Powering progress: electrifying the mine of the future

Co-authored by:
Jason Clifton, Partner, Consulting, EY Canada
Karen D'Andrea, Manager, Business Consulting, EY Canada

The ability to electrify may be the lever that determines which Canadian mines will lead from the front as the sector transforms.

In brief:

• As decarbonization regulations tighten, shifting electrification from ambition to strategic imperative will be critical as the sector redefines its future.
• Moving equipment in such environments will require more than simply transitioning diesel to electricity, demanding focus and collaboration to succeed.
• The time for pilots is over; as battery-powered capabilities improve, balancing reality with long-term objectives will drive the next era of competitiveness.

For mining fleet managers in Canada and around the world, electrification is no longer a vision of a remote and distant future. With federal commitments to reduce greenhouse gas (GHG) emissions 40% to 45% by 2030, and ambitious net-zero decarbonization targets by 2050, it’s become an everyday reality.

As countries look to harness the benefits of electric power — from lower operating costs to clean, affordable and abundant power in an environmentally responsible and renewable package — Canada as a whole is both well equipped and well positioned to embrace an electrified future. In a sector where leaders rate availability and access to capital as a top risk, regulations, federal and provincial tax credits and programs are aligning to help seize opportunity and invite deployment. Homegrown innovation is being encouraged to boost economic growth and expand the national grid.

Transportation comprises 22% of emissions in Canada, with mining responsible for its fair share.¹ And while electrification in mining is not yet widespread, it’s picking up momentum. Equipment electrification is expected to grow from US$3.05b to US$10.51b by 2033.² By 2030, Canada’s clean energy GDP is projected to reach CDN$107b, driven by CDN$58b in annual investments.³ Within a decade, it’s estimated that almost half of the transportation sector’s GDP and employment will be at the hands of electric mobility.⁴

With global investment in clean energy having risen to a record US$1.8t in 2023, it’s clear that diesel’s century-long grip on mining is weakening as the sector enters its renaissance.⁵ And with Industry 4.0 capabilities — including the industrial internet of things (IIOT), automation, AI-driven operating systems, digital twinning and real-time analytics — colliding to create near-perfect conditions for integration, the industry is reaching a tipping point where electric fleets may not just be possible, but preferable, as the industry redefines its low-carbon future.

BEVs make a safer underground

But the truth is that despite the challenges, electrification in mining is a good fit. Acknowledged for their efficiency — 90% versus 30% for diesel engines — BEVs are smaller, can offer double the horsepower, travel faster and reduce cycle times to deliver greater productivity.^{8, 9} Experiencing an estimated 40% less maintenance, they require fewer parts, experience less downtime and, with lower fuel and operating costs, can expedite cost of ownership.^{10, 11}

Solutions like EY’s UtilityWave can track, monitor and understand charging networks, providing mining organizations with the analytics to optimize reliability and asset utilization. Upfront planning for visibility and control can help identify opportunities to accelerate the energy transition, unlocking value from data, including operational savings.

In addition to cost savings, BEVs are commended for being quieter, cleaner and operating in a cooler manner, creating healthier work environments. Where temperatures from equipment and processing can soar to 50C, and air quality can reach high concentrations of diesel exhaust fumes, toxins and particulate matter, BEVs reduce heat, eliminate emissions and cut down on equipment noise and vibration.

When it comes to safety, a fire deep underground can be a matter of life and death. But a fire is a fire, regardless of how it’s caused. And while there’s limited data comparing BEV and diesel fires in mining, statistics show that fire rates of passenger internal combustion engine vehicles (ICEVs) can be 11 times higher than that of equivalent BEVs.¹²

Safety concerns associated with BEVs, however, are considered manageable, according to EY Community of Interest participants. Change plans and training workers to handle high-voltage systems — and upskilling them on battery maintenance — will be critical to sustaining and scaling electrically for the future, as will strong fire emergency response plans. Both initiatives could benefit from sectoral collaboration. Working together to develop knowledge-transfer apprenticeships and formalized training programs for preparedness would benefit all.¹³

Collaboration and innovative advancements in recycling technologies represent a circular economy opportunity for those interested in investing. And the improvement in air quality BEVs bring, thanks to reduced pollutants, improve conditions not only for mine employees but for surrounding communities as well.

Converting to electric can be a sign of goodwill to neighbours and Indigenous communities and can help mining organizations meet their ESG goals, facilitating social licence to operate and positively impacting brand with the public, regulators and potential financiers.

Capturing value

Despite the many benefits, the question remains: is electrification the most attractive financial option to meet emissions mandates? In the right circumstances, there is a clear business case to take the electrification plunge and decarbonize through electrification.

In Canada there is both support and important precedent. Statistics show that Ontario mines have adopted clean technologies at higher rates than industries such as utilities and manufacturing, pioneering the integration of BEVs over the past decade.^{14, 15} In 2024, the number of Canadian underground mines that trialled or acquired BEVs outnumbered sites elsewhere in the world by two to one.¹⁶ And yet of the attendees participating in EY’s Mine Electrification Community of Interest, including eight leading Canadian mining companies, most said they were nearing or had just started deployment of BEVs.

Incentives, like the Low Carbon Economy Fund used to electrify IAMGOLD’s Côté mine in Sudbury, Ontario, may help sectors like mining take steps to reduce emissions and create jobs while building a sustainable future for generations to come.¹⁷

Tax credits, like the clean technology investment tax credit and the critical minerals exploration tax credit - which expanded eligibility requirements in this year’s federal budget - are supporting players across the value chain.

The creation of the $2b Critical Minerals Sovereign Fund and First and Last Mile Fund will invest in getting near-term critical minerals projects to production.¹⁸ Financial incentives like the Critical Minerals Infrastructure Fund, the Canada First Research Excellence Fund (CFREF) and the Strategic Innovation Fund (SIF) - which invested $100m to develop a world-leading, low-emissions potash mine in Saskatchewan - and post-secondary and research collaborations are creating opportunities for mining organizations regardless of their size.¹⁹

A leg up

Incentives can contribute to the discussion around payback periods and help clarify ROI uncertainty. And policymaker mandates and government support of pilot projects — like those helping to make electric load-haul-dump machines one of the fastest-growing segments in confined mine environments — are moving the needle forward.

There are four key actions businesses in the sector can take today to help pave the way for electrification and the advancement of mining as a whole:

• Aligned voice. Having the money to purchase new equipment, build infrastructure and implement technology requires investment. Defining the value proposition to instill confidence and invite investment will take collaboration, both within mining and cross-functionally outside of it. Taking up the mantle together and aligning on broader goals to streamline progress will help keep investment at the forefront of clean technology efforts.
  
  
• Identity advantage. As mining defines its future, it will be important to address the sector’s image and perception. By showcasing the value mining brings across all aspects of daily life, sharing EV advancements and success stories and dispelling myths through public relations campaigns, the sector can foster public support and build a more modern brand for the future.
  
  
• Strategic synergies. Collaborating with educational institutions can encourage younger professionals to consider a career in mining, addressing brain drain and the “grey tsunami” of an aging workforce, as well as the need for new capabilities to manage Industry 4.0 and its technological change. It can help in supporting training - including safety training on electrical systems - and advance research and innovation of recycling technologies, rapid-battery swapping systems and autonomous capabilities, and the need for lighter, longer-lasting and faster-charging batteries, energy storage and grid capabilities.
  
  
• Borrowed brilliance. Learning from the real-world experiences of other industries that have walked the path ahead of mining, like public transport authorities, can provide critical time-saving advantages. Having already established long-term strategies, following in their footsteps can guide policy and regulation efforts, help facilitate adoption and build relationships based on shared goals, accelerating Canada’s net-zero goals.

While continued innovation and unprecedented collaboration will help cut the path to electrification, doing so will represent a fundamental shift, demanding new ways of thinking and operating. Done right, the adoption and advancement of electrical power in mining has the potential to unlock exponential value and positive change, and position Canadian mines as sustainability leaders on the world stage.

Summary

When it comes to transformation, everyone wants a sure thing. But as today’s mining companies hold off conversions until electrified options become more accessible, diesel prices, carbon predictions and the cost of maintaining combustion-driven equipment are mounting in a sector under pressure.

As next-cycle investment decisions rise to meet the growing demand for clean minerals, the business case for electrification is clear. Mining leaders will need to carefully balance near-term budget constraints with long-term savings and environmental compliance to unlock efficiencies, take hold and seize the upside.