play a small part in the energy transition over the next 15 years due to the challenges it poses.
Nuclear’s association with major disasters (including recently at Fukishima in 2011 and the infamous meltdown at Chernobyl in 1986, among others), its production of toxic, radioactive waste and its military uses raises significant concerns, particularly around safety, in many parts of the world.
Globally, the average construction time of a nuclear reactor sits somewhere between 8-10 years (excluding permitting), much slower than that of solar power, which grows generating capacity faster than any other energy source. In addition, new nuclear power is one of the most expensive energy production means and is generally not cost competitive.
In an effort to make nuclear more viable, a number of different countries and companies are currently focussing their effort on the development of small modular reactors (SMRs). That is, the re-scaling and re-purposing of existing nuclear technology for wider markets. Due to size and standardisation, these reactors are predicted to be simpler, safer and easier to install, as well as being amenable to assembly-line construction.
Currently this technology does not exist, and there are no SMRs licensed or under construction, however countries with strong international regulations, a mature supply chain, nuclear expertise and domestic uranium mining could attempt to take an early position.
If SMRs were to come to fruition, they could have profound impacts on the mining industry in two key ways. Firstly, it could help operators, particularly those in remote areas, decarbonize, especially if supported by intermittent renewables.
Secondly, the shifting demand for nuclear will change demand patterns for upstream mining commodities, especially uranium. Those with footholds on deposits may find themselves with increasingly better economic outlooks.
Despite this, the waste, construction, permitting and cost barriers, combined with the number of existing reactors coming to the end of their life or being prematurely retired, suggests that nuclear power is an unlikely winner in the energy transition. The fast-pace uptake, safety and efficiency of renewables appears difficult to compete with.
As the covid-19 pandemic continues to evolve and businesses respond to the dynamic environment, we at State of Play want to provide as much valuable data back to the industry as possible to help guide the response. We are now moving toward a monthly cadence for our surveys, with some different questions and some that remain constant to track change over time. Even if you completed the survey previously, please complete it again here and share.
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