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By L A. Martinez Tipe, J McKibben, S Barry

"Metal prices are central to a mineral investment decision and have a profound impact on the financial performance of companies in the mining industry. At its most basic level, metal prices are influenced by the disequilibrium between international metal volume supply and demand. That is, the commodity price is a regulator that equates international metal supply and demand where inventories act as a buffer between the emergence of this disequilibrium and its dissolution through a price change.From this viewpoint, mining companies are required to forecast metal and bulk commodity prices when evaluating minerals projects through discounted cash flow (DCF) analysis. While supply-demand models are instructive, many companies use historical prices, spot prices, futures/forward pricing and consensus opinion (or a combination of all of these) to develop price forecasts.This paper discusses the definition, fundamentals and differences between futures/forward and consensus pricing and the appropriateness of each in a DCF model for mine project economic evaluation.Our results demonstrate that great care is required when using either futures/forward or consensus pricing and that the decision to use one rather than the other requires consideration of other important elements in the DCF model (ie the risk-adjusted discount rate).CITATION:Martinez Tipe, L A, McKibben, J and Barry, S, 2016. Metal prices and the differences between forward and consensus pricing – which one is better for use in a discounted cash flow model?, in Proceedings Project Evaluation 2016, pp 149–158 (The Australasian Institute of Mining and Metallurgy: Melbourne)."

Mar 8, 2016

By W Stange, N Hanson

An important aspect of the project evaluation process is the achievement of a clear and quantitative understanding of the primary drivers influencing project value and risk. A business scenario-based approach is required to ensure that the project meets value and risk hurdles over the short, medium and longer term. Adopting an optimising approach can aid significantly in the development of a project concept into a business that is optimal and sustainable in the longer term. Through the application of case studies, based on work performed with various mining organisations during the last five years, this paper will demonstrate how project value and robustness can be optimised. Experience has demonstrated that applying this approach results in significant value improvements and risk reduction û primarily by application of a rigorous, fact-based analysis and optimisation process that rapidly increases management team understanding and insight of key driver of value and risk.

Jan 1, 2007

During the 1998/99 Asian crisis Solid Energy's export revenues collapsed from over US$70M to under US$40M. Simultaneously, domestic market uncertainty led to decreases in volumes and prices. A major new underground mine was not technically viable, and was closed, and several other mines were marginal. Less than two years later, Solid Energy and its JV partner closed a second new underground mine. The company was in financial crisis, and reported an $86M loss for 1998/99. After refinancing with stringent workout conditions it still had minimal returns due to low prices, unaffordable transportation costs and huge unrealised FX losses as the NZ dollar fell 40 per cent in value. The obvious scenario was to æcash upÆ û complete extraction at remaining mines, sell off any viable parts of the business, pay off debt and wind the company down.In 2002 Solid Energy has completed its recovery. Although margins remain slim and volatile in both export and domestic markets, it is achieving record volumes and revenues. It has paid off its shareholder loan, has minimal remaining FX losses, and cashflow is allowing further mine and infrastructure development. The key to the turnaround has been implementation of rigorous planning, analysis and decision-making in all aspects of the business. The company has a comprehensive, rolling 20-year plan used annually to update rolling five year and annual business plans. Solid Energy augments strong line management operations with rigorous standards and processes for mine planning and development, operational decision-making, and functional support. Detailed, quantitative risk analysis is used in all aspects of the business and allows comprehensive integration of opportunity and risk management across all activities in the company.Coal mining is widely perceived as an æold-economyÆ industry. But, like other successful æold economyÆ companies, the information systems and management processes used by Solid Energy are as leading edge as any in the high-tech sector. They are the key to managing to add and sustain maximum value for a company that has access to coal resources sufficient for hundreds of years.

Jan 1, 2002

By A R. Sale

This paper highlights two aspects of the mineral sands industry in Australia: the development of the industry from approximately 1870 through to 1980, and the author’s experience in the industry from 1966 to date.The first real heavy mineral (HM) mining in Australia started in 1870 with the mining of heavy mineral slicks on the beaches along the east coast of Australia. The real potential of Australian heavy minerals was however only realised in the 1920s with the first production of a heavy mineral concentrate that was shipped to Canada for processing. Post WW 11 and the Korean War, Australia was the largest producer of mineral sands products in the world as well as a significant developer of associated separation equipment and technology. The number of producing companies in the east coast peaked at 33 in 1957, was reduced to ten by 1965, and subsequently further reduced to five in 1980 as a result of potential mining areas being declared National Parks or Conservation Reserves. Today there is one company, Unimin Australia Pty Ltd (formally Consolidated Rutile Ltd) operating on the east coast. In contrast there were three companies on the west coast in 1965, four companies in 1980, and four companies today (albeit not the same companies).There have been considerable ups and downs for the industry in Australia, however world wide it was renowned in the past as being an industry that attracted numerous interesting and innovative characters that played a major role in developing it into the vibrant industry that it is today. This, given the current climate, is predicted to continue into the future.The author has been continuously involved in the industry for over 45 years from 1966, initially as an electrician at Consolidated Rutile Ltd culminating in the role of General Manager/President of Iluka Resources Limited USA, prior to his retirement in 2009. His exposure has been world wide and has covered all aspects of the industry but in the main focused on project development and operational areas. During this time there have been significant technological advances, yet to some extent the basic principles have not changed at all. Some of the most noteworthy advances include the development of the Wright Spiral in 1977, the development of the Reading High Intensity Wet Magnet (WHIMS), the rare earth magnets, the CRL floating thickener and the improvement of analytical techniques. From a safety, health and environmental perspective there has been significant advances that the industry has much to be proud of. These include wetland restoration both in Australia and in the US, the restoration of farmland in Virginia and Capel, and the re-establishment of native species, for example at Eneabba and Richards Bay to name but a few.

Oct 5, 2011

By R Dimitrakopoulos, R Senécal

This paper presents a metaheuristic solution to the optimisation of open pit long-term production scheduling with a stockpile and geological uncertainty. The optimisation formulation is a two-stage stochastic integer programming (SIP) model that determines the optimal mining sequence that maximises the total discounted cash flow, while penalising for high deviations from production targets. A parallel implementation of Tabu Search is proposed to accelerate the solution of the SIP formulation and take full advantage of multicore computer processing. Different variants of the proposed algorithm are applied to a case study to assess the performance of the parallel approach. The proposed algorithm and variants are benchmarked using linear relaxation of the complete problem to determine robustness and provide a better overview of the related performance. The results show a net improvement over the sequential solution, and the new proposal seems to be promising when working with a large-scale data set.CITATION:Senécal, R and Dimitrakopoulos, R, 2014. Parallel implementation of a Tabu search procedure for stochastic mine scheduling, in Proceedings Orebody Modelling and Strategic Mine Planning Symposium 2014 , pp 405–414 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Nov 24, 2014

By C R. Fountain, W R. Cannings

The zinc-lead-silver mineral resource at Lady Loretta ranks amongst the worldÆs richest when measured in terms of in situ metal grades. However, the project remains undeveloped 28 years after its discovery in 1969. The primary obstacle to development has been the fine and complex grain structure of its ores, which make flotation concentration inefficient even with fine grinding. The size and remote location of the deposit have also hindered exploitation. BUKA planned to directly fume the volatile target metals from the ore when it acquired the project. Intensive, post-acquisition modeling showed the innovative processing route to be uneconomic, notwithstanding high metals recovery and low waste content in fume product. Progressive modifications and supplements to the underlying fuming process enhanced economics and resulted in a new mine-to-metal processing route for zinc-lead-silver ores. The proprietary, three-stage BUKA Zinc Process offers technical, economic and environmental advantages. It is expected to find widespread application in the treatment of ores and residues. However, neither continued R&D nor application to Lady LorettaÆs currently delineated resource can be justified under prevailing market conditions. The objectives and results of each step in the process development sequence are outlined with reference to their impact on the commercial viability of the Lady Loretta project.

Jan 1, 1998

For too long we, as an industry, have borne the brunt of irrational claims, poor science and even worse, journalism with regards to our affect on the environment. To some of us, the overwhelming media attention on greenhouse warming, the polluting outputs of mineral processing or unthinkable depletion of natural resources has left us embarrassed and more unfortunately has turned bright young people away from a career in the minerals industry.This paper shows the hypocrisy associated with an element of the green movement and dispels some general myths on mining disseminated by radical environmentalists.The fallacy of the greenhouse warming effect will be scrutinised by common sense and the mining industryÆs use of land will be discussed and put in proper perspective.Problems associated with safety and emissions and the means to overcome such are discussed briefly.

Jan 1, 2004

By C Fountain

Australian mining and engineering companies have increasingly been investing in the mining industry in Brazil. It is a country of enormous mineral and agricultural wealth, with a well-established mining sector. Some Brazilian mining companies and personnel have been journeying in the opposite direction. There are significant differences in the approaches to engineering between the Australian and Brazilian industries that can cause confusion for companies operating in the other country. These range from differing expectations during the various stages of feasibility studies to style of plant and contracting strategies during the construction phase of projects. Some of the differences are driven by tax regimes, labour costs, or different settlement patterns. Others are the result of different histories and pressures on the industries in the two nations.This paper describes some of the differences in approach found in the two countries and some of the reasons for them.

Aug 8, 2011

I trust you know now or will know by the time you havecompleted your degree and added a little on-the-job experience,how to make the product from the mine you are working for. Butyou may not know the process to turn it into dollars, which ofcourse will be the life blood of your company. I am not going topromise to turn you into super salesmen, but I hope I can takeyou beyond the level of believing that selling our mineralproducts is as simple as putting in it on to a train, waving itgoodbye and waiting for the cheque to turn up in the mailbox afew weeks later.

Jan 1, 1994

By I Levy

At our Monkland Mine at Gympie, we operate a deep, narrow vein gold mine using hand held equipment, rail mounted haulage and narrow shafts. This is in many respects the old-fashioned way and is well suited most of the orebody geometry exposed to-date. We have also commenced some long hole stoping and we use alimaks for some jobs. The heart of our particular mining style is the employment and retention of experienced miners with remuneration based on productivity. We do our planning/monitoring/supervision down to the level of daily individual productivity. In focussing on cycles per se, we have chosen not to talk about drill and blast cycles or cycles for mine development, stope preparation or drawdown and haulage. Instead we have stepped right back from the operation as presently run and have adopted a very broad view of the mining cycle. We will in this presentation intertwine the ebb and flow of, exploration, project sponsorship, development, production and cash returns to owners. The time line considered spans both history and predicted future.

Jan 1, 1998

By S Benson

Staurolite is one of the major contaminant minerals contained in the Tiwest Cooljarloo orebodies. Approximately 80 per cent of staurolite in mined ore, reports to the heavy mineral concentrate that is supplied to the Dry Mill. Staurolite in heavy mineral concentrate is typically five per cent by weight and has no significant effect in the Dry Mill other than to occupy equipment space, reporting as a tailing, that requires transportation and disposal back to the mine site. Staurolite is an aluminosilicate with a MohÆs hardness of 7.5. It is known to have potential as an abrasive blast agent and it is produced in substantial quantities in the USA for that purpose. Research indicated that there was potentially a market for staurolite within Australia, as a replacement for some of the lower grade abrasives as well as a material of choice. A small tonnage of staurolite product was manufactured through a simple circuit within the Dry Mill in December 1998. This was subjected to industrial scale tests by external companies specialising in sand blasting. The most significant batch of tests were conducted at the Tiwest Chandala site on plant and equipment undergoing corrosion repairs. Staurolite was tested against three other commercially available abrasives and compared very well with respect to surface profile, surface texture, coating adhesive strength and dust generation. As part of a due diligence study, free silica, radiation and heavy metals contents of spent abrasive and dust was investigated. This information was needed to seek approval from the appropriate Western Australian statutory authorities to sell staurolite as a product. Approval was received in November 1999. Tiwest has since installed a production circuit in the Dry Mill capable of producing 20 000 tpa of Staurolite.

Jan 1, 2001

By T Brown

Australia is now committed to the most significant period of infrastructure investment since the 1960s and the current climate of project finance and public private partnership (PPP) model uncertainty means it is imperative that the affordability and certainty in delivery of infrastructure projects is maximised.In light of the current and forecast levels of infrastructure investment it is worth drawing comparison with a similar period of Australian expansion when the nation’s first railways were constructed. Similarly to over a century ago, we are following a trend in rapid development and are already reaping the inefficiencies that could be avoided with broader technical planning and improved client coordination.The original rail networks were developed by the individual states before they combined to form a Federation of states in 1901. As a result of the adoption of different gauges by 1917 a passenger wanting to travel by train from Brisbane to Perth had to change trains six times.Similarly in 2011, there is little parity between Australian states on the quality requirements (performance specifications) for road tunnels. Differences between states start most significantly with the size of the specified traffic envelopes, thus the size of tunnel required. Where ambiguity and differences exist in project documentation, performance specifi cations (PS) and broad technical requirements for road tunnel projects, any associated risk in interpretation ultimately ends up being incorporated in the bidder’s (constructor’s) final sell price.Whilst not nearly as inconvenient as having to change train at each state border, and largely unnoticed by the general tax paying motorist, this paper examines examples of apparent minor differences in Australia’s recently constructed road tunnels to highlight the differences in road tunnel specifications.The paper identifies how these small differences manifest themselves in major price penalties between projects and further, highlights the need for further specification review, refinement and standardisation across road tunnel jurisdictions to increase road tunnel affordability.

Mar 8, 2011

By D Giurco

This paper presents the results from research undertaken in the CSIRO-funded Mineral Futures Collaboration Cluster on developing a future vision for the mining and minerals industry – Vision 2040 – in which the industry proactively contributes to long-term benefit for communities and the nation. Our research finds that Australia is currently experiencing mining-led prosperity due to high commodity prices, yet underlying this are challenges for maintaining market share due to lower productivity from extracting lower grade, more remote and complex ores. Whilst much focus has been on developing new technologies for finding and processing such ores, this paper assesses these activities, together with policy and market innovations in the context of needing to strengthen social, environmental and financial capital for long-term benefit. Vision 2010 sees mining activities linked to systems that are net providers of clean water, energy and ecosystem services, rather than minimising negative impacts alone; sovereign wealth funds are used to harness current prosperity for future innovation. Using a case study in lithium and comparisons to iron/steel, coal and copper – we illustrate the opportunities for new technology, policy and market innovations to link the mining and minerals sector in Australia to more sustainable patterns of production, consumption and prosperity.

Nov 22, 2011

By M D. Sussman

A large number of countries in the world now have some regulation for labelling the presence of genetically modified organisms (GMO) in food. For the last ten years, ISO/TC 34/SC 16 has been providing methods, guidelines and requirements concerning the evaluation of molecular biomarkers including GMOs. This activity makes sure that stakeholders on all sides of commercial transactions are satisfied and their marketing or regulatory needs are met. Developing and maintaining a transparent, science-based environment for users of horizontal methods for molecular biomarker analysis is a high priority. Sampling and analysis of molecular biomarkers has become critically important for food and agricultural organisations developing, producing, distributing and selling genetically engineered, non-genetically engineered, identity preserved and/or organic crops and their derived products and preventing their respective destructive diseases. To aid in international harmonisation, a new work item proposal to develop an ISO type A management system standard (MSS) for organisations including laboratories using molecular biomarker analysis and sampling has been submitted to ISO/TC 34/SC 16. The purpose of this MSS is ensuring that determination of the presence, absence or quantification of a particular biomarker with a relationship to a product quality determinant, a marketing claim, a regulation or a plant pathogen is carried out under a suitable quality assurance / quality control system. This MSS will provide an overarching system to apply and manage molecular biomarker analysis and sampling for any organisation large, medium or small in a private, government or academic setting.CITATION:Sussman, M D, 2017. ISO/TC 34/SC 16 horizontal methods for molecular biomarker analysis – molecular biomarker analysis and sampling management system, in Proceedings Eighth World Conference on Sampling and Blending , pp 295–302 (The Australasian Institute of Mining and Metallurgy: Melbourne).

May 9, 2017

By J Zhang, R Dimitrakopoulos

A two-stage stochastic mixed integer non-linear program is formulated for a mining complex to optimise strategic and tactical plans. The objective is to find the near optimal decisions for a mineral supply chain in the context with uncertainties in both ore supply and the commodity market (price and demand). The endogenous spot price in the commodity market and long-term sales contracts are considered in the formulation of the mining complex’s optimisation model and an ad hoc heuristic is developed to deal with the throughput – and head-grade-dependent recovery rate in processing plants. Numerical results indicate that the proposed heuristic is effective and efficient in numerical tests. Based on the proposed model and heuristic, a long-term contract design strategy is proposed for making decisions on the contract price and strategic investments. A shadow price based method is also proposed to evaluate the existing mining schedule.CITATION:Zhang, J and Dimitrakopoulos, R, 2014. Optimising a mineral supply chain under uncertainty with long-term sales contracts, in Proceedings Orebody Modelling and Strategic Mine Planning Symposium 2014 , pp 25–32 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Nov 24, 2014

DIVERSITY There are plenty of examples to show that diversity has been the fundamental downfall of many organisations, particularly when you consider the international position. What about core business, the return of companies to key competence directions and market focus. The stockmarket for instance defines groups and companies in key groups of core business. The expectation is that companies toe the line and do not diversify across their areas of defined expertise. In essence, the market has given notice that the requirements are to focus and stick to our core business. So what right does the conference have to suggest that diversity is the key to prosperity. Hasn't the organiser read the book, studied the history, listened to the market - obviously not. Have they got it wrong, My feeling and belief is no - the organisers have got it right. However, the matter is not as simple as first perceived. What is Diversity, or Diversification as I would prefer? Is it a product position? Is it a geographic position? Is it an expansion or change in services offered? Does a gold mining company diversify into copper or diamonds or aluminium or nickel? Does a gold miner in Australia diversify into China or Kazakhstan or West Africa? How do the two relate? They don't. A successful company will always possess a 'core competence' not so much a 'core business'. The best example of this is the service company extraordinaire - McDonalds. They don't sell hamburgers or french fries, they sell a service, a convenience, a lifestyle. The core business is hamburgers and if McDonalds were to diversify further into new styles of hamburgers, I suggest to you they would fail. But if McDonalds were to diversify into other products based on their 'core competence', provision of service, then I would suggest to you they would be very successful. The service procedure, service machine, service system, the formula, stava the rnnetant the nrnrlnrte -

Jan 1, 1996

By G Lumley

Gold miners have been underperforming the price of gold for a number of years. So why has the æmarketÆ undervalued our gold miners relative to what they have been mining? The low valuation ascribed to gold mining companies is largely attributable to their profit performance. In the period since 2006 the price of gold in A$ has risen about $900/oz, but the real cash margin (operating cash costs + cost of finding and/or acquiring deposits + the cost of bringing them into production) has only risen about A$100. Rising operating costs are a major part of this reduction in real margin. Energy and labour costs have risen more than the inflation rates across a number of countries as have taxes, royalties, etc. There are however, more significant contributors to the rising cost base. Firstly, in 2006 the average gold grade was 2.0 g/t; today it is 1.3 g/t. Secondly, strip ratios (for surface mines) have increased by 19 per cent during this time. Open cut mining equipment unit output across the world has dropped by 26 per cent during 2006 - 2012. Finally, costs have risen by 55 per cent during this time period. Consequently, there is now 3.8 times more mining cost required to produce an ounce of gold from surface mines compared with 2006. The decline in gold grade looks to be a permanent trend as does increasing strip ratio if output is to be maintained. Costs will continue to rise although cost control will be necessary. Reversing the decline in equipment performance and closing the gap between median and best practice provides the hope for a sustainable reversal of cost increases. The current gap between best practice and median performance has grown to 112 per cent for mining trucks, 168 per cent for excavators and 169 per cent for front end loaders. Closing this gap is the potential for a more profitable future. For most gold mining companies improving mining efficiency is not an option; it is an imperative.CITATION:Lumley, G, 2013. How many gold mines will inefficiency kill?, in Proceedings World Gold 2013 , pp 267-276 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Sep 26, 2013

By C J. Moran

The Gladstone region, as one of the most industrially intense regions in Australia, uses significant quantities of fresh water. Awoonga Dam, situated on the Boyne River, is the only major source of water in the region. The current typical annual usage is 53 GL (Porteous, 2006) and approximately 80 per cent of the water is used by heavy industry (Gladstone Area Water Board, 2004). Until relatively recently, there has been ready and easy access to raw water for industrial use. The recent drought, which resulted in severe water restrictions in 2002 and 2003, emphasised the importance of water for a dominant industrial region like Gladstone. Although now in the process of changing, the typical contractual arrangements in the past have provided little financial incentive for efficient water use. From research undertaken on potential water reuse opportunities, several key questions have emerged related to water management in an industrial region such as Gladstone. This paper highlights these key questions, presents findings from recent regional strategies and assesses the potential for water reuse. Even though there is no clear-cut financial incentive for reusing water, there could be stronger regional and risk mitigation drivers for doing so. Initiatives to incorporate adaptive capacity through collaborative industrial synergies would allow for robustness and resilience in water security, leading to long-term sustainable water management across the Gladstone region.

Jan 1, 2006

By P Breuer, X Dai, A Bergamin, D Hewitt

"Copper-ammonia-thiosulfate?leaching of gold has been researched for several decades as a potential alternative to cyanidation. However, this technology has not yet been applied commercially due to many challenges such as complex solution chemistry, reagent degradation and losses, system instability with losses of precious metals and difficulties in gold recovery from the leachate. Progress has been made at CSIRO in tackling some of these challenges including:better understanding and control of the leach conditions to minimise reagent losses whilst maximising gold recovery use of strong base ion exchange resins to recover the gold strategies to deal with polythionates that adsorb competitively with gold on ion exchange resins development and evaluation of process flow sheets.As a result there has been increased interest from the gold industry and renewed activities to develop thiosulfate based processes for gold recovery. One application area, which has been developed to the point of piloting, is the treatment of gravity gold concentrates using a copper-ammonia-thiosulfate leach with ion exchange recovery of the gold thiosulfate. This paper describes some of the advancements in the development of a potential process flow sheet for this application.CITATION:Dai, X, Breuer, P, Hewitt, D and Bergamin, A, 2013. Thiosulfate process for treating gold concentrates, in Proceedings World Gold 2013, pp 61-70 (The Australasian Institute of Mining and Metallurgy: Melbourne)."

Sep 26, 2013

By D Andrew, G Stanway, P Mahoney, C Griebel

The iron ore mining industry is currently going through an adjustment from high to more moderate growth as China’s economy transitions from capital-intensive investment to a more services-oriented economy. We are now witnessing a renewed focus on productivity improvements and cost savings as planned expansions are completed. Despite the scale and importance that the mining industry plays in the global economy, innovation literature is generally more targeted at faster-moving industries with shorter innovation timeframes and lower capital requirements. To fill this gap, VCI set out to understand the state of innovation in the mining industry in 2014. This State of Play report aims to give an objective appraisal of the strengths and weaknesses of innovation in mining. The report has three sections covering both the structure and delivery of innovation in mining:Ecosystem – focused on understanding how the iron ore mining innovation ecosystem system works, including the roles of large and small miners, service companies, researchers and governments. Our recommendations focus on what is required for the system to work well and improve the level and quality of innovation in the industry.Strategy – how do companies define their innovation strategy in relation to their corporate strategy? How are these related to prevailing global and industry trends? How do they communicate this with their business? How successful are they? These are among the questions that this section attempts to answer. Our recommendations are pitched at the executive leadership of iron ore mining and service companies.Delivery – focused on how companies develop and deliver innovation, looking at the success of different structural options, leadership and culture, partnerships and the best approaches to change. Recommendations are aimed at improving outcomes within the iron ore mining value chain, including the role that suppliers play.CITATION:Stanway, G, Mahoney, P, Andrew, D and Griebel, C, 2015. Understanding the state of innovation in the iron ore industry, in Proceedings Iron Ore 2015, pp 631–646 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Jul 13, 2015