In Johannesburg, South Africa, Stan Pillay lists some of the challenges he faces in his role as manager for climate and energy change at Anglo American, one of the world’s largest mining companies. “We are impacted by increasing energy input costs, and in some of our operating regions by the potential for carbon taxation in the medium term and implications of energy supply security.”

Rising energy costs aren’t just a problem in South Africa. Mining houses around the world face rising oil and electricity prices along with potential carbon taxes, increased competition for energy sources, decreasing head grade and increasing strip ratio.

McKinsey and Company, the global consultancy, worked with Sandvik to investigate energy costs in mining. It estimates that if left unaddressed, the total proportion of energy and carbon-emission costs in mining operations could rise from a range of 15 to 20 percent to as high as 50 percent in the next 10 to 15 years – an alarming figure for the world’s fourth most energy-intensive industry.

The economic crisis has only served to enhance the pressure on mining companies to respond. In 2010, global adviser PricewaterhouseCoopers released its seventh annual review of mining trends, based on a survey of the world’s top 40 mining companies. “Pressure on margins and cash flows has reinforced the need to manage down energy costs and ultimately the assignment of cost to carbon,” it concluded. “Technological innovation is critical in this space.” In other words, energy costs are hitting companies in the pocket. To remain competitive, finding new ways to be energy efficient is crucial.

To help mining companies meet this challenge, Sandvik has begun a large study to pinpoint ways to save energy and reduce CO2 emissions, including an analysis of mines from 10 of the world’s 15 top mining houses. From these studies a fact base is forming, identifying opportunities for energy savings that range from relatively small operational changes like turning off conveyors while blasting, to larger system changes like in-pit crushing.

The aim is not only to bring energy issues to the table, but to lead an ongoing discussion on ways to lower energy consumption.

“This is a key part of the strategy Sandvik is developing and is where it is positioning itself for the future of mining and the fundamental changes that need to occur in terms of both processes and equipment,” says Andrew Philpott, who helps to coordinate energy efficiency studies for Sandvik. In doing so, Sandvik hopes to provide practical answers. “Providing solutions for our clients to be able to respond to both economic and legislative pressures is where we want to be,” Philpott says.

Already, findings from the study are pointing to potential areas for savings. Only 5 to 10 percent of energy used in mining is directly linked to the value-adding components of ore mining, transportation and processing. The rest is lost along the value chain, mostly on auxiliary systems or the extraction and processing of valueless rock. A huge amount of energy is seeping through the cracks, and companies need to capture it. “There are two ways to look at carbon efficiency,” says Paul Isotalo, who has helped lead case studies in energy efficiency for Sandvik. “One is to see the whole field as a challenge, as a problem to be solved. The other view is to see the new playing field as an opportunity, and that’s the approach we’ve chosen.”

One of Sandvik’s case studies paid special attention to improving drilling accuracy as a way to save energy. Accurate drilling is a combination of minimized in-hole deflection and careful alignment of the drill feed through pre-planned blast patterns. Besides the energy-saving features of drills, Sandvik fitted top-hammer drilling units with the latest technology for 3-D hole positioning and automatic feed alignment by using GPS compass technology. This made controlled blasting possible, producing fewer oversized boulders and more or fewer fines as needed. Overall, the case showed a substantial reduction in fuel consumption of the rigs.

Importantly, while drilling itself represents a relatively minor part of overall energy consumption, the study also found that using the right equipment and making the right choices during the drilling phase can show substantial results further on in the extraction process. In short, drilling efficiency counts, but drilling accuracy counts more. Put together, these findings could lead to important savings for companies. But responding to rising energy costs will require even more innovation in overall process and planning. “Products can help, but they will not make the fundamental changes that will need to respond to energy and climate changes,” Philpott says. “It makes a small difference but it is not making the differences that are needed here.”

It’s clear that adequate energy efficiency won’t arrive through an isolated solution but requires new types of thinking within all stages of mining operations and planning. In many ways, the challenge is to envision the mine of the future. It’s a large task, but also an important opportunity.

Stan Pillay at Anglo American shares this vision: “When we model a life of mine, the five-year forecast or set out the mine’s monthly section level planning, we want them each to be aware of their energy goals for that time. The aim is to integrate energy and carbon into short, medium and long-term planning.” Through Sandvik’s study and with companies coming together to share their knowledge, this goal may be closer than you think.