The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Green energy transition is creating exponential demand for Alaska's minerals and low-carbon electricity to power mines North of 60 Mining News – June 3, 2022
Alaska is enormously enriched in the minerals and metals needed for the clean energy transition, including the world-class Graphite Creek deposit north of Nome.
Alaska mines and communities are often located in remote areas where grid power is not an option.
Low-carbon emissions from mining operations are increasingly becoming a prerequisite for downstream buyers, including refineries that upgrade doré poured at mines into high-grade gold bars.
Nuclear microreactors offer a safe and zero-carbon energy source that is ideal for replacing the diesel generators that typically power remote villages and rural mines in Alaska.
The global transition to low-carbon energy and transportation is both an incredible opportunity and daunting challenge for Alaska's mining sector. On the one hand, Alaska is incredibly enriched with the minerals and metals required to build electric vehicles, solar panels, wind farms, and other clean energy technologies. On the other, America's Last Frontier is burdened by a lack of affordable, low-carbon energy options in the remote reaches of the state where many of these critical mineral resources are found.
"There will be exponential demand growth for critical minerals in the coming decades because of the global move toward the global greener energy transition, no one disputes that fact," Alaska Department of Natural Resources Commissioner Corrie Feige framed a May 26 discussion on mining in a net-zero world during the Alaska Sustainable Energy conference.
"All of this skyrocketing demand comes as the mining industry itself is embracing the energy transition – companies are developing strategies and technologies to meet the growing need while also implementing their own operational efficiencies and strategies to reduce emissions and drive their operations toward their net-zero targets," she continued.
These strategies include the development of electric mining equipment and other technologies that will only be effective if they can be plugged into low- to zero-carbon power.
Without the reliable year-round sunshine that is available closer to the equator, abundant hydroelectricity such as is found in many parts of Canada, or access to energy grids being fed with greater quantities of zero-carbon energy, mining companies must think outside the box when developing net-zero strategies at current and future Alaska mines that could help the world meet the skyrocketing demand for energy metals.
Alaska is aflush in potential sustainable energy solutions for communities, mines, and other industries across the state. Some of the greatest tidal energy potential in the world; geothermal, massive amounts of natural gas and carbon storage capacity for blue hydrogen, plentiful wind energy, and even solar.
The 49th State is also at the forefront of the development of micronuclear, a safe and zero-carbon energy source that is ideal for replacing the diesel generators that typically power remote villages and rural mines.
These potential sustainable energy solutions could help lower the carbon footprint of Alaska mines that produce the minerals and metals needed in enormous quantities as the world transitions to low-carbon energy.
With billions of dollars available to Alaska through the roughly $1 trillion Bipartisan Infrastructure Law, realizing Alaska's vast renewable energy potential could become a reality.
"If we can capitalize on some of this infrastructure money to get some of the renewable concepts going, we will be awash in energy," Alaska Gov. Mike Dunleavy penned in a statement leading up to the inaugural Alaska Sustainable Energy conference. "We will have realized Alaska's dream of not only being a gas and oil exporter, but we will drop the cost of energy in Alaska dramatically. This will transform the landscape in this state. This will get manufacturers looking at Alaska. This will get more mining possibilities."
Critical minerals trove
Alaska hosts tremendous potential to be a domestic source of the minerals and metals needed for every aspect of America's economy. In addition to the more than $3 billion worth of zinc, gold, and other minerals exported each year, the Far North State hosts deposits of the rare earth elements that make EV motors and wind turbines more efficient; graphite, cobalt, and other raw materials for the lithium-ion batteries powering EVs and storing intermittent renewable energy; and the copper needed in large quantities for every aspect of the envisioned green energy future.
"Alaska is actually the treasure trove for critical minerals in the U.S.," Ray Leonard, CEO of Linden Energy Holdings, a private firm focused on international natural gas projects in Africa, said during a keynote address at the Alaska Sustainable Energy conference. "This is a place where Alaska can punch above its weight."
Given the massive quantities of minerals being demanded by the clean energy and EV sectors, the world needs jurisdictions with the ability to punch above their weight when it comes to feeding raw materials into the clean energy supply chains to do so.
The International Energy Agency, Wood Mackenzie, and other global energy analysts have cautioned that achieving the climate pledges made by global governments is dependent on the availability of critical minerals essential to realizing those ambitions.
"The energy transition primarily depends on the pace at which sufficient reserves of mined commodities can be developed, extracted and processed into refined products," WoodMac penned in its "Mission Impossible: supplying the base metals for accelerated decarbonization" report published earlier this year.
This is due to every aspect of low-carbon energy and transportation being much more mineral-intensive than the legacy technologies they are replacing.
Offshore wind, for example, requires nearly 14 times more metals per megawatt of power produced than natural gas and roughly six times more than coal.
And low-carbon energy sources not only must replace the normal electrical needs but will need to be expanded to recharge the millions of EVs being plugged into global grids – adding to what some analysts see as "mission impossible" for ramping up global mines at the pace needed to meet demands powered by global climate goals.
The International Energy Agency estimates that the roughly 16 million vehicles currently traveling international roadways draw roughly 30 terawatt-hours of electricity off global grids per year, which is roughly as much as "all the electricity generated in Ireland."
With the EV revolution still in its infancy, this draw on electrical grids will grow by orders of magnitude as battery-powered cars, trucks, SUVs, and busses replace more of the 1.4 billion fossil-fueled vehicles currently being driven around the world.
Even in these nascent stages of the transition to low-carbon energy and transportation, however, shortages are already causing skyrocketing prices for the mined materials needed to build the clean energy future.
"Prices of many minerals and metals that are essential for clean energy technologies have recently soared due to a combination of rising demand, disrupted supply chains and concerns around tightening supply," Tae-Yoon Kim, an energy analyst at International Energy Agency, penned in a May editorial on critical clean energy minerals.
While runaway prices are good for the bottom line of mining companies producing these materials, the lack of supply threatens to slow the progress and raise the price tag of the green energy transition.
"From batteries to solar panels and wind turbines, the rapid cost reduction trends seen over the past decade mostly reversed in 2021, with prices for wind turbines and solar PV (photovoltaic) modules up by 9% and 16% respectively. Prices for lithium-ion batteries are likely to see a major uptick in 2022," Kim wrote.
The inadequate supplies of mined materials, however, are not limited to battery metals, rare earths, and other critical minerals. The green energy transition is also putting strains on the supplies of base metals such as aluminum, copper, and zinc.
WoodMac estimates that mining companies, financiers, and governments will need to invest roughly US$2 trillion into base metal mines and supply chains over the next 15 years to have a chance of supplying enough of the basic metals to achieve the ambitious climate goals that came out of the COP26 climate change conference in Glasgow, Scotland.
"If this capital is not mobilized in time, then an accelerated energy transition cannot be achieved," the natural resource analytics firm penned in a summary of its findings.
The rocketing demand and prices of clean energy metals, along with the massive investments needed to meet that demand, provide a once-in-a-century opportunity for Alaska and its mining sector.
"Alaska's mineral resources are key to national security, and the nation and Alaska's economy and clean energy transition goals," Feige said.
Low-carbon energy critical
While skyrocketing demand for the minerals and metals needed to build the clean energy and transportation future is a potential boon for Alaska's mining sector, a lack of low-carbon energy to extract and process these mined commodities could prevent this opportunity from being realized.
Investors, financiers, manufacturers, and the public at large are increasingly demanding that minerals and metals be produced with the highest environmental, social, and governance standards. One of the big points of emphasis on ESG is the quantity of carbon dioxide emissions pumped into the atmosphere to produce these raw materials.
While lowering CO2 emissions is especially important for mines that produce the long list of minerals and metals needed to build EVs and the low-carbon energy grids, the focus on how much greenhouse gas they emit is becoming an increasingly important factor for the viability of all operations.
Jim Coxon, vice president of North America operations for Northern Star Resources, a gold mining company that owns the Pogo Mine in Alaska, said investors and fund managers ask about CO2 reduction and ESG strategies before they even begin investigating the financial aspects of potential investments into a mining project.
GHG emissions are also weighing on mining companies' ability to sell the gold they produce, according to Sunil Kumar, vice president of energy strategy and engineering for Kinross Gold Corp., a major gold mining company that owns the Fort Knox Mine in Alaska.
Kumar said one of the refiners that upgrades doré – a gold bar produced at mine sites that typically has some silver and other impurities – to high-purity gold bars has informed Kinross that in the future it will only accept doré from mines that meet certain CO2 emissions criteria.
For mining companies, this means that the availability of reliable, low-cost, and low-GHG-intensity electricity will be a major factor in the economics and investment decisions for new and existing mines.
Moving in lockstep with global government climate initiatives, most of the major mining companies are implementing strategies to reach net-zero GHG emissions by 2050.
This is a tall order for a heavy industrial sector with operations that often use as much electricity as a small city and have traditionally depended on large diesel burning equipment to dig up and transport mineral-rich rocks.
Like society at large, the mining industry is rapidly installing zero-carbon energy sources to power their operations and are developing new technologies such as battery- and hydrogen-powered mining equipment.
The electrification of mining, however, only has minimal GHG emissions benefits if the electric haul trucks and excavation equipment are plugged into CO2 emitting power sources.
Besides Southeast Alaska, which has plentiful hydroelectricity, there is currently no readily available low-carbon energy accessible to mines and residents across most of the 49th State.
Kumar informed attendees of the Alaska Sustainable Energy conference that a quick and decisive strategy for achieving zero-carbon energy goals is important to Kinross and other global mining companies considering investments in current and future mines in The Last Frontier.
"Timing is critical," he said.
Emerging low-carbon strategy
Understanding the urgency of establishing low-carbon infrastructure in the state, along with an abundance of federal funding to help make this happen, are primary reasons Gov. Dunleavy and his administration hosted the first Alaska Sustainable Energy conference.
"This isn't about an either, or, this is about an all-in approach on energy sources," Dunleavy said at the beginning of the three-day event that boasted roughly 90 speakers and nearly 500 attendees.
An emerging low-carbon energy strategy that involves leveraging the state's abundant natural gas to serve as a bridge to some mix of tidal, hydro, wind, solar, geothermal, hydrogen, and micronuclear energy to power Alaska's energy needs began to come to light during the event.
"Alaska has got everything we need to lead, not just this country but in many respects the world," Dunleavy said during opening remarks at ArcticX, a one-day Arctic energy summit hosted by the U.S. Department of Energy that segued to the Alaska Sustainable Energy conference.
The importance of DOE hosting an energy summit in Anchorage and having a presence during the three-day Alaska Sustainable Energy conference that followed cannot be overstated.
First, DOE holds the purse strings to at least $62 billion of federal clean energy funding made available by the Bipartisan Infrastructure Law, and secondly, the national labs under the energy department are developing the technologies with the potential to unlock Alaska's clean energy potential.
"If Alaska wants to be a leader on carbon sequestration, we can; if we want to be a hydrogen hub, we can be; if we want advanced marine energy, geothermal energy, and be the early site for microreactors, we can; and if we want to bundle smaller projects across the state and apply for funds to build them, that door is now open at the loan program office," said Sen. Lisa Murkowski, R-Alaska. "So, Alaska is poised in a good place right now – we stand to benefit greatly from the partnerships and collaborations with DOE."
The successful implementation of a sustainable energy strategy would help lower the CO2 emissions and raise the ESG scores of mines currently operating in Alaska, as well as attract investments needed to realize the state's vast potential for supplying the enormous quantities of critical, base, and precious metals needed for the global transition to low-carbon energy and transportation.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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