Energy efficiency and demand management

Key features

  • Secure power until 2017.
  • Direct energy consumption of 1,139.7 Terajoules.
  • Indirect energy (grid electricity) consumption of 5,600.3 Terajoules

Energy constraints

The demand for South Africa's already stretched energy capacity continues to increase and this is a continuing business concern for us at Lonmin. As reported in 2012, we remain cautiously confident that we have secure, reliable power supply to support our operations and growth plans until 2017. However, the steep and steadily rising increases in electricity prices together with the imminent implementation of carbon taxation place rising pressure on our operational costs.

The South African National Energy Regulator, NERSA, has granted Eskom five 8% annual increases as part of its third multi-year electricity price determination. However, in light of the external drivers behind the rise in national energy demand, the delays announced in the construction of newly-built Eskom projects and the existing strain on the national grid, we expect that Eskom may not be able to keep its operational costs within these limits and that a request for an additional increase may be announced in 2014 or 2015.

These cost pressures are likely to be exacerbated by the imminent implementation of a national carbon tax. This is covered in more detail in the section, Climate change.

Approach

Our approach to addressing this risk rests on improving our operational energy efficiencies and reviewing the business case behind renewable energy generation. We aim to achieve this through the implementation of strategic new technologies and enhancing awareness levels among our management teams and workforce.

We have amended our Energy Management Strategy (EMS) to reflect our recent implementation of a management approach called the Total Cost of Ownership, which looks beyond the price tag of electrical equipment, energy-related projects and awareness campaigns and considers instead the total cost implications of our energy decisions in the long term.

Energy profile (TJ) [graph]

The year was a successful one in our energy efficiency journey; with several initiatives completed and a significant increase in general awareness becoming evident across all of our operational divisions.

Our total energy consumption for the year was 6,740 Terajoules1 RA (TJ), (2012: 6,433 TJ), an increase of 4.8%, while we became less efficient by 5.7% from 4.77 TJ per PGM ounce in 2012 to 5.04 TJ per PGM ounce in 2013.

Total energy consumption is broken down into direct and indirect consumption. Indirect energy consumption refers to electricity supplied by the national electricity utility, Eskom, and is our most-significant energy source. At 5,600.3 TJ, our electricity consumption amounted to 83% of our overall energy profile in 2013 (2012: 5,348TJ, 83%).

Energy consumption and efficiency (TJ) [graph]
Electricity consumption and efficiency (TJ) [graph]
  1. 1 One Terajoule = 1,000 Gigajoules
  2. 2 One Megawatt hour = 0.0036 Terajoules
GRI
EN3
Direct energy consumption by primary energy source.
EN4
Indirect energy consumption by primary source.


The energy efficiency projects below, co-funded by Eskom, were completed during the year.

The funding opportunities that Eskom offers in support of energy efficiency projects are encouraging. All of our energy efficiency initiatives are partially funded through these channels.

Full roll-out of optimised air networks at Karee shafts, Rowland shaft and the shafts on our Eastern Platinum operations

Optimised Air Network (OAN) installations maintain the air pressure to a shaft at a pre-set value through a simple control valve located at the point of supply. This has reduced our electricity load by 7.18MW, which equated to an avoided cost of R 27.9 million, calculated at 2013 tariff rates.

Lighting retrofit at Lonmin Platinum Division offices in Marikana

The Lonmin Platinum Division (LPD) offices, the Andrew Saffy Memorial Hospital and the Main Offices at Karee are now fully equipped with energy efficient (EE) fluorescent and LED lighting technology. This was our first Standard Product funding model project completed in partnership with Eskom and has amounted to load reduction and associated cost reductions of 0.33MW and R0.21 million, calculated at 2013 tariff rates respectively.

Heat pump rollout at change houses

Heat pumps have now been installed at all change houses in the Mining and Process divisions to replace the previously installed conventional geysers. A pilot phase of the project was also implemented at the hostel at Western Platinum, with 293 units fitted. This was completed under Eskom's Standard Offer funding model and has amounted to a 1.35MW load reduction and a R3.08 million cost saving, calculated at 2013 tariff rates.

45kW energy efficient fans

67 of 290 aerodynamically-optimised 45kW fans have been installed to replace the conventional 45kW fans that have historically been the mine standard. These operate continuously and have contributed to consumption and cost savings of 0.9MW and R0.68 million respectively.

Energy efficient lighting underground

More than 18,000 specially designed 6W LED lamps and 8,000 E27 screw-in lamps were issued during the year to replace the 13W Compact Fluorescent Lamps (CFLs) that were traditionally issued as the mine standard. This has enabled us to achieve a 0.08MW reduction. In addition these lamps, unlike their CFL predecessors, do not contain mercury or any hazardous components, which means an added reduction in our hazardous waste generation and disposal footprint.

Compressed air initiative

Lonmin has entered into a performance contract with Eskom in partnership with an energy savings company, to reduce the amount of energy required to generate compressed air. By focussing on only using the most efficient means of generating compressed air and further optimising the compressor control system and networks, we are recording on-going energy and load reductions.

The energy efficiency projects below, co-funded by Eskom, were launched during the year.

1MW solar power plant

The environmental authorisation for a solar plant capable of delivering 1MW of power, as a trial of on-site generation at the LPD offices, is still in process. The plant will be built by a contracted energy savings company which will sell us the power generated through a Power Purchase Agreement. This plant will serve as a trial to determine the feasibility of solar power generation for other applications within our organisation. It is planned for completion in 2014.

Fuel cell feasibility study at the PMR

A feasibility study was initiated in August 2013 to determine whether the PMR in Brakpan, Gauteng, could be fully/partially migrated off the national grid by using a natural gas-fired fuel cell solution as an alternative to grid power. Such a project would be the first of its kind in South Africa and would provide valuable insight into Africa's potential to increase its own power-producing capacity using its vast untapped natural gas fields. The study is due for completion in 2014.

Focus on further lighting optimisation

Lighting across our various business units has been identified as an area where we can make a meaningful energy saving. We have spent two years testing various types of energy efficient lighting possibilities and we are now developing a project that will seek to ensure that only energy efficient lighting may be purchased for all our lighting applications. We will register the project with Eskom once finalised.

49M

Next year will also see us embark on a communication campaign among our workforce and in partnership with Eskom, to support their 49M initiative, which aims to get 49 million South Africans to embrace energy savings as a national culture, not only in the workplace, but at home as well. 49M is endorsed by government and several business partners.

See Case study: Energising the Grace Care Centre.

GRI
EN5
Energy saved due to conservation and efficiency improvements.
EN6
Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives.
EN7
Initiatives to reduce indirect energy consumption and reductions achieved.