222 costs (Fraser Institute, 2026). Both the level and stability of energy costs are significant drivers of mining competitiveness. Mining operations are also highly sensitive to energy quality and supply reliability. Even short disruptions can halt production processes, affect integrated value chains, and directly impact revenues. Over long investment horizons, this exposure elevates energy conditions from an operational variable to a strategic determinant of project viability. These pressures are amplified as mining expands into deeper, lower-grade, and more remote deposits. Declining ore grades require larger volumes of material to be extracted and processed to achieve the same output, significantly increasing energy consumption per unit of production. Empirical evidence from Chile and Australia indicates that a reduction in copper ore grades from 0.4% to 0.2% can increase energy requirements per unit of output by up to seven times (Calvo et al., 2016, Table 3; Resources, 5(4)). Longitudinal data from major copper-producing regions further show that declining grades increased fuel consumption per tonne of copper produced by over 100% in certain operations over a twenty-year period (Norgate et al., 2023). These figures are order-of-magnitude estimates derived from life-cycle analyses; actual outcomes vary by ore type, processing route, and mine depth. Four statistics capture the scale of exposure: – 15–40% of total operating costs is energy — often exceeding labor4. – 7× increase in energy per unit when copper ore grades decline from 0.4% to 0.2%. – 2x fuel consumption increase per tonne of copper in some operations as grades decline. – Significant share of leading mining companies has adopted Scope 1 and Scope 2 emissions reduction targets for 2030, reflecting increasing ESG pressure (IEA, 2021) 5. Under these conditions, energy becomes a defining factor for mining viability. Geologically attractive deposits can become uneconomic if energy supply is unreliable, excessively costly, or misaligned with evolving environmental requirements. It is no longer sufficient for energy to be affordable; it must also be reliable and dispatchable, capable of supporting continuous operations while aligning with lower-emission strategies. 3. Natural Gas as a System Resource Natural gas is the second most widely used source of electricity generation globally, accounting for over one-fifth of total output. In the context of the energy transition, it has consolidated its 4 According to mining‑sector studies, electricity accounts between 30% and 80% of the total energy consumed at mines, depending on the type of operation (open‑pit vs underground) and the level of processing, while the remainder is mainly diesel and other fuels (CEEC, 2021). 5 Scope 1 and Scope 2 emissions refer to two key categories of greenhouse gas emissions under the GHG Protocol. Scope 1 covers direct emissions from a company’s own operations, such as fuel burned in mining equipment or on-site processes, while Scope 2 includes indirect emissions from the electricity or energy the company purchases and consumes.
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