Israel Land Authority (ILA) last week published a development tender for the abandoned Timna copper mine near Eilat, which includes construction of a solar farm and an underground data center, which would be the biggest in Israel.
The tender is for 2,080 dunams (520 acres) of land at Timna Park, made up mainly of mining pits and waste created during the copper mining process. The pits were excavated by the Timna Copper Mining Company from 1959 to 1976.
The ILA and Hevel Eilot Regional Council aim to transform the area, which has been abandoned for 50 years, into a solar farm and green energy storage facilities, with a large underground data center in one of the existing pits in the mine. The planned underground data center will be double the size of Israel's biggest data center, which is currently the SDS data center in Modi'in, which covers 12,500 square meters and consumes 27 megawatts of electricity.
The cost of the land was not specified in the tender, but it is estimated at an amount between NIS 60 million and 150 million, far cheaper than land in the center of the country. However, it is estimated that clearing the mining waste and dealing with the large mining pits that have been created in the area will require considerable additional expenditure from the developer who wins the tender. But the ILA hopes that the cheap energy from the solar farm above and the proximity to the Blue-Raman fiber optic cable from the Red Sea will attract more interest to the area. As this is a development tender, with the planning phase at the discretion of the developer and not the ILA, it will also keep costs lower.
One group of investors is already believed to be interested in submitting documents for the tender. Haim Eisenstadt's Green Global Data Center Group has already had contact with the Hevel Eilot Regional Council for several months. Aizenstadt, who keeps a low profile and rarely appears in the media, did not respond to Globes' inquiries. On social media, he posted a visit to Timna, where he posed for a photo next to James Leong, an investment manager from Chinese fund Pagoda, together with senior officials from the Hevel Eilot Regional Council. Aizenstadt who is also an art collector, posted on social media meetings with senior officials in the UAE, Saudi Arabia and Bahrain.
Several international companies have already enquired
Copper mining in the Timna region began as far back as the Bronze Age, about 5,000 years ago. The area in the tender deals was used by relatively modern mines that were established at the opening of Timna Park, by the government company Timna Copper Mines in 1955. The activity, which included the mining of 1.1 million tons of copper and manganese ore continued continuously until 1976, when the plant was closed due to the drop in copper prices on world markets. Despite repeated attempts, and even though the price of copper soared again, all initiatives to bring the mines back into operation failed.
The last attempt was in 2004, when a Mexican company leased part of the area, and began to rehabilitate the old mines. The company invested tens of millions of shekels and received government grants totaling about NIS 200 million in exchange for a future investment of NIS 2 billion, but eventually the company collapsed following a scandal. The Mexican company anyway claimed that the Sheshinski 2 recommendations on the export of state resources, reduced the economic viability of its operations.
Dr. Hanan Ginat, Mayor of the Hevel Eilot Regional Council and former Israel Geological Society president told "Globes" that at the very least the concentration of copper in the soil does not exceed 1%. "So to begin with, operating copper mining as of today is less worthwhile, even after the increase in world prices," he says. "Today it is a damaged area, which includes 50 million tons of bland material (the shredded material created after mining and extracting the copper). We said to ourselves - why don't we use the large area here for a complex that will include a data center that uses all the electricity from its surroundings? Several international companies have already enquired, so we understand that there is a demand for the area."
A data center is a building that houses hundreds or thousands of computers and servers, which use a lot of electricity and emit heat. In order to cool the building, "coolers" - cooling facilities - are installed. Due to the operation of the cooling facilities, there is a fear of noise pollution in the immediate vicinity, however, according to Ginat, the center will not be built near a residential area. The nearest settlement, Be'er Ora, is 2.5 kilometers away. However, the farm will be located only a few hundred meters from the park, but since it will be built below ground level, the head of the council does not foresee any damage of any kind, including noise."
The ILA and regional council are interested in attracting businesspeople who would prefer to operate the data center without being connected up to the electricity company. The data center will be built in one of the mines and covered with soil, and solar panels and various electricity storage facilities will be installed on the area above it.
Unlike the other local authorities in Israel, the Hevel Eilot Regional Council has excess electricity production. The solar panels in the fields and on the roofs of the buildings together produce about 220 megawatts per hour, with a large part of it intended for outside the area including Eilat. Due to the limitations in the electricity transmission infrastructure, it is difficult to transmit all the electricity produced to Central Israel. Building a data center, which uses tens of megawatts of electricity per hour, could solve the problem. The local council promises that connecting to its independent solar power grid will reduce electricity costs by about NIS 0.20 per kilowatt or NIS 87 million per year.
Will cheap land compensate for the remote location?
In the Israeli data center industry, there is not much enthusiasm for the idea. Many in the industry believe that demand for a data center in the Arava will be low, mainly due to the distance from the rest of Israel. Data centers house activities of customers or representatives of tech giants such as Amazon or Google, and in order to attract them, it must be closer to the center. In addition, the high number of data centers in Israel makes it difficult to find customers - a prerequisite for an entrepreneur bidding for such a tender.
Ginat, claims that the tender would not have been published had it not been for several international companies that expressed interest in it from the beginning. He says, the proximity to Google's Blue-Raman fiber-optic communications cable system increases the attractiveness of the tender. The interest does not necessarily arise among entrepreneurs in Israel, but among international companies interested in proximity to the submarine cable, which links in one direction links Eilat to Saudi Arabia, Oman and from there to India. In the other direction Google's Blue-Raman is a fiber optic cable links Eilat in the south, along Route 90 to Tel Aviv, and onto Europe, and which when completed next year is expected to compete with the fiber optic cable that will be deployed later along the Eilat and Ashkelon oil pipeline.
Published by Globes, Israel business news - en.globes.co.il - on September 28, 2023.
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