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The first difficulty encount.ered in preparing this paper was to find a definition of the word "special" as applied to steel. The first thought is "obviously any grade not mild steel" but this is an over-simplification, because the term "mild steel" covers a series of carbon ranges, each found from experience to be especially suited to the production of a particular rolled section.Even if the Australian structural mild steels are excluded it is found that no part of the plant here is independent of special steel.The face-man on Iron Monarch makes his bench safe by barring down with a 0.6% carbon steel bar. He bores a hole into the ironstone with a 0.75-0.8% carbon steel drill, driven by a jackhammer which is built of a variety of special steels. After it is shot down, the stone is lifted by an electric shovel, very few of whose steel components fall into the general category of structural grades of mild steel.Further special steels are met with in the truck into which the stone is loaded, the hauling electric locomotive, and the rails on which these .run. Even the permanent way uses more than one grade, e.g., the crossings experiencing heavy service have their frogs built with austenitic manganese steel inserts.Special steels play their part in the overhead crane which tips these trucks, and in the crushers into which they discharge, and so they can be followed right through the production line, and they are still there at the seaward end of the ship loading boom at the head of the WhyalIa ore jetty.

Jan 1, 1951

The use of operational research in mining is illustrated by simple examples of the techniques of simulation, linear programming, theory of sampling, and experimental design.Statistical simulation of the delays in answering telephones was used to compare the efficiency of alarm systems in collieries, and to determine stock control policy for a bin in mucking, filling, and tramming operations. Linear programming was used to help minimize transportation costs between collieries and washeries. The theory of sampling was applied to separate and balance the components of error introduced at the' various stages in the collection and reduction of routine samples of coal, and to the assessment of errors of estimates of grade in orebodies from drill samples. 'l'he principles of experimentaldesign were used to compare wear of different conveyor beltings and costs of battery and diesel locomotives in underground transport.INTRODUCTIONIn operational research some of the procedural techniques and professional attitudes of mind found among scientists and, in particular, mathematicians and statisticians, are applied to operational problems in industry ranging from policy making in the broadest sense to the humblest sampling procedures. These apply in mining equally with other industries.Anyone who reviews a procedure critically and in a systematic way may legitimately claim to be doing operational research. On the other hand, what is found in books on operational research is usually a collection of mathematical and statistical techniques which, though forming only a corner of operational research activity, illustrate the novel approaches to problems which characterize the discipline and which would probably not occur to the un...

Jan 1, 1962

Completion of a project requires two separate money-focused activities, namely economic evaluation of the cash flows underlying the project (before financing) and if the economics look promising, how it can be financed. Economic evaluation might be best led by a person with a technical-operating background, whereas financing might be best led by an accountant. Both should be presented in simple language with easy to understand models. Economic evaluation has a sad and bad history because it evolved from the fringes of accounting. Anyone can become a self-appointed practitioner. Some still take pride in mathematical complexity without realising that they distance themselves from the decision-makers and alienate other team members. Today there is no evaluation modelling consistency across the mining industry and this reflects poorly on our discipline. It is not tolerated amongst our peers in engineering and accounting. In 2009 æbest practiceÆ economic evaluation modelling is well defined. It is:easy to follow;tailored to its purpose;transparent;discipline, rigour and consistency;recording of all source data; and hencequick to audit. Mantra: If you cannot readily understand my model you do not have a problem, I do! The task of the economic model is to make the range of business cases underlying the decision easy to understand. Intellectual power is used to simplify the decision to its key issues and risks and to present the full range of possible business outcomes in readily understood terms. Project team members, management and the board must be able to make their decisions with æeyes wide openÆ. A steering committee should be established to develop a set of standards and practices that could be adopted for economic modelling within the industry. The industry needs to purge itself of the undisciplined economic evaluation modelling that now characterises the discipline.

Jan 1, 2009

By P Walton, L W. Armstrong, D P. Blair

Sydney is the capital city of NSW and has a population of approximately four million people. Eighty per cent of the cityÆs water is supplied by Warragamba Dam, which is situated some 75 kilometres south west of the city centre. A risk assessment was carried out on the dam and future predictions of water flows into the catchment area showed that there was a risk of a one in 700-year flood not being contained by the dam. The predicted loss of life and property damage warranted the construction of an auxiliary spillway on the eastern side of the existing dam to cater for any uncontrollable influx of water. A test blasting program was instigated and the blasting parameters were established that would lead to routine production blasting of the sandstone rock making it more cost effective to excavate. Blast induced vibrations were a concern to the owners and the dam wall and ancillary infrastructure was instrumented with sensitive vibration monitoring equipment during the test blasting phase of the operation. Once the blasting parameters were established from the testing program production blasting was carried out on a daily basis to maintain æstockpileÆ of fragmented ground for the excavation equipment. Blast vibration models were developed to predict vibration levels for more sensitive areas of the dam to give the operators more confidence in their operations. The blast induced vibration levels recorded did not cause any structural damage to the dam wall and the waveform frequencies of the blasting operation were much higher than that experienced during a recent earthquake. The integrity of the SCAÆs assets were at no time jeopardised.

Jan 1, 2001

Present value maximisation studies are a useful aid in enhancing the economic performance of open pit mining operations. Maximising present value helps to reduce the risk of financial failure. Maximisation of present value also means that the capital invested is being used most efficiently. A characteristic step in determining the present value of an open pit mining operation is to set out the sequence in which increments of material (ore of various grades and waste rock) are mined. Traditionally, present value maximisation has been performed by selecting a cut-off grade for each increment so as to maximise the present value of the total operation, by an iterative process using computers. Kenneth F Lane has developed a method and applied it to many mining operations. An alternative method for determining the maximum present value of an open pit mining operation is given. In this method the maximum present value is determined by working backwards from the end of the operation life, progressively asking the question of each increment `what cut-off grade maximises the the present value at the start of mining of that increment?' The method allows calculations to be performed by a `spreadsheet' package. Present value determinations are characteristically performed under constant conditions (eg prices, costs) throughout the operation life. Unfortunately real life circumstances are rarely constant, with the costs of mining inputs rising at variable rates. The prices received for mineral products have been shown to broadly trend downwards with time in real terms. Treatment of such changes in the determination of the maximum present value of an operation is discussed.

Jan 1, 1994

I start with some lines from "Pleasures of Hope" by the poet Campbell, published in 1798, which sets the flavour of what I am going to say. They blissful omens bid my spirit see The boundless fields of rapture yet to be; I watch the wheels of Nature's mazy plan, And learn the future by the past of man. I hope to echo the poet's optimistic view of what is yet to come. I am not sure I can find all the omens blissful but we all have some experience of what the wheels of Nature's mazy plan get up to. His advice to learn the future by the past of man seemed sensible to follow, so on the principle that the past of several men would be better than one alone I invited Alan Attwood, Maurice Cahalan, Gavin Moncrieff, Derek Temple, and Peter Wright to help me prepare this address; I am most grateful to them for their contributions. Of the technologies covered in this sequence of keynote addresses, metallurgy is the one which is closest to our consumers. On the age-old principle, which I do not expect to see changed in the 21st Century, that production is about providing the customer with what he wants, when he wants it, where he wants it, and at a price he can afford, I think we should start by trying to see how the market place is likely to develop, and to work back from there to review what technology we need to meet these demands.

Jan 1, 1986

Mining in Guyana dates back into antiquity and a brief history of gold and diamond mining and of the small-scale miner, the pork-knocker, is given. The gold and diamond deposits found on the beds and in the flats of old and present rivers and the current methods of investiga- ting these deposits are briefly described. Methods of mining these deposits including the small-scale hand methods of pitting and diving with or without helmets are also briefly described. 'The small-scale method of dredging using a suction dredge in conjunction with a diver is described in more detail, from its develop- ment to current practice, without giving too much mechanical and technical details. The organisation of the industry and the mining titles, laws and policy relating thereto are reviewed. A brief account is given of the socio- economic role of the industry. Conclusions are made regarding the need for improvements in existing equipment and financing and for incentives to stimulate production. The future outlook of the industry is con- sidered.

Jan 1, 1986

Over the past five years, dedicated tertiary mining engineering programs have become financially unsustainable in Australia on the basis of undergraduate enrolments alone. The situation is worse in other minerals related disciplines and extends to the technical minerals education sector. This paper reviews the causes for the current situation. Indicators are presented which suggest that enrolment trends can no longer be attributed only to business cycles in the minerals industry but are also reflective of a fundamental shift in student interest in the sciences and resources based engineering disciplines. Reactive responses to changing trends are diluting and compromising the quality of mining engineering education. It is unlikely that the trends can be reversed or resisted. Tertiary minerals educators need to position themselves so that they can be responsive to on-going change. Two proposals are offered which aim to anchor mining engineering in a long-term sustainable manner. The proposals have a common educational component which is concerned with restructuring how mining engineering programs are presented and providing more flexible access to such programs. However, the two proposals have significantly different commercial components. The commercial component of first proposal is concerned with working within the traditional education framework of universities to endow a critical number of core staff positions. It effectively equates to fund raising. The second proposal is concerned with developing a stand-alone commercial operation around the education and research advantages of the global and multi-disciplinary university system. As a shareholder in this business, a university department would earn dividends that it could then use to support its education initiatives. This proposal provides a performance-based mechanism for supporting university minerals programs and has the potential to be cost-neutral. Both proposals are suited to resource sharing with a select number of international mining schools and to the incorporation of the other tertiary minerals disciplines under threat.

Jan 1, 2000

Prospecting in arid terrain can produce substantial environmental impacts, comparable to or greater in magnitude than the impacts associated with actual mining or petroleum production. Impacts are likely to be particularly severe where prospecting involves intensive geophysical exploration, especially in areas which have escaped degradation by other land uses such as pastoralism. With appropriate environmental planning and management, however, the environmental impacts of prospecting in arid terrain can be greatly reduced and mitigated, at low cost. In many countries, prospecting licences, exploration leases and associated tenements now carry a range of conditions relating to environmental protection. The assessment, avoidance and mitigation of environmental impacts is therefore an important component of and-zone exploration. My aim here is to give an overview of some of the main aspects of an environmental planning and management (EPM) programme for prospecting in arid terrain (PAT). Detailed operational prescriptions for environmental protection procedures are necessarily specific to particular areas and types of prospecting: see. e.g., Buckley (1982a, 1984, 1985a, 1986a), Klepacki et al. (1985) and Stone (1986). The intention here is to provide a checklist rather than a recipe book: as an aid in incorporating environmental aspects into the overall planning and management of an exploration programme, and in liaison with company environmental staff, consultants and regulatory bodies. I also hope to show that whilst some of the techniques used in particular environmental disciplines certainly require specialist expertise, the overall design of an EPM programme is not in the least esoteric, but simply an exercise in straightforward common sense. Perhaps this paper could be subtitled: "Demystifying environmental Planning".

Jan 1, 1988

ITSL Technology group employs around 100 people at Mississauga in Canada. Its long and proud history as a driving force for the worldÆs nickel industry continues, progressively adapting to meet IncoÆs ongoing development needs. The nickel industry, unlike many others in the minerals processing world, has not evolved into one or two narrow technology paradigms. Rather, each process requires a degree of optimisation to meet the characteristics of the ore. Without a competent team to address this complexity, the uncertainties that arise can greatly increase the risk (and costs) associated with the nickel industry developments. The development work carried out at ITSL Technology ranges from milling and metallurgical processing of ores through to development of value added products for the battery and electronics industries. It covers routine evaluation of ores for exploration (mine planning and greenfield), and provides on the ground support to bring specialist technical perspectives to site-based projects. In recent years, ITSL Technology has had as its particular focus the process development and commissioning support for IncoÆs major projects. Over the next several years, Inco will commission its Goro laterite operation, design and construct the further processing facility for VoiseyÆs Bay, undertake major upgrades at Sudbury, Thompson and PT Inco, and bring forward some additional resources currently in the exploration stage. The appropriate mix of both internal and external resources to effectively manage this project portfolio will prove critical to success. The key to ITSL Technology meeting these development challenges has been in working closely with its internal customers to ensure alignment of the value proposition, to identify the critical issues to be managed, and to understand the deliverables required. This paper discusses examples to reinforce these principles in the definition and development for two different projects; processing of VoiseyÆs Bay ores and concentrates and resource optimisation at Thompson.

Jan 1, 2006

By Somerville M, Muray A, Bocking M

Australia has an extremely large total hot dry rock (HDR) resource above a depth of 5 km, equivalent to 7500 times its present annual energy consumption, of which 80 per cent underlies the Great Artesian Basin. The resources most likely to be exploited first are those residing in homogeneous granitic bodies beneath sedimentary basins containing insulating rocks such as shales and coal measures. In the Sydney Basin south of Muswellbrook, an area of high geothermal gradient corresponds to a gravity low thought to be a buried granite body at a temperature of possibly 250¦C. This locality is suspected to have the ideal geological characteristics for Australia's first hot rock test facility. Australia's high HDR potential is possibly unique in the world, in that the potential sites satisfy four independent, geological conditions, each considered as favourable for the creation of a resource, and for the ease of extracting that resource. They are: ò Higher crustal heat generating capacity than that of normal continental crust. ò Much of the Australian continent is covered by sedimentary basins which contain a high proportion of shales and coal measures that have low thermal conductivities, thus providing an insulating blanket for the heat being generated beneath. ò The sedimentary basins are in many places underlain by large untectonised granitic bodies that are not only a major contributor to heat generation, but also ideally suited to the establishment of HDR reservoirs. ò The crustal shortening stress field that is found in the majority of the Australian continental crust results in a vertical minimum principal stress orientation which should result in the development of favourably oriented horizontal stimulation cells necessary for maximising an HDR resource.

Jan 1, 1995

By D Williams

Recent advances in global positioning systems (GPS), machine guidance technology and telemetry allow an unprecedented level of control of surface mining operations. GPS technology can now locate the bucket of a shovel or the blade of a dozer within 50 mm. Some of the outcomes possible are: precise selective mining û even when the ore is visually indistinguishable from waste; tracking grade and tonnage of every ore parcel through the mine; real time productivity monitoring; detailed post accident safety analysis; and tracking the movements of every piece of equipment. This paper will consider the contribution that GPS based machine control systems can make to ensuring that surface mining projects deliver the outcomes promised in the feasibility studies. Case studies of installations are presented.

Jan 1, 2003

By J J. Cilliers, E Ventura-Medina

Mineral froth flotation is used to separate particles of valuable mineral from its associated gangue. It involves the selective separation of the hydrophobic particles from the slurry into the froth. As air is blown into the slurry, the hydrophobic particles attach to the air bubbles, while the waste particles remain in suspension. While the froth rises up, bubbles start to coalesce and burst, allowing the entrained liquid surrounding the bubbles to drain and return part of the gangue to the pulp. Mineral separation is therefore a function of the amount of valuable material loaded on the bubble shells, as well as the amount of gangue material entrained in the liquid channels separating the bubbles (Plateau borders). As a result, the separation performance of the process is affected by mineral attachment and drainage or bursting in the froth. This study aims to establish the relationship between solids loading, froth stability and separation performance. For this purpose, a series of industrial experiments were carried out to measure mineral attachment as well as bubble bursting by combining direct sampling of the bubble films and video image analysis of the froth surface. This work suggests that the solids loading on bubbles strongly affects the separation performance. The results generally showed that solids loading and concentrate grade are closely related, while froth bursting rate can be linked to the drainage of gangue from the Plateau borders and also to the overall recovery of valuable mineral. It was shown in particular that higher loadings, usually associated with higher froth bursting rates, are indicative of more selectivity in attachment and therefore a higher mineral grade in the concentrate. Additionally, this work suggests that bubble solids loading and froth stability are essential parameters to include in froth flotation models as they allow control and optimisation of the flotation performance.

Jan 1, 2005

By P Joyce, A S. Ray, P S. Thomas, J Haggman

Climate change and global warming present a significant challenge as unsustainable levels of greenhouse gas emissions arising from human activities continue to be emitted. The cement industry is responsible for between five and ten per cent of annual world carbon dioxide emissions; most arising from the manufacture of Portland cement (PC). An effective way of reducing emissions is by incorporating supplementary cementitious materials (SCMs) as partial PC replacements. SCMs are silicate or aluminosilicate based pozzolanic materials which, in finely divided form, combine with water and calcium hydroxide (lime), liberated by cement hydration, to form compounds exhibiting cementitious properties. Pitchstone is such an aluminosilicate and has the potential to act as an effective pozzolan for partial replacement of PC. In North Queensland, Australia, a vast deposit of pitchstone is mined and processed for expandable perlite aggregate. During the classification stage of the excavated natural material, waste pitchstone fines (PF) less than 0.5 mm in size are generated. This study evaluates the waste PF as a viable, eco-friendly pozzolan for the partial replacement of PC. The reactivity of the PF is compared to fly ash (FA), using the pozzolanic compressive strength activity index (SAI) after seven, 28, and 91 days ageing at 20 per cent and 40 per cent PC substitutions. PF was found to be comparable to FA as a pozzolan at 20 per cent PC substitution at all ages tested. However, for the 40 per cent substitution blends significant strength was only achieved at 91 days ageing for the FA blend. The pozzolanic reactivity was also investigated using thermogravimetric analysis to determine the degree of free lime present after 91 days. In all cases where an SCM was added, the free lime was observed to be consumed with increasing age.

Jan 1, 2008

By H Waterer, L Zheng, T Kalinowski

The Hunter Valley Coal Chain (HVCC) consists of mining companies, rail operators, rail track owners and terminal operators, together forming the worldÆs largest coal exporting facility. In 2008, the throughput of HVCC was about 92 million tonnes, or more than ten per cent of the worldÆs total trade in coal for that year. The coal export operation generates around $15 billion in annual export income for Australia. As demand has increased significantly in recent years, and is expected to increase further in the future, efficient supply chain management is crucial. The Hunter Valley Coal Chain Coordinator Limited (HVCCC) was founded to enable integrated planning and coordination of the interests of all parties, thus improving the efficiency of the system as a whole. One of the many planning challenges faced by the HVCCC is that of annual maintenance planning. Different supply chain elements, such as trains, railway track, terminal equipment and load points, must undergo regular preventive and corrective maintenance, leading to significant reductions in system capacity (up to 15 per cent). However good alignment of the maintenance tasks can reduce their impact, and the HVCCC undertakes an annual process to ensure the impact of maintenance on the supply chain capacity is as small as possible. This is achieved in an iterative negotiation process between HVCCC and individual service providers. In the past, maintenance schedule optimisation was largely manual, which for the more than 1000 tasks involved is quite labour-intensive.In this paper the authors describe an approach developed at the University of Newcastle in partnership with the HVCCC to automate this schedule optimisation process. We will discuss our experience in applying exact (mixed integer programming) and heuristic techniques from mathematics and computer science to address the problem. This work is anticipated to lead to new decision-support tools for the HVCCCÆs capacity planning team.

Sep 26, 2011

By P Waters, S Miller

BHPBilliton operates the Mt Whaleback Mine located in the semi-arid Pilbara Region of Western Australia. Approximately 200 Mt of net acid generating (NAG) material still remains to be mined. Acid Rock Drainage (ARD) was first identified at the site in 1995 following cyclonic storms. This resulted in the development of strategies that have allowed the mine to successfully manage ARD whilst continuing to operate. BHPBilliton Iron Ore is working toward prevention of ARD in its operations, however, historical practices have left residual areas that must be considered. Three significant sources of ARD have been identified that must be managed: stormwater run-off from exposed pyritic shales in pit surfaces; basal flows beneath overburden storage areas following rainfall events; and contaminated water from pit dewatering. The mine contains all ARD water onsite. This is achieved by: storage of all affected water in the ARD dam; evaporation of affected water from the ARD dam and the adjacent evaporation ponds; pumping from upstream dams to prevent stormwater from being affected; and emergency storage and treatment in-pit as a contingency. The site ARD management strategy is approved by senior management and endorsed by State Government regulatory authorities and relevant external stakeholders. Additional strategies are also under evaluation to effect long-term closure of the operation. Record rainfalls from 1998 - 2001 have tested the capabilities of the ARD strategy and management plan. Learnings from these events, coupled with recommendations from an extensive technical audit in 2000, have been incorporated into the strategy for ARD management. This paper presents the strategy and an overview of the ARD management plan that can be considered and applied by other affected sites in the management of ARD.

Jan 1, 2003

Distal air-fall ashes are widespread deposits that may record volcanism many hundreds of kilometres from their source. They are characteristically thin, fine-grained and have a low preservation potential usually being either eroded, or reworked and incorporated in overlying sediments following deposition. The most likely sites of accumulation are deep sea, lake and swamp environments where low energy conditions favour preservation. Post-depositional alteration of predominantly glassy volcanic ash is commonly extensive hampering identification of such layers in the geological record. As a result air-fall tuffs are poorly represented in the rock record and furthermore are commonly misinterpreted. Southeast Queensland during the late Triassic hosted active silicic volcanism and a number of fault-controlled basins in which coal-bearing sediments were accumulating. Silicic volcanics of late Triassic age are represented by the Brisbane Tuff in the Brisbane city area, the Chillingham Volcanics to the south of Brisbane and extending into New South Wales, the North Arm and Mount Byron Volcanics to the north of Brisbane, the Aranbanga Beds exposed around Gayndah and the Agnes Waters and Muncon Volcanics which occur northwest of Bundaberg. Stephens (1986) interprets these Volcanics as the remnants of a major silicic igneous 'province which he likens to modern continental orogenic margins. The Ipswich, Tarong and Callide Basins of southeast Queensland all contain coal measure sequences of late Triassic age that accumulated in alluvial plain environments. A Dicroidium flora is common to all and palynol.ogical evidence indicates a late Triassic (Carnian) age (de Jersey, 1975; Stevens, 1981). The coal seams of the three basins are characterised by their thickness (up to 25 m) and the presence of abundant thin, laterally persistent, kaolinite claystones (tonsteins) that show a marked similarity of morphology, texture and mineralogy. Detailed studies of the Ipswich Coal Measures (Falkner, 1986) suggest a volcanic air-fall origin for the tonsteins of the Ipswich Basin. Similar.tonsteins from the Tarong and Callide Basins provide evidence for widespread silicic volcanism during the late Triassic in southeast Queensland.

Jan 1, 1987

By J Bryant

In recent years the mining industry has suffered from skill shortages in a range of disciplines including mine geology. As a consequence, many businesses operate with incompletely filled organisation charts and technical professionals are frequently thrust into roles earlier than previous generations of geologists, engineers and metallurgists. Exacerbating the difficulties managers face with recruiting suitably experienced professionals is the churn of people through roles. Churn may be caused by internal pressures related to the rapid increase in projects and opportunities within a company or by external factors including the high workforce mobility resulting from the advent of fly-in, fly-out (FIFO). Historically, new entrants into the mine geology profession often received on-the-job training from their more experienced colleagues. This training, supplemented with targeted skills and knowledge enhancement through dedicated short courses, ensured the wide range of skills, knowledge and abilities required in the complex role of mine geology were continually renewed. Faced with an influx of new graduates and a dearth of mine geology professionals in the critical ten to 15 year experience range, the industry needs to develop new paradigms to ensure that the full business benefit of the mine geology function is delivered. This is increasingly important as the complexity of business planning built on geologically-based variables grows. Mine geologists are now faced with the potential incorporation of geometallurgy and waste characterisation along with energy efficiency, carbon-economy and other environmental issues into their roles. Providing baseline data, models, operational control and reconciliation for a wider range of variables further stretches the already limited geological resources available to the industry and exposes personnel with relatively low levels of experience to potentially business transforming decision processes. This paper outlines a successful approach to mentoring at the individual and team level. It discusses what went well and what could have been done differently from both the mentor and menteeÆs perspective with examples from case studies and offers insights into a new approach to dealing with gaps in organisation charts and high turnover of personnel.

Jan 1, 2009

As a basis for my address to you tonight I thought it might be opportune if we considered the great history of the mineral industry in Australia, and the contribution it has made to the development of the country. While it is perhaps interesting to review the achievements of the past there is also the opportunity to examine the developments of the future.The names generally given to the three periods of man's life on the earth-the Stone, the Bronze, and the Iron Ageand to which should perhaps now be added the Atomic Age, imply the vast importance of the progressive steps in 'man's discovery of minerals and the means of working them. They tell the story of his advance from the flint knife to the bronze celt, and then to the keen-edged iron weapon, and now to the possibilities of the peaceful application of atomic energy. Not only have the stories of gold, iron, copper and tin told a great deal of the history of the progress of mankind, but they have also traced the commercial and industrial growth of Australia over the last century.Gold in the 1850's was responsible for the most significant period of immigration Australia has ever had-when the population almost tripled in the ten years to 1860. Minerals were also responsible for opening up Australia and determining the pattern of settlement. As mineral finds were made, railways were constructed to these fields, then agricultural development followed.Then, as the industrial era started, minerals provided the raw material for Australia's rapid industrial expansion, and they have all contributed to the extent that they have made...

Jan 1, 1960

By N Robson, E Stephens

Australian mining companies are actively exploring for and developing mineral deposits throughout the world with interests in emerging markets such as Africa, Asia and South America. It is important to understand emerging market risk as this will affect the willingness of mining companies and financial institutions to invest in a country, especially with reference to their key asset, the mining licence or operating/concession agreement. Mining companies looking to develop new projects in emerging markets have different risk profiles than projects in countries such as Australia and Canada. Examples of key risks faced in emerging markets include: political û expropriation, nationalisation, contract frustration, currency inconvertibility, war, terrorism, strikes, riots and civil commotion; and legal û mining legislation, arbitration and dispute resolution, trade agreements. There is a problem in the difference in risk perceptions between mining companies, financial institutions and insurers. This can cause different stakeholders to carry out different evaluations of the risks faced by a project, resulting in confusion about the risk margin attached to any project. In a time where resource nationalisation and energy security are prompting governments to become more involved in the mining sector we run through some recent examples of mining companies that have had problems due to the key risks highlighted earlier. Importance of carrying out the right due diligence to replace perceptions with reality: early identification of risks û detailed due diligence on emerging market risks that may arise will help with their identification and mitigation, make use of companies that can help identify risks and suggest solutions, control the cost of financing û risk margin applied to a project finance loan will be influenced by the risks faced, and risk management and using political risk insurance. There are plenty of opportunities in emerging markets but it is important to recognise the associated risks. Detailed due diligence at an early stage will provide long-term benefits.

Jan 1, 2007