Search Documents

By C. Dirscherl, M. Combes

"Declining ore grade, leading to increased material transport and plant throughput requirements, is one of the major challenges in the current mining environment. This is accompanied by rising energy and labor costs, decreasing plant productivity and the requirement for highest plant availability. Siemens’ answer is the latest gearless drive technology for grinding and conveying. Gearless drive solutions are surpassing the mechanical limits of conventional drive systems serving to utilize the principle of economies of scale. By elimination of various components of the drive train the maintenance activities and spare parts inventories are reduced. The advantages are culminating in the incomparable availability of the Siemens’ gearless drive technology of 99.46 to 99.71% - as confirmed by real operational data from the Antapaccay mine in Peru. It was the first plant worldwide to use gearless drives for both applications.INTRODUCTION – THE GEARLESS PRINCIPLE The principle idea behind a gearless drive system is to reduce the number of components and diversity of parts. Especially those components that are at the edge of current manufacturing or power limits are eliminated. The used equipment provides the possibility to scale up and increase the power transmitted to the driven machine. This finally results in a possible increase of throughput respectively transported or processed material. In order to apply this principle of simplification we will take a look at the components of a conventional drive system consisting of: - Driven equipment (mill, conveyor, slurry pump) - Components altering the rated speed (gearboxes, girth gear / pinion) - The electric motor - Starting devices for the motor (VSD, CCV, LRS, clutch), which are necessary because a direct across-the-line start of high power motors with load would result in a significant drop in the line supply voltage - Alternatively a variable speed drive (VSD) or cycloconverter (CCV) to utilize the possibility of speed variation during operation - The electrical supply system (cables, switchgear, transformers, protection equipment)"

Jan 1, 2014

By M. F. Almeida

"Due to the randomness of all factors influencing the sintering operation, a two-stepped procedure is proposed to find the best way of using stocked fines at a plant producing Fe-Mn alloys for the steelmaking industry. The approach is based on the following: (1) predict the result of the sintering operation by establishing the best multilinear regression model using some of the characteristics of the loaded material; and (2) find the best solution under a minimizing cost criteria by solving a linear optimization problem using the regression equation plus constraints on the feed and product. IntroductionSome tests carried out using 20% to 30% of sinter in the material loaded into a 60 000 KVA Tysland-Hole electric furnace producing Fe-Mn alloys for the steelmaking industry indicated: (1) a meaningful decrease in the off-gas temperature and, consequently, a better energy use due to the material higher porosity; (2) more uniform heat distribution as a consequence of the electrode reaction zone enlargement; (3) an improved furnace control resulting in a smoother operation; and (4) a decrease in gas production facilitating the off-gas treatment. For some years, this plant used only the coarse fraction of the Mn ores, thus stocking all the received and own-generated fine particles. In view of the mentioned results, a strategy for increasing the use of stocked fines was formulated, including a step where it was necessary to decide which components and respective quantities should be used in the blends to be sintered (Almeida, 1984).It is well known that several factors affect productivity and energy consumption in sinter production, also influencing the product quality. Raw materials characteristics, namely chemical and size composition, affect permeability to gases and may or may not allow a deeper bed. In general, finer ores decrease permeability, increasing electricity consumption by fans, but due to their higher specific surface area, react more completely with other components in the mixture. For coke granulometry, a compromise must be obtained in order not to burn it too quickly nor to widen the flame front, therefore decreasing productivity. Decreasing coke in the blend also acts in sinter bonding, decreasing its consistency and increasing crushing and return fines. Moisture addition also influences components mixing, pre-agglomeration, bed permeability and, consequently, sintering productivity. Therefore, optimum conditions must be established for both a given sintering plant and the components in the feed (Dawson, 1993)."

Jan 1, 1998

By Paul Guliov

Preliminary investigations of stone resources were conducted in the La Range, Johnson Lake-Pelican Narrows-Deschambault Lake and Creighton-Amisk Lake regions of Saskatchewan. The work identified a rich variety of accessible, attractive and technically promising stone resources. Ordovician dolomites in various combinations of red, buff, yellow, grey and purple are very dense and take a very good polish. These are classified as marbles in the industry and some rival the famous marbles of Verona, Italy. A wide variety of attractive granites have been identified. Among these is a jade green stone (charnockite) and ornamental banded granites (gneisses). A dark greenish to black stone (amphibolite) with white and red veining resembles the well-known Verde Antique variety of Vermont and Italy and surpasses it aesthetically and in engineering properties. Some of these stones have been displayed at Canadian and United States expositions where they received an enthusiastic response from the international stone industry. More detailed evaluation and test quarrying of promising deposits are required. Such work could be rewarding to the industry as some stone varieties in the province have the potential for gaining international markets.

Jan 1, 2001

By L O. Montpetit

The economics of the asbestos mining industry of Canada, and the physical and chemical characteristics of asbestos fibre, as well as exploration, mining, milling and quality control methods, have been described by several authors in the past few years. The scope of this presentation is to survey the application of asbestos fibres in the major product groups of the construction industry in North America. Principal categories considered include flooring materials, asbestos-cement pipes and building products, high-temperature insulation, textiles, saturated asbestos felts and asphalt com pounds. During 1962, the asbestos mining industry of Canada produced an estimated 1.3 million tons of chrysotile fibre grades, and production capacity is expanding. The market demand for chrysotile fibre, on this continent, has been in the order of 50 per cent of the production volume. The asbestos industry is dependent for growth on the construction industry. Product research is active in finding new uses for asbestos fibre; some of the new developments are presented, including the use of short-fibre asbestos grades for extending the life of asphalt pavement.

Jan 1, 1963

By Éric Létoumeau, Julie Fournier, Sylvain Caron, Yves Breau, Martin Plante, Dominique Girard, Luc Tardif, François Robichaud

"Since 1999, COREM (formerly the Centre de Recherche Minérale) has conducted and coordinated research and development activities for a consortium of mining companies that uses the benefits and advantages of collaborative pre-competitive research. In particular, COREM’s “In Situ Optimization Group” is involved in the development and implementation of modem information technologies related to process optimization and control.The POP Project was launched in order to increase and consolidate the use of such technologies applied to mineralurgical and metallurgical processes. To ensure a successful transfer to the industry, there are a number of essential activities that have to be undertaken. These activities have been identified by COREM’s members and are grouped into three main modules:- R&D Module: research and development in universities and research centres;-Technology Transfer Module: integration of new tools into the POP Software, industrial applications and technical support;- Training Module: education of new engineers in universities and continuing education of plant personnel through on-site workshops.This paper outlines the opportunities that led to the definition of the POP Project, presents its main objectives and describes its main modules. The main features of the POP Software are outlined, the first applications at COREM’s member plants are presented and, finally, future developments are discussed."

Jan 1, 2002

By J. A. Morgan, W. A. Barclay, J. C. Pedersen, I. C. Campbell, D. S. Bubar, R. P. Taylor

"Abstract - The Lilypad Lakes property is host to a group of Ta-mineralized dikes that occur over an area of at least 10 km2. Field relationships are consistent with a syn- to late syn-tectonic timing for their emplacement (with respect to the major regional D1 episode of deformation), with several of the dikes exhibiting a steeply dipping, open, S- to M- to Z-shaped fold geometry. Individual dikes range up to 30 m wide (Rubellite Dyke, Pollucite Dyke), have strike lengths of up to 750 m (e.g., JJ Dyke), and are continuous to depths of greater than 250 m (e.g., Rubellite Dyke, Pollucite Dyke). Typically, they display sharp intrusive contacts characterized by the development of thin, holmquistite-rich haloes. The Tamineralized dikes are comprised of silica- and alumina-rich, sodic, granitic pegmatites that display extreme levels of geochemical fractionation (K/Rb typically < 10.0, as low as 2.2; Nb/Ta typically < 0.20, as low as 0.03), and enrichments in an economically important group of lithophile elements, most notably Li, Rb, Cs, and Ta. Geochemical assays of individual surface grab and drill core samples have yielded values as high as 1.51 wt.% Li2O, 1.25 wt.% Rb2O, 6.21 wt.% Cs2O, and 0.108 wt.% Ta2O5. Diamond drilling has established the presence of wide (~20 m), potentially ore-grade intersections of Ta mineralization (>0.045 wt.% Ta2O5) in both the Rubellite and the Pollucite Dykes.Three Ta-oxide minerals (microlite, wodginite, manganotantalite) of primary origin predominate in the Ta-mineralized dikes, where they occur as fine, disseminated grains in the albite-rich pegmatite matrix. The sequence of crystallization is typically manganotantalite wodginite microlite, which conforms to a well-established paragenetic sequence for rare-element granitic pegmatites in general. All three of the primary Ta oxides are characterized by a high degree of chemical purity (e.g., average Ta concentrations in microlite from 77-79 wt.% Ta2O5), a compositional feature consistent with the extreme levels of geochemical fractionation characteristic of the host granitic pegmatites, and one that indicates that the Lilypad Lakes pegmatites are likely to produce Ta mineral concentrates of the very highest quality.Locally, a second generation of Ta minerals is present, restricted to small vugs in the pegmatite matrix that are surrounded by fine aggregates of K-rich mica or clay. The secondary Ta minerals are dominated by microlite, which is typically intergrown with fluorite and Fe-sulphides, and is distinguished from its primary counterpart by its lower Ta content (around 70 wt.% Ta2O5) and much higher concentration of uranium (up to 9 wt.% UO2). Also, secondary microlite consistently yields low analytical totals from electron microprobe analysis, suggesting that it is H2O-rich. The presence of this second, vug-related generation of microlite, together with the occurrence of localized networks of crosscutting fractures that host high concentrations of Cs and Rb (in the minerals pollucite and Rb-Kfeldspar), suggests that a late-stage, fluid-dominated metasomatic/hydrothermal event may have been important in certain sections of the dikes, and has effected a redistribution of the economically important elements Ta and Cs."

Jan 1, 2005

By M. C. Pietrobon

"A common problem in assessing the applicability of laboratory flotation data is determining how closely conditions during laboratory testing of the ore matches those that occur in a plant. Typical laboratory based investigations do not consider factors such as water quality, pulp temperature and the pulp chemical environment during both grinding and conditioning on laboratory flotation performance. Disregarding these important factors may seriously compromise the validity of conclusions based solely on laboratory experimental results. Furthermore, considering these factors during the flowsheet design stage in the development of new ore resources may reduce financial risk associated with building a new plant. A methodology is described here which embraces these factors in an attempt to bridge the gap between laboratory and plant. The methodology should be considered a vital first step in all laboratory based experimental programs and has implications for fundamental studies on the flotation behaviour of single minerals. This methodology increases the confidence with which findings of laboratory based studies can be transferred to the plant and highlights the effect of variables which may be accessible to manipulation in the plant.Pulp chemical parameters, such as pulp dissolved oxygen demand, pH, Eh, mineral oxidation and solution composition were manipulated in the laboratory by adjusting the duration of gas purging after grinding, the process water input and pulp temperature. A key finding was that matching of the laboratory pulp chemistry to the plant pulp chemistry was dependent upon oxidation after grinding. In turn, mineral oxidation was dependent upon the pH in grinding, water composition and the duration of oxygen purging after grinding. The methodology closely matched the dissolved oxygen demand and surface chemistry of laboratory and plant pulps."

Jan 1, 2002

By T. K. Bose

According to the Intergovernmental Panel on Climate Change (IPCC), the average global temperature has risen over the last century. If this trend continues over the next century, the IPCC projects a significant increase in temperature and a rise in sea level. The changes in climate could adversely impact human health, agriculture, water resources and ecosystems. Most national and international agencies have concluded that our use of carbon-rich fuel is responsible for global warming through the greenhouse effect. In the future, the situation may get worse if the increased need for energy in countries like China, India and Brazil is fulfilled by burning fossil fuel. Advanced natural gas-fuelled vehicles have the potential to reduce carbon monoxide and reactive hydrocarbon emissions substantially compared to gasoline vehicles. Further environmental benefits can be realized by using a blend of natural gas and hydrogen. Such an approach will help create an infrastructure for an eventual transition to hydrogen.

Jan 1, 2005

By E. N. Gilje

"IntroductionDURING the past five years, over two miles of shaft sinking have been completed at Falconbridge. As sinking has continued, we have improved our equipment and technique with a resulting increase in efficiency. Throughout this period, all sinking has been done by contracting firms, under our direction and to our equipment specifications, with highly satisfactory results. Since 1949, Riddell shaft mucking machines have been successfully used in conjunction with the •benching method of sinking. Our most recent practice can best be illustrated by describing the method used in sinking No. 1 shaft at the Fecunis Lake mine.No. 1 Shaft, Fecunis Lake MineNo. 1 shaft, consisting of six compartments and measuring 13 ft. 11 l/2 in. by 19 ft. 9 3/8 in., outside timber (Figure 1), will be sunk to a depth of 4,170 feet. It was designed to accommodate two 10-ft.diam. Koepe hoists."

Jan 1, 1955

By W. L. Thayer, K. A. Jonasson, R. D. Coleman, J. D. Hazlett, C. E. Capes

"Loss of coal fines in reject slurries limits the yield of coal cleaning operations. Difficulties in handling fines also limit the extent of physical cleaning in treating coals with finely-disseminated impurities. Selective oil agglomeration allows even extreme fines to be processed and offers some novel approaches for coal cleaning and utilization.The oil agglomeration process for the recovery and beneficiation of fine and ultrafine coal has now been commercialized by the Chemical Engineering Section/Chemistry Division of the National Research Council (NRC). This paper describes these activities to apply oil agglomeration and related fine coal technologies on an industrial scale. Pilot plant and large scale results are described, as well as aspects of agglomerate utilization in both wet and dry form."

Jan 1, 1988

By Philippe Angers

This article analyzes the social acceptability process of a mining project located in an existing city. It will explore how the principles of sustainable development have been integrated in the project of the Canadian Malartic open pit mine held by the Osisko Mining Corporation, and the corporate social responsibility (CSR) initiatives proposed to strengthen the social acceptability of the project. This mine is located on the ancient south quarter of Malartic and has required the displacement of hundred of houses and five institutions. The location and the inherent social impacts generated by the relocation of the citizens of the south quarter makes this case particularly interesting to understand social dynamics in an era of environmental consciousness. These major constraints of the mine generate high expectations within the urban population with regard to the social and economic benefits it will receive from the project. In a context where society demands higher CSR from the corporation, Osisko is closely followed regarding their actions toward the sustainable development principles to see if they respect the environment and the desires of the community. From the beginning, the company had to be a model of sustainable development in various aspects reflected by the manifold interest of the population. To understand the endeavor made by the company to fulfill the demand of CSR, we will analyze how the company understood sustainable development principles and what CSR initiatives Osisko company put forward. We will explore the involvement of the company in various social aspects like employment, employee satisfaction, and the level of commitment to non-discrimination policy in employment, notably with the native populations. We will also take a closer look at the relationship built by the company with the community and the level of commitment with the various stakeholders of the community. In this way, we will be able to seize the level of involvement of the company in the fulfillment of the principles of sustainable development toward a higher CSR, and to specify the trajectory adopted to build social acceptance.

Aug 1, 2013

By J. -F. Blais, M. -O. Simonnot, J. Mocellin, G. Mercier, J. -L. Morel

Large quantities of ferromanganese sludge are generated as waste material by blast furnace during the manufacturing of ferromanganese. These slags are very rich in manganese, zinc and lead (5 to 40 %). These residues have been deposited in a pond in periphery of the steel industry. Considering the market value of the metals, these brownfield sites can now be considered as secondary resources. We have developed a hydrometallurgical process for selectively leaching Zn, Mn and Pb in order to produce compounds of Mn and Zn pure enough to be economically recoverable and a residue rich in Pb. Batch laboratory experiments were carried out to determine appropriate leaching conditions to maximize zinc extraction (100 %) and manganese extraction (90.0 %) with sulfuric acid and to generate a residue containing 15 to 30% of lead. This Pb residue is recyclable by another process.

Jan 1, 2015

By Robert J. Maron, Mark Fernald, Alex Van der Spek, O’Keefe. Christian, Tim Bailey

"Sonar array-based non-invasive flow measurement technology is becoming an accepted and many times a preferred method of measuring challenging single and multi-phase flows in the mineral processing industry. This fundamental sensor and measurement technology has been extended to two developments that provide new measurement capabilities useful for monitoring and managing slurry flows and pipes.The first development is the non-invasive measurement of real-time velocity profile of slurry flow in horizontal pipes. Multiple non-invasive passive sensors measure localized velocities and are combined to provide a velocity profile measurement. This information can be used to determine the approach and onset of solid deposition on the bottom of the pipe. Having this information in real time can enable operation at lower velocities and/or higher solids concentration while avoiding solids deposition or plugging and its associated operational costs.The second development is the non-invasive measurement of pipe wear on slurry lines. Presently, such measurements are made by hand-held portable ultrasonic thickness gages. The numerous shortfalls associated with the manual method are overcome with a set of permanently or semi-permanently installed transducers clamped onto the outside of the pipe. This ring of sensors contains a series of conformable ultrasonic transducers spaced around the circumference, which are used to measure the thickness of the pipe under their respective locations. Compared to manual methods, this system and approach results in better repeatability and accuracy. It also decreases inspection labor costs and pipe access requirements. The minimal accuracy variations in the presence of varying environmental temperatures will be shown. Trending of pipe wall thicknesses in high wear pipelines will be illustrated. The benefits of significantly improved pipe wear monitoring in hydrotransport lines with abrasive solids, and associated improvement in the ability to insure safe operation and avoidance of costly environmental damage due to leaks caused by pipe wear will be discussed."

Jan 1, 2009

By Marcel Vallée

Frequently, costs overruns and defaults in mining project performance result in serious problems and headaches for all project participants and impact on corporate objectives, profits and image and, occasionally, lead to project failure. As mining professional s, we should be very concerned that, in a recent World Bank paper (Weber-Fahr, 2001), geological and technical risks were considered the most important ones facing mining projects. Whenever we manage to reduce or minimize these risks, we are in better position to overcome the environment-, market-, finance- and community-related ones. The causes of this situation seem rather systemic, as a fairly long list of industry problems with new pro jects has been described in industry papers in pas t and recent years. A brief review of industry problems with mining projects will be given first, followed by a review of the basics of the current Quality Management and Continuous Improvement perspectives that have evolved from earlier quality control and quality assurance systems and policies. Particular particular attention will be given to the work of W. E. Deming. As the system approach is an essential part of such policies, it will be described succinctly. Given that poor communications and interactions among geologists, mineral processors and mining engineers/operators ca n seriously affect project efficiency and profitability, these interrelated processes with in the mining systems will be analyzed and modelled and the impacts of such situations will be described through a number of anonymous case histories and examples. A synthesis of Dr Deming&apos;s management system, includ ing his Four teen P oints and System of Profound Knowledge, will be prese nted .

May 1, 2002

By Roxanne Scott

Outline ? Overview of Community Investment in the Mining Sector ? Emerging Good Practice: ?Strategic Integrated Community Investment? ? Assessing Local Context: ? Institutional Assessment ? Partnership Assessment Approaches to Community Investment Isolation: No proactive engagement in community development Ad hoc philanthropy: small infrastructure, sponsorships, donations Strategic philanthropy: Community proposes options for development Company decides what to do and carries it out, e.g. building schools, health posts, roads Strategic integrated community investment: ? Aligned with government/community development goals and priorities ? Communities and government involved in decisions and execution ? Focused on training and capacity building ? Partnerships ? Continuation in absence of company support Measured returns on investment

May 1, 2010

By Patrick J. Williams, Peter J. Pollard

"Abstract - Enigmatic hydrothermal vein/breccia/replacement Cu-Au deposits with magnetite and/or hematite are well-represented in Australian 1850 Ma to 1500 Ma terrains and associated with different-aged synorogenic intrusions in the Tennant Creek Block (ca. 1850 Ma); the Gawler-Curnamona region (1640 Ma to 1590 Ma); and the Cloncurry district (Mount Isa Eastern Fold Belt, 1540 Ma to 1500 Ma with a possible earlier event at ca. 1600 Ma). No deposits are known to be coeval with various 1780 Ma to 1610 Ma anorogenic intrusions. Deposits are hosted by many different rock-types with varying metamorphic grade including granites and various supracrustal rocks. Depth of mineralization varied from many kilometers in semiductile crust (e.g., Cloncurry deposits) to very shallow (e.g., Olympic Dam). Ore deposition near Cloncurry occurred in brittle-ductile shear zones from geochemically variable and complex, CO2-rich, 300°C to 500°C, high salinity fluids with magmatic stable isotopic signatures. Recently published studies of a giant granitoid-hosted magnetite vein complex at the Lightning Creek prospect (>1000 Mt magnetite) suggest it is a product of internal differentiation and endogenous Fe and Cu-rich hydrous-carbonic fluid phase generation within a quartz monzodiorite-monzogranite intrusion. Coupled with other field relationships, this points to a possible genetic relationship with intermediate (55 to 65 wt% SiO2) members of an alkaline and partly shoshonitic granitoid supersuite which appears to have both mantle and crustal source components from ?Nd evidence. In constrast, main-phase mineralization at Olympic Dam in the Gawler Craton is distinguished by hematite-phyllosilicate alteration and chalcopyrite-bornite-chalcocite zoning, reflecting fluid mixing in a high level (<250°C) system with a probable large component of meteoric water. Early high-temperature parageneses and fluid inclusions imply that the extensive hematitic breccias overprinted an older magnetite system which may have had similarities with those at Lightning Creek and Ernest Henry in the Cloncurry district.Deposits of this family are inherently difficult to find and evaluate as even within a single district, there is no reliable relationship between the location of ore and any specific combination of geophysical characteristics. Diverse alteration assemblages, geochemistry and physical characteristics suggest the deposits reflect the interaction of multi-sourced fluids with different host rocks in a wide range of geological environments. Recent discoveries and research in the Cloncurry district have extended the range of deposit models available and aid the development of a rudimentary classification in which economic and exploration characteristics can be linked to variations in the mechanisms and environments of ore formation."

Jan 1, 2001

A rough simulated borehole has been developed for the installation and dynamic testing of rock bolts a the WASM Dynamic Test Facility. The rough simulated borehole is used for rock bolts that are sensitive to equipment installation technique or borehole geometry (particularly friction rock stabilisers and resin encapsulated bolts). An extensive axial test program has quantified a difference between the static and dynamic capacity (kN/m of embedment) for friction rock stabilisers once sliding starts. The 47mm split tube bolt has a 50% reduction in embedment capacity (but with significant variation) dissipating 2.7kJ/100mm of sliding per meter of embedment, and the Omega (inflatable) bolt had a 70% reduction in embedment capacity dissipating 6.2kJ/100mm of sliding per meter of embedment. The Omega bolt dynamic capacity remainder at least equivalent to the split tube bolt static capacity.

May 1, 2009

By Patrick Polk

For many years, sulfuric acid producers all over the world have been forced to meet ever more strict environmental regulations to reduce SO2 emissions. The sulfuric acid industry has implemented new solutions in order to comply with the new lower SO2 emissions target. Haldor Topsoe (Topsoe) has responded to this challenge by continuously improving the range of VK sulfuric acid catalysts and providing tailor-made catalyst solutions to meet the demands of the sulfuric acid producers for lower SO2 emissions. Reducing emissions through catalysis: requires less capital than installing a scrubber, requires no additional process chemicals, generates no waste or by-product to dispose of. In 1996 Topsoe introduced VK69, a cesium-promoted vanadium catalyst, designed for operation in the pass(es) after the intermediate absorption tower in double absorption plants. The high activity of VK69 allows for a more than 50% reduction in SO2 emissions from existing double-absorption plants. Topsoe currently has more than 110 installations of VK69. To comply with the still more stringent regulations being placed on the sulfuric acid industry to lower SO2 emissions, Topsoe has developed a new sulfuric acid catalyst designated VK-701 LEAP5™. This catalyst was introduced to the market in 2010. VK-701 LEAP5™ is based on a novel technology which circumvents the internal transport deficiencies of existing commercial sulfuric acid catalysts and thereby offers exceptionally high activity in strong, SO3 rich gases. Sulfuric acid plants have used this catalyst to meet emissions requirements lower than previously believed possible with a catalyst only solution. This paper will present examples on how to reduce emissions by implementing a tailor-made catalyst solution using VK69 and VK-701 LEAP5™.

Jan 1, 2014

By N. M. Stubina, P. J. Lind

Barrick Gold is in the process of building several new mines and implementing new processes at existing mines for which metallurgical technology is of key importance. The roles of the company&apos;s Strategic Technology Solutions team and the Barrick Technology Centre are discussed within the context of their responsibilities within Barrick&apos;s Operations Support group. The paper will present an overview of the development of the technology centre from the former Placer Dome Research Centre to its current form supporting strategic technology, capital projects, and operating sites. Novel approaches to research and development will be presented as well as an overview of some of the technologies developed from bench-scale to pilot-scale, and beyond.

Jan 1, 2011

By John A. Wells, Leticia Conca, Kenneth G. Thomas

"Since about 2002 there has been significant capital cost escalation, not inflation, in the mining industry causing turmoil for successful project completion. Project capital costs have more than doubled and some cases tripled in this time period. This has rendered many projects to be economically challenged and in some cases not viable. In addition higher than expected operating costs have further adversely affected project metrics such as NPV and IRR. Capital cost increases for projects have been widely reported globally. This current paper reviews three items. Firstly, why such capital increases and the various components that make up capital estimates. Secondly, it looks at reasons why preliminary estimates, for example at scoping and pre-feasibility level, have been lower than the ultimate constructed costs. Such increases and differences in estimates have caused major problems for mine builders and have led to a general nervousness on the part of those providing project finance. Thirdly, what discipline is needed in project execution in an attempt to mitigate such capital increases. The paper will hopefully give a better understanding of the various issues and factors involved for those in the mining industry.INTRODUCTION The years 2012 and 2013 were a turbulent time for the mining industry. The European economic crisis, politics, metal price volatility and a wave of changes of CEO´s in some of the major mining companies all contributed to a challenging couple of years. Two issues stood out. First, the huge increases reported in the capital costs of projects, where increases of 100% - 300% were not uncommon and in some cases exceeded that during the first decade of the 21st century. Second, company write downs related to takeovers during the boom and the stabilization/correction in commodity prices. These have led to great uncertainty, made it difficult (or impossible) to raise project financing costs, contributed to the changes at CEO level and placed many projects either on hold or cancelled altogether. It is commonplace now to read of companies talking of reduced capital expenditure and making a complete review of their projects and operations to contain costs."

Jan 1, 2014