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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PROJECT SURVEY 2017 20 E&MJ; • JANUARY 2017 www.e-mj.com zinc mine, which produced 2.8 million t/y. Since the beginning of 2015, 18 lead-zinc ore mines have started operation. Fifteen of those were small producing mines in China. One mine started up in Canada and two in Spain. Trevali Mining Corp. (Van- couver, British Columbia) restarted the Caribou mine in Bathurst, New Brunswick. In Spain, Minas de Aguas Tenidas SAU, a joint venture between Mubadala and Tra- figura, has restarted the Sotiel mine, and the new mine in Huelva Cueva de la Mora, which produces copper and zinc ore. The strong zinc market has miners reevaluating projects to bring supply on- line. Globally, Industrial Info is tracking more than 175 zinc-ore mining projects totaling about $16.5 billion as part of the Global Mining Business Intelligence Platform. Twenty-six zinc mining projects to- taling $3 billion are under construction. This includes a $172 million project by Gansu Changba Nonferrous Metals Co. Ltd. to expand an underground zinc-lead mine in Longnan, China. The project is expected to increase mine capacity up to 3 million t/y by late 2018. Projects are also under construction in Australia, In- dia, Indonesia, Ireland, Kazakhstan, Peru and South Africa. New Technology Will Drive Demand for Metals Energy efficiency will be an important driver of capital spending in 2017 as companies continue to look for ways to reduce operational cost. The expansion in microgrid development, as well as the use of electricity, batteries and fuel cells at mining operations, will continue. To reduce the use of diesel fuel in mining operations, companies are investing in retrofitting equipment fleets with electric- ity, batteries or fuel cells. With demand for batteries and fuel cells going up, de- mand for lithium and platinum, which are used in these products, is also rising and driving project development. All in all, 2016 is looking more like a turnaround year for the mining industry. Capital expenditures are expected to im- prove moderately in step with commodity prices in 2017. Joseph Govreau is vice president of re- search for the metals & minerals indus- try for Industrial Info Resources, located in Sugar Land, Texas. Pinching the Project Pipeline A quick scan of 2H 2016 mining industry financial reports, pre- sentations and conference-call transcripts provides a relatively clear idea of how metal producers are handling the management of their project pipelines. Unsurprisingly, their current focus is mostly on cost-effective completion of brownfield projects, with promising greenfield projects receiving attention but advancing under a yellow caution flag. A case in point: During Southern Copper Corp.'s (SCC) third-quarter 2016 earnings call in October, company executives were quite willing to discuss the potential value of greenfield proj- ects such as the proposed Tia Maria mine in Peru, development of the El Arco copper-gold deposit in Mexico and the Los Chan- cas copper-moly deposit in Peru, but repeatedly qualified their comments to ensure there was no misinterpretation—investment in these prospects will proceed carefully and in step with market trends. As SCC EVP Daniel Muñiz explained when asked about the company's strategy vis-à-vis brownfield vs. greenfield devel- opment: "[Our mindset] is to be very conservative, looking at IRRs, looking at risk/reward and pushing the gas on the better ones, so to speak." However, some prospects are harder to cat- egorize than others. As an example, he cited the company's El Pilar property as a greenfield project that could also be regarded as brownfield, explaining that its location within 40 km of the company's existing Buenavista operation could qualify it as a logical expansion of the new SX-EW plant at Buenavista—and at a bargain, noting that SCC acquired it in 2015 for $100 million and believes it could yield 30,000 tons of copper per year. Meanwhile, Vale, the world's largest iron ore producer, is look- ing at revising its fundamental concepts for mine planning and design in order to reduce the number of future projects needed to maintain its production goals, as well as to reduce future capital investment requirements. In a late-2016 investor presentation in New York City, Peter Poppinga, chief executive of Vale's Ferrous Minerals business, explained how the company plans to change its future mine-plan template from a conventional sequence involving mining → crushing → screening → milling → concentration → sale- able product, to a simpler plan that would encompass only mining → crushing → screening, culminating in an "intermediate product" that would then be shipped from Brazil to a point closer to the end customer for further processing into the required saleable product. This move to offshore blending, said Poppinga, would elimi - nate the need for each of Vale's three mine groups, or systems— Northern, Southern and Southeastern—to produce its own final, saleable product. Along with Vale's push to increase the propor- tion of dry processing used in its ore preparation, it is expected to substantially reduce its need for new projects to maintain a production level of 450 million mt/y until 2030, along with an associated drastic drop in long-term capex.