Early planning key to profitable mines in sustainable communities
According to Andrew van Zyl, partner and principal consultant at SRK Consulting, the value of upfront input from experts is that developers and investors “find out what they don’t know” and gain the assurance that technical and financial studies are optimally conducted the first-time round.
It also ensures that a full 360° mining perspective, taking into account the technical, financial, environmental and social risks, can be addressed timeously so that they are fully exposed and factored into project planning.
SRK will be showcasing its 360° mining perspective at its exhibition booth at the 2017 Investing in African Mining Indaba in Cape Town in February 2017.
Test of success
“It is difficult enough to prove a discovery and bring a project on-stream within the available budget,” said Van Zyl, “but the real test of success is whether that mine can be designed to operate within the lowest possible cost quartile.”
Achieving a profitable operation starts with finding the right strategy as early as possible, which must address all the modifying factors that stand between the project’s in-the-ground mineral resource and its economically mineable mineral reserve.
Social license to mine
“Among the increasingly important strategic factors is the social license to mine,” he said. “Recent stoppages and disruptions at Anglo American’s Los Brancos mine in Chile show that social licence is becoming more tenuous and difficult to maintain.”
He said increasingly onerous regulatory frameworks applied by many lenders and governments pushed mines to move ‘beyond compliance’ to fully integrating environmental and social management into their business philosophy and practice.
Van Zyl believes it is increasingly vital for project champions to seek professional guidance from a very early stage, even before the formal technical studies are initiated.
“Benefits from early consultation in the exploration phase, for instance, could relate to the extraction, sampling and storage of drill cores in a way that allows for further testing and checking of results at a later stage,” he said.
Technology needs to be high on the agenda
Indeed, technology itself needs to be high on the agenda of choosing the optimal project strategy – as falling productivity in mining globally threatens the industry’s sustainability, said SRK corporate consultant Roger Dixon.
“With productivity levels, today 25-30% lower than they were a decade ago, it is not enough for mines to focus on isolated areas of operation for a magic bullet,” said Dixon. “Progress in mining will shift from how well the operation moves material to how well it collects, analyses and acts on information to move material more productively.”
Marcin Wertz, partner and head of the mining unit at SRK, highlighted the team approach to mining studies, with each team-member being keenly aware of the impact of their decisions on other aspects of the project.
“Advances in technology allow more sophisticated modelling and integration of various key aspects of mine planning – from ore body, structural geology, geohydrology and geotechnical engineering to mine planning and scheduling,” said Wertz. “The ‘holy grail’ is to have one sophisticated model comprising elements of all these disciplines; this optimises the mine plan, secures better efficiencies, and reduces project risk. Too often, costly mistakes occur at implementation stage due to, for example, insufficient orebody knowledge.”
Water and energy
Access to water and energy are also key factors for new projects, as competition for these scarce resources grows and the likelihood rises of conflict with stakeholders.
“Many of the most prospective mining areas in Africa, for instance, are water-scarce – and it is no simple matter to secure long-term access to affordable water,” said Van Zyl. “Channels of communication with other users must be closely managed, while on-site usage strategies must prioritise conservation and strict environmental compliance.”
Similarly, energy constraints in much of Africa – and rising electricity prices in countries like South Africa – mean that today’s mine energy designs must address higher risks, better efficiencies and smarter application.
According to SRK principal mining engineer Noddy McGeorge, energy planning could include altering production plans to meet the needs of load balancing, exploring energy recovery systems and installing more secure power sources on-site.
“Savings can be valuably found where energy usage is highest,” said McGeorge. “A good example is in fuel consumption in open pit operations; about 70% of diesel consumed is used in elevating waste material to be dumped – so any design innovations that reduce the amount or position of waste can help cut the diesel bill.”
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Gerald Group resolves iron ore dispute with Sierra Leone
Gerald Group, the US commodity trader, will pay Sierra Leone $20mn and cede a 10% stake in an iron ore project as part of the resolution to a nearly two-year dispute that led to the shutdown of production, the two sides revealed.
Gerald's wholly-owned subsidiary SL Mining filed for arbitration in August 2019 over a royalty payment dispute and suspended the Marampa mine the following month. Sierra Leone's government responded by cancelling its mining licence.
As part of the agreement signed on Friday, Sierra Leone will take a non-dilutable 10% stake in a new company that will replace SL Mining and resume operations at Marampa by June 1, Gerald said in a statement.
Gerald will make two $10mn payments this year and will have the immediate right to ship its current stockpile of about 707,000 tonnes of iron ore, it said.
Both sides will withdraw their legal claims before the International Chamber of Commerce (ICC) and International Centre for Settlement of Investment Disputes (ICSID), the statement added.
Gerald’s chairman and CEO Craig Dean commented: "I am delighted that we have been able to resolve our differences and have a fresh start and new beginning with the government of Sierra Leone."
Sierra Leone's Mines Minister Timothy Kabba told a news conference on Tuesday that the agreement was a milestone for the country.
"Whatever the pain we may have borne or dreaded throughout these two years ... this outcome justifies our action," he said.
Gerald estimates that Marampa holds about 1 billion tonnes of iron ore with a potential lifespan of 30 years.
Back in 2019, Dean spoke with Mining about the development of Marampa and commented: "SL Mining offers a substantial opportunity for Gerald Group as our Marampa mine in Sierra Leone is set to deliver six million tonnes of high-grade iron ore during its operational life. If you analyse the iron ore market it has transformed, even from a couple of years ago when prices were very low. Now prices have stabilised we’re in a favourable position with our first shipments leaving for China.
"Our goal is to make ‘Marampa Blue’ an internationally recognised premium grade iron ore brand. We intend to expand the delivery of high-grade 65% iron ore concentrate to markets in Europe and Africa.”