Energy and Climate Change
Our expanded operations and growth in production bring with them increased energy demand.
Since 2008, Kinross’ total tonnes of ore processed has increased by 73%. During that time period, largely in response to higher gold prices, lower ore grades have been processed, requiring larger energy inputs and resulting in increased emissions of CO2. In 2010, Kinross’ acquisition of Red Back Mining brought two new operating mines in West Africa to Kinross’ portfolio, increasing production for part of 2010 and the full-year 2011, as well as increasing total energy consumption and CO2 emissions.
Energy consumption increased by 12% in 2010 over 2009, and by 28% in 2011 over 2010, including increases in electricity consumption of 10% in 2010 and 9% in 2011. CO2 emissions resulting from direct energy consumption increased by 13% in 2010 over 2009, and by 44% in 2011 over 2010. The inclusion of the West African sites represents 90% of the total increase. Indirect emissions increased by 8% in 2010 from 2009, and by 11% in 2011 over the previous year: arising from purchased electricity at the Chirano mine.
Energy consumption at Kinross represents approximately 25% of our total cash cost of production in 2011, second only to labour costs. Over 2010 and 2011, we spent $356 million on electricity and $299 million on diesel fuel, the two sources of power that also produce the majority of our direct and indirect greenhouse gas emissions. To reduce our environmental impact and to remain competitive, we must continue to advance our efforts to reduce energy consumption and improve energy efficiency wherever practical.
In our 2009 Corporate Responsibility Report, Kinross stated its intention to develop a climate change strategy. As a first step, in 2010 we began to integrate the potential physical risks from climate change into our enterprise risk management system. Starting with a third-party review of regional climate change impacts on temperature, precipitation, and extreme weather, we identified potential climate-related scenarios that might affect our operations. Those risks were then evaluated at the regional and site levels, and action plans developed for risks such as potential effects of permafrost thaw on ground conditions at Kupol; changes in the operating season for the Kupol winter road; and water scarcity in water-stressed regions in Chile. In each of these areas, operational programs are under consideration or already in place (ground temperature monitoring; evaluation of all-season road construction; and water conservation measures, respectively).
We also completed a Global Energy Assessment and life-of-mine greenhouse gas/energy projection for all of our operations and projects. Going forward, our greenhouse gas (GHG) emissions and energy use will depend, to a large degree, on the sequencing and timing of our development projects at Tasiast, Lobo-Marte and FDN, and the project capital optimization review process that we announced in January 2012. In that context, we have developed a three-pronged strategy for energy and GHGs that focuses on core business improvements:
- At existing operations, our focus is on high-use and high-risk sites to establish energy strategies focused on both optimizing supply and reducing consumption. We are focusing on new opportunities and initiatives already underway;
- At our major growth projects at Tasiast, Lobo-Marte and FDN, we are reviewing energy supplies and opportunities to reduce consumption as part of our capital optimization program. Opportunities include alternative processing methods that require less energy per unit of production, other conventional power options such as natural gas or electricity, and a review of alternative and/or renewable energy options where there are resources available; and
- As part of the EIA required for the approval and permitting of new mine projects, we are assessing climate change impacts and strategies as a key part of the EIA process.
To support our strategy, we created and filled two new roles in the first half of 2012. Our new Director, Energy Strategy will focus on optimizing energy supply, and our new Manager, Global Energy Management will be dedicated to improving energy efficiency.
Meanwhile, we continue efforts to quantify viable renewable energy resources at our sites. Since we first began our Renewable and Alternative Energy working group in 2004, Kinross has evaluated several potential opportunities, and will continue to review opportunities as we develop our projects.
Renewable and Alternative Energy Opportunities
|Evaluated and shown to be not viable||Opportunities for further evaluation|
Chile Region III
Process Efficiency Measures
Kinross’ commitment to continuous improvement has helped us identify a number of process initiatives to increase energy efficiency and reduce cost. Following are a few of our 2010 and 2011 initiatives:
- In 2010, La Coipa installed energy-efficient lighting throughout its operation, a first for any mine in the Atacama region of Chile. The operation realized savings of 1.7 megawatt-hours in the first year. Our continuous improvement team in Chile plans to meet with other Chilean mines to share best practices for energy conservation;
- At Fort Knox, an improved SAG mill drive reduced maintenance and lowered energy consumption by 9%. In 2010, the operation saved 5,500 megawatt-hours of power for a total savings of $769,600;
- At Kupol, where temperatures can drop to -50 Celsius, eight glycol pumps are used to heat buildings and walkways. In 2010, variable frequency drives were installed on the pumps, resulting in energy savings of 750 megawatt-hours per year, valued at approximately $250,000. The initiative had a payback period of less than one year; and
- At La Coipa, major repairs to the compressed air network reduced leaks in the system and resulted in significant reductions in energy use of 2,900 megawatt-hours per year and of 1,363 CO2 equivalent in indirect emissions and $551,000.