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By D. Sprott, P. A. Kirsch, J. Harris, D. Cliff

This paper details the work of RISKGATE, the largest Australian Coal Association Research Program (ACARP) occupational health and safety initiative to date. The program is an interactive online risk management system developed to maximize health and safety performance in the coal mining industry by implementing continuous improvement in managing major unwanted events. The comprehensive knowledge base covers tires, collisions, fires, isolation, strata control underground, ground control open cut, explosions, explosives, manual tasks, and slips/trips/falls. All major Australian coal mining companies contributed topic experts to this broad industry initiative: nine coal mining companies, more than 80 experts, and more than 400 days of individual time for knowledge-capture workshops.

Jan 1, 2014

By A. R. Barnes, N. Stubina

Increasingly, gold producers are forced to treat ever more refractory ores. While ores containing pyrite, arsenopyrite and carbonaceous material have been subjected to complete pressure oxidation (PDX) as the standard process for such ores, recent improvements in fluid bed roasting technologies have led to a resurgence of interest in roasting as a viable alternative. The lower capital and operating costs of roaster installations add further impetus to this trend. The Extractive Metallurgy Group at Xstrata Process Support operates four fluid bed reactors of various sizes which have been utilised on a large number of projects to treat highly refractory ores. Preliminary mineralogical modelling of both the physical and chemical aspects of the roasting process and subsequent testing under carefully controlled conditions has allowed clients to obtain gold recoveries approaching or matching those achievable by PDX. The flexibility of the units to operate in various modes- " bubbling bed", circulating bed, two stage, sub-stoichiometric and combinations of these, and the range of sample sizes accommodated, from a few kilograms to a few tons, has enabled XPS to accommodate clients with a wide variety of gold bearing refractory ores from all over the world. This paper outlines the key challenges of fluid bed roasting of refractory gold ores, describes the methodology used to design the testwork program and provides some results from select test campaigns.

Jan 1, 2011

By A. Berry, N. R. Banerjee, C. S. Finnigan, M. Fayek, N. J. Bridge

Lac Cinquante is a mineralogically simple, vein-hosted uranium deposit in Archean basement rocks (Angikuni greenstone belt) that originally were unconformably overlain by Proterozoic sedimentary and volcanic rocks of the Baker Lake Group (BLG). Basement rocks are mainly pillowed and massive tholeiitic lavas (N-MORB) with interbedded tuff; overlying sedimentary rocks comprise a basal talus/fault breccia that grades upward into fluvial sedimentary rocks and subaerial, trachytic volcanic rocks; granite and porphyry dikes (Hudson and/or Nueltin granitoids) intrude the basement rocks. A typical section through the Main Zone comprises 1) laminated ‘tuff’, 2) altered (carbonate-hematite-chlorite) schistose ‘tuff’, 3) a pitchblende-bearing, breccia-vein, 4) altered ‘tuff’, and 5) laminated ‘tuff’. The vein comprises brecciated chlorite, hematite, and pitchblende with carbonate cementing the breccia. Graphitic ‘tuff’ with sulfide-stringer veinlets locally overlies or underlies the vein. Pitchblende also occurs in the altered rocks and in gash veins that cut basement rocks. U-Pb ages on pitchblende fall into two groups: one at 1828 } 29 Ma reflects primary uranium mineralization, and a second at 1437 } 31 Ma represents resetting. Pb-Pb chemical ages show other resetting events at 1260-1321Ma, 895 Ma, 741-813 Ma, and 660-706 Ma. One possible genetic model for the Lac Cinquante deposit involves leaching of uranium from granitoids and the BLG by basinal brines that migrated to depositional sites where graphitic rocks acted as a reductant. A second model requires that uranium was sole-sourced from the BLG and that granitoid rocks provided heat to drive the hydrothermal system, which leached and ultimately precipitated uranium. The deposit has characteristics similar to vein-type uranium deposits in the Beaverlodge District of Saskatchewan

Jan 1, 2013

By R. T. Jones

"Technical publications in the field of mining and metallurgy have existed for a long time. Recent developments in electronic publishing on websites make it possible to disseminate information more widely and cost effectively than before. Professional societies have an opportunity to serve their members and their industry by publishing high-quality peer-reviewed papers on their websites as well as in printed form. Older publications can be scanned, and optical character recognition can be used to provide searchable text. Various business models exist around this process. This paper outlines the approach used by the Southern African Institute of Mining and Metallurgy (SAIMM) to provide free open access to their journal papers and conference proceedings, as well as the work being done by OneMine.org to collect technical papers from a number of international societies and make them available to subscribers via a large database. An approach is outlined that should be of benefit to authors, readers, and society at large.INTRODUCTIONGeorgius Agricola (1494-1555) was not the first writer on the subjects of mining and metallurgy, but is well known as the author of De Re Metallica (‘of things metallic’ or ‘on the nature of metals’), a book that documents and illustrates the observations he made in the course of his extensive travels in the 1500s. Agricola wrote extensively about mining methods and metallurgical processes that were in place in the Middle Ages. The original Latin version of De Re Metallica was published in 1556, the year after Agricola died. It was translated into English by Herbert Hoover, a mining engineer and later President of the United States, and his wife Lou Henry Hoover, a geologist and classicist. The English version of De Re Metallica was published in 1912."

Jan 1, 2012

In the past decade, the increased engagement of business in debates around sustainable development has prompted recognition of the importance of biological diversity at the local, national and global scales. Driven by increasing populations that demand rising real incomes, a range of human induced pressures are modifying natural habitats and diminishing their ability to support life. Public policy changes have struggled to arrest the loss of habitats such as wetlands or tropical forests, and the related extinction of plant and animal species. Although conservation legislation and regulation were once the exclusive responsibility of government, new partnerships are now being forged that increase the role of the private sector and non-government organisations (NGOs) in developing and delivering conservation initiatives. Since the mid 1990s Rio Tinto has had to adapt to meet the demands of a rapidly changing conservation landscape. When Rio Tinto adopted its statement of business practice in 1998 The way we work, it explicitly recognised the need to take account of relevant environmental factors in obtaining access to lands, particularly in designated areas of high conservation value. With the revision of The way we work in April 2003, the policy on land access was strengthened through removal of the word ?designated?, thereby signalling recognition of the importance of biodiversity outside of protected areas. In addition, Rio Tinto?s revised land access policy explicitly refers to the use of land that is surplus to operational requirements for habitat protection and biodiversity conservation, subject to social considerations. In late 2003 Rio Tinto further strengthened its commitment to biodiversity with the promulgation of its biodiversity strategy and related position statement, biodiversity principles? (See Appendix 1.1) and technical guidance documents. This commitment is also embodied in a variety of initiatives at the corporate and operational levels, which are reported on annually in Rio Tinto?s Social and environment review. This guide has been prepared to support the practical implementation of Rio Tinto?s biodiversity strategy. The purpose is to provide guidance on how to effectively integrate biodiversity into Rio Tinto?s operations. It is applicable to all Rio Tinto exploration, new development projects and operations, irrespective of whether they have been operational for some years or are at the beginning or end of their operational life cycles. This guidance has been developed to support the Rio Tinto Environment Standards and the Rio Tinto Community Standard and any additional supporting documents as they are developed.

Apr 1, 2005

By R. L. Bruening, N. E. Izatt, S. R. Izatt

"Rare earth elements (REE) are essential and unique components of many high-technology products without which functioning of modern society would be greatly impaired. Commercial deposits of REE are limited to a few geographical locations. Largely untapped sources of REE are available in endof- life (EOL) magnets, rechargeable batteries, and electronics. Presently, < 1% of REE in EOL wastes is recycled. Conversion of EOL wastes to liquid streams allows use of IBC’s Molecular Recognition Technology (MRT) process to selectively recover, separate, and purify target REE and associated metals at g/L to mg/L or lower concentration levels. The MRT process together with its applications to separations of REE and associated metals in recycling as well as in mining are described. Economic and environmental advantages of MRT are presented. INTRODUCTIONRare earth elements (REE) include the lanthanide series (La-Lu), Y, and Sc. These elements are not rare, but concentrated minable deposits are scarce (Cordier 2012; Haxel, Hedrick, & Orris, 2002). Over 95 % of the world’s supply of REE is controlled by China (Hanson, 2011a) where they are mined, processed, and the pure elements incorporated into a growing number of consumer and military products. The consumer products are marketed worldwide. Since REE are vitally important in consumer and military products, this situation has caused other nations to scramble to develop the capability to produce their own supply (Cordier, 2012).In the U. S., Molycorp has reopened the Mountain Pass REE mine in California and production has begun (Goldenberg, 2010). Development of a reliable internal source of REE is of high national priority in the U.S. (Hanson, 2011b; Hess, 2012: “Obama Announces”, 2012). These elements have in recent decades been incorporated into new consumer and military products that are essential to our economy and defense. These products range from wind turbines, high performance magnets, hybrid car rechargeable batteries, energy efficient lighting electronics, flat screen televisions, and smart phones to advanced weapons systems (Haxel et al., 2002; Levkowitz & Beauchamp-Mustafaga, 2010)."

Jan 1, 2012

Despite the fact that mined minerals and gemstones have allowed human beings to continuously improve their standard of living throughout the ages, mining has also been implicated in violent conflict for two principle reasons. The first is that mineral resources have been used or traded to conduct or finance violent conflict from small to large scales. The second is the substantial social, economic and environmental changes that occur in a community or a region as a result of mining activity which can either precipitate or re-awaken latent conflict. A modern complication of mining-related violent conflict is the trend for activists, international NGOs and intergovernmental organisations (e.g. the United Nations) to regard any human consequences of resource extraction in terms of Human Rights violations. Acknowledging but not labouring the Human Rights implications of mining-related violent conflict, this paper explores whether or not there is a relationship between the actual or perceived value of mineral resources and the level of violence that occurs in mining-related conflicts. Key to the investigation is a mapping exercise of mining related conflict from 2005 ? 2012: to see where mining related conflict is happening; to identify precipitant causes of mining related conflict; and, to discover what correlation ? if any ? there might be in the degree of violence and the value of the mineral(s) implicated. Findings of the analysis are presented in this conference paper.

Aug 1, 2013

By S. Espley, T. Nyabeze, D. Beneteau

"Many mentorship programs are available to Canadian mining industry employees. Some are company-led initiatives, whereas others are provided through educational institutions or nonprofit organizations. In 2016, a national survey was launched to gain insight into perceptions of what mentorship is, learn about available programs, and collate experiences with formal and informal mentorship opportunities. This paper outlines survey findings and delivers recommendations to industry for consideration in employee mentorship programs. In addition, mining industry leaders share their mentor/mentee perspectives. The intent of this paper is to bring awareness of best practices that can help employees grow and develop in their profession.RÉSUMÉ Les employés de l’industrie minière canadienne ont accès à de nombreux programmes d’encadrement. Certains sont des initiatives menées par les sociétés, d’autres sont proposées par le biais d’établissements d’enseignement ou d’organismes à but non lucratif. En 2016, une enquête à l’échelle nationale a été lancée en vue d’obtenir des informations quant à la perception de ce qu’est réellement l’encadrement, de découvrir les programmes proposés et de comparer les expériences aux possibilités d’encadrement, officielles ou non. Cet article présente les résultats de cette enquête et fournit des recommandations à l’intention de l’industrie afin qu’elle les prenne en compte dans ses programmes d’encadrement des employés. En outre, des chefs de file de l’industrie minière partagent leurs points de vue conseillers/protégés. L’intention de cet article est de sensibiliser les employés aux meilleures pratiques, ce qui les aidera à évoluer et à se développer dans leur profession. INTRODUCTIONThis paper about mentorship in the mining industry is based on voluntary responses to a cold survey, written and circulated by the authors. In 2016, a link to an online mentorship survey was circulated to males and females in the mining industry with the belief that mentorship programs should be available to everyone. The link was delivered via the authors’ personal networks in mining, the CIM Reporter, Women in Mining (WIM) email blasts, LinkedIn, and Facebook. This paper summarizes the answers to the survey questions. The paper is a follow up to one by the same authors (Nyabeze, Espley, & Beneteau, 2010), which was written to gain insight into why women join and stay in the mining industry, and to learn why the overall representation of women is low."

Jan 1, 2018

By B. K. Gorain

"As mining has evolved over a century, so are the challenges associated with mining. Mining of complex ore bodies at greater depths is a major challenge requiring high capital and operating costs due to remote locations, high energy costs, water quality and complex environmental issues. In addition, the stakeholder expectations are growing along with challenges associated with highly complex mine permitting processes and changing demographics of mining jurisdictions. The dynamic metals market adds to these challenges impacting the long term development and sustainability of mining projects.These challenges are compelling mining companies to look at various innovations with an integrated approach focusing on meeting the needs of various stakeholders. Mining companies are slowly tapping into some successful concepts that have transformed other industries such as manufacturing, chemical, pharmaceuticals along with oil and gas.This paper provides an overview of various innovations and technology developments in mineral processing that have shaped the current mining industry. A glimpse of the present and future challenges in mining is also presented. An integrated approach to problem solving involving various stakeholders is gaining momentum and this has been reflected in this paper. Various developments that are being pursed in mineral processing focusing on a change in the existing mining paradigm are also presented in this paper.INTRODUCTIONAs mining is evolving, so are the challenges associated with mining. Some of the key challenges are complex ore bodies at greater depths, high capital and operating costs, water scarcity and quality issues, high energy costs, complex environmental issues including tailings management, worldwide constraints on resource availability, more and more elaborated regulations in emerging economies impacting the permitting processes, increasing stakeholder expectations, changing demographics of mining operations with ever-changing cultural or community expectations and the urgent need for a better assessment of project viability, this in very dynamic metals markets impacting the dynamics of mining projects development and sustainability."

Jan 1, 2016

By M. Hitch, M. B. Lytle

Resource development conflicts arise largely due to differences in worldview between those who support and those who oppose development. This paper illustrates how societies and civilizations with different worldviews produce different levels of creative and economic energy. A questionnaire was created to build a database of responses to test whether worldview and resource development are correlated. Factor and multivariate regression analysis determined correlations for respondent groupings. Results showed a positive correlation between the respondents\u2019 worldviews and their attitudes toward resource development. Correlations became stronger as the homogeneity of the sample subgroups increased.

Jan 1, 2017

By CIM Mineral Resource, Mineral Reserve Committee

The CIM Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines (MRMR Best Practice Guidelines) were prepared by the Canadian Institute of Mining, Metallurgy and Petroleum's (CIM) Mineral Resources and Mineral Reserves Committee (CIM MRMR Committee) to update an earlier version that was accepted by CIM Council on November 23, 2003 (CIM, 2003). These 2019 MRMR Best Practice Guidelines supersede and replace the November 23, 2003 version of the MRMR Guidelines. These 2019 MRMR Guidelines are not intended to be prescriptive and are not intended to provide detailed and exhaustive instructions for preparation of Mineral Resource and/or Mineral Reserve (MRMR) estimates. Rather, they are intended as general guidance to assist professional geoscientists (or equivalent) and engineers (or equivalent) in preparing high quality estimates of MRMR that incorporate sound geoscientific, engineering, evaluation and design practices. They are based on well-established estimation and mine planning principles and are designed to provide general guidelines of best professional practices employed in the preparation of MRMR estimates. Although the 2019 MRMR Best Practice Guidelines are intended for use by Canadian-based mining/exploration practitioners, many of the concepts and practices presented herein are in general agreement with current industry practices in jurisdictions with membership in the Committee for Mineral Reserves International Reporting Standards (CRIRSCO). For this document, persons preparing MRMR estimates are called Practitioners. Preparation of MRMR estimates should be carried out by Practitioners who either hold the status of Professional Geoscientist (or equivalent) or Professional Engineer (or equivalent), or who prepare the estimates under the supervision of a Professional Geoscientist (or equivalent) or Professional Engineer (or equivalent). For the purposes of this document, all references to reporting describe such necessary reports and related documentation that are created as part of the normal-course work flow of preparing MRMR estimates for internal purposes. For clarity, all public disclosure of MRMR estimates made by, or on behalf of, an issuer and intended to be, or reasonably likely to be, made available to the public in a jurisdiction of Canada must comply with the requirements of National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101), as amended from time to time. At least one Qualified Person (QP) must take responsibility for each part of the estimation process when publicly disclosing the results of MRMR estimates. The intended audience for these 2019 MRMR Best Practice Guidelines includes Practitioners at all levels of skill and experience, government agencies, academic institutions, and the public.

Nov 29, 2019

By A. I. Collins, D. Danninger

Newmont has installed advanced control and online optimization on the dry grinding circuit and both roasters on its Carlin Trend refractory ore treatment plant. Subsequently, Newmont has developed a master plan for institutionalizing advanced control and optimization on all its processing units. Newmont is committed to a program of applying advanced control and optimization from crushing of ore to pouring of gold. This paper describes Newmont&apos;s experience with implementing advanced control and optimization and the benefits received. In addition, identification of advanced control and optimization opportunities and their economic justification is discussed.

Jan 1, 2005

ABSTRACT This paper details the work of RISKGATE, the largest Australian Coal Association Research Program (ACARP) occupational health and safety initiative to date. The program is an interactive online risk management system developed to maximize health and safety performance in the coal mining industry by implementing continuous improvement in managing major unwanted events. The comprehensive knowledge base covers tires, collisions, fires, isolation, strata control underground, ground control open cut, explosions, explosives, manual tasks, and slips/trips/falls. All major Australian coal mining companies contributed topic experts to this broad industry initiative: nine coal mining companies, more than 80 experts, and more than 400 days of individual time for knowledge-capture workshops.

Jan 1, 2014

By Michelia Alba, Ronaldo S. Sampaio, Davi S. Braga, Mathieu Dubé

Climate change is pressuring industries and governments for decarbonization commitments, research, testing, and use of best practices to achieve the target of global warming below 1.5/2 °C. As it accounts for as much as 7% of all global CO2 emissions and 7% of energy consumption, the steel sector needs to address this issue with extended efforts. This paper provides information on the key potential of renewable biochar as an alternative fuel for pellet production. It also summarizes the successful application of biochar in a pioneering case study as the main fuel for a Grate-kiln pellet plant in Brazil, as well as the study of its use to replace coke and anthracite as an additive for iron ore pellets and other possible applications in the steel industry in COREM's precompetitive research & innovation program. The final discussion reveals the large quantity of biochar required by the Brazilian and Quebec scenarios for reducing CO2 emissions of iron ore pelletizing plants.

Jan 1, 2023

By C. L. Popp

The scope is to address issues confronted by parties in the mining industry such as: Mine planners, survey and engineering departments, field teams and subcontractors. Describing approaches and best practices for assembling a project team to identify and create modeling requirements and to implement beneficial results. 3D Machine Control and Guidance tools continue to reduce project risk and attract quality resources with skill sets new to the earthmoving industry. These tools increase production, reduce rework and help with government permitting.

May 1, 2013

By Enzo Palumbo, Joël P. T. Kapusta, François Larouche

In light of the rapid deployment of bottom blowing smelting in China over the last ten years, one has to wonder why it has taken the copper industry so long to adopt ultra-high oxygen enrichment via Savard-Lee type injectors. As early as 1976, Kellogg and Henderson suggested, in their landmark paper on energy usage in the copper industry, that ‘maximum use of oxygen enrichment of process air’ was one of seven ‘energy saving features’ for copper matte smelting and converting. Yet today, shrouded injection and high oxygen enrichment has not been implemented in copper bath smelting outside China and Vietnam. In this paper, the authors explore the reasons why bath smelting processes such as the Noranda Reactor and the Teniente Converter still operate around 40% oxygen enrichment, while the bottom blowing SKS/BBS process typically runs at 65 to 75% oxygen, with all three processes producing white metal. Are there fundamental metallurgical explanations for this striking difference beyond the long-standing skepticism towards high oxygen shrouded injection and its perceived high implementation cost?

Jan 1, 2015

By S. A. L. Read

"The intact rock constant, mi, is one of the three basic input parameters required for the widelyused Hoek-Brown failure criterion. Values for the constant should ideally be determined by statistical analysis of laboratory test data. In this paper the influence of the inclusion or exclusion of tensile test data on derived values is discussed. We firstly investigate the relationship between direct tensile strength (DTS) test values and Brazilian tensile strength (BTS) test values based on a literature search, finding that the correlation between the two test types is DTS = 0.9*BTS, independent of the lithology being tested. Secondly, using the shear strength database of Douglas (2002), we examine the influence of confining pressure range and the inclusion or exclusion of DTS and BTS test values on calculated values of mi.Chief amongst the influences was the exclusion of tensile data in the calculation procedure, particularly when the Hoek triaxial confining stress range requirement (?3?max = 0.5?c) was not satisfied. Based on a reasonable 1:1 relationship between R (the ratio of unconfined compressive to tensile strength), use of actual tensile data in the calculations for the Hoek brown failure criterion is considered to be a simpler and more robust approach to the use of a tensile cutoff based on empirical criteria such as that of Fairhurst (1964). We advocate the fitting a failure curve using compressive and tensile test data as the most reliable means of calculating mi, while at the same time satisfying requirements as originally advocated by Hoek relating to the appropriate triaxial confining stress range (?3?max = 0.5?c) and sufficient (>5) evenlyspread data points. In the absence of triaxial data the use of R provides a practical means of obtaining estimates of mi that are more robust than guideline values."

Jan 1, 2015

By R. Vracar, D. Sinadinovic, Ž. Kamberovic

The paper presents a study on the oxidation of polymetallic gold ore by oxygen in an autoclave. It presents optimum parameters of autoclave leaching of sulphide refractory ore in self-generated sulphuric acid solutions aiming to get products with favourable technological characteristics from which precious and other useful metals can be recovered. A high partial oxygen pressure (1.5 MPa to 2 MPa), high leaching temperature (190°C to 200°C), pulp density 80 g/L to 240 g/L, ore fraction size 76 µm and leaching time up to 4 hours yield good results in rich ores. The full extent of copper and zinc conversion as well as a high extent of iron conversion has been achieved, while lead, gold and silver and a minor part of iron remain as a solid residue among gangue minerals.

Jan 1, 2001

By Leslie McHattie

?Intelligent mine? conjures up a futuristic image of unmanned extractors and loaders working in harsh conditions in a remote lunar landscape. The promise of increasing mine fleet productivity and solving the problem labor shortages in mining regions can certainly be achieved today through remote controlled extraction and automated hauling. The technology is available and it doesn?t seem to be so much science fiction when Google?s self-driving cars hurtle down the freeway. ?Intelligent mining,? on the other hand, implies the application of information technology at every phase of the mining value chain, from exploration and geological modeling to equipment, operations and maintenance, and logistics and transportation. These are really industry-specific, enterprise-class software solutions focused on using information technology to support the business processes of mining and make them more efficient and effective. Overlaying the physical world with the digital or virtual world enables us to model and simulate our assets, giving us the ability to effectively design, build, and ultimately optimize the performance and reliability of our assets throughout the lifecycle. The digital asset, often a 3D model, is created initially during the engineering and construction phase, and is handed over to the operator before the mine goes into operation. Combined with geospatial or geographic information systems, the operator has a complete digital representation of the physical world, which forms the foundation for risk and performance management, along with compliance and regulatory reporting. Laser scanning and positioning technology can be used to create point clouds ? information models consisting of millions of data points ? which enable the visualization and representation of the ?as-operated? reality. But consider that once the mine is in operation, it throws off an endless stream of data in the form of performance and condition data from sensors and monitoring devices on fixed and mobile assets through networks, servers, and services. This ?big data? can be processed and analyzed to spot trends, help predict events, and formulate reliability strategies as early as the design stage (e.g., reliability-centered design). ?Intelligent mining? implies that massive amounts of data augment the reality of the physical mine, plant, and equipment. This embedded intelligence can be used to optimize operational efficiency, increase asset availability and utilization, improve safety and environmental integrity, and maximize return on investment. Lastly, the sweet spot for intelligent mining is seen in the convergence of consumerization and industrialization. The application of ?consumer? technologies that we use every day on our iPhones and Android devices, such as cameras, motion sensors, and positioning in an industrial context, are producing ?immersive? experiences. Overlaying the digital world on the physical world and connecting them accurately through intelligent positioning results in ?intelligent infrastructure,? which is safer and more sustainable. Bentley Systems works with many mining companies and engineering, procurement and construction companies involved in all aspects of mining infrastructure development. In fact, 10 of the top 20 mining companies ranked by market capitalization are users of Bentley software, including all of the top five. In addition, Bentley provides software solutions to the world?s leading engineering, procurement, and construction companies, as well as owner-operators, who design, build and operate the world?s infrastructure. Bentley?s solutions for mining and resource extraction industries help increase the efficiency of capital projects associated with the design, procurement, and construction of mines and processing plants, as well as the operation and maintenance of mining fleet and equipment.

Aug 1, 2013

By L. D. Smith

Net Present Value Impact of Discount Rate The Discounted Cash Flow (DCF) method of valuations is universally used and accepted. The main criticism of the method is that it does not recognize the value of projects long life projects. This can be seen in the preceding graph where the present value of cash flows in later years are small for discount rates over about 10%. This graph covers a project that has a 25 year operating life. It is clear from the low height of the NPV bars at 10% and 15% in the last years of the project that an additional 25 years would add almost no value to total project NPV. As an example of this effect, an colleague undertook the evaluation of a pulp and paper project. The plant could be justified, but it was not possible to justify planting the trees as they took too long to grow and so had not appreciable NPV. The plant had to purchase wood to feed the plant.

May 1, 2013