Mining’s lifeline to cheap energy Hope for renewables

A NORTH Queensland transmission line project opens the potential for more renewable energy projects to supply lower cost power to the mining sector, an energy analyst says.

Also, any losses in profitability for existing assets can be mitigated by these opportunities, Macquarie Securities analyst Ian Myles says.

Mr Myles was commenting on the impact of f the $1.5 billion Copperstring transmission line project on the APA Group, which operates the Carpentaria Gas Pipeline and the Diamantina Power Station in Mount Isa.

The Copperstring 2.0 project, which the State Government this week committed to provide up to $14.8 million, is a second attempt to connect the Mount Isa and Cloncurry regions into the National Electricity Market at Townsville.

A similar project a decade ago fell over when Mount Isa Mines, then owned by Xstrata, opted to sign a long-term power agreement with APA, which developed the Diamantina Power Station in 2013.

The move secured reliable supply but locked in highpriced gas-fired power.

Mr Myles said that CopperString 2.0 would change Diamantina from a base-load power station to one where it generally ran when there was peak demand.

The earnings contribution of the power station before interest, taxes, depreciation and amortisation was about $91 million.

Mr Myles said a previous lack of suitable generation at Mount Isa could have been why the original Copperstring project did not work but that t the opportunity now was to broaden the use of renewables and expand the use of Diamantina as a firming or intermitt tent supplier.

“This should mitigate any loss in energy-only profitability,” Mr Myles said. “Diamantina shifts to providing firming capacity, thus the opportunity is to vertically expand into the renewable projects in the corridor and continue to provide firm energy to the miners.”

There is talk of a big solar project being built in Mount Isa, while Windlab has developed a hybrid wind, solar and battery power station at Hughenden, which has the potential to be expanded with a $2 billion wind farm project.

The Copperstring proponents want to begin construction in mid-2021.

It is expected to take three years to build and create 800 construction jobs.