The successful route to building new mines in Africa is considering infrastructure requirements upfront, and incorporating them at feasibility stage, writes Laura Cornish.
Traditionally, the driver for engineering firm selection for mine feasibility studies has been relevant process plant design experience, with the secondary assumption that any related infrastructure scope can be successfully delivered.
This may have been realistic when plant and equipment were the main cost consideration for greenfield developments, but this is no longer the case, particularly in Africa. Today, infrastructure dominates mine capital cost and risk, and can represent as much as 75% of a new project’s capital requirements, according to the Australian Bureau of Statistics. “For less developed countries in Africa, South America and Asia, the infrastructure costs are likely to be even higher as a percentage of mine development cost,” says Andrew Keith, general manager for JK Aurecon, an alliance established between JKTech and Aurecon in 2012 to address such challenges.
“The reality today is that infrastructure has become more challenging for mining companies to develop than process plants, and it is not their core expertise. Costs of the facilities “outside the fence” can amount to as much as 80%,” says Linsey Dyer, Aurecon South Africa business development manager. “It is also a fact that sustainability issues have become a significant driver of project delays.”
Keith continues: “Easier, cheaper, higher grade ores are depleted and the industry has to develop mines in further, less developed geographies and with lower ore grades. This is reflected in the average ore grade of global mineral operations for certain ores declining by as much as 30% this century. Sustainability issues have been exacerbated by these same factors: the larger the proposed footprint of the project – geographical, logistical, energy intensity, environmental and social – the more complex and potentially delayed the time-to-market becomes in terms of achieving social licence to operate and authority approvals.”
Surrounding and neighbouring communities are becoming increasingly informed about their ‘land rights’ and local governments are implementing regulations that protect their people. Miners have to respect this and comply. “Indeed a trend in the modern world of resource project development is that to achieve true social licence to operate is that simple compliance is no longer the benchmark.”
In line with the recognition that the mine development landscape has changed and evolved, Aurecon established an alliance with acknowledged metallurgical and process specialist JKTech in order to provide a new feasibility model that integrates expert assessment of mine processing with enabling infrastructure in a holistic way to enhance project value. Such a model incorporates process plant design as one of several specialist packages that will deliver benefits including reduced and more certain project costs, lower or phased requirements for electricity and water, leading to more sustainable mines, and staged delivery of infrastructure in line with more accurate project life cycle scheduling.
“As a combined entity, we can assist clients with every development aspect to deliver a sustainable, cost-effective solution,” Dyer adds. “An optimised ore body development with smart infrastructure delivery ultimately gets the highest value product to the market as quickly as possible.” The combination of Aurecon’s historical infrastructure expertise with JKTech’s mineral processing methodology and ore characterisation techniques offers client solutions in the global resources project development market that effectively release additional project value and reduce total project costs, through an alternative method of delivering on every project aspect.
Aurecon is strong and experienced in pit-to-port logistics, infrastructure and integrated development planning in a broad range of economies. What’s more, Keith says the group understands that the mining industry globally is under immense pressure to provide sustainable economic and social benefits to the communities in which they operate, and has a service offering that enables project owners to achieve just this.
“We use a number of business registered tools to ensure all project elements are incorporated into a study or design. Our sustainable operations tool is based on five sustainable capital concepts, which look at natural, social, human, financial and manufactured capital. We look at sustainability across the five capitals and come up with innovative opportunities, in partnership with all stakeholders, on how to make mine sites more sustainable without depleting shareholder value,” Dyer notes.
According to Dyer, the alliance could not have been better timed. “Most mining companies are starting to appreciate the necessity to look at new projects from this viewpoint and are thinking along these lines, particularly at concept stage.”
At the time when the alliance was first announced, Paul Hardy, CEO of Aurecon and Dr Dan Alexander, CEO of JKTech described the deal succinctly: “This alliance is supported by a cultural alignment and desire between our two organisations to think outside the box, to provide original design solutions for our clients in line with their project’s technical and geographical characteristics. Optimising infrastructure design with plant and mine design becomes more critical as the costs and demands for power, water, steel, etc. increase.. Aurecon’s expertise with infrastructure combined with JKTech’s geometallurgy, mining and processing expertise along with one of the largest databases of processing plants that exist, will lead the mining industry into the next phase of optimised mine design.”
The alliance works
The benefits of the JK Aurecon approach are well illustrated by a recent example of a nickel company that wanted to bring a new ore deposit on stream as rapidly as possible in a race to get concentrate to market.
The mine had used existing concentrator and infrastructure designs from another one of its projects in order to fast track the mine (‘cut and paste engineering’).
The final project grossly underperformed and the loss of value over seven months of lost recovery completely swamped any cost savings and NPV benefits from accelerating the schedule.
Unfortunately, the lesson was not well learnt and in a subsequent project the scoping study was planned along similar lines ignoring geometallurgical factors that had contributed to the lost recovery in the previous project.
“Our subsequent review of the scoping study and holistic opportunity identification integrating infrastructure together with processing development concluded that for no additional capital investment, the mine could deliver up to 12% increased revenues at 2% reduced operating costs, and, importantly, at highly reduced risk of failure to achieve target plant throughputs,” Keith concludes.