Mitigating Risk in the Mining Sector: Best Practice Implementation & Independent Audits

Mitigating Risk in the Mining Sector: Best Practice Implementation & Independent Audits

Jean Richardson, Andre McKen, Russ Calow, SGS Minerals Services

Outi Maatta, SGS Systems, Standards and Certifications

Adrian Shaw, SGS Project Finance

2

Definition of Risk, Risk Management

Risk - the effect of uncertainty on objectives

Risk management identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor & control probability and/or impact of

unfortunate events to maximize the realization of opportunities

ISO 31000, Nov 2009

3

Risk in the Minerals Sector

PROJECT FINANCE

SSC

MINERALS

4

Top Risks to Mitigate, 2009/2010

Cost containment

Industry consolidation

Access to capital

Keep social license to operate

Climate change

Skills shortage

Lack of infrastructure access

Access to secure energy

Resources nationalization

Pipeline shrinkage

Technical/operational Strategic Financial Social Environmental Operational/Human Resources Location Location/Operational Political Strategic

Ernst and Young, 2009.

5

CEOs’ Concerns, 2009/2010

Pricewaterhousecoopers, 2010

20102009

54% Somewhat or extremely concerned

6

Energy Use

Rule 2009

HEAT MECH LOSS GRAIN SIZE REDUCTION

85%

14%

1%

3-4% of global energy consumption used for comminution. Of this 1% is used for grain size reduction.

Alavadro et al 1998

South Africa (Eskom) generates 38 GV/yr

AngloPlats uses 1 GV/yr

40% in comminution and smelting

Less than 1% results in grain size reduction

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Comminution Update

Technology advancements Jaw, cone crushers → ball& rod mills → SAG & FAG mills → HPGR

Complex deposits, complex mineralogy, fine grained ore Finer grinding needed – UFG, Activox, multiple regrinds 1998 High Definition Mineralogy 2000 Variability in hardness & grindability - geometallurgy

Simulation and modeling in feasibility Process and systems control Technical and management audits

Plant improvements & ISO 50001

Need, costs and availability of power Carbon emissions

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Technology Advances

Replace old equipment & assess technologies

Design flowsheet for mineralogy – can require fine grinding

HPGR more energy efficient

0

20

40

60

80

300 75 106 75 45Target Grind Size (micron)

Ene

rgy

(kW

h/t)

HPGRJaw-Rolls-Ball

Rule et al., 2009

40%

20%

fine coarse

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Complex DepositsMapping Variability/Geometallurgy

SGS SPI Grindability Test

Tumbling (abrasive) test

2 kg of 22 mm top size

Good for variability mapping

Batch test

Yields SPI & Ci for SAG design Hardness Domains

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SGS SPI Database

0

10

20

30

40

50

60

70

80

90

100

0 50 100 150 200 250 300SAG Power Index

Cum

ulat

ive

Freq

uenc

y D

istri

butio

n (%

)

hard soft

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t/hP80

t/hP80

t/hP80

t/hP80

t/hP80

t/hP80

Comminution Model SGS CEETCompleted

Simulate & Populate the Block Model

SAG MILL BALL

MILL

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Cerro Verde25 65.5 Elevation

Tonnes P e r H ou r

Throughput Modeled in 3D

Peruvian Porphyry Cu-Au

Blue / soft ore/ high tph Brown / hard ore/ low tph

5000

4500

13

Predict Power Needs by Year(SAG and Ball Mills)

Bulled, 2007a, b

hard

BALL MILL

SAG MILL

P80

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Technical Audits

Technical Audits (Plant optimization) Surveys, sampling, analysis, troubleshooting

Many plant parameters PSA, critical size build-up, mill speed, pulp density

SAG Mill

Cyclone

Ball MillClassification Screen

Pebble Crusher

Hard RockSp

litter

Soft Rock

CT

Cyclone

Ball Mill

Gravity

Ball Mill Splitter

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Results Oriented: Improved Profitability

Cu plant Implementation of a pre-

crusher improved power efficiency 31% for hard ores

Capex = $US 11M

New revenues $US 40M/yr

Au oxide plant Optimization increased throughput

by 9.5% at similar grind

No CAPEX

New revenue $US13M/yr

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Management Audits: ISO Standards

BS EN 16000 → ISO 50 0001 Energy supply and use including equipment and systems Procurement and use-related disposal issues Continuous improvement cycles

ANSI/MSE 2000-2008

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Value of Systematic Energy Management

PRODUCTION Decreased energy use Controlled energy costs Improved operational efficiency

PLANNING Data for fact-based decisions Operating and capital spending Purchasing strategies

PROTECTION Protection against energy market instabilities Reduced environmental impacts, show corporate social responsibility Competitive advantages

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SGS: a Partner in Risk Mitigation