Volume 8 Number 10
October 8 - November 11 2012
In the Australian Bureau of Resources and Energy’s March 2012 quarterly report, the forecast for the value of Australian exports of resources and energy is about $200 billion for 2011-12.
In the Minerals Council of Australia pre-budget submission, 2011-2012, the Australian Bureau of Agricultural and Resource Economics and Sciences reports that advanced projects totalled $45.2 billion in the six months to October 2010, while less advanced projects have a potential capital expenditure of $131.2 billion.
These astounding numbers indicate the significance of mining to the Australian economy.
A special report of the US Department of Commerce 2010 gives a mining overview of Latin America. Brazil is one of the largest importers of metallurgical coal, used basically by its steel manufacturers.
The main supplier countries were Australia (35 per cent of the total imported in 2006) and the US at 26 per cent.
In Chile, mining production and exports represent around 6.6 per cent of national GDP. Copper mining is the biggest contributor with Codelco being the top producer.
However, mining executives around the world are becoming cautious. In Chile and Brazil, the large metal producers are re-evaluating future investments. The financial crisis has reduced investment funding. The copper grade being mined is decreasing.
At home, BHP Billiton’s Marius Kloppers recently announced a stay on the Olympic Dam expansion, citing the high Australian dollar and the high capital costs of construction. He mentioned Chile and Columbia as attractive mining opportunities.
The Olympic Dam deposit is still there, and BHP Billiton will investigate an alternative, less capital-intensive design of the open-pit expansion involving new technologies, to improve the project’s economics.
For many years at the University of Melbourne our research team of mathematicians and engineers has been working on optimising the access design in hard rock underground mines (gold, nickel, copper or uranium mines). The access is made up of the network of interconnected tunnels and shafts that form the backbone of the mine network.
Our research has been supported by a number of companies, including BHP Billiton, Xstrata, Newmont, Rio Tinto, Barrick and Vale (the Brazilian second largest mining company in the world), Oz, MinMetals, Rand and Tribune, as well as the Australia Research Council.
Through research in partnership with industry, we have developed software that minimises construction and haulage costs over the life of a mine. The capital costs of construction are high. It is these costs that Kloppers flagged as a key reason for deferring the Olympic Dam project. In addition, haulage costs over the life of the mine are large. Hence, efficient infrastructure is key to profitable mining.
The automation of design via optimisation tools is essential not only to reduce costs but also to overcome skill shortages and our software tool is currently being incorporated in a premier global software company’s product.
The importance of innovation in mining cannot be underestimated.
One of the main drivers of innovation is that deposits of metals such as gold and copper are getting deeper, and harder to find. In Australia, many open pit mines are reaching the end of their lives, and mines are going underground, where there is traditionally far less design optimisation. Deeper deposits mean more uncertainty.
There are higher development costs too, and increasing input costs in labour, energy and water. Heat and fresh air are constraints, so ventilation needs to be optimised as part of a complete mine design rather than “on-demand”. Mass mining is putting pressure on ports, rail etc.
Automation is a large driver. Auto-nomous loading and hauling have formed one of the principal recent R&D thrusts in both open cut and underground mining, and skills shortages, volatile commodity prices, and the general economy are all risk factors.
Barriers to innovation include a shortage of experienced researchers in universities and industry. Also companies are slow to implement new methods. Increasingly, the industry is run by risk-averse accountants, rather than mining engineers, and there is a need for more long-term vision, rather than short-term thinking.
Additionally, investors want quick returns, and universities and industry can have unrealistic views of commercial outcomes for intellectual property. There’s a long lead-time between a “good idea” and its realisation, and even then rewards often go to marketers rather than developers.
For innovation to be successful, it must be driven by industry `champions’.
Collaboration or critical mass is vital in tackling the industry’s big problems, and should be international, with industry-wide support for training. Universities and governments can help by promoting student and staff exchange programs.
And finally, government involvement is critical. The Chilean model of a mining surcharge to support research and training is excellent.