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November 19 13:122015

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by Pablo Crespo

Why a Tesla business model is compelling for the mining industry?

Figure 1: Business Model Approach to Renewables & Electric Vehicles for Mining Industry

By: Arnoldus van den Hurk, CEO, r4mining.com, info@renewables4mining.com

There are two large opportunities for renewable energy in mining: renewables for electricity and renewables for fuel.For both scenarios hybrid energy architecture can be found in the form of hybrid power grids (mini grids) and hybridfuel vehicles.

The impetus for electric vehicles in mining is being driven by the increasing competitiveness in the space from SiliconValley players such as Tesla, Google and Apple and from battery manufacturers including Panasonic, LG andFoxconn.

The price of ionlithium batteries is following the same trajectory as PV prices over the last decade. The dramatic PVprice drop resulted from the development of gigawatt factories in the silicon PV and silicon ingot markets. Historyseems to be repeating itself with Tesla’s Gigafactory – a facility focused on electric vehicle and energy storage for theresidential renewable marketplace. Some commentators are actually forecasting even steeper reductions in storageprices driven by the momentum building in the convergence of IT, vehicle, residential and utilityscale energy storage.

Figure 2: Tesla Gigafactory. http://www.teslamotors.com/gigafactory

Today, there are 5 – 7 battery gigafactories in construction and another 5 big facilities in the pipeline (see chartbelow). This explosion of battery technology production will not only disrupt the automobile sector but will also greatlyimpact mining.

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Courtesy of: Visual Capitalist

The combination of renewable resources, electric vehicles and battery technology will transform renewables to a 24/7energy value proposition for mining. Additionally, the PPA project finance model that is currently being successfullydeployed in minerenewable projects could also be applied to the mining vehicle marketplace too – producing a“Tesla Business Model for Mining” .

In order to figure out the implications of this dramatic of electric vehicles (EV) in mining, we will look at 7 valuepropositions for mining with the analysis of Canvas business model I published in a recent article at Energy andMines.

Figure 3: Value Proposition Design of Canvas Business Model: Application to Electric Vehicles for Mining

WHY ELECTRIC VEHICLES FOR MINING – EIGHT VALUE PROPOSITIONS1. Electric vehicles are efficient. Electric vehicles (EV) help mining companies that want to increase transport

productivity by using reliable, 24/7 renewable energy with 5 times the efficiency of the traditional, internalcombustion engine vehicles (ICEVs)

Renewable energy production and battery storage can provide 24/7 energy supply. However, battery storage isindependent of renewables, it can be combined in a hybrid and/or nonrenewable generation supply.

ICEVs have a motor energy efficiency around 1822% compared with 8090% efficiency of EV. Most ICEV energyloss is through heat

2. EVs are 10 times cheaper to run than ICEVs and the running costs are not susceptible to fuel price volatility

According to Consumer Goods 2012 and Clean Disruption of energy and transportation, over five years a JeepLiberty gasoline cost $US 15,000 and a Tesla Roadster would cost $US 1,565 of electricity (12 c$US/kWh).

One of the NCRE advantages at the Chilean copper mines is linked to the control of the volatility of fuel prices forelectricity generation.

3. EVs improve profitability by decreasing maintenance costs by 8090%

Operations and maintenance costs of EVs in north America and Europe are 87% cheaper than for ICEVs. ICEVshave 2400 moving parts compared with, for example, the 18 moving parts in a Tesla Roadster. There will be 90%fewer repairs during a longer lifetime for the EV.

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The details of the above value proposition and business model will be one of the subjects discussed at Energy andMines London Summit workshop – An Essential Introduction to Mining for Renewables Professionals. Please don’thesitate to send me any comments you want to share about these subjects to info@renewables4mining.com.

EVs integrate significantly better within Big Data, SCADA and other monitoring and control mining systems thancurrent ICEV fleets

4. EVs help mining companies who want to promote higher transport security and safety thanks to their increasedpower, better design flexibility, more traction control and safer fuel storage compared to the more expensive anddangerous ICEV vehicles.

5. EVs provide greater opportunities for transport finance such as the PPA business model and bankable capitalallocation to the upfront capex investment. The PPA would become the FPA (Fuel Purchase Agreement). Why notpay mining trucks per $US/MWhr?

6. EVs help mining companies improve sustainability – they operate with significantly reduced GHG footprint.

7. EVs help mines improve the synergies between transport and electricity using these vehicles as “moving powergrid” storage, which contributes to the overall mining facility management.

8. Last but not least, EV are critical in underground mining, not only replacing diesel and their impact in air qualityand safe healthy work ambient, but also by the reduction of energy cost linked to ventilation. Ventilation costsrepresent between 55% to 70% of total power costs.

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