Sustainability / Environment / Energy

Energy

Being energy efficient helps us to reduce our GHG emissions, and cut costs and gives us a competitive advantage in a resource-scarce environment.

A number of Xstrata’s activities are energy intensive. Around half the energy we use comes from electricity, predominantly used to run our metallurgical operations. At mines, our primary source of energy is diesel, used to run the mining fleet and mobile equipment, which represents 21% of our overall energy use.

Our priority is to ensure all Xstrata operations have access to a secure and cost-effective supply of energy. This is crucial for the continued operation and growth of our business. The reliability and affordability of energy supply can be affected by factors beyond our control, including increased demand, political, regulatory and economic uncertainties, and problems with local generation and transmission of power. In some regions we depend on one major or national power generation company, for example, Eskom in South Africa. We manage this risk by improving the energy efficiency of our operations, negotiating long-term contracts with energy providers, and diversifying our power sources where possible.

Being energy efficient helps us to reduce our GHG emissions, and cut costs and gives us a competitive advantage in a resource-scarce environment. We measure efficiency as energy intensity – the amount of energy required to produce one tonne of product.

We are working to make mining more efficient. All our businesses have energy efficiency plans in place and we carry out regular energy audits at operations. We endeavour to make all new major mines and projects as efficient as possible. We engage with suppliers to develop more efficient equipment and replace worn machinery and vehicles with energy-efficient alternatives.

Energy use

Xstrata operations used 127.1 petajoules of energy in 2008, a very similar level to 2007 (127.4 petajoules restated). Stable electricity use and increased diesel consumption because of higher production and haulage distances were offset by reduced use of coke and other fossil fuels, the result of lower production and improved efficiency at Xstrata Alloys operations. Xstrata Alloys’ ferrochrome smelters are amongst our most energy intensive operations and accounted for 16% of our total energy use in 2008 and 85% of Alloys’ total energy use.

Our direct energy consumption amounted to 64.8 petajoules, marginally lower than in 2007. We used 62.3 petajoules of purchased electricity, of which 30% came from renewable sources. In 2008, energy costs represented 12% of total Group operating costs, split equally between fuel costs (6%) and electricity costs (6%).

Several operations suffered from constrained energy supply in 2008. In South Africa the only electricity provider, Eskom, imposed restrictions on energy use by industry at the start of 2008. Xstrata Alloys’ energy efficiency initiatives will help to mitigate the impact of future restrictions. In Chile, sites continued to be affected by an unreliable supply of natural gas. To minimise the impacts of this on operations, sites can run on a variety of alternative energy sources including diesel, fuel oil and liquid petroleum gas and can reconvert to natural gas if sufficient supplies are available in future.

Energy efficiency

Our Group target for 2008 was to reduce energy intensity (petajoules per million tonnes of product) by an average of 3% on 2007 levels by 2012. Our Alloys and Coal businesses are targeting a 5% improvement in energy intensity by 2012. All Xstrata Copper sites are required to implement energy intensity reduction targets. Four out of five divisions have targets in place, all of Xstrata Copper’s sites will have targets in place by the end of 2009. Xstrata Nickel and Xstrata Zinc are aiming for a 1% reduction in intensity as there are fewer opportunities to further reduce these energy efficient operations. In 2008 our Group energy intensity remained at a similar level to 2007.

Xstrata Alloys, our most energy-intensive business, improved its energy efficiency by 8% from 2007 levels. Its energy efficiency activities in2008 included:
> At Lion, full-scale implementation of Xstrata’s proprietary Premus technology for more efficient ferrochrome production, which will enable us to improve efficiency by around 30%, when compared to the most efficient other technology available and save nearly 430,000 MWh per annum as a result.

> Launch of the fully-operational Bokamoso pelletising plant. The plant has substantially increased furnace efficiency, reducing energy consumption at Wonderkop and Rustenburg by over 6% per year, cutting the amount of ore required to feed the furnace, and producing less slag.

Further improvements are being targeted at the Eland platinum mine, where an investigation is under way into how to reduce diesel consumption. In 2008, Eland consumed 1.3 million litres per month.

Last Modified on September 14 2009, 11:57:47 PST

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