Engineering & Mining Journal

JAN 2019

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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Page 19 of 59

PROJECT SURVEY 2019 18 E&MJ • JANUARY 2019 When looking at what factors drive pro- ject spending in the mining sector, Gross Domestic Product (GDP) growth and com- modity price/demand fundamentals are at the top of the list of leading indicators. In the U.S., GDP growth was 4.2% and 3.5% in the second and third quarters of 2018, respectively, a marked economic improve- ment after hitting a low of around 1.7% in 2016. However, GDP growth in the U.S. appears to be on a declining trend to un- der 3% for 2019. Asian nations, including China, are averaging around 6.5% growth, and world average GDP growth has been really going sideways at about 3.7% since 2017, according to the International Mon- etary Fund (IMF). That sideways move- ment is expected to continue in 2019. The gains in commodity prices that were seen in 2017 were somewhat mut- ed in 2018. Metals prices declined about 10% during 2018, according to the World Bank metals index. Metals prices are expected to stabilize in 2019. China continues to be the main driver for metals demand, accounting for about 50% of the global commodity consump- tion. Consumption is likely to slow in 2019, which is putting a damper on an otherwise improved capital spending en- vironment. The Chinese government has tightened environmental regulations for mines, ushering in a crucial time for trans- formation and upgrading, and also making it harder for mining companies to permit new mines. However, mining, especially for copper and other nonferrous metals, will continue to grow in China, because of market demand through programs like the One Belt One Road Initiative. Around the world, development of mining projects continues in spite of un- certainty surrounding trade war policies and other constraints, such as resource nationalism, geopolitical obstacles, labor issues and infrastructure/energy costs. As a result of the resource nationalism trend, mining development in Indonesia has es- sentially stagnated. Freeport McMoRan and the government remain on track to seal a final divestment deal worth $3.85 billion for the massive Grasberg mine in Indonesia. The trade war has disrupted global supply chains, sending companies in search of alternatives, and this is plac- ing upward pressure on end-product costs. Mining companies continue to invest in productivity optimizations and strate- gic mine expansion projects, mainly to replace capacity from mines nearing end of life, or to combat low ore grades. Pro- jects tend to be smaller, in-plant capital and equipment upgrades/replacements, while larger grassroot projects continue to get pushed out. Project development will focus on new technology to reduce energy and labor costs, the two largest cost cen- ters for mining operations. In Australia, iron ore miners are spear- heading the implementation of new tech- nology to reduce costs, enhance productiv- ity and improve mine safety. Usage of fully autonomous heavy haulage vehicles and long-distance trains is on the rise, result- ing in significant cost savings. Rio Tinto is the first mining company to achieve fully automated drilling without human interven- tion and plans to increase its autonomous haulage fleet by 50% by end of 2019. Fortescue Metals Group plans to become the world's first iron-ore miner to have a fully autonomous fleet. BHP's autonomous drills at its Yandi and Mining Area C iron ore mines are generating notable productivity improvements while significantly reducing wear-and-tear maintenance costs. New growth markets like electric vehi- cles and battery storage are driving demand for mining exploration and brownfield min- ing projects for many commodities, in- cluding cobalt, lithium, copper, graphite and zinc. If there is any doubt that electric vehicle production will drive demand for battery metals; Tesla, which sells about half of its annual car production to China, is planning to spend $2 billion to build a gigafactory in Shanghai, which is expect- ed double electric vehicle production in two years. It also plans a European facto- ry. And Tesla has lots of new competitors joining the race, in addition to the major automakers, who are investing billions into new model hybrids and electric vehicles. The Rise of Lithium Australia, Argentina, Chile and Bolivia lead the world in lithium projects, but there are projects popping up everywhere. In North Carolina, for example, there is a historic spodumene ore (lithium) region. FMC Miners Plan More Projects for 2019 Mining related construction projects increase 8%, reversing a declining trend since 2012 By Joe Govreau

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