15/07/2015 - 11:32

Otoc wins work at Sandfire

15/07/2015 - 11:32

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An international consortium comprising European renewable energy companies, Australian government agencies, and local contractor Otoc has come together to finance and develop a $40 million solar power project at Sandfire Resources' DeGrussa copper mine.

Otoc wins work at Sandfire
An artist's impression of the DeGrussa solar power project.

An international consortium comprising European renewable energy companies, Australian government agencies, and local contractor Otoc has come together to finance and develop a $40 million solar power project at Sandfire Resources' DeGrussa copper mine.

Under a joint venture agreement with German company juwi Renewable Energy, Otoc will provide procurement and on-site installation services to the project under a $10 million contract, with juwi to provide technical expertise and commissioning.

Construction of the 10.6 megawatt renewable energy power station, which includes a 6MW battery facility, will begin this month, and is expected to be fully operational by early next year.

The power station is expected to reduce diesel consumption by 20 per cent and cut carbon dioxide emissions by over 12,000 tonnes annually at DeGrussa, and will be the largest integrated off-grid solar power system in the country.

When the project was announced in February, Sandfire had signed an agreement to hand over ownership to juwi, however today it said French company Neoen would own the facility.

The Clean Energy Finance Corporation is committing up to $15 million in debt finance towards the project, while the Australian Renewable Energy Agency is providing $20.9 million, with Neoen contributing the majority of the balance.

Sandfire is contributing less than $1 million in cash to the project.

When completed, the solar power station will be integrated with an existing 19MW diesel-fired power station, which is owned and operated by Pacific Energy.

Under an existing agreement with Pacific, the diesel power station will continue to provide base-load power to the mine, located 900 kilometres north-east of Perth.

Arena chief executive Ivor Frischknecht said the project would provide the majority of Sandfire’s daytime electricity requirements, offsetting about 5 million litres of diesel each year, which is more than 20 per cent of total diesel consumption.

Otoc chief executive Simon Thomas said the scope of the project demonstrated the company’s diversification abilities, being its first in the renewable energies sector.

“Our strategy continues to be focused on sourcing Otoc’s earnings via more diverse work streams aside from our historical reliance on delivery of non-process infrastructure to the resources sector in the Pilbara,” he said.

Sandfire managing director Karl Simich said the signing of the final agreements with juwi and other consortium members was a pleasing milestone for the project.

“We identified some time ago that solar power presented an exciting opportunity for us to participate in a low-risk renewable energy initiative at DeGrussa and we have no doubt that this project has the potential to be an Australian first – establishing DeGrussa as a reference site for the use of off-grid solar and battery storage technology in the mining industry,” Mr Simich said.

“The project has the potential to reduce the mine’s diesel consumption and is consistent with our relentless focus on driving down costs.

“At the same time, it will reduce our carbon footprint, make an important contribution towards achieving improved environmental outcomes and potentially help promote the use of renewable energy in the Australian mining industry.” 

Shares in Otoc were 12.6 per cent higher to 8 cents each, while Sandfire shares rose 0.16 per cent to $6.30 each at 11:30am.

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