First Solar Expects Rio Deal to Spur Global Expansion in Mining

May 21, 2014 10:00 am ET

May 22 (Bloomberg) -- First Solar Inc., the largest U.S. solar-panel maker, expects a deal to provide power to a Rio Tinto Group mine in Australia to lead to similar projects that will help global resources companies save on fuel costs.

First Solar and Ingenero Pty agreed to provide solar power to Rio’s Weipa bauxite mine in Queensland state, the companies said today in a statement. The project combining solar power with diesel will get A$3.5 million ($3.2 million) from the Australian government in its initial phase and A$7.8 million in the second stage, Tempe, Arizona-based First Solar said.

“Having a company like Rio go into this space sends a pretty strong message to the rest of the industry,” Jack Curtis, First Solar’s Sydney-based vice president of business development for the Asia-Pacific, said in a phone interview yesterday. “We’ve already seen a good uptick in interest in these projects from companies like Rio, and we think that will accelerate on the back of this announcement.”

First Solar is seeking to develop as much as 200 megawatts of capacity for the mining industry over three years, Curtis said in March. The world’s largest mining companies, including BHP Billiton Ltd. and Rio, at the same time are reining in spending after a decade-long boom in metal prices ended.

First Solar is talking to mining companies about additional hybrid projects and seeking to show the industry that it can provide reliable supply, Curtis said. Rio may expand the solar technology to other operations, he said.

‘Meaningful Size’

The project “is the first one of any meaningful size that is being done globally with a company of Rio’s prominence and size, so there’s a real potential to export this as a pilot to a much broader global audience” Curtis said yesterday.

The project will start with 1.7 megawatts and may add an additional 5 megawatts, according to the statement. The first phase will generate enough electricity to offset as much as 20 percent of the daytime demand while reducing diesel use.

The agreement comes after Prime Minister Tony Abbott’s government said earlier this month it plans to scrap the Australian Renewable Energy Agency to save A$1.3 billion. Curtis said he doesn’t expect that move to affect the project.