Understanding how Renewables fits with Mining s Strategies Today ( The Perfect Storm )

Transcription

1 Renewables for Mining Toronto Summit Understanding how Renewables fits with Mining s Strategies Today ( The Perfect Storm ) Russell Blades, Director Energy & Climate Change November 21,

2 CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION Certain information contained in this presentation, including any information as to our strategy, projects, plans or future financial or operating performance, constitutes forward-looking statements. All statements, other than statements of historical fact, are forward-looking statements. The words believe, expect, anticipate, contemplate, target, plan, objective aspiration, aim, intend, project, goal, continue, budget, estimate, potential, may, will, can, should, could, would and similar expressions identify forward-looking statements. In particular, this presentation contains forward-looking statements including, without limitation, with respect to: (i) targeted green gas emission and cost reductions; (ii) projected capital, operating and exploration expenditures; (iii) mine life and production rates; (iv) expectations regarding future price assumptions, financial performance and other outlook or guidance; and (v) the estimated timing and conclusions of technical reports and other studies. Forward-looking statements are necessarily based upon a number of estimates and assumptions; including material estimates and assumptions related to the factors set forth below that, while considered reasonable by the company as at the date of this presentation in light of management s experience and perception of current conditions and expected developments, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements and undue reliance should not be placed on such statements and information. Such factors include, but are not limited to: fluctuations in the spot and forward price of gold, copper or certain other commodities (such as silver, diesel fuel, natural gas and electricity); the speculative nature of mineral exploration and development; changes in mineral production performance, exploitation and exploration successes; risks associated with the fact that certain studies are still in the early stages of evaluation and additional engineering and other analysis is required to fully assess their impact; diminishing quantities or grades of reserves; increased costs, delays, suspensions and technical challenges associated with the construction of capital projects; operating or technical difficulties in connection with mining or development activities, including geotechnical challenges and disruptions in the maintenance or provision of required infrastructure and information technology systems; failure to comply with environmental and health and safety laws and regulations; timing of receipt of, or failure to comply with, necessary permits and approvals; uncertainty whether some or all of the studies and investments targeted by Barrick will meet the company s capital allocation objectives; the impact of inflation; fluctuations in the currency markets; changes in national and local government legislation, taxation, controls or regulations and/or changes in the administration of laws, policies and practices, expropriation or nationalization of property and political or economic developments in Canada, the United States and other jurisdictions in which the company does or may carry on business in the future; lack of certainty with respect to foreign legal systems, corruption and other factors that are inconsistent with the rule of law; damage to the company s reputation due to the actual or perceived occurrence of any number of events, including negative publicity with respect to the company s handling of environmental matters or dealings with community groups, whether true or not; risk of loss due to acts of war, terrorism, sabotage and civil disturbances; litigation; contests over title to properties, particularly title to undeveloped properties, or over access to water, power and other required infrastructure; business opportunities that may be presented to, or pursued by, the company; risks associated with working with partners in jointly controlled assets; employee relations including loss of key employees; increased costs and physical risks, including extreme weather events and resource shortages, related to climate change; and the availability and increased costs associated with mining inputs and labor. In addition, there are risks and hazards associated with the business of mineral exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion, copper cathode or gold or copper concentrate losses (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks).many of these uncertainties and contingencies can affect our actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are not guarantees of future performance. All of the forward-looking statements made in this presentation are qualified by these cautionary statements. Specific reference is made to the most recent Form 40-F/Annual Information Form on file with the SEC and Canadian provincial securities regulatory authorities for a more detailed discussion of some of the factors underlying forward-looking statements and the risks that may affect Barrick's ability to achieve the expectations set forth in the forward-looking statements contained in this presentation. The company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. Greenhouse gas emissions and energy figures presented on a 100% basis for all sites operated by Barrick. Additional details regarding Barrick's Five Year Energy Plan, including with respect to Barrick's commitment to reduce its operating costs and greenhouse gas emissions in a sustainable fashion, are currently provided in our 2015 Responsibility Report. These initiatives are still in the early stages of development and there are currently no specific targets in the Five Year Energy Plan other than reducing energy costs by 10%.

3 Barrick Gold Corporation Million oz Gold produced $9.0 Billion Revenue 14,000 Employees 3.8 Million tco 2 e Million GJ 1 $742 Million in Energy Spend 1 1. Greenhouse gas emissions and energy figures presented on a 100% basis for all sites operated by Barrick 3

4 Barrick s Renewable Experience Western 102 Solar Plant Veladero Solar Pilot Plant Punta Colorada Wind Farm Veladero Wind Turbine Nevada UG Biodiesel Biofuel Projects In 2015, about 18% of Barrick s power needs were met from renewable resources 4

5 The Perfect Storm Renewables for Mining Social License (Impact to Community, Providing Power, etc) Cost & Finance (Reduced Capital, Green Bonds, ITC) Energy Storage (Battery, Pumped Hydro, Mass, etc) Air Emissions (GHG, DPM, NOx, etc) Fuel Price Volatility (Oil, DFO, HFO, Nat Gas, etc) Increasing Energy Use (Ore type, deeper mines, etc) Climate Change (Carbon Pricing, COP21, REC s) Electrification of Mines (Material movement, UG Vehicles, etc) Remoteness of Mines (Energy infrastructure, security, etc) Energy Efficiency (LED s, VFD s, VOD, Smart Grids, etc) Greater focus on climate change, cost of carbon, air emissions like DPM, disclosure and social license to operate We live in a time of fuel price uncertainty and volatility Major improvements in technology in terms of costs, efficiency, reliability, financing and acceptance New mines in remote areas with no existing energy infrastructure in place, complex ore bodies and lower grades Moving from traditional diesel haul trucks and equipment to electrification 5

6 Fossil Fuel Price Volatility (USA) $0.27/kWh 1 $0.10/kWh 1 LSDFO Natural Gas Source: IndexMundi (DFO = 138,490 Btu/gal HHV) 1. Based on a diesel genset with a 10,000 Btu/kWh heat rate and price of diesel ($/MMBtu) at the time 2. Power Cost Estimate ($/kwh) = Btu/kWh ( heat rate ) x $/MMBtu x (1 MMBtu/ Btu). Power price volatility proportional to fuel supply prices 3. Price differential also explains Barrick s interest in converting haul trucks to natural gas (LNG, HDCNG) as part of our fuel switching strategy 4. Renewable power pricing tends to be competitive and relatively flat over time with often a small annual escalator (i.e. 2%) 6

7 Increasing Energy Use in Mining Million oz Gold Gallons DFO/oz Gold Million Oz Gold Gallons DFO/oz Gold Source: SRSrocco, August 4, 2014 Even though gold production declined for the top 5 gold producers by only 9% between 2005 and 2013, the amount of diesel on a per oz basis actually increased by over 100%! 7

8 Capital Cost of Renewables - Solar on Fire 8

9 Solar & Wind Prices (Capital and PPA s) Solar Capital (USA) Wind PPA s (USA) $1.20/W dc Source: SEIA Source: Berkeley Lab California 3.67 /kwh Nevada 3.87 /kwh Mexico 3.50 /kwh Peru 4.79 /kwh Chile 2.91 /kwh UAE 2.99 /kwh Abu Dhabi 2.42 /kwh Solar PPA s Worldwide 9

10 Energy Storage Options Kidston Pumped Hydro ARES Gravitational Storage Flywheel Storage (Former Barrick mine site) Batteries Thermal Compressed Air (Solid State, Flow) (Cooling, Heating, Power) 10

11 COP21 GHG Reduction Targets Leading towards a price for carbon (Tax, Cap & Trade) for mining, power plants, etc 11

12 Material Movement - Electric Railveyor Ropecon Conveyors Displace or augment diesel haul trucks Improved efficiency (kwh/t-km) Electrical Regeneration on downhill routes Integrates with renewables, energy storage and smart grids Trolley Assist (Lumwana) Reduce DPM emissions and diesel spill risks 12

13 Electric Underground Mining Equipment GE Scoop Artisan LHD Atlas Copco Scoop Tram (with battery pack) (with battery pack) (with cable) Displace diesel equipment Electrical Regeneration on downhill routes Integrate with renewables, energy storage and smart grid Reduce DPM and ventilation, heating and cooling requirements Includes electric drills, bolters, etc (eliminate all diesel from UG) 13

14 The beginning of the end The world is now adding more capacity for renewable and clean power each year than coal, natural gas, and oil combined Solar could represent the largest source of power by

15 Renewable Energy Investments - Mining Navigant predicts that by 2022, the mining industry could invest almost $4.0 Billion in renewable energy projects Others (r4mining, etc) suggests that this number could be considerably higher; especially when you consider utility investments needed to provide grid power to the mining industry 15

16 Mine of the Future? Source: Deloitte Understand and model potential impact of renewables, energy management, fuel switching and digitization on our capital and operating (AISC) costs, carbon footprint, productivity, mine life, system reliability, sustainability and community relations 16

17 The Lighter Side of Renewables