New approaches to familiar practices are critical for long-term success
Mineral exploration and mining are challenging businesses but are rarely considered as innovative by people outside the industry. However, both exploration and mining have a long tradition of innovation. Over the past 50 years, major step changes in exploration have resulted from radical advances in our understanding of ore forming processes; the development of new sophisticated airborne, ground and downhole geophysical techniques; new geochemical methods, supported by analytical technologies, that give us multi-element data at background levels of parts per billion or even trillion; and remote sensing technologies that allow us to identify diagnostic minerals from space. We also have ways to interrogate, interpret and model all of this data. Similarly, over a more extended period of nearly 100 years, mining has evolved from a small scale individual effort to a highly mechanised process which includes bulk surface and underground methods, selective extraction through flotation and leaching, GPS-GIS control systems integrated with mine plans, and increasing degrees of automation. All of these innovations collectively facilitate modern mining at a massive scale both in pits and underground.
With this auspicious record, why is there a particular need for innovation now? And if we need innovation, what are the priority areas that will make the most difference and who will drive the change process?
Through the boom years of 2003-12, the industry spent record amounts on exploration, expanded operations, and built new mines with significant and increasing capital costs. In spite of this effort, and in part because of it, the quality of many discoveries and operations declined. Demand and high prices encouraged the development of low-grade resources and expansions of operations at lower cut-offs. The net result was declining quality of many mines in terms of grade, but of equal importance were the resulting increasing strip ratios, tailings volumes, and energy and water consumption per unit of product. As prices declined post 2012, these factors have all impacted costs and margins and the industry is now under considerable pressure.
Yet the underlying demand from an expanding global population and emerging economies will continue. At some point prices will rise but the current weakness has exposed fundamental issues in our business. Continuous expansion at lower production grades with reliance on economies of scale will not meet demand while simultaneously delivering meaningful returns. Furthermore, this approach will place the industry in increasing conflict with civil society and related expectations focused on sustainability. The industry has to change and this requires innovation in both technical and non-technical areas.
There are four areas where the industry is clearly under pressure:
- While discoveries are being made, the quality of these discoveries – particularly in terms of grade and cost-effective access – is declining. Quality discoveries excite the industry and investors and create long-term value for all concerned. However, focusing on high quality discoveries is challenging and requires a major commitment both in terms of approach and funding. Declining finance for junior companies and lower exploration budgets among major companies decreases the chance of success, all other factors being equal.
- The mining boom and related high commodity prices over the last decade supported new projects and expansions often at the expense of productivity and efficiency. Furthermore, the commodity boom drove up construction, manufacturing and labour costs resulting in massive escalation of capital costs. The net result is pressure on operating costs and margins that cannot be simply addressed by cost cutting and continuous improvement, despite how important these may be in the short term.
- The critical importance of sustainability, global environmental concerns and the demands from local people for increased consultation and participation in projects is widely recognised by the industry. Many companies have made major efforts to address these issues through corporate sustainability goals and significantly improved community engagement. However, new mega-projects and expanded operations with lower grades and declining overall quality challenge these corporate initiatives particularly in relation to energy and water, which remain key areas of concern for many local communities.
- The challenges described above have not been lost on analysts and investors. The result has been a loss of confidence at a time when we need investment to drive innovation. Cynics may argue that loss of confidence is typical at this point in the cycle, but the damage may be more severe and long-lasting than in previous cycles.
These areas are discussed further below in the context of the discovery process, starting with the recognition of resource potential, followed by the mining process from development to mining, processing, product delivery and waste management. To some extent the exploration and mining challenges appear disparate, but they are intimately related.
Innovation in exploration
Remote and at times harsh conditions have always made it difficult for exploration, but modern explorers also have to deal with numerous technologies, an explosion of data, and critical early community engagement. Successful exploration and discovery is therefore challenging and while there are no panaceas, the following ingredients are common to many major discoveries:
- high-quality, dedicated teams with a good mix of experience and a degree of autonomy
- supportive management providing reasonable levels of sustained funding over several years
- a focus on prospective areas, based either on sound interpretation of available data in new regions (early stage/grass roots/greenfields) or on the understanding of existing mines and deposits in mature regions (brownfields/MineEx)
- management of a portfolio of opportunities in these areas with continuous turnover and upgrading of the portfolio – ie dropping properties that do not merit expenditure, perseverance on properties that clearly show promise, and drill testing as early as possible
- use of an appropriate mix of field work and technologies without relying on any single approach.
This overall strategy is likely to remain consistent going forward with modifications depending on the jurisdiction, target-type, and exploration environment (greenfields versus brownfields, early versus mature
stage, etc). There is scope, however, to optimise exploration through innovation in several areas:
- Our ability to generate and use conceptual models effectively can be improved. We all appreciate new ideas and hypotheses that explain ore formation, particularly with regards to the most significant giant/high-grade deposits, but we need to discriminate those concepts that are testable and applicable using current or potential future approaches from those that merely excite debate. Research funding should focus on efforts to turn applicable ideas into robust models that can be adapted in space and time. While there is no substitute for experience, we also have to get better at transferring knowledge related to ore forming processes and new models, as well as identifying and using key criteria, particularly in the distal parts of major systems. Field and observational skills will remain critical but will be aided by additional mineralogical or geochemical signatures.
- Geophysical tools will become increasingly important in covered terrains, although depth penetration will remain a limiting factor for most techniques. Integration with physical properties and mineralogical-geochemical data, use of inversion modeling, and creative conceptual thinking will support targeting. The potential emergence of airborne IP in the next decade may add another regional to property-scale tool that should aid exploration in large covered areas if integrated effectively with other datasets. Seismic methods will see increasing use given its ability to see beyond current maximum mining depths, as well as the potential to define prospective stratigraphy, ore-related structures and, in some cases, the presence of alteration and sulphides.
- Faster, cheaper, more portable drilling will have a significant impact: the more holes we drill – assuming equivalent or better efforts in defining targets – the more likely the discoveries. This is especially true in covered terrains, but is equally true for exploration in mature camps at depths below typical geophysical penetration. A reduced footprint is also desirable and will be achieved through highly portable low-impact rigs and directional drilling from a limited number of pads when evaluating deep targets.
- Systematic collection of more data from drilling can add significant value as demonstrated over several decades by the oil and gas industry. Examples include real-time sampling and analysis at the drill rig; collection of a wide variety of optical, geophysical and geochemical data downhole; and routine scanning of diamond drill core. The latter will augment, but not replace, sound observations. Most importantly this new explosion of data will require sophisticated QA/QC to guarantee data quality, and more effective integration with conceptual models will be needed to support evaluation and further targeting. Of equal importance to exploration and evaluation, these data will form the basis for geometallurgy which will be critical for improving the quality and performance of operations (see below).
Innovation in mining
The commercial pressures that have become pre-eminent in many operations in the last couple of years have led to major programs focused on cost reduction, improvements that deliver immediate value, and deferred capital. While understandable and necessary, these programs do not address real value creation through significant change. The combination of declining quality (grade), increasing energy and cost intensity (per unit of product), and environmental-sustainability imperatives (eg energy, water and tailings management) demands new thinking and new technologies.
One of the most important prerequisites for change is to improve the understanding of ore bodies. Ore and waste characterisation, or geometallurgy, has been embraced at some operations but the application is inconsistent and, surprising as it may seem, many deposits are not fully understood at a scale that supports optimisation or the evaluation of new approaches. Examples of the way in which geometallurgical data will underpin innovation are discussed below.
- It is widely recognised that ‘prescriptive’ blasting can deliver appropriately sized fragments for optimised ‘mine-to-mill’ programs.
To be most useful, however, rock characterisation is required to implement the most cost-effective blasting. Much of the basic data at the bench and deposit scale measurements are generated at the exploration and geotechnical evaluation stages and can be routinely augmented with real-time data from blast hole drilling. Outsourcing blasting, a common practice, can make full integration of optimisation programs more difficult if different incentives are applied between organisations.
- Variations in grade and physical rock properties (hardness, breakage and grinding) at the right scale may be exploited to remove low-grade material at the face or through simple screening post crushing. Use of a range of sensors increasingly offers the opportunity to sort ore at different stages in the flow sheet and hence reject waste or low-grade, and enhance the resulting grade of ore entering the grinding and flotation circuits. The sooner material is rejected, the greater the potential energy reduction and value enhancement. Integration of sensor data with block model grades and physical properties allows additional real-time optimisation.
- The quality of products is critical for marketing and pricing with bulk commodities, but it is also important in base metal mining. Producing metal on-site (‘mine-to-metal’) is already done at many leach operations, but new heap, tank or autoclave leaching followed by SX-EW offers an alternative to conventional concentrate shipment that may reduce costs and enhance value. Production of metal at mine sites may also offer future opportunities to enter the supply chain locally or globally and ultimately allow producers to participate in the development of new products and recycling opportunities. This suggestion is counter to the current demarcation between mining and smelting/refining but may have appeal as more new high-value materials and metals
- In situ leaching is already a viable technology for potash and some uranium deposits. In some cases, it may also be possible to leach copper and other commodities in situ, radically removing all conventional mining and processing costs. There are challenges related to in situ leaching, particularly related effective permeability, leach performance and recovery, and hydrologic management to mitigate contamination during or after leaching. Full characterisation of ore and surrounding units, including permeability, is clearly a prerequisite.
- Tailings and waste rock management continue to come under intense scrutiny. Characterisation of waste rock and tailings beyond simple acid-base accounting is necessary if we are to find new approaches for tailings storage in different climatic regimes, and new ways to minimise the environmental risks associated with massive volumes of waste rock. Our long-term goal should be to reduce the volumes of these materials through enhanced selectivity in mining.
The role of geometallurgy – ore and waste characterisation – is emphasised because of its importance in creating value by exploiting variability and minimising impact. Initial geometallurgical data is best collected by geoscientists relatively early in exploration-evaluation programs and hence provides the primary link between discovery and development. Too often, exploration and even aspects of geotechnical data are lost in the transition from discovery and evaluation into project development, and in some cases this lack of collaboration and communication is the source of start-up and production problems. Regardless of who collects the geometallurgical data, the application of the results requires a collaborative approach among the traditional disciplines of geoscience, mining, processing and environmental management. To be effective, the disciplinary silos must be dismantled through innovative change management. Correctly applied, this approach aids evaluation, underpins optimised design and improves quality.
In recent years, many parties both within and outside the industry have commented on the need for mining to improve in the critical areas of productivity, margin growth, and sustainability. The focus needs to be on quality and value, rather than quantity with associated reliance on economies of scale. The need for quality discoveries and new ways to optimise the quality of operations is clear. To succeed, we need innovation with new approaches, new technologies and the change management required to drive successful implementation.
At the start of this article, I also highlighted two other areas where the industry is under pressure – sustainability and investment. Societal demands for sustainable practices will increase at all scales and the industry will need to meet these expectations. To a large degree, efforts in productivity are aligned with sustainability through improved selectivity and lower energy-water-emissions per unit of production. Additional energy programs including conservation, efficient material handling, heat and energy capture, and on-site renewable energy all support sustainability and can lower costs. Similar efforts related to tailings and water are equally important. What is more challenging is the relationship to local communities. Innovation and new ideas are required to forge effective relationships with communities, including new business, partnership, and even ownership models. The concept of shared value has to be embraced, albeit in many different forms, if the industry is going to develop the new operations that the world needs.
The situation with investment and investors is equally complicated because we live in a world of intense competition and expectations of instantaneous returns. The investor appetite for mining has been reduced by complexity and long timelines even when history demonstrates the extraordinary value that the resource industry can create. The reality is that we need investors more than ever to drive change and innovation in the mining industry so that we can deliver the returns that they expect in
The mining industry is known for conservative thinking and reluctance to change. And yet this is not entirely true. There is a history of innovation with creative partnerships, use of new technologies, and enormous advances in safety. Furthermore, the industry is not always risk averse and has the ability to manage risk effectively, for example with exploration pursued in challenging places and counter-cyclical acquisitions. Now is the time for the more forward thinking and adventurous companies to combine these traits with a new commitment to exploration and new ways to improve performance. In pursuing these goals the industry needs to seek the support of the investors and the belief of communities. It’s time to reverse the decline of quality and demonstrate that the mining industry can deliver commodities efficiently and cleanly to support global development while also providing real value to all concerned.