Five challenges that mining needs to address today
Challenge #1: Increased electrification of vehicles
We don’t have to look very far to see that climate change targets are driving demand for alternative energy sources and technologies like electric vehicles. This in turn is increasing demand for certain raw materials: lithium and carbon for batteries, copper for motors and cables, and rare earth minerals for the rotors and stators of electric motors.
Ironically, the processing needed to prepare many of these metals and minerals is hydrometallurgically intensive. So processing them for commercial use can have significant environmental impacts because of the chemicals used and the water required.
The output of copper mines is starting to falter, and there have been no new large discoveries in the past two decades. When we consider that a fully electric vehicle needs four times the amount of copper that a normal internal combustion vehicle does, the gravity of the supply-and-demand gap is sobering.
Solution: Begin optimizing the entire mine-to-mill process and think holistically about how to maximize throughput in a way that is both financially and environmentally sustainable.
Furthermore, we need to be careful that lithium doesn’t become the “new oil” in another single-resource-based economy. Because most lithium deposits are in a small number of geographic areas (mainly South America and China), we need to anticipate and avoid becoming beholden to just a few nations like we’ve done in the past with the Middle East and oil.
Challenge #2: Increased energy consumption costs
Rising energy costs is one of the biggest financial threats to mining operations today. In 2017 in Australia, electricity accounted for 6 percent of the total cost of mining. As an example, Newcrest Cadia Valley Operations saw a 90 percent increase in energy costs after its energy contract expired in June 2017. In 2012, Mining World indicated that comminution—one of the most fundamental processes in mining—accounts for a staggering 4 percent of the total global energy demand.
Solution: Move to renewable energy sources and adopt new technologies for energy storage and grid control.
In 2016, Deloitte reported that some miners have realized energy savings of 10–40 percent by investing in renewable energy installations, deploying innovative energy technology for mineral processing, and driving toward a more automated mine.
For example, Glencore Raglan is now saving more than 2.4 million litres of diesel fuel per year as a result of installing a 3.0 MW wind power system, and 600 kW of energy storage by using flywheels, lithium-ion batteries, and hydrogen fuel cells, as well as a microgrid controller developed by Hatch to keep the system coordinated.
Challenge #3: Global scarcity of fresh water
Activist investors, communities, and environmental groups are turning the spotlight on water-intensive industries like mining. In 2017, Anglo American CEO Mark Cutifani said, “Water is one of the greatest constraints to the new supply of mined products across the industry.”
Mining requires significant amounts of fresh water, and many mining operations are already in water-stressed regions. The Financial Times reported that mining companies spent about $12 billion last year on water infrastructure, compared with about $3.4 billion in 2009.
Solution: We need to rethink the mining flow sheet and standard processing technologies with the goal of reducing water requirements and providing lower impact processing chemistries.
In 2017, Reuters reported that Anglo American was using 65 percent recycled water in its operations with a goal of increasing that to about 95 percent in the next 10 years.
Saltwater conversion is one viable way forward for many mining operations. Hatch is helping Codelco build a saltwater desalination plant for its Toki Porphyry Copper Deposit mining operation in Chile. It will provide about 1,680 litres per second of fresh water for mineral processing operations.
Challenge #4: Capital intensity in mining
Developing new mines is expensive, and fewer and fewer corporations can afford the full life-cycle costs of current mining operations. Rio Tinto alone has at least $12 billion in mine closures on its books. With current operations, mines will need to be monitored for hundreds of years after they close.
No longer can massive mines that create hectares of tailings be the only option.
Solution: We need more focused mining operations, starting with better characterization of the ore body during exploration.
New statistical techniques can reduce uncertainty in the block model. If we can use them to reduce the amount of material processed earlier, we can optimize ore extraction at the source and cut capital intensity throughout the mining and processing flow sheet.
Challenge #5: Dealing with data and the rise of digital
One of the newest challenges for mining operations is managing the massive amounts of data produced across the value chain. Mining operations are spread out globally and decision-making is often siloed. Because the value chain isn’t connected through data, only about 10 percent of the data we have is being leveraged to reduce process variability and optimize operations.
Solution: We need to start implementing advanced data processing technology to connect the value chain, and to consolidate and condense massive amounts of data. Further, artificial intelligence (AI) and other data science techniques can perform deep analysis and make predictions that are more accurate and specific than anything we’ve seen before.
A fully connected value chain and deeper insights from our data will optimize the human decision-making that is still at the core of our business operations.
Where do we start?
There are monumental challenges, and we need to take them very seriously. One thing is clear: we can’t continue mining with traditional methods alone. We need to be ready with the people, processes, and technologies that can transform the industry.
First, we need to change our thinking. We need a better social and environmental conscience around mining, for ethics and economics, too. We also need to think holistically about our end-to-end processes to understand and frame the issues correctly so we can make sound investments in the right way.
Second, we need to be collaborative and people-focused. We need to start looking outside our organizations and our industry to build a collaborative ecosystem based on best practices that will reduce risk and maximize our innovative potential. We need to take our social license responsibilities seriously and work to get our people and society onside with the massive changes that are required.
Third, we need to dive in now. We need to take a leap of faith and start putting our ideas into action, working to hone and improve them as we go.
Addressing these financial, social, and environmental challenges are the table stakes for the future of any business like ours. If we don’t start now, we will all miss the boat.