October 2019

Current challenges and opportunities for the minerals industry

  • By Peter McCarthy HonFAusIMM(CP), Principal, AMC Consultants Pty Ltd

This article is based on a distinguished lecture delivered at an AusIMM Melbourne Branch lunch in June 2019

The greatest challenge our industry faces today is the growing public antipathy to mining projects, exacerbated by events such as tailings dam failures and facilitated by social media. 

This challenge can be overcome by changing the way we operate through technical innovation and through better two-way communication with our community. We can accelerate the process of innovation through the free communication of ideas between mining companies, researchers, consultants, contractors and manufacturers.

We also need to revisit the concept of value, and to question the drive for large developments to achieve economies of scale. 

A review of the history of innovation in mining gives insights into how changes occur and what the business case for innovation should look like. To understand the opportunities, we must explore the concept of the ‘adjacent possible’: the new and emerging technologies that have not yet been adopted by the minerals industry. 

Our biggest challenge

People are never going to love the mining industry. There will always be vocal and committed groups who oppose everything we do. Logic cannot sway them, even as they buy cars, mobile phones and the many products of our society that depend on mining. If you are pro-environment, so they reason, you must be anti-mining. Increasingly, this message is taught in schools and reinforced through social media. It is even a theme in popular science journals and influences the selection of ethical investments. 

Our sector will not be able to persuade our opponents that they are wrong. Instead, we need to change the way we go about developing projects and selecting technologies, and how we engage with the communities around mining operations. New mines will be approved and gain support only if we listen to the community and respond.

These days it can take decades to get a large project off the ground, and many will not be accepted by communities, however attractive the economics might be. Even small communities in remote, lightly populated areas now have the power, aided by social media, to stop development. And if a mining company works with a government to gain approvals without the support of the local community, it can expect ongoing opposition, demonstrations, active non-government organisation (NGO) attention and damaging social media campaigns that can lead to losing the project. In developing countries, the new owner may well be the government, using its army to suppress opposition. 

An important consequence of our poor image is that young people, particularly professionals, don’t want to join our industry. In turn, a shortage of experienced people is one of the causes of poor business performance and adverse community impacts.

Many of the operational problems the sector faces have emerging technological solutions. Highly selective mining, using rock cutting machines and belt sorting, will reduce the amount of rock going to processing and tailings storage. New dry processing techniques will reduce the size of wet tailings dams (though they may bring new dust control challenges). New processes will be found to turn some rejected material into useful products such as bricks, pavers and tiles. Selective underground mining will greatly reduce the surface impact of mines and their associated waste dumps. Mining orebodies slowly, over several decades instead of as rapidly as possible, will establish community support and reduce initial capital costs. Yes, we can maximise net present value (NPV) by going in big, but that is the approach that has alienated society. Smaller mines need fewer workers and less accommodation, making on-site living more feasible. They use less power and have less impact on the environment. 

The need to manage project risk was well understood in the past. A small mine was built, often with second-hand plant, and then cash flow from the operation, or equity funding from the now-reassured investors, was used for a series of expansions and optimisations. If there was a problem with the initial ore reserve or cost estimates, the exposure of shareholders to this problem was minimised and managed. 

Project risk includes loss of social licence. A slow start and gradual build up allows the community to adjust, while allowing the mining company to understand and mitigate impacts, and take advantage of employment and training opportunities. With a measured approach, environmental impacts develop slowly and can be mitigated before they become serious.

In recent years, many project investment decisions have been made on the assumption that unlimited project finance is available. Due to global economic circumstances this is no longer the case, and a more traditional approach to project optimisation is needed. After considering risk, a modest-sized, staged development may provide better shareholder returns than the largest project that an orebody can theoretically support. Staged development may require multiple parallel processing circuits and smaller, more selective mining machines operating at higher cut-off grades.

Tailings dams

Our biggest unsolved issue is the use of tailings dams. History keeps reminding us that tailings dams can cause massive environmental damage and they can fail. Even the biggest and best mining companies cannot manage them safely all the time. From Bougainville and Ok Tedi in the 1980s to Vale’s two failures in 2015 and one in January 2019, tailings management is not just a public relations issue for our industry. Tailings dams are a real threat to communities and the environment. While dams continue to operate, our opponents are justified in their opposition.

Bigger mines mean bigger tailings dams, and the risk has increased by a factor of 20 every third of a century. According to Bowker and Chambers (2015), half of all the ‘Very Serious Failures’ in the last 70 years (to 2010) occurred in the last 20 years. Bowker and Chambers predicted more than 20 failures from 2010-2019, with a total unfunded public cost of $6 billion. They were right, and by 2019 we have exceeded that estimate. These losses are uninsurable.

Bowker and Chambers say that the cause of tailings dam failures is not only a technical problem, but rather that the combination of falling grades and higher throughputs have created large, fast-growing tailings dams at mines with slim operating margins, where safety factors may be pushed below an acceptable limit.

How can innovative technology help us?

Biologist Stuart Kauffman introduced the idea of the ‘adjacent possible’ in relation to prebiotic chemical combinations, which are all the possible combinations that could arise from a primordial soup. Author Steven Johnson took this further in his 2010 book Where good ideas come from, saying the adjacent possible is ‘a kind of shadow future hovering on the edge of the present state of things, a map of all the ways in which the present can reinvent itself.’ The electric battery revolution and digital transformation of industry (ie Industry 4.0) are two parallel streams that are coming together. High-capacity batteries and smart communication will rapidly change the way we operate. It’s like bringing together gliders and internal combustion engines in 1903 to create powered flight. 

Past innovation in mining

In his thesis on the development of mining technology in Australia, Ralph Birrell (2005) classified innovations as micro-innovations (successive small changes) or as macro-innovations (radical new concepts without clear precedents). Sometimes, several important micro-innovations combine into what amounts to a single new concept. I would like to consider the origins of a few mining technologies and how they related to the adjacent possible.

  • 1712: Thomas Newcomen, an ironmonger who knew what was possible with new iron technology, developed the first practical steam engine for mine pumping. 
  • 1808: John Taylor, a mining engineer, developed the Cornish rolls crusher after seeing an apple cider crusher.
  • 1831: William Bickford, a Cornish merchant, invented safety fuse from an idea he got by visiting a rope maker.
  • 1844: C Brunton, an American, created the first pneumatic rockdrill, an idea based on him seeing a steam engine.
  • 1904: Daniel Jacklin, at Bingham Canyon in Utah, applied railway technology, including locomotives and steam shovels, to revolutionise open pit mining.
  • 1905: Henry Sulman perfected froth flotation based on a body of new research, including observations by a brewer of bubbles rising in beer. There were many other patents, but Sulman won the IMM gold medal.
  • 1956: Robert Acre developed ANFO following analysis of the accidental 1947 Texas City ammonium nitrate explosion.
  • 1957: Joy Manufacturing Company produced the diesel powered, rubber tyred Transloader, the first underground load-haul-dump vehicle, based on knowledge of open pit loaders.
  • 1962: James S Robbins company developed the raise borer from machines they were already building for civil tunnelling.
  • 1966: Ket Carter operated our first mechanised decline mine at Cleveland Tin in Tasmania, using newly available underground diesel loaders and existing surface trucks.
  • 1971: Boliden mine operated the first autonomous diesel trucks underground, using mainframe computer technology that had just become available. 

I’m going to stop there, which was only a couple of years after I joined the industry. There have been innovations since then of course. But to me, none have had the impact of those listed above. Importantly, in each case the innovation came from observation or application of an existing technology in the adjacent possible.

What is today’s adjacent possible?

In January 2019, Rio Tinto announced that they would be establishing a think tank to be named the Pioneer Hub in Brisbane and will consider partnering with technology companies like Microsoft and Apple (Gray, 2019). I am sure the Pioneer Hub will be exploring the adjacent possible. 

‘Sometimes, several important micro-innovations combine into what amounts to a single new concept.’

When looking at broader innovations around the world, we have recently learned that:

  • The use of hydrogen as a fuel for mobile equipment is becoming practical.
  • A Birmingham, UK team is part of a consortium of academics and businesses developing quantum gravity sensors or gravimeters that will be twice as sensitive and 10 times as fast as current equipment. According to the team, quantum technology could ‘transform the world in ways we can barely imagine’ (Bowler, 2019). 
  • Bill Gates is leading a coalition of billionaires to create a ‘Google Maps for the Earth’s crust’, specifically for mineral exploration (Farchy, 2019). 
  • Autonomous drones are raising productivity at mine sites and reducing costs. These unmanned aerial vehicles’ ability to gain access to constricted areas and inspect equipment that cannot be easily reached by human inspectors also eliminates safety risks while enabling more ground to be covered in less time.
  • The military has drones with explosive payloads that can fly for two hours in a swarm, avoiding each other as they overwhelm a target. The low-cost Kalashnikov drone can fly for 30 minutes at a speed of 130 km/h and carries 2.7 kilograms of explosives. It can be guided to explode on a target 65 kilometres away (Sly, 2019).
  • Photon assay technology provides a chemistry-free, non-destructive assay in minutes. It provides accurate and fully automated analysis of mineral grades in ore samples with high throughput rates and has the potential to replace conventional fire-assays.
  • NextOre, a company spun out of CSIRO, applies sophisticated sensing technology for mining. NextOre’s products apply magnetic resonance technology to deliver second-by-second information about material on high-speed conveyors that can be used for real-time decision making, primarily ore sorting.

One thing that is not in the adjacent possible at present is asteroid mining. We will not see asteroid mining in the lifetime of anyone alive today. The two largest companies established to do it, Deep Space Industries and Planetary Resources, have both failed since Donald Trump cancelled the Obama asteroid program (Crane, 2019). An economic analysis by French research institute CentraleSupélec shows that mining asteroids for platinum, for example, will almost never be worthwhile as the supply on earth would undercut the price (Hein, Matheson and Fries, 2018).

But imagine drones carrying ore, flying out of a portal high on a mountainside, across some jungle and a wide river, to a plant or railhead! It would look like a European wasp nest. We have drones today that could do that job, and the costs are not outrageous. We would need continuous mining machines producing finely broken ore and loading it into containers for the drones to carry. Is that the adjacent possible?

Objections to innovation

At the Austmine 2019 conference, one of the vendors told me that his product will not sell because it is substantially more expensive than the existing technology. It will save lots of capital and operating expense elsewhere in the mine, but decisions are made on upfront cost.

One of the speakers was quite comfortable in telling us that, although he thinks a particular technology is the way of the future, he will not try it until it has been proven at someone else’s mine.

It is easy to dismiss my suggestion about drones because the costs are not defined, and the technology is not yet developed. The easy path is to ignore such fanciful ideas. I attended an excellent presentation by Gavin Yeates for the AusIMM Melbourne Branch earlier in 2019. Gavin pointed out that the only way to overcome inertia is to create a business case for innovation. How do we do that?

In mining we already have a process for making a business case: the feasibility study process. We proceed through a series of stages, from conceptual, to prefeasibility and then feasibility, each becoming more detailed and costing more than the previous stage. In that way, we limit our exposure and can reject the innovation if it is proving to be commercially impractical. However, I have made early-stage proposals for such studies of possible innovative technologies to mining companies and to collaborative research groups without a nibble of interest. Why is that?

Adoption

While the mining innovations I listed earlier seem valuable to us in retrospect, some took many years to be adopted by the mining industry. Safety fuse, an obvious winner, was unpopular for decades because of cost, and people continued to pour gunpowder into goose quills. Autonomous underground trucks are yet to catch on. Some of the reasons given for slow adoption have been:

  • it will be more expensive than the status quo
  • it is difficult to retrofit in an existing mine
  • the workforce will need re-training
  • there is a lack of supporting infrastructure and spares.

Gavin Yeates has previously pointed out that many of our mining processes are the same as they were 50 or 100 years ago. He concluded that we only get one chance per orebody to choose the technology that will be used. It is too difficult to make changes, other than minor changes, once the mine is operating.

‘The only way to overcome inertia is to create a business case for innovation.’

I once did a study that showed it took, on average, seven years for a new mining technology to be trialled in an Australian mine. It took a further 13 years from the first trials until widespread adoption or, in other words, general acceptance. If it takes 20 years for a new idea to achieve acceptance, then who will support the development of such ideas?

Commercial interests

With a few exceptions, mining companies are not interested in true research and development, though they like to package some activities under that label if there is a tax advantage to doing so. For reasons of internal approval and finance they need to de-risk the development studies for any new mineral deposit. If forced to innovate to make an operation work they will do so, but all parties involved – the owners, consultants, financiers and technical auditors – want to use proven technology and leave the risks in the areas of geology and product markets.

Equipment manufacturers, traditionally based in Scandinavia and the USA and more recently in China, have no incentive to change current paradigms. They will build faster, bigger machines, improve operating availability and continue to compete in the way that Kodak, Agfa and Fuji competed before the advent of digital photography. There are exceptions: my friends at Gekko Systems in Ballarat are true innovators and have won many awards for their products. They remind me of those 19th and 20th century innovators I mentioned earlier.

Universities and collaborative research organisations, including those that are notionally government owned and funded, are heavily dependent on industry funding. In my experience, the industry has little appetite for long-term innovative research.

Consultants – and here I hold up my hand – have ideas that could lead to innovation, but are too bound up in the daily grind of timesheets and monthly invoices to pursue those ideas. The scope of their activities is dictated by their clients – the financiers and mining companies.

Mining contractors are innovators. They are always looking for the edge over their competitors and are willing to gamble on good ideas. However, they need payback within a year or two, and the history of innovation tells us that a short payback is unlikely.

Feasibility studies for new technologies are expensive, but to be convincing I think they need to be conducted with the same detail and rigour that we apply to established technologies. Performance and cost data must be built up from first principles. Who will fund the work needed to make the business case for the research to be done?

I believe that the change will come from wealthy investors and innovators. In other words, from the likes of Bill Gates, Elon Musk, Mark Zuckerberg and Jeff Bezos. In 2016, Musk established the Boring Company, whose website (boringcompany.com/products) says:

Estimated project pricing can typically be provided within one week. Stay tuned for the Tunnel Price Calculator coming to this site in 2019, where the user can enter product line, location, geology type, and length, and the calculator will return a project price range maximum and minimum.

Mining innovation needs passionate advocates who can influence investment decisions. That means having experienced mining engineers, geologists and metallurgists in senior management and board positions where these decisions are taken. Even with the best will in the world, a lawyer or banker may struggle to recognise a complicated technological opportunity.

On-the-job training

I mentioned earlier that we have trouble attracting young people to the sector. Technological innovation will create opportunities for young people, but university education usually lags well behind the workplace. For some jobs, a background in computer games may be more valuable.

Unfortunately, in my experience many academics in the minerals area have lacked practical experience and struggled to relate to their students. The disparity in salaries with industry draws talented people away from the universities. Staffing and funding levels go up and down and rarely synchronise with the cyclic demand for graduates. The content of courses lags the changes happening in our high-tech industry.

I had the great fortune to be trained in a big underground mine through a cadetship and graduate scheme operated by Conzinc RioTinto of Australia. The scheme ended many years ago, but the people who passed through it went on to lead several of Australia’s largest mining companies. I am sure that I learned more on the job, every day, than I learned at night school in the university college. I had worked on several of the leading technologies of the day before I had graduated. Good geologists and engineers combine practical skills and experience with a solid academic background, but I believe well-structured training is more important.

Industry cadetships can provide an opportunity to develop professionals quickly and soundly. In four years, universities can provide only a basic grounding in general engineering, chemistry, geology, economics, management, the environment and all the new applications in information systems, control systems, robotics and so on. The field has grown beyond a generalised undergraduate syllabus. Employers, be they mining companies, contractors or consultants, should accept the cost of providing undergraduate cadetships and structured graduate training as part of the cost of doing business, to a much greater level than they do at present. This includes better support for professional development programs offered by AusIMM and other societies. The adjacent possible is too close, and is moving too quickly, for traditional career paths to remain viable. 

‘Industry cadetships can provide an opportunity to develop professionals quickly and soundly.’

Conclusion

The greatest challenge for our industry is to change the way we operate, so that we meet community expectations. We have opportunities to make changes through technological innovation and through more effective training of our professional people. We need to fund research programs that run for longer than one or two years, and to properly evaluate opportunities using the staged feasibility study process. 

Future mines will be highly selective, moving smaller tonnages, and increasingly they will be underground. They will apply technologies that exist today and are hovering at the edge of the adjacent possible.

Expenditure on innovation around the adjacent possible is like expenditure on exploration. It ensures the business will continue beyond the life of existing activities. That is what true sustainability is all about.  

References

Birrell R W, 2005. The development of mining technology in Australia 1801-1945 [online]. Available from: http://hdl.handle.net/11343/36521

Bowker L N and Chambers D, 2015. The risk, public liability and economics of tailings storage facility failures [online]. Available from: earthworks.org/cms/assets/uploads/archive/files/pubs-others/BowkerChambers-RiskPublicLiability_EconomicsOfTailingsStorageFacility%20Failures-23Jul15.pdf

Bowler T, 2019. How quantum sensing is changing the way we see the world, BBC News, March 8 [online]. Available from: https://www.bbc.com/news/business-47294704 

Crane L, 2019. The Final Frontier, New Scientist, 23 February, 20-22. 

Farchy J, 2019. Bill Gates leads push to create ‘Google Maps for the earth’s crust’, The Age, March 5 [online]. Available from: https://www.theage.com.au/business/markets/bill-gates-leads-push-to-create-google-maps-for-the-earth-s-crust-20190305-p511qm.html 

Gray D, 2019. Rio Tinto predicts new copper mine will be built in Western Australia, The Age, March 9 [online]. Available from: www.theage.com.au/business/companies/rio-tinto-predicts-new-copper-mine-will-be-built-in-western-australia-20190308-p512vv.html 

Hein A M, Matheson R and Fries D, 2018. A Techno-Economic Analysis of Asteroid Mining [online]. Available from: https://arxiv.org/abs/1810.03836 

Johnson S, 2011. Where good ideas come from p 31 (Riverhead Books: New York) 

Sly L, 2019. Kalashnikov gave insurgents a cheap gun. Now it has a killer drone, The Age, March 3 [online]. Available from: https://www.theage.com.au/world/middle-east/kalashnikov-gave-insurgents-a-cheap-gun-now-it-has-a-killer-drone-20190227-p510oe.html

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