Electrifying mines could double their electricity demand

| Commentary

Mining has a critical role to play in the transition to a net-zero economy,1The raw-materials challenge: How the metals and mining sector will be at the core of enabling the energy transition,” McKinsey, January 10, 2022. and the sector will likely need to reduce at least 85 percent of its emissions by 2050.2Climate risk and decarbonization: What every mining CEO needs to know,” McKinsey, January 28, 2020. Additional pressure from investors and consumers alike is on the rise, causing mining companies to set increasingly bold abatement commitments.

Ensuring access to renewable-electricity sources is crucial for miners, as renewables can help power electrified mobile mining equipment and displace diesel equipment. This helps abate not only Scope 2 emissions (those caused by energy being purchased and produced) but also Scope 1 emissions (those that directly result from operations).

That said, electrifying the mobile fleet of the global iron ore industry would require an additional 20 to 30 terawatt-hours of electricity (Exhibit 1).

Electrifying the global iron ore industry would require as much as 11 gigawatt-hours of additional electricity per million metric ton of iron ore.

As electric haul trucks become available, a sample open-pit iron ore mine could replace 27 diesel haul trucks—as well as the corresponding loading and auxiliary equipment—with electric powered versions, causing electricity demand to more than double (Exhibit 2).

The electrification of a sample iron ore mine could cause electricity demand to more than double.

Alternative pathways could include conveying (lower electricity demand versus a battery electric vehicle [BEV] truck scenario) and hydrogen (higher electricity demand versus a BEV truck scenario) for replacing diesel trucks.

Electrifying mines is challenging but has the potential to generate value in the coming years


Large capital expenditures requirements. The power infrastructure investment for electrifying the iron ore industry could reach $30 billion to $45 billion,3 and new sources of capital (such as green bonds) could be needed.

Large infrastructure improvements. Mines will need to upgrade electric-grid connections, build additional on-site substations and networks, and install or contract renewable-power capacity.

BEV technological challenges. Battery technologies need to achieve higher density, lower costs, faster charging rates, and larger scale to make electric equipment competitive.


Operational expenditures gains. Electrification could reduce energy costs by as much as 40 to 70 percent and reduce maintenance costs for mobile equipment by approximately 30 percent.

Operational improvements. Electric equipment could allow for steeper ramp designs, lower stripping ratios, faster cycle times, and less-frequent breakdowns.

CO2 emissions abatement. A fully electrified mine with renewable-power sources could have a carbon footprint that is 60 to 80 percent lower, avoiding carbon taxes and capturing potential green-product premiums.4Capturing the green-premium value from sustainable materials,” McKinsey, October 28, 2022.

For more on the topic of mining industry decarbonization, reach out to our team via www.MineLens.com or email us at MineLens@McKinsey.com.

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