Greening the Mining Industry - Part 2

Green Design

Introduction

There is no doubt that dealing with issues of sustainability is difficult. While there is a level of awareness among organisations of the coming need to achieve ‘sustainability’ goals, they are not yet sure of what governments may require of them, so it is difficult to plan responses. There is reasonable clarity on what the issues are: enhanced greenhouse effect, continental and global fresh water availability, toxicity, and eventually issues of ongoing availability of some resources. Planning for success in a market regime where external forces are poorly understood is a great challenge. Even so, a cursory analysis of the likely scenarios indicates that everybody will need to be reducing their greenhouse gas contributions, reducing their impact on the water cycle and reducing the inputs of toxic materials to the environment.

So what can organisations be doing and thinking about now to help them position themselves to be competitive in a world where their ability to comply with government regulations and to do business sustainably, may determine their ongoing existence?

Firstly, companies need to understand and accept that the world is changing, and that societal pressures will require them to respond. If we accept that there is a need to do business differently, the response needs to consider remediating for current operations, and adopting new practices for new operations.

For the mining industry, where particular operations may persist for more than 50 years, there are many current operations with long futures still ahead of them, and no doubt many planned operations will be operating well into the 21st century. Interestingly, many of the projected consequences of global climate change are expected to occur within that same timeframe.

Introducing the new systems and procedures to new operations will be challenging, but nowhere near as hard as retrofitting brownfield operations. The best time to position for success in greenfield operations is during the design phase. This article introduces some of the issues around incorporating sustainability requirements in the design phase. Remediating brownfield operations will be the subject of later articles – so keep an eye on future issues of Symbiosis.

Are we prepared?

In a survey conducted by PWC in 2008 (Table 1) less than 10% of resources industry CEO’s had a high level of confidence in their greenhouse emissions data. More that 50% had taken little or no action to address the issues.
Reporting of greenhouse emission will be required by the Australian Government for almost all mining companies commencing in the financial year 2008-2009. Clearly the level of reparedness for the upcoming requirements in Australia is low, and yet the time of implementation is very near!

What can you do?

Mining Companies need to approach the process of smart design in the following stages;

• Understand the issues
• Work out the information you need
• Simulate and design iteratively until the optimal design is achieved.

Understand the issues

I dealt with the high level issues of sustainability in the mining industry in issue n. Broadly speaking, the considerable interest and debate around the globe on climate change means proactive action is very important and mining companies will need to respond quickly and credibly if they are to retain their ‘licence to operate’. It’s nothing new, the mining industry has been responding to changing community attitudes for the last 3000 years.
Work out the information you need.

In order to respond to anthropogenic climate drivers, and government and community requirements to report on those responses, as well as potentially develop new markets, products and businesses, organisations need to identify what information they need to be collecting. A number of organisations have commenced this work. Firstly the Global Reporting Initiative , is one organisation (see Callout 1) that has widespread support and hasas well as a framework which is currently being used for many nations’ emissions reporting requirements. The ‘Mining and Metals’ sector supplement includes specific details of the information and procedures that should be considered. The Australian Government’s National Greenhouse and Energy Reporting Act (NGER) provides specific requirements for Australia, and other jurisdictions should publish their requirements in due course.

Iterative simulation and design

The ability to optimise a process for any particular outcome is best achieved in the design of that process, before large expenditures on capital works and equipment make later changes very expensive. Adisa Azapagic of the University of Surrey has studied many aspects of this issue including sustainable development indicators and process design. In these works, Azapagic develops a methodology for considering sustainability issues in the design of chemical processes and further develops the ideas by translating that to the mining industry .

In order to do this, you require an intimate knowledge of the mining process and an holistic view that takes account of the affects of process inputs, as well as the downstream effects of process outputs. That is, it optimises the process not just within the process, but external to the process.

Most industries have a good understanding of how to design a process to optimise financial outcomes, indeed financial outcomes are usually they way that we decide on the viability of an investment. Unfortunately, environmental outcomes are usually considered late in the planning cycle, and certainly after the major design decisions have been made.

Other recent contributions to the literature detail how to measure sustainability outcomes in infrastructure projects and Mangena and Brent describe the application of a Life Cycle Impact Assessment framework in the coal industry . Finally, the development of a mining Life Cycle Assessment Model (LICYMIN) at the Imperial College London provides a solid basis for using the other tools to model a mining operation throughout its whole life (Figure 1).

Figure 1 - The mining life cycle impact assessment system and model boundaries. [after Durucan et al 2006]

Discussion

These and many other works have defined the macro and micro level processes and the inputs and outputs of all stages of a mining operation. They explain how these data can be used to optimise sustainable design through a process of simulation in a systems thinking environment. Importantly, this allows these new decision making criteria to be included along with the economic criteria (which are also in the models). Modelling different scenarios in a simulation environment allows all aspects to be considered to provide the best possible outcome; for the company and for the environment. Most importantly, the case is made for the benefits of including sustainability at the design stage rather than trying to squeeze it in later.

With an understanding of how to include sustainability issues into the concept stage design process for a new operation, at both the macro process level (mining, processing, remediation etc) as well as the micro level (coal washing process, copper leaching process etc) and a solid grasp of the data that will need to be captured, mining companies can begin to plan for future reporting requirements.

Greening the Mining Industry – Part 1

Comment by Dennis Franklin

Introduction

For the last 100 years, the mining industry has been responding to changing community attitudes about the environment and sustainability. The considerable interest and debate around the globe on climate change means proactive action is very important, In this article I hope to highlight some of those impacts, and in later follow up articles, I will discuss impacts and responses in more detail. I won’t reproduce all of the work that is being published, but I will point to some of the emerging trends and insights into the role and contribution of Information Technology (IT). In particular, I’ll be highlighting some of the areas where IT can help to support the industry’s response and management of “sustainability”.

Today, not a single project can proceed without an understanding of its impacts on the environment. Now the growing community interest on a global scale means that the mining industry, indeed all industries, need to understand their specific and general impacts on the global environment. The industry’s contribution is through emissions resulting from the mining process, and through the production of raw materials that contribute to the main causes of global emissions. Legislation to minimise those impacts is already being enacted or drafted in many jurisdictions. Even though the mining industry is an important contributor to the economy and our lifestyles, it is, by its very nature, an industry whose emissions will be subject to increased scrutiny.

Where are the impacts across the life cycle of a mine?

Most of the recent press on environmental impacts is about the generation of greenhouse enhancing gases. The main contributors here are Carbon Dioxide (CO2), Methane, and Nitrous Oxide . These contributions are different at different stages of the life cycle of a mine.

The use of fuels, power, and water and the possible introduction of contaminants have impacts that exist across the whole life-cycle. The obvious response to all of this is to use those resources more efficiently and so use less of them. Optimising mine operations through smart design during the concept and pre-feasibility phases of a project can produce significant offsets.

Ensuring that new technologies in mining equipment which lead to reduced fuel usage, more effective tyre wear, and automation and optimisation of their use through fleet management can deliver significant whole-of-life cost savings and can reduce carbon emissions per ton of product. Just as the public are moving towards energy efficiency in their homes through the use of energy saving lighting and appliances, so the mining industry can reduce its energy usage through smart selection of equipment and consumables.

The Build Phase

Perhaps the best time to affect the life-cycle impacts of anything is during the design stage. Minimising the embodied impacts of building a new mine can best be addressed during design. For example, the production of concrete has relatively low embodied energy (energy used to produce the material) but it tends to be used in large quantities . On the other hand, concrete production produces up to 3000 kg/tonne of CO2 and so the carbon contribution is significant.

In domestic applications, however, both of these issues can be traded off against the benefits that concrete slabs can provide. Good design turns concrete slabs into heat sinks that reduce the need for power usage for heating and cooling. So while the interactions are complex, there is a case for good design turning an initial high contribution to environmental impacts into a long term beneficial outcome.

Another example is the use of an in-pit crusher and conveyor to offset the needs for a large diesel truck fleet in an open pit operation. Emissions from the extra trucks is much greater that the carbon footprint of the conveyor system.

The same is true for many other aspects of mine design, mine planning and mining process design where a detailed understanding of the environmental impacts could contribute to a better long term outcome.

The Operate Phase

Good design can go a long way to minimising impacts from operational processes but there are ways to improve existing operations without major capital upgrades. These include better power management, optimising algorithms for mobile equipment, and almost any application of Lean Manufacturing techniques for reducing wasteful effort in the production processes.

The more significant issue during the operational phase of a mining operation is the end-user impact of the raw materials being produced. The obvious example is coal, the burning of which contributes a significant amount of CO2 to the atmosphere. While the argument about whether anthropogenic CO2 is the cause of climate change is controversial, the industry needs to take a position on this issue simply because the political landscape requires it. Besides, any rational approach to risk management would dictate the need to act on the risk anyway, regardless of the likelihood of the risk, simply because the size of the projected global impacts is huge.

The responses to the liberation of CO2 to the environment by burning coal and other carbon fuels tend to be technological. Now, many are researching processes that capture liberated CO2 and turn it into a form that can be stored for long periods, for instance Geo-sequestration. Sequestration seeks to inject CO2 back into the geological strata to remove it from the short-term carbon cycle. Research into these technologies is in its infancy, but most large mining companies and most governments are contributing funds to the research. Another approach is to offset emissions by parallel activities that remove CO2 from the atmosphere, such as reforestation. In time, the establishment of carbon trading markets will allow nett emitters to offset against the activities of others.

The Retirement Phase

The retirement phase of a mining operation includes all of the activities discussed with the life-cycle but offers some interesting opportunities for offsetting emissions as the environmental repatriation activities are progressed. Where appropriate reforestation of mine sites is progressed, carbon offsets should be claimable. Here are also gains to be made through the optimal dismantling of the infrastructure and the reuse of equipment. One option is the mothballing of operations until a time when the technology advances have addressed the problem, similar to the practice of mothballing operations during times of low prices. The threat of this possibility is enough to give the mining industry a strong motivation to be an active participant of the technology development.

Conclusions

The issues at question for the mining industry are not trivial, and the interrelationships between the natural processes are complex. Most of the research on the impacts is detailed and well understood but the necessary responses that need to be taken are not yet well researched. Even so, there are many activities that can be commenced, not just because they make environmental sense, but because they can make business sense as well. Already, in other industries, innovations that reduce energy use are being instituted because they save money. Smart design can help to deliver both energy savings and operational benefits; they are worth doing for their own sake.

How IT can cut Carbon Emissions

Wed, 15 Oct 2008 09:15:00 PDT

The McKinsey Quarterly article of talks about - How IT can cut carbon emissions

Greenhouse gas emissions associated with making and powering the world’s computers and telecom networks are growing fast. Despite efforts by technology manufacturers and users to make these tools more energy efficient, rapid growth in demand for computing and communications—particularly in developing nations—is creating a big carbon footprint.
The good news is that information and communications technologies can reduce far more emissions than they generate.

I agree with all of the comments that they make. IT, even though it generates some greenhouse and other gases, displaces many many activities that are far more GhG producing. A perfectly legitimate approach to a companies GhG footprint issues maybe to increase the footprint of the IT Department and overall reduce the footprint of the company. Of course, doing both at the same time is a valid option as well.

We need to be very careful about goaling IT departments to lower their GhG footprint.

Business Analytics in Mining

Recycled from a previous blog post...

I just saw this great article by Dr Graeme Lumly in the latest issue of 'Highgrade". He talks about the need for more and better analytics in the mining industry and provides an example.

The example is a clear illustration of what can happen when you don't really know what your process looks like. In an effort to change their bulk transport processes to prevent (or at least lessen) the amount of ore that is spilled, the mining company managed to do an amazing thing. The new process saved about $1 million in cleaning up spillage, but cost approximately $9 million in revenue. The change to the process led to less ore being transported.

This is obviously not a great outcome. It certainly argues strongly for better analytics that would help operators to define their current practices, and to model what any change to process might mean. Tying that to bottom line outcomes can clearly show whether a change is a good idea or not, clearly had the company in the example done so they might not have proceeded. I'm sure that eventually common sense would prevail as the revenue started to be affected and questions started to be asked.

The illustration begs another question about innovation. I didn't get it from Dr. Lumley's article, but did the company do a pilot of the process change. If they had they would have quickly determined that the change was great for the spillage problem, but not great for the financials!

Its Safety and Production...

Hi Readers

There is a very lively discussion going on in LinkedIn about the guys who were sacked for doing the Harlem Shake underground (click here)

"Social media opinion across Australia is divided after 15 mine workers were sacked for doing the Harlem Shake dance craze while working underground.

The eight dancers, a worker who recorded the stunt as well as several onlookers were fired after the video they posted on YouTube went viral. " Australian Mining

So in the LinkedIn discussion there are three schools of thought. The first says that the guys broke all the rules and should have been fired, the second says they were letting off steam and should not have been given the sack, and the third (and the one I belong to) is that the guys were stupid, should not have been sacked and anyway this sort of thing is good for morale.

On the LinkedIn page I commented that if this had not been posted on YouTube they would never have been fired, a warning maybe, which is closer to what I think would be the appropriate management response.   One other writer commented that this action by management was a response to being embarrassed in public and that it was justified on spurious safety grounds.

More generally, I think that mining companies treat safety like a religion.   The dogma cannot be challenged, even when it is clearly stupid.   One example comes from a company where I was working wherein an employee in head office was hauled over the coals because they walked down the stairs without holding the handrail.   I get that the safety culture needs to be part of business everywhere, but walking down the stairs in an office building is not unsafe like working underground is unsafe.   There needs to be perspective.

Why is it important for us to take a realistic approach to safety?   Because if you have rules which are inappropriate to the particular workplace then the whole safety regime will fall into ridicule and people will do no more than play lip service to the rules.

I believe it is more important to have a regime that is appropriate to the circumstances, an even more importantly safety systems need to equally prioritise production or else when the production screws are on, safety will be compromised.   If a production supervisor needs to make safety shortcuts to meet a target, they will do so.   You either need to accept that production KPIs need to be adjusted down or find a way to be safer and produce more.

So lets think about safety systems that are appropriate, that improve safety, and also improve production.   And lets not make it difficult for people to behave safely, or punish them for letting off a bit of steam (as long as the are not being unsafe).

I've written about this before here.

Why IT Projects fail.

I'm a great fan of the TV show, Grand Designs.   The first time I saw the show, my partner and I had just started to build our new home.   Architect designed, bespoke everything.   Should have been a disaster, but it was a dream build.  So why are there so many near disasters on the show.   Well I guess they vet the people so that they have a show with plenty of tension, problems to solve, and interesting characters.   

The things that usually go wrong on Grand Designs are that people try to build homes that they can't afford, mainly because some problem occurs, or they are silly enough to start knowing they don’t have enough money!   Sometimes they have to rework mistakes.   Sometimes the design is overly complex, or poorly estimated, or hard to execute.   Sometimes the people and their ideas are just plain crazy.   So which were the standouts that just worked?   

One was the guy who with his own hands built a Cruck house in the middle of the woods, whose own deep technical skills and a modest expectations built a truly beautiful home for less than the price of a medium sized car.   Another was the ex-chairman of Wilkinson Sword whose home I didn't much care for, but whose project came in band on time and budget; he knew how to manage.

Which brings me to IT projects.   

M

I make the building design analogy after being inspired to by a paper by Dr. Paul Dorsey (click here)  - on the "Top 10 Reasons Why Systems Projects Fail".   Its a bit dated - its from 1995 - but all the studies out there, up to and including 2012, indicate that a remarkably high proportion of IT projects fail - up to 80% some say.   Others say that at least 30% fail completely and another 50% fail to deliver expected benefits.   There are many reasons.   In 2011 Michael Krigsman reported on a study in his blog (click here)  that the top 5 reasons IT projects fail are;

1. Requirements: Unclear, lack of agreement, lack of priority, contradictory, ambiguous, imprecise.

2. Resources: Lack of resources, resource conflicts, turnover of key resources, poor planning.

3. Schedules: Too tight, unrealistic, overly optimistic.

4. Planning: Based on insufficient data, missing items, insufficient details, poor estimates.

5. Risks: Unidentified or assumed, not managed.

This is as good a list as any and is consistent with what most other studies report.   In my mind it all comes down to this; IT folk and the business executives overseeing them do not apply commonsense project management process to IT Projects.   Partly this is because the IT people don't really understand the things that are important to their business clients, and the business executives often don't think that IT is all that important to them, either because they don’t understand it or don’t want to understand it.   Paul Dorsey talks about this lack of engagement as a big reason IT projects are often set up to fail.

Dorsey also talks about the importance of having independent advice.   It is ALWAYS in the interest of the project team, internal or contracted, to present a positive view of the project - right up until when it fails (my view).

So what does building a house have to do with this.   If you are going to build a bespoke home you need to get expert help.   An expert designer (architect) even though they cost a mint, will be cheaper in the long run.   An expert Project Manager to co-ordinate all the activities and trades, and an expert builder who is technically knowledgeable are critical.   Then get in a room with all of them and make sure they are all talking before you shell out for anything!   We did this on our place, that's why it went without a hitch.

The same is true for an IT Project, be it big or small.   Invest in design, proper process and great people.   It doesn’t guarantee success, but not having it guarantees failure.   Oh, and get independent advice and audit.   You can give me a call for that.

Dennis.Franklin@IndagoPartners.com

Commodities Prices will only increase

At the moment there is a lot of hoo-ha about the difficulty the mining industry faces in terms of margin squeeze. This goes along with complaints that government is overtaxing mining companies. What we need to remember is it is the job of mining company executives to advocate for their company, but the long term sustainability of mining is nowhere near as dire as they say.   At least not in the way they think.

There is much more chance that the industry will be unable to meet demand than they will go broke trying.

I don't want to talk about the taxation side of this equation in this post, I'll do that separately. Here I want to talk about the probable trajectory of commodity prices over the medium to long term.

Supply is Constrained

Commodity prices are essentially driven by those old favorites, supply and demand. On the supply side we see that the industry is constrained by a number of things. Access to good quality ore is an issue because the easy to access, high grade ore gets mined first, so there is a trend now that orebodies are getting deeper and/or lower grade. They are also being found in areas distant from population centres and in difficult terrain as the close material has been mined out. This situation cries out for new ways of mining and that requires R&D and step changes. There are a lot of other factors: human, technological, political, but the availability and nature of the resource is the most important.

Demand is exponential

Demand for resources is driven by two things only. Population increase and societal development. The population of the earth is growing exponentially, and people everywhere are trying to improve their living standards. So even now, with commodity prices on the decline, we see a long term trend which is in exponential growth mode. Investment in China and India now, and probably in Africa in the next 20 years will continue to increase demand and put inflationary pressure on commodity prices.

Commodity Price Index

The commodity Price Index put out by the Reserve Bank of Australia (Link) (Graphic) shows clearly that industrial activity in China and India is driving unpecendted demand for resources. The increasing trend over the last 10 years includes a shorter cycle 'mini-boom and bust' but the overall trend is clear.

So What!

So what, you ask. Well, I've talked about myths in the mining industry that prevent investment in innovation, and here is another view. During times of increasing commodity prices, many mining companies will cease investment on anything that gets in the way of production, including innovation, vehicle maintenance and new equipment. Often they also take their eye of their operating costs. And in the bust cycle, they are too busy screwing down on costs to invest in anything. So it's a double whammy.

Over the next 30 years, resources demand will increase exponentially. Incremetnal change will not produce the productivty increases necessary, it by nature provides a diminishing return, so step change is critical. The mining companies that embrace it will be the success stories of the future, the question is - will your company be one of them?

4 Myths that prevent Innovation in the Mining Industry

Recently I've noticed a lot of people in the news talking about the importance of innovation and commercialisation as potential drivers of enhanced productivity in Australian industry.   With a number of recent studies talking about how Australian industry productivity levels have fallen behind our peers, many argue that this has to do with a lack of investment in innovation.   In a powerful talk, Mark Cutifani (CEO AngloGold Ashanti and now CEO Designate of Anglo American) discusses, among other things, the importance of mining to the world economy and its innovation challenge.  Click Here to watch Mark speak.

A lot of industries around the world are investing in innovation that is being driven by advances in information and communications technologies.   These advances include: New wireless communications technologies, smaller and more powerful mobile computing platforms, access to big data and big computers over the internet (think Cloud computing) and whole new ways for people to collaborate (think Twitter and Facebook).  The combination of all these technology trends forms the eye of a perfect storm that will allow many companies and industries to re-invent the way they operate.   

In a mining context these trends present opportunities to work and be effective in remote areas, or across geographically dispersed footprints, or in difficult operating conditions.   New approaches that these ideas will allow are machine and process automation, operational control and monitoring from a distance, mobile equipment automation, and comprehensive sensor networks that allow unprecedented vision of an operation.   So why aren't mining companies investing hell-for-leather in these new ideas, to try to find competitive advantage in their marketplaces?    

Over the last 15 years working around mining companies trying to bring new technological approaches to the table, I have been rebuffed more times than I can count.   This is not to say that all mining companies are luddites.  Some companies are rising to the innovation challenge with major step change initiatives.  However, they are the exception, not the rule.   Here are some of the myths that are used by miners to avoid innovation.

Myth Number 1.   We are different to other industries.   Many of the ideas that I talk about to miners are ideas that have already been proven to work in other industries.   But the first response I often get is that mining is different to other activities.   It is true that there is inherent operational complexity in mining and processing an ore body that is not homogenous and invariably different to every other ore body in some significant way.  This means that miners need lots of flexibility.   Fair enough, but once the ore is out of the ground and loaded into the transport medium, the process becomes as predictable as any industrial chemical or manufacturing plant, all of which are leaps and bounds ahead of mining in terms of automating their operations.    And even parts of the upstream mining process have outside analogies.  For instance, there is a direct analogy between operating and automating a truck and shovel fleet in an open cut mine to operating and automating a tank warfare operation.   Lots of large machines hooning around the countryside with a need to know where all of the others are, avoid crashing into each other, and deliver an efficient outcome for the operation.   Yes mining is different, but it’s not that different, and parts of it are very similar to other industries.

Myth Number 2.   Ours is a simple business.   I often hear the refrain that mining is a simple business - that “we just dig stuff up and send it to our customers”.  Interestingly, I often hear this argument from the same people as argue for complexity being a big issue.   The level of complexity that we observe depends on the scale at which we look.   At the highest level mining is a fairly simple matter, but this masks levels of great complexity within the industry.   It is true that no two ore bodies are the same; geographical issues introduce variability and even the nature of the metallurgy will dictate the complexity of the extraction and concentration processes.   Miners do much more than dig stuff up and sell it.   All of which leads me to conclude that smart new information technologies must surely be able to lighten the load.   For instance, with all of the computing power available today, and with clever new analytical programs, the simulation of multiple potential outcomes becomes relatively straight forward.   If complexity of the ore body means we can't make decisions in advance, then simulation holds the key to building multiple mine plans from which we can choose as we go along and improve our knowledge of an ore body.   As the ore body knowledge is improved, previous simulations would help operators quickly home in on the right course of action.

Myth Number 3.   Innovation is risky.   Yes innovation is risky.   But it is not as risky or expensive as flawed investment decision processes involving billions of dollars.   It is not as risky or expensive as exploring for minerals, and it is not as risky or expensive as not innovating at all.   Innovation through R&D is a process.   It should be undertaken strategically, and it should be managed like all other business processes with one small exception.   Early in the innovation process, ideas need to be given seed funding to help them deliver a business case and they need to be protected from those whose interests are vested in the status quo.   That seed funding needs to ensure that the biggest risks, the biggest assumptions in an innovation idea, are tested early, and failed early.    After developing a sensible business case and identifying a path to commercialisation, the idea must be managed as rigorously as any other project.

Myth Number 4.   We can't afford Innovation.   I am often amazed that highly profitable mining companies feel they can't invest in their future.   Of course they do - mineral exploration is the most visible example that they do.   And most mining companies over a certain size will have some significant investment in R&D, either in-house or as investments via university research.   But almost without fail, mining companies invest in incremental innovation that is focussed on the existing portfolio of problems.   Very few take bold steps.   What I find interesting is that mining companies, especially big ones, are more than happy to make flawed (in hindsight) investment decisions that can destroy billions of dollars of shareholder value, but baulk at spending a few million dollars on doing some fundamental research into step change innovation.  

Not all miners are adverse to innovation.   I was recently involved, with many others, in an innovation activity at AngloGold Ashanti (www.aga-tic.com).   Faced with the problem that their South African gold mines were becoming too deep to mine profitably, and the knowledge that there remained enormous reserves of gold below 4000m, AGA initiated an open innovation forum with all of their major suppliers to attempt to re-invent underground mining at depth.   The outcomes are impressive, and are now being tested on a block of ground to see if the new technologies are up to the task.   It's a great example for the industry.