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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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.”