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Case study – From methane curse to carbon trading

Case study – From methane curse to carbon trading


What the flare at Beatrix will
look like


 

Over the past 30 years explosions caused by the ignition of methane claimed more than 40 of our miners’ lives at Beatrix, Gold Fields’ mine in the Free State. We are now turning the methane curse into a carbon-trading and electricity-generation blessing.

The same methane – 40 per cent of the total at Beatrix – will now be flared and later on harnessed to produce 5 MW of electricity, representing five per cent of Beatrix’s electricity needs. Gold Fields put the finishing touches on the methane project during the year under review and in the process became the first gold miner in the world to sell Certified Emissions Reductions (CERs), the financial securities used to trade carbon emissions.

Gold Fields will sell 1,700,000 CERs to European energy trading company Mercuria Energy Trading SA under forward contracts, which will run until 2016. A CER is awarded for every tonne of carbon dioxide (CO2) saved during a company’s production process. Since methane is considered a particularly “aggressive” greenhouse gas, we will receive 21 CERs for each tonne of methane we capture.

At current CER values and exchange rates, the CER contract is worth about R200 million and will provide an economic return on the project. Gold Fields will use the funds to finance the flare facility and the power generation plant, says Jan du Plessis, Senior Consultant, Environmental Engineering, in the South Africa Region. Since 2005 he has been working on a strategy to make our operations greener by reducing dependence on carbon-based energy, particularly coal.

This clearly has environmental benefits for the company, but the establishment of a viable global market in the trading of carbon credits derived from carbon emissions saved has also made it economically viable to become a greener company, as it will aid the funding at projects which otherwise may have not gotten off the ground.