The global growth of mineral exploration
Despite a combination of factors such as higher taxes in some countries, increasing costs associated with environmental compliance and labour, which have resulted in an increase in the expenditure put into mineral exploration over the past two decades. The mineral exploration industry is on the edge of large advancements in technology that will make even challenging geographical sites accessible and allow the industry to grow in response to the growing needs of consumers.
Since the turn of the century, the international landscape of mineral exploration and development has undergone changes. The vast majority of mineral exploration from 2000 was undertaken by Australian, Canadian and U.S. companies. International companies headquartered in these three countries continue to explore globally and generate the greatest exploration expenditure.
In 2014, information about approximately 2,500 exploration sites was gathered by the U.S Geological Survey (USGS). Based on the number of active exploration sites, Canada remains the premier destination, closely followed by Australia, Latin America, Rest of World and Africa. Latin America has been considered the most rewarding region for mineral exploration by many companies for the past decade. This is owed to the perception of its mineral policies, and its successful historical record of mineral production and development.
Mineral exploration in recent years has shifted from the traditionally minerally well-endowed originators to practically all countries. The term BRIC refers to the coalition of several countries with growing economies (Brazil, Russia, India and China). The mineral exploration budget for countries in BRIC has, according to USGS, increased from about $300 million in 2005 to more than $1.7 billion in 2014.
For BRIC, this translates into a growth from accounting for 7% of the global mineral exploration budget to more than 12% in less than a decade. In the same timeframe, there has been a trend leading toward increased investment in mining, with an increase in the percentage of the total global exploration budget attributed to mine site exploration. Specifically for global leaders Australia, Latin America and the U.S whose exploration budget increased from 2014 to 2015.
In Australia, exploration companies are looking for high-grade deposits under covered terrain. According to USGS "Although the country’s historical success rate for locating minable deposits in covered terrain has not been high, depletion of shallow deposits is driving explorers to look in areas that have traditionally been more cost intensive and technically challenging." A new survey by MIC shows this has lead to a growth in global and owner-operated mining companies alike such as Castle Drilling investing in equipment-related technologies.
In the June quarter 2016, according to the ABS mineral exploration expenditure rose 21.9% ($63.5m) to $353.9m. The report also proving the industry with a positive outlook of growth with exploration on areas of new deposits rising by 19.5% ($17.0m) and expenditure on areas of existing deposits rising by 22.9% ($46.6m). Despite the challenge of mineral exploration in remote locations, the industry continues to grow.
The mineral exploration has been forced to adapt to survive and grow. The USGS reported that mineral exploration companies established in remote locations in countries such as Chile, Mongolia, Peru and South Africa are considering greater use of renewable energy as part of a strategy to lock in long-term energy prices and cut exposure to regulatory changes, market pricing, and the rising demand for energy. As viable resources decline, there is increasing attention focused on the exploration of the ocean floor for its mineral potential.
Modern projects are able to target new sources of mineral supply that have become recoverable as a result of advances in technology. These advancements are allowing companies to improve their profitability and even revisit previously unprofitable sites. Companies are also moving towards operating with a smaller environmental footprint, using innovation to achieve this.
According to Deloitte, across the board, innovation ambition is focused squarely on the Core level. Along with a strong emphasis on technological solutions to optimise old techniques “as-needed”. In the context of mineral exploration, innovation is mostly a means to an end. Either finding better ways to discover high-quality deposits or reducing exploration or production risks and costs.
Here are a few technologies Deloitte thinks could potentially shift the trajectory not only for miners but for global industry in general;
With the cost of sensors dropping, it is becoming more workable to collect data on a wide variety of mining equipment as well. Given the unquestioned advantages of ensuring continuous equipment uptime, some companies are exploring the feasibility of adopting cloud-based integrated IT platforms to ease collaboration with suppliers.
The move towards autonomous vehicles and automated technologies has already revolutionised mine operations. As the “intelligence” of these machines grows, they will be able to perform increasingly complex tasks, including hazardous processing activities—reducing labour costs and enhancing productivity as a result.
Medical gene research has spawned unanticipated genomic mining solutions. Such as the use of bacteria capable of extracting minerals in situ and bioremediation processes that use natural enzymes to clean sites contaminated by metal leaching and drainage. Whilst still relatively new, genomics solutions have already been used to bio remediate polluted soils, improve mine drainage and mitigate threats to biological diversity through monitoring.
Hybrid airships although still under development are closer to reality. They would enable mining companies to haul equipment to remote regions that lack accessible roads. Costs for the airships are expected to be comparable to truck transport over icy roads, and considerably cheaper than helicopter transport.
The innovation and productivity programs run by mineral exploration companies are reaping benefits to themselves but also for the countries these companies are situated in. External benefits to the wider economy include higher capital, labour and multifactor productivity. Along with the associated potential to increase GDP growth and living standards.
By 2050, an additional 2.5 billion people will be urbanised, bringing the total urbanised population to 6.3 billion. This means that over the coming three decades, the world’s population will grow by two-thirds and 90 percent of the increase will take place in urban areas of Asia and Africa (UN 2014). This suggests significant ongoing growth in demand for commodities that fuel urbanisation and industrialisation in these regions in particular.
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AngloGold Ashanti establishes BG Umoja JV in Tanzania
AngloGold Ashanti, in line with it s strategy to ensure a sustainable contribution to the economies of host countries, has established the BG Umoja joint venture (JV), in Tanzania.
Awarded a $186m two-year mining contract for the Nyankanga and Geita Hill underground mining projects, the 80/20 joint venture is a partnership between Africa Underground Mining Services (AUMS) Tanzania, a subsidiary of Australia’s Perenti Group, and local drilling services and mining- supply company, Geofields Tanzania Limited.
The partnership is modelled on a similar underground mining joint venture at the Company’s Obuasi Redevelopment Project in Ghana between AUMS Ghana and Accra-based, wholly Ghanaian-owned Rocksure and will help build local specialised mining capacity.
“We’re working with our experienced mining contractors to assist in establishing local joint ventures for long-term transfer of sustainable skills, and to continue building on our sustainable local procurement programmes,” commented Sicelo Ntuli, AngloGold Ashanti’s Chief Operating Officer: Africa.
“AngloGold Ashanti is building sustainable local procurement programmes that will allow it to stimulate economic and social development at all of its operations, evidenced by the significant contribution Geita has made to the fiscus and people of Tanzania.”
AngloGold Ashanti’s annual expenditure with indigenous Tanzanian suppliers has almost tripled to $162mn since 2016. The company’s local team in Tanzania has set itself an ambitious target of 60% to 70% of all expenditures with indigenous Tanzanian companies, by 2025.
Scope 3 Emissions
In addition, AngloGold Ashanti’s Geita Gold Mine has awarded a two-year fuel transportation contract, worth approximately $10.8m a year, to two local contractors - one of which is originally from Geita. This is in line with the mine’s commitment to contribute to the economies of host communities. The Geita-based company was part of Geita Mine’s supply chain capacity building initiative for host community suppliers, a partnership between the Mine and the National Economic Empowerment Council.
To influence Scope 3 emissions, trucks are to be compliant with EURO IV emissions standards, tankers are to be made of an aluminium alloy material to reduce weight and the age of the fleet will be maintained at less than six years.
Diversity & Inclusion
The contractors already employ women fuel tanker drivers, fulfilling the Mine’s requirements for diversity and inclusion. The two contractors both own workshop facilities in Geita town and participate in social initiatives aimed at uplifting the lives of host community residents.
AngloGold Ashanti has been operating at Geita Gold Mine for more than 20 years, with the project initially a single pit mine, evolving now to a predominantly underground operation, employing 5,700 employees and contractors.
Earlier this year, the Government of Tanzania recognized AngloGold Ashanti’s contribution to the economy of the country, awarding it for its outstanding performance in a number of areas, including environmental and safety performance, corporate social investment, the best taxpayer in the mining sector, the runners up in local business content and overall best performer in the mining sector in Tanzania in 2019/2020.
Geita Gold Mine
Geita, one of AngloGold Ashanti’s flagship mines, is located in north-western Tanzania in the Lake Victoria goldfields of Mwanza region, about 120km from Mwanza and 4km west of the town of Geita. It has been in operation as a large-scale mine since 2000.