MinEx Consulting Strategic advice on mineral economics & exploration The current investment landscape for mining, exploration & mineral sands John Sykes Strategist, MinEx Consulting also PhD Candidate, Centre for Exploration Targeting, The University of Western Australia (UWA) Lecturer, Strategic Management of Resource Companies and Strategic Analysis & Consulting, Business School, UWA Lecturer, Strategic Planning & Practice, Australian Institute of Management, WA Managing Director, Greenfields Research 19 th Australian Mineral Sands Conference 22 nd March 2018, Perth, WA Image: Shutterstock
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MinEx Consulting Strategic advice on mineral economics & exploration
The current investment landscape for mining,
exploration & mineral sandsJohn Sykes
Strategist, MinEx Consultingalso
PhD Candidate, Centre for Exploration Targeting, The University of Western Australia (UWA)
Lecturer, Strategic Management of Resource Companies and Strategic Analysis & Consulting, Business School, UWA
Lecturer, Strategic Planning & Practice, Australian Institute of Management, WA
Managing Director, Greenfields Research
19th Australian Mineral Sands Conference 22nd March 2018, Perth, WA
Image: Shutterstock
MinEx Consulting Strategic advice on mineral economics & exploration
How do we make sense of this?
The White
House's Climate
Change Believers
Are Headed Out
the Door
- Time, 15 March 2018
U.S.-Backed Fighters Take Largest Syrian Oil Field From ISIS
- The New York Times, 22 October 2017
Sanjeev Gupta to beat Tesla's
Elon Musk with bigger
battery in South Australia
- Australian Financial Review, 16 March 2018
Brazil dam collapse: BHP to give $235 million more for clean-up of environmental disaster
MinEx Consulting Strategic advice on mineral economics & exploration
The mining industry is currently experiencing FOMO
Real estate
+8.9%
Healthcare
+21.9%
Finance
+5.8%
Mining
& Metals
-1.4%
Telecoms
-2.9%
Energy
-3.5%
I.T.
+10.8%
Utilities
0.8%
Consumer
Staples
2.3%
+12.9%
Consumer
Discretionary Industrials
+12.6%
Materials
2.3%
Data: ASX; NB: Indices are for ASX200, apart from ‘Mining & Metals’ which is based on ASX300. Materials, based on ASX200, includes Mining & Metals constituents of ASX200. Real estate based on REITS. Finance excludes A-REITs
MinEx Consulting Strategic advice on mineral economics & exploration
…the fringe is where radical innovation is occurring…
• Four key areas of science, technology and innovation:
Biotechnology & genetics
Computer science & IT*
Nanotechnology
Neurology & psychology
Sources: Turney, 2010; Imperial Tech Foresight*Computer science, IT, data science, machine learning, AI etc., are proximal industries to mining so we are already aware of their potential – what about the others?
MinEx Consulting Strategic advice on mineral economics & exploration
…but only when it all comes together!Nickel
Discoveries in Sudbury & New Caledonia
Bulk open pit mining
Flotation & smelting
advances
Demand for armour
Ability to handle radiation
Uranium
Demand for nuclear weapons
Demand for nuclear power
Bulk mining for very low
grade radium
Radium-uranium discoveries in the Congo
Aluminium
Bauxite discoveries in North America
Bayer and Hall-Heroultprocesses
Transportation demand
Bulk open pit mining
Source: Sykes et al., 2016; Images: Shutterstock
MinEx Consulting Strategic advice on mineral economics & exploration
Titanium metal is too energy intensive, i.e. expensive
0
50
100
150
200
250
300
350
400
Lead
(fu
rnac
e)
Stee
l
Lead
(sm
elt
)
Co
pp
er (
sme
lt)
Zin
c (s
me
lt)
Zin
c (e
lect
ro)
Co
pp
er (
leac
h)
Stai
nle
ss S
teel
Nic
kel (
sme
lt)
Nic
kel (
leac
h)
Alu
min
ium
Tita
niu
m
MJ
/ K
g
Energy consumption during metals production
• Titanium has a very high
strength & stiffness-to-weight
ratio in comparison to steel
making it far more useful… in
theory;
• However, it is very expensive
due to the energy consumed
during production drastically
affecting its price-performance
ratio in comparison to steel;
• The industry has long waited for
a breakthrough replacement to
the Kroll process that is less
energy intensive;
• Unfortunately, we’re still
waiting…
3%17%
33%12%
35%
Gross energy requirement during titanium production
Mining & processing Smelting
Refining Reduction
ElectrolysisData: Norgate et al., 2006; Gao et al., 2018
MinEx Consulting Strategic advice on mineral economics & exploration
…and too polluting! But is a solution appearing?
0
5
10
15
20
25
30
35
40
Lead
(b
last
fu
rnac
e)
Stee
l
Lead
(sm
elt
ing)
Co
pp
er (
sme
ltin
g)
Zin
c (I
mp
eri
al)
Zin
c (e
lect
roly
tic)
Co
pp
er (
leac
hin
g)
Stai
nle
ss S
teel
Nic
kel (
sme
ltin
g)
Nic
kel (
leac
hin
g)
Alu
min
ium
Tita
niu
m
Kg
CO
2 e
q. /
Kg
CO2 emissions during metals production
• Renewable energy would resolve CO2
intensity issues;
• Would this alone stimulate titanium metal demand?
• However, ‘super’ cheap renewable energy (e.g. near-free solar) would resolve both cost and environmental issues and could be the market growth trigger…
• …thus an alternative to the Kroll process may not be required.
4%17%
9%
18%
52%
Electricity consumption during titanium production
Mining & processing Smelting
Refining Reduction
ElectrolysisData: Norgate et al., 2006; Gao et al., 2018
MinEx Consulting Strategic advice on mineral economics & exploration
Heta Lampinen, Helen Langley, John Libby, Martin Lynch, Stuart Masters, Michael Mead, Adele Millard,
Joanne Moo, Suzanne Murray, Sandra Occhipinti, Ahmad Saleem, Ian Satchwell, Robert Sills, John
Southalan, David Stevenson, Narendran Subramaniam, Siobhan Sullivan, Daniel Sully, Janet
Sutherland, Marcus Tomkinson, Marnie Tonkin, Jan Tunjic, Will Turner, Stanislav Ulrich, Jessica Volich,
Wenchao Wan, Peter Williams, Marcus Willson and Afira Zulkifli Tahmali, as well as my PhD
supervision team: Allan Trench, Campbell McCuaig, Mark Jessell and Nico Thebaud, and finally
Richard Schodde at MinEx Consulting.
MinEx Consulting Strategic advice on mineral economics & exploration
References
• Christensen, C., 1997, The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail, Harvard Business Review Press: Brighton (MA), 225p.
• Gao, F., Nie, Z., Yang, D., Sun, B., Liu, Y., Gong, X., & Wang, Z., 2018, Environmental impacts analysis of titanium sponge production using Kroll process in China, Journal of Cleaner Production, 174, pp 771-779.
• Norgate, T.E., Jahanshahi, S., & Rankin, W.J., 2007, Assessing the environmental impact of metal production processes, Journal of Cleaner Production, 15, pp 838-848.
• Ramirez, R., & Wilkinson, A., 2016, Strategic Reframing: The Oxford Scenario Planning Approach, Oxford University Press: Oxford, 242p.
• Steger, M., 2013, Globalization: A Very Short Introduction, Oxford University Press: Oxford, 176p.
• Strauss, S.D., 1986, Trouble in the Third Kingdom: Minerals Industry in Transition, Mining Journal Books: London, 227p.
• Sykes, J.P., Trench, A., McCuaig, T.C., & Jessell, M., 2017, Charles Dickens on the (potentially) changing role of globalisation and sustainability in the long-term future of mining and exploration, Tenth International Mining Geology Conference, Hobart (TAS), 20-22 September, pp 239-256.
• Sykes, J.P., Wright, J.P., & Trench, A., 2016, Discovery, supply and demand: From Metals of Antiquity to critical metals, Applied Earth Science, 125:1, pp 3-20.
• Trench, A., & Sykes, J.P., 2014, Perspectives on Mineral Commodity Price Cycles and their Relevance to Underground Mining, 12th AusIMM Underground Operators’ Conference, Adelaide (SA), 24-26 March, pp 19-31.
• Turney, J., 2010, The Rough Guide to The Future, Rough Guides: London, 376p.