A largely untapped resource that’s rarely considered an asset—the mining industry’s inactive tailings storage sites—could host a new wave of energy projects
By Blair Loftis
There are approximately 1,000 active metal mines in the United States that have at least one tailings impoundment—and often several grouped together in cells—each as large as 640 acres in size. The U.S. Environmental Protection Agency (EPA) estimates that there are several thousand tailings impoundments associated with active non-coal mining, and tens of thousands of inactive abandoned impoundments.
Many of these sites could be converted from land with little or no intrinsic value to renewable energy systems that produce clean, carbon-free electricity. Today’s environment offers mine owners a unique opportunity to get in on a sustainable energy solution with tremendous return on investment and long-term value.
The Right Mine-Set
When searching for a renewable asset site, solar and wind farm developers generally focus on land control and land availability—two features that mines have in abundance. Typically, mines have immense volumes of privately owned land that is not subject to conventional federal oversight from organizations such as the Bureau of Land Management (BLM). Large solar facilities, 100-megawatt (MW) capacity or larger, need about 1,000 acres of flat land. A mine site’s thousands of acres of property—and particularly its large tailings dams—are potentially an ideal home for a renewable energy installment.
For example, the New Cornelia mine, owned by Freeport-McMoRan Copper and Gold, is an inactive open-pit copper mine in Arizona that was shut down in 1983. There are approximately 6,800 acres of tailings dams located on the site—that’s about 10 square miles of flat real estate with no intrinsic value. Due to environmental constraints, it really can’t be used for anything else. So if only half of the available land on that site were suitable for construction, it would support the development of a photovoltaic (PV) solar energy system with at least 350 MW of capacity. The same is true for concentrated solar thermal (CST) technology. Typically, CST developers are looking for flat, rectangular land assemblages on the scale of 2,000 acres to facilitate the development of 150 MW of solar electricity.
Most solar farm developers are looking for land that has a topographical slope of less than or equal to 2%. Although tailings dams are constructed in lifts with the outer containment perimeter typically being at a 2H:1V or 3H:1V slope, the top of the impoundment is almost entirely flat. The dams are also accessible by wide roads built to handle large, heavy mining equipment. Therefore, the roads can easily handle the necessary turning radius that trucks require when carrying PV cells or wind turbines. This built-in accessibility immediately solves one of the most common problems renewable-energy developers face.
Then there’s the need for electrical infrastructure to transmit power produced by renewable energy systems to the market. On a traditional solar project, the construction of power distribution infrastructure is a very costly and time-consuming undertaking. However, mining operations are typically large consumers of electrical load and already have the necessary transmission or distribution assets to provide the mining operation with electricity. In fact, utilities often route prime voltage transmission lines to mining facilities on the order of 138 kV, 230 kV or sometimes even 500 kV. As an added benefit, many mines will have their own distribution electrical substation the renewable energy facility can utilize. A large solar farm with a capacity of 500 MW or more would need to be within 100 miles of the power load center. Smaller projects, in the 20 to 40 MW range, would require closer proximity to the load center, probably within 10 miles.
The availability of a power infrastructure is just one part of the equation. There also needs to be available capacity on the line to deliver the electricity to the consumer. A 230-kV line with a transmission capacity of 25 MW won’t be much good if the developer intends to build a sizable asset. This is a common consideration in the siting of a new renewable-energy development, or any form of electricity generation. The capacity constraints surrounding the nation’s electrical-transmission infrastructure is an issue that is well-understood and in the process of being solved.
Furthermore, because mining companies are significant consumers of electricity, their relationships with electric utilities are very strong. Many mines have decades-old electrical delivery contracts with privately and publicly owned utilities. This can provide the solar developer with the significant advantage of partnering with a mining company to sell renewable power to the utility.
In general, an inactive mine site has all the right elements: The land is flat, large truck movement is not an issue, a power infrastructure is readily available and, perhaps most important, stakeholders—the EPA, state agencies and organizations such as the Arizona Mining Association—want to see brownfields converted to renewable greenfield assets.
Mines and Mandates
This arrangement is not so much about mines using the renewable energy that would be produced on their lands. The price of electricity generated from renewable resources can’t compete with pricing typical of the long-term contracts that the mining operations have with the utilities. Instead, developing wind and solar energy farms presumes that there is a utility interested in buying back the power generated. Will there be enough interest from utilities to justify the investment in wind and solar energy? The answer is yes. Utilities are under increasingly stringent federal and state mandates to develop renewable portfolios as part of overall supply. In fact, 37 states have mandated renewable or alternative energy standards or goals, and many federal and state organizations are willing to help those working to achieve them.
The EPA has formed an initiative to facilitate the reuse of contaminated properties and active and abandoned mine sites for renewable energy generation. They have converted some small brownfield properties to greenfield renewable assets, but they are all relatively small systems with around 1 MW of power. They have expressed great interest in a 20- to 40-MW asset as a next step. As part of the Restoration Design initiative, the EPA would work with the developer and mining company to deal with environmental concerns at a local level. The EPA believes it can use its influence to help persuade jurisdictional authorities that an appropriate reduction of remedy associated with normal environmental mitigation measures should be considered if the tailings dam is being converted from “brown” to “green.” The primary incentive of one mining company that is actively engaged in this process is to partner with the EPA on a renewable-energy project as a means to strengthen its relationship with the EPA.
Other branches of the federal government are also taking an active interest in this proposition. For instance, the Arizona State Office of the Bureau of Land Management has begun the second phase of the Restoration Design Energy Project (Restoration Design) initiative, funded with stimulus money under the American Recovery and Reinvestment Act. The initiative aims to convert waste land such as landfills, abandoned mine lands, gravel pits, hazardous material sites and former airfields into renewable-energy assets.
The mining industry is also getting involved. Sydney Hay, the president of the Arizona Mining Association, is a proponent of the BLM legislation, as well as Arizona state legislation, to use abandoned mine lands for solar and wind power.
Even the services industry is getting involved. Kleinfelder has contributed to the development of more than 9,000 MW of installed wind capacity and is working on the development of over 1,200 MW of solar generation. As an infrastructure-based firm, it has worked extensively in both the mining and energy markets and has a clear view of the synergies and opportunities to bring the two industries together. In fact, they are so convinced of the opportunities that they are involved in influencing policy change in states that have the most opportunity to benefit from the development of renewable assets on mining properties. For example, Kleinfelder is a member of a task force working with the Arizona Mining Association (AMA) to present a bill to the Arizona legislature that would include a plan to help the state gain full energy independence by 2020.
“The use of post-mine land for renewable-energy generation is an important step our industry can take,” Hay said. “The benefits for everyone involved are clear, making this a logical step for mining companies here in Arizona. We are seeing this concept being implemented rapidly by Kleinfelder and others. We applaud it.”
Kleinfelder views this opportunity as a win-win for the renewable developers and the mining industry. As a result, we have been actively brokering relationships between wind and solar developers and mining companies. We help to identify what sites would be aligned with the most appropriate renewable technology and then facilitate the introduction to the renewable developer that fits the profile.
Is Your Mine a Renewable Possibility?
The first step in assessing a mine’s renewable-energy possibilities is to analyze potential in the near term. What can be done in the next 24 months? That assessment should include an evaluation of land and power infrastructure assets. Is there a market for the power commodity with the local utility? Land assets should be located in a service territory that includes an investor-owned utility or a public utility—like the Salt River Project, one of Arizona’s largest utilities—with an interest in buying renewable energy. And most important, what technology best fits the site? It really is a “horses for courses” exercise to determine which technology is best suited—wind, solar PV or solar CST—to the renewable-resource efficacy of the region, the land availability and the preference of the local utility.
The mining company must then do a bit of soul searching to qualify and quantify why entrance into the renewable sector makes good business sense. For example, a mining company interested in securing a power hedge or that has a mandate to address carbon regulation may opt to develop a small- to medium-sized generation asset for on-site consumption. This is known in the industry as “behind the meter” or “inside the fence” distributed generation. Alternatively, a mining company may prefer to simply provide the land asset required by the renewable developer, thus taking on the role of a host to the project and deriving its benefit through lease revenue or royalty payments. Finally, those companies fortunate to be making a profit may entertain an equity partnership with the renewable developer so that they can benefit from the federal investment tax credits.
Of all the attributes mining properties present to the renewable developer, probably the most important of all is scalability. Mines have the land that the developers desire. If the developer can establish land control on large assemblages in the form of lease options, it will have the opportunity to satisfy the utility’s need for the addition of renewable-energy generation in an incremental fashion. Land control creates a more reasonable entrance strategy: Go in small and build it up over time. The mine can initiate asset development at a threshold of 5 to 50 MW (50 to 500 acres) for solar and 30 MW for wind (approximately 1,000 to 2,000 acres depending upon the viability of the wind resource). Projects of this scale are easier to finance in an economy with a constrained equity market. However, once an agreement is reached with the mining company to establish exclusive use of the land, the developer has the ability to add on to the initial development with each annual solicitation for renewable power from the utility. Obviously, adding onto the initial investment is less expensive than constructing a new asset of similar scale at a new location. This provides the developer with a significant advantage in a competitive market. The developer can also avoid the burdens associated with constructing on public lands (for example, BLM). It can also avoid many of the typical requirements dictated by the National Environmental Policy Act (NEPA) because the tailings dams do not normally support the habitat of listed or threatened and endangered species. It is a path of least resistance for the developer.
As a case in point, the largest PV solar plant in the country to date is Florida Power & Light’s new DeSoto Solar Energy Center southeast of Tampa, which includes 90,000 solar panels and produces 25 MW. Although this facility is of significant size by today’s standards, it will likely pale in comparison to similar facilities constructed on mining lands. Renewable projects on mining property could be four to five times larger.
Take it one step further. Those mining properties that exist in areas of both prime wind and solar resource efficacy will have the opportunity for the development of a co-located or blended asset. This means that a wind farm could be constructed in conjunction with a solar park on the same property. In terms of power delivered to the grid, when the wind doesn’t blow but the sun shines, a balance of electrical delivery can be achieved to meet the needs of the utility. By creating a smoother load profile—addressing the intermittent nature of both wind and solar by mutual compensation between the two—this sort of facility would be favored by the end consumer (the investor-owned or public utility). If a renewable developer were to put this in mining perspective, they would hit the mother lode.
It is important to understand the market dynamics so the appropriate technology can be paired with the appropriate site. The mining company needs to cultivate a relationship with a trusted renewable developer. That developer needs to demonstrate a keen understanding of the local market with an ability to get its project approved by the local utility. What’s the risk? That’s difficult to quantify as the renewable developers act as independent power producers (IPPs), meaning they construct, own, operate and completely finance the renewable energy project. The real issue is that a partnership is formed with a company that understands the objectives of the mining company and commits to a development process that will not distract from the mining company’s core business: the refinement of precious metals from ore.
The Power Process
Tessera Solar, SunEdison and Recurrent Energy—to name just a few power producers—are actively pursuing mine site owners interested in developing a renewable energy asset. These companies are considering scalable sites that initially deliver 20 to 40 MW or larger. Pacific Gas & Electric recently announced the development of a 210 MW solar energy site and another 550 MW site, although neither is on an inactive mine site. Solar energy systems of this scale and potential are ideal propositions for mine sites.
The proposed Sterling Energy Systems Solar Two (Tessera Solar) project in Imperial Valley, California, would be a 750 MW system that includes the construction of a new 230 kV substation on the project site, connected to a San Diego Gas & Electric Imperial Valley Substation using a 10-mile, double-circuit, 230 kV transmission line. Other than this interconnection transmission line, no new transmission lines or off-site substations were required for the 300 MW Phase I construction.
The Sterling Energy project Phase I requires approximately 2,600 acres, and Phase II requires approximately 3,500 acres. The total area required for both phases, including the area for the operation and administration building, the maintenance building and the substation building, is approximately 6,500 acres—a size that is well within range of a tailings dam on an inactive mine site.
So, with land availability being perhaps the biggest issue facing solar and wind farm developers, mining companies may in fact be king. If the surplus land not being actively processed by the mining companies can be converted to renewable assets, then an untapped resource could quite possibly bring a new wave of energy projects to the market. Can mining companies gain international recognition as being green? Absolutely. Greener than they may have ever thought possible.
Blair Loftis is vice president and national director of alternative and renewable energy for Kleinfelder, a science and engineering consulting firm headquartered in San Diego, California, USA.
