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The coming radical change in mining practice

By Simon Michaux - posted Tuesday, 15 October 2013


Something is happening around us. It's been highly visible for five years or so by those who choose to look. It seemed that Australia had missed the troubles plaguing the United States and Europe. The Global Financial Crisis (GFC) seemed to not bother us here at all. Australia was doing well, largely due to the economic performance of the mining industry in a boom cycle. But now the party seems to be over.

That mining boom has clearly moved into a contraction cycle. The mining industry has seen mass layoffs and large operation shutdowns, resulting in troubled economic predictions for the Australian economy. Mining is becoming economically unviable

There are a number of technical reasons for this, which have translated into an economic outcome.

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  • Decreasing grade
  • Increasing rock hardness
  • Higher strip ratio
  • Increase in penalty elements
  • Increase in required energy
  • Increase in required potable water
  • Much greater environmental impact

As we mine out all of the easy to work deposits, only the harder work deposits are left. Often ore deposits are deeper underground, requiring a greater strip ratio or deeper underground operations. This requires more energy and capital as part of the cost of doing business. Penalty elements in saleable concentrate going to the smelter like arsenic, fluoride or cyanide are not accepted where decades ago they would have been rejected. Often, only countries like China would accept these concentrates due to environmental pollution generated during their processing. Economies of scale need mining operations to double and triple in size for the next generation to be economically viable.

All future operations looked at now are huge low grade deposits, with penalty minerals more prominently present in deposit that prevent efficient processing at ever decreasing grind sizes. The scale of these low grade operations is much larger than what is done now.

Energy is the rate determining step mining is no longer the financial bonanza it used to be. Total world fossil fuel supply is close to peak, driven by peak of oil production. Declining oil production in the coming years will create a rising gap which other fossil fuels like gas or coal, will be unable to compensate for. The energy contribution of nuclear fuels is too low in order to have any significant influence at a global level, though this might be different for some countries. Moreover, like with fossil fuels, easy and cheap to develop mines are also being depleted in uranium production effort and cost will continuously increase as a consequence.

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  • 1 Mtoe = 7.1 million barrel of crude oil and condensate
  • 1 Mtoe = 10 million barrel of natural gas
  • 1 Mtoe = 1.16 billion m3 of natural gas liquids
  • 1 Mtoe = 1.5 Mt hard coal (1.8 Mt sub-bituminous coal)
  • 1 Mtoe = 3 Mt lignite
  • 1 Mtoe = 58 t uranium

The industrial systems that each of these energy sources supports is quite different and are not interchangeable easily. That beings said, each of those industrial systems are vital for our society to function. Putting all energy sources together gives a snapshot of our industrial capability. Peak total energy is projected to be approximately in the year 2017, four years away. As all of these sources are only a few years away from peaking and declining (with the exception of uranium), a compelling case can be made that that our society and its industrial sector energy supply faces a fundamental problem, that is systemic in nature.

All of the above results in an increase in power and water at a time when power and potable water shortages are probable. This implies that mining in its conventional form will peak and decline, just like production rates of any other non-renewable natural resource.

Unfortunately, the implications of contracting natural resources is counter to economic objectives and philosophies. Demand for all metals has been growing at an unsustainable rate.

Put these observable trends together and a compelling case can be made that our society is approaching an existential crisis that is systemic in nature and is in denial about the existence of that crisis. Everything we need and want to operate is drawn from non-renewable natural resources in a finite system. Most of those natural resources that we need are depleting or will do soon. Conversely, demand for everything we need and want is expanding fast in the name of economic growth (and increasing population). When these trends meet, there will come a point where how we do things will fundamentally change

None of these issues can be seen in isolation. Everything interacts together. This means that a chain reaction is probably what is going to happen. A traditionally isolated problem will happen, which will trigger unprecedented chaos. This is the nature of systemic crises around fundamental support services.

The party is over when demand for something vital outstrips supply or some vital service ceases to function reliably (or at all). The flashpoint is not the peak production of any given natural resource but when the perception of the average people en-masse understands that the world they live in is no longer possible. Once those voting public understand that there is no easy solution at hand that allows their life to continue in the fashion they have become accustomed to, then there will be no avoiding the supporting issues. Failure to address these issues will result our society being devastated. A school of thought tells us that there is considerable effort to keep the voting public largely ignorant of these issues, to keep them at their posts, working and consuming. What happens to the idea of democracy when there is no longer enough to go around? If we wish to stay a democracy then the average person must become educated in these issues and actively take part in developing the solutions.

The challenge for our political leadership is considerable. A series of solutions are required and then an unprecedented amount of leadership and vision needs to be applied. The voting public have to understand what the genuine issues are and all stake holders then have to work together. Our current approach seems to be wilful ignorance and 'give war a chance'.

We either meet these problems effectively, or those problems meet us with devastating consequences.

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This is a short version of the presentation given by Dr Simon Michaux on peak mining to the Fenner Conference on Environment in Canberra last week.



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About the Author

Dr Simon Michaux has a Bach App Sc in Physics and Geology and a PhD in mining engineering. He has worked in the mining industry for 18 years in various capacities.

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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