ACI Num 2 2019 by Prime Creative Media

VOLUME 13 NUMBER 2 | 2019

Australian Resources & Investment MANAGING KEY RISKS IN AUSTRALIAN MINING

BUSINESS CASE FOR INTEROPERABILITY

THE NEW GOLD BUGS

NICKEL: A METAL FOR THE FUTURE

9 772201 996000

ISSN 2201-9960

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MINERAL SANDS heating up

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CONTENTS

I N T H I S I S SU E

T H E F E AT H E R S T O N E REPORT

F E AT U R E D P R E S E N TAT I O N

merging economies to drive rising E coal demand, by Tony Featherstone

8 8

IN MEMORIAM

Sir Arvi Parbo AC FTSE

Investor interest turns to Queensland

ecuring a positive future: managing S key risks in Australian mining, by Trevor Hart, KPMG Australia

ining and modern slavery, M by Dr Leeora Black, Deloitte

Canyon eyes bauxite dominance

‘White gold’ in a green revolution

20 Analysis with Regina Meani dani Australia still absolutely A committed

by Anthony Fensom

44 Cardinal Resources’ significant discovery

46 Positive results for Kairos Minerals 48 The (un)necessary golden

trigger, by Przemyslaw Radomski, Sunshine Profits

26 The business case for

interoperability, by Gavin Yeates, Gavin Yeates Consulting Pty. Ltd.

50 Kalamazoo plans high-tech approach

28 Boots for Australian miners

30 Hot-dip galvanizing – sustainable

54 Gold fighting Fed and dollar

protection for steel in the resources industry

32 32

T R A N S P O R T, E Q U I P M E N T & M AC H I N E R Y

nergy-efficiency improvement in E mine railway operation using AI, by Dr Ali Soofastaei, Vale, Australia

ENVIRONMENT

36 Electric cars can clean up the

mining industry – here’s how, by Elsa Dominish and Nick Florin, University of Technology Sydney

38 A new radar level transmitter for the water-supply and sewage industry

–2–

GOLD

40 The new gold bugs,

MINE DE VELOPMENT

F E AT U R E D

24 Lucas Dow, CEO, Adani Mining

Potential game changer for NTM Gold

headwinds, by Gavin Wendt, MineLife Pty Ltd

58 Argent Minerals eyes high-grade feed 60 Material resource extension on the horizon

62 Responsible investing and the

importance of addressing climate change, by Andrew Naylor, World Gold Council

64 High gold connection at Apollo Hill deposit

66 Lake Roe project continues to grow

AUSTRALIAN RESOURCES & INVESTMENT

68 COPPER

68 Is peak copper back? by Steve Freeth

70 Aeris has big ambitions

72 MINERAL SANDS

Hot sands, by Anthony Fensom

VRX Silica on track for big gain

P O TA S H

ZINC

78 Australia’s first SOP project

84 Building a sustainable future

with zinc, by Mary Helen Yount, International Zinc Association

NICKEL

80 Nickel: a metal for the future, content provided by the Nickel Institute

82 Nickel markets delivering for Panoramic

OIL & GAS

86 Transferring LNG: groundbreaking technology

88 World’s strongest opportunity for low-risk commercial UCG

FOCUS

MINERAL SANDS HEATING UP One of the hottest commodities on the market

–3–

F E AT U R E D A R T I C L E

W W W. AUST R ALI AN R E SO U R CE S ANDIN V E ST M EN T.CO M . AU

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–4–

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T H E F E AT H E R S T O N E R E P O R T

THE

Featherstone REPORT

EMERGING ECONOMIES TO DRIVE RISING COAL DEMAND BY TONY FEATHER STONE

Much life is left in fossil fuels despite first-world move towards renewable energy sources.

f Australia’s coal industry is living on borrowed time, then nobody has told ASX-listed coal stocks. Several have had large share price gains in the past 12 months, despite persistent gloom about coal’s future and a subdued local share market. Australian Resources and Investments (AR&I) analysis shows that 10 coal stocks have rallied more than 50 per cent over one year to March 2019. TerraCom (formerly Guildford Coal) tops the table with a total return of 210 per cent over 12 months. Jameson Resources is up 80 per cent in one year, and MC Mining has soared 77 per cent. Universal Coal, Stanmore Coal and Cokal have also starred. Key coal stock New Hope Corporation has more than doubled in the past two years, even after recent falls. Context is needed with these gains. Most coal stocks were hammered between 2011 and 2016 during the mining investment downturn, and several died or are languishing. Recent gains impress but are coming off a low base that has amplified the percentage increase. In many cases, investors who bought during the mining boom at the start of this decade have lost money on coal stocks. New Hope Corporation, for example, is still trading well below its 2011 peak, despite its 2018 rally. The stock fell sharply after a lower-than-expected half-year result, which was released in March 2019. Other key coal stocks have struggled. Chineseowned Yancoal Australia shed 24 per cent over one year, and Whitehaven Coal was broadly flat in this period. Moreover, many junior coal exploration stocks on the ASX are stagnating, unable to raise

–6–

sufficient capital to develop their project or attract shareholders. AR&I examined dozens of coal stocks for this analysis, and there was plenty of red ink at the small end of the market. Caveats aside, the performance of Stanmore Coal, Universal Coal, TerraCom and others shows that there is more life left in quality emerging coal products than what the market realised, and that investors became too bearish on the sector and may still be so. Make no mistake: the coal sector has a long list of headwinds. In the short term, a slowing global economy could weigh on coal demand, and thermal and coking coal prices. China’s economy, the key consumer of Australian coal, appears to be slowing faster than the market expected. China’s recent restrictions on Australian coal are a significant threat to the industry. There are mixed messages on whether Australian coal has been banned for now or is just taking much longer than usual to clear Chinese customs. Either way, it’s bad for our coal producers, and several ASX coal stocks tanked on news of China’s ban in February and March. Some observers believe that China’s ban/go-slow approach to Australian coal is politically motivated; it could possibly be payback for Australia blocking China’s high-tech champion, Huawei, from the 5G network roll out amid cybersecurity concerns. Others say that Australia’s criticism of the militarisation of the South China Sea, and suggestions that China may have been behind cybersecurity attacks on our Members of Parliament, added to tensions between the two countries, making coal an early casualty.

AUSTRALIAN RESOURCES & INVESTMENT

Another theory is that by slowing coal imports, China is helping its struggling local coal miners compete against higher-quality, cheaper coal from Australia. Chinese action so far has been limited, affecting less than two per cent of Australian coal imports, according to reports. But coal is Australia’s secondlargest export industry and worth almost four per cent of gross domestic product. As such, a diplomatic resolution seems likely. Moreover, Australian coal provides a fraction of China’s overall energy needs, although it is important in its steelmaking. Reducing coal imports could increase prices and hurt the competitiveness of struggling Chinese steel producers that can ill afford higher input prices. Fierce opposition to Adani’s proposed Carmichael coal mine in central Queensland is another headwind. It has increased community pressure on politicians to reject new coal-generation projects, reduce support for the sector and quicken the move towards renewables. C H A L L E N G I N G M E D I U M -T E R M O U T L O O K These and other threats will lead to lower coal prices in the medium term. The hard-coking coal price (adjusted for inflation) is expected to average US$151 per tonne in 2023, from US$179 per tonne in 2019, according to KPMG’s January 2019 ‘Coal Price and FX Market Forecasts’, which collates a range of estimates. Low and ultra-low volatile PCI coal will fall from US$113 per tonne in 2019 to US$106 in 2023. Semi-soft coking coal is expected to ease from US$121 to US$91 in this period. The upshot is that Australian coal producers that benefited from higher prices and rising production face a more difficult outlook in the next few years. But that is not reflected in the share market, judging by the outperformance of several coal stocks over 12 months. Australian coal is banking on continued strong growth in Asian demand to ease the rate of decline in production and prices, as renewables have a bigger role in the global energy mix. Asian coal demand will jump from 740 million tonnes in 2017 to almost 1150 million tonnes in 2030, according to a report commissioned last year for the Minerals Council of Australia. ‘Even based on the conservative assumptions used in the Commodity Insights report, this demand growth represents a major opportunity for our world-class coal producers and the Australian economy,’ the Council said in a media statement last year. In contrast, the Institute for Energy Economics and Financial Analysis (IEEFA), a coal critic, in March 2019 said that building new coal mines in Australia ‘made no sense’. IEEFA commented on Whitehaven Coal’s application to open a thermal coal mine north of Gunnedah in New South Wales.

A S E L E C T I O N O F A S X- L I S T E D C OA L M I N I N G S T O C K S * One-year total return % **

Market Cap ($m)

TerraCom

210%

264

Jameson Resource

80%

MC Mining

77%

134

Universal Coal

75%

178

Stanmore Coal

74%

306

Cokal

69%

New Hope Corporation

67%

2776

Walkabout Resources

64%

Atrum Coal

63%

Dgr Global

50%

Nucoal Resources

34%

Allegiance Coal

24%

Whitehaven Coal

4200

Tigers Realm Coa

-13%

Yancoal Australia

-24%

4833

New Century Resources

-31%

424

Metro Mining

-50%

194

Paringa Resources

-58%

Prairie Mining

-60%

Altura Mining

-70%

256

Source: Morningstar * data as at 21 March 2019 ** based on total return (capital growth and any dividends) Note: table ranked by highest total return. Only includes ASX-listed coal stocks with a market-cap above $20 million.

‘This application shows that the outdated coal industry is being left behind as cheaper renewable energies increasingly become part of the mix and lenders shift away from coal, particularly more expensive imported coal,’ says IEEFA’s Tim Buckley. The world, it seems, is splitting in two over coal. Emerging nations that need cheap, reliable energy sources to industrialise their economies and lift more of the population out of poverty will drive huge extra demand for coal. But affluent, developed nations that are concerned about climate change are pressuring institutions to limit coal funding and production. Nobody doubts that the world needs to move towards more renewables and less fossil fuel in the energy mix. The question is the speed and orderliness of the transition. Those hoping for a rapid decline in Australian coal might be disappointed, given rising Asian demand and coal’s export status (how would some state governments cope with far fewer coal royalties?). Share market action in 2018 showed that there is more life in high-quality ASX-listed coal stocks than the bears realised. But maintaining those gains will be harder this year, particularly if China’s opposition to Australian coal imports intensifies and is implemented at more ports.

Tony Featherstone is a former managing editor of BRW, Shares and Personal Investor magazines. The information in this article should not be considered personal advice. It has been prepared without considering your objectives, financial situation or needs. Before acting on information in this article, consider its appropriateness and accuracy, regarding your objectives, financial situation and needs. Do further research of your own and/or seek personal financial advice from a licensed adviser before making any financial or investment decisions based on this article. All prices and analysis as at time of print.

–7–

IN MEMORIAM

R IA IN M E M O

Sir Arvi Parbo AC FTSE 10 February 1926 – 1 May 2019

ollowing the World War II, tens of thousands of migrants came to Australia from wartorn Europe. Estonian-born Sir Arvi Parbo was one of them. Arvi Hillar Parbo, the second of four sons to Aado and Hilda (nee Rass), was born on 10 February 1926 in Tallinn, Estonia. When the war ended in May 1945, 19-year-old Arvi entered a Displaced Persons Camp in Lűbeck, and he became a refugee in Germany where he finished his secondary education. In late 1946, he enrolled at the Clausthal Mining Academy in West Germany. After two years, he decided that because the opportunities in mining were limited in Germany, he would emigrate. Once asked why he came to Australia rather than Brazil or Canada, he replied, ‘I was in a hurry and the queue of applicants to go to Australia was shorter than for any other country’. He arrived in Melbourne in November 1949, and went to Bonegilla transit camp in north-eastern Victoria. Soon after, he was sent to work in a quarry south of Adelaide to fulfil the obligatory two years’ service with a nominated employer. Later, he was allowed to change to George Gitsham & Sons – motor body builders in Adelaide – because it was closer to the Adelaide University where he had enrolled as a student. After three years of part-time and two years of full-time study, he completed Mining Engineering with first class honours in 1955. Professor John P Morgan from Adelaide University helped Arvi to secure a position with Western Mining Corporation (WMC) at its Great Western Consolidated (GWC) gold mine at Bullfinch, in Western Australia. Arvi’s first appointment was as a surveyor at Bullfinch, north of Southern Cross. He soon came under the notice of the General Superintendent, (Sir) Laurence Brodie-Hall, who appointed him Underground Manager of the Nevoria Mine in 1958. Two years later, ‘Brodie’ recommended Arvi for the position of Technical Assistant to the Managing Director, William M Morgan. The Parbos moved to Melbourne in May 1960, where Arvi soon became involved in a variety of tasks, one of which was to assist Chairman (Sir) Lindesay Clark with the negotiations that led to the formation of Alcoa of Australia Limited in 1961. In a brief biography of Sir Arvi in The Age in August 1982, journalist Alan Trengove recounted a Sir Arvi visit to Alcoa’s head office in the United States. ‘Until he was better known, though, his name occasionally caused confusion. In 1961, Western Mining’s Chairman Lindesay (later Sir Lindesay) Clark asked him to join him on an important American assignment, and a cable was duly sent ahead to their hosts notifying

–8–

that Mr and Mrs Clark would arrive on a certain flight “accompanied by Parbo”. ‘It wasn’t until later that the assistant learned there had been a hurried conference in Pittsburgh to try to figure out who or what was “Parbo”. A Butler? A poodle? The Americans were too polite to ask, but whatever it was, they decided to book it a room.’ In 1964, Arvi was transferred from Melbourne to Kalgoorlie as Deputy General Superintendent, Western Australia, to assist (Sir) Laurence Brodie-Hall with the expansion of Western Australian Operations. He played an important role in the development of the iron ore project at Koolanooka, and the establishment of Kambalda Nickel Operations. In February 1968, WMC appointed Sir Arvi as its General Manager, a Director in September 1970, Managing Director in November 1971, and Chairman and Managing Director in October 1974. WMC grew appreciably during the period that Sir Arvi was Chairman and Managing Director – capital increased enormously, nickel production trebled, gold output increased fourteenfold, talc operations expanded, oil and gas exploration and production commenced, the Olympic Dam copper-uranium deposit was brought into production, and Queensland phosphate operations were re-established. In 1986, after 15 years as Managing Director of WMC, Sir Arvi relinquished the role, but remained Executive Chairman until December 1990, when he retired as an executive of the company, but remained Chairman. At a retirement dinner in the Melbourne Club early in 1991, Sir Arvi reflected on his association with WMC: ‘I have been truly privileged to spend my working life with Western Mining. I have always enjoyed whatever I have been doing, and the opportunity to work with people I respect and admire – true professionals in whatever their function in the company. I cannot remember a day when I was not looking forward to going to work. I have appreciated the comradeship and the high ethical standards, which have made me proud to be a part of Western Mining. These standards were set by Sir Lindesay (Clark) and have been maintained since then.’ Outside of his 34 years at WMC, Sir Arvi was Chairman of Alcoa of Australia Limited from 1978 until 1996. He played a significant role in the affairs of Alcoa of Australia, and served on the parent Board of Aluminum Company of America from 1980 until 1998. In August 1987, Sir Arvi was appointed a Director of The Broken Hill Proprietary Company Limited (now BHP Billiton), and was Chairman from May 1989 to May 1992.

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F E AT U R E D

Copper mine

INVESTOR INTEREST TURNS TO QUEENSLAND A ustralia has announced a new mining initiative, and Queensland, with its abundant mineral resources and world-class assets, can expect to be the centre of investor interest, making Brisbane the ideal location for the upcoming Energy Mines and Money event set to showcase mineral, coal, oil and gas projects and match them with global investment. In a National Resources Statement published in February 2019, the Australian Government set out its policy and long-term reform agenda for the country’s resources sector. The statement included a five-point action plan for Australia to become the most globally attractive resources investment destination; to open up new resources regions; to improve the sector’s focus on development; and to retain the world’s best workforce and deliver better community outcomes. This strategic long-term approach aims to position Australia’s resources sector as the world’s most advanced, innovative and successful. In the statement, the government said it believes that there is a bright future for the country’s resources sector due to Australia’s proximity to the burgeoning Asian economies, and their huge appetite for metals and minerals. With its vast mineral endowment and proven history of innovative exploration and mining practices, Queensland is well placed to benefit from this federal initiative. The state government supports exploration to deliver a strong and internationally competitive resources sector. In the past two years, for example, exploration permits have been granted for over 80,000 square kilometres of land, and 127 mining permits have been approved. The state’s mining and energy industry contributes over seven per cent of gross state product, and more than half of Queensland’s

– 10 –

exports, with direct and indirect employment of over 180,000 people. Coal is the most important sector, and the Department of Natural Resources, Mines and Energy estimates that Queensland contains 63 billion tonnes of coal resources (over half in the Bowen Basin), with metallurgical coal (coking and PCI) making up 25 billion tonnes of this total. In 2016–17, Queensland produced 241 million tonnes of coal (worth A$37.3 billion), almost 201,000 tonnes of copper cathode and 123,000 tonnes copper concentrate (worth a combined A$1.9 billion), 30 million tonnes of bauxite (A$1.2 billion) and 17,400 kilograms of gold doré (worth A$436 million), plus numerous other metals and minerals, including significant amounts of silver, lead, zinc and titanium. Queensland’s Multicom Resources, Armour Energy, Australian Mines and High Titanium Resources are just some of the companies that will showcase their projects and latest developments to investors at the upcoming Energy Mines and Money event. With the support of the Queensland Government and Trade Investment Queensland, investors from around the world are invited to Brisbane from 12–13 June for Energy Mines and Money where they will be able to compare and assess coal, oil, gas and renewable energy, alongside precious, base, bulk and battery metals projects throughout a two-day conference and exhibition. In addition to its pro-business government, Queensland has modern rail, port and transport infrastructure, a highly skilled and productive workforce, a strong and resilient economy, and a pleasant, subtropical climate. This event is clearly an attractive target for mining investors, not least those with an eye on Asia. For more information, please visit queensland.minesandmoney.com.

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Energy Mines and Money showcases strategic mineral, coal, oil and gas opportunities, and matches projects with global investment throughout a two-day conference and exhibition taking place in Brisbane from 12-13 June 2019. With the support of the Queensland Government and Trade Investment Queensland, the 2nd annual Energy Mines and Money will bring together over 700 mining leaders, energy executives, investors, commodity buyers, traders and brokers for two days of learning, deal making and unparalleled networking. The conference programme features over 80 global thought leaders discussing investment strategies, future commodity trends as well as energy policy. With an in depth look at coal, oil, gas and renewable energy, alongside precious, base, bulk and battery metals projects with spotlight presentations from over 40 mining and energy companies. With mining, oil and gas companies on display, some of the world’s largest natural resources fund managers in attendance, and a packed programme of keynotes, market analysis, company presentations, panels and workshops, this unique forum to hear from industry leaders, network, share knowledge and most importantly get deals done is not tobe missed. P R I N C I PA L PA R T N E R

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F E AT U R E D

SECURING A POSITIVE FUTURE

Managing key risks in Australian mining Insights from the KPMG Australian Mining Risk Forecast 2019.

S BY TR EVOR HART, GLOBAL AND NATIONAL MINING LEADER, KPMG AUSTR ALIA

– 12 –

ixty-six per cent of global miners are confident – or very confident – on growth for their business. Change is the only certainty for today’s Australian mining industry, according to the results of the KPMG Australian Mining Risk Forecast, ‘Risks and opportunities for mining – Outlook 2019’, released in March this year. The recent disaster at Brumadinho, Brazil, is the most sobering example of how dynamic and catastrophic risks can become reality. Many of the risks and opportunities we discuss in our report are interrelated and none more so than those impacting the obligation to safely conduct enterprise. The entire sector feels an event such as Brumadinho, as industry participants reflect on the devastating impact it has on so many lives. Every year, KPMG asks mining executives about the state of their industry, key trends, and their expectations for their organisations. This year, we expanded the survey to capture key global market trends, backed by responses from over 130 executives and industry highlights from Canada, Australia, Brazil

and South Africa. The valuable results provided us with key perspectives on the top 10 risks as rated by global mining leaders. In Australia, the focus was found to be productivity, social licence to operate, and access to talent. POSITIVE OUTLOOK One of the most positive findings from the KPMG Mining Risk Forecast 2019 was that organisations in the sector are confident about growth and are actively seeking future growth strategies. On the opportunistic side, a majority of global miners said that they are looking for growth opportunities via organic means, such as through innovation and disruption, and mergers and acquisitions (M&As). We see this flowing through to Australia, and the results point to a dynamic and confident outlook for the mining sector in the next 12 months, both locally and overseas. The sector also continues to embrace technology and innovation. Seventy-three per cent of respondents see technological disruption as more of an opportunity than a threat to their business.

AUSTRALIAN RESOURCES & INVESTMENT

from deeper ore bodies, labour costs and operating standards are examples of risks to sustainable operations. Increasingly, companies are looking to technology and innovative solutions to mitigate rising costs and increase productivity. Our KPMG Mining Risk Forecast identifies some of the ways this is occurring, including through improved extraction methods, streamlining distribution, increasing worker productivity, and mitigating risks by building new partnerships and attracting the right talent. SOCIAL LICENCE IS KEY In Australia, respondents to the KPMG Forecast were particularly focused on social licence to operate as a growing issue to manage. KPMG is encouraging miners to strategically consider how they are addressing the complexity of matters that collectively impact social licence. In Australia, this includes corporate trust, community engagement, climate change and carbon, water and, importantly, health and safety. Certainly, as the scale and number of these challenges increase, there is a greater appetite for miners to collaborate, to lift standards and enhance the sustainability of the sector as a whole. Australia is uniquely placed to support these efforts with the world’s largest producers having significant investments, operations and infrastructure here. Coupled with state and federal governments that understand how critical the sector is to our economy, this should provide the right ecosystem for greater collaboration.

RISK HE ADWINDS Just as we note a positive outlook for mining globally, we must also remain aware of geopolitical headwinds impacting the sector. For mining, these include the risks of a trade war and slowing rates of global growth. Of great importance to Australian organisations is the forecasted slowdown in the growth of the Chinese economy, and how this may affect commodity prices and business profitability in the future. Mitigating these risks are the demand fundamentals driven by infrastructure development and rapid growth in areas such as renewable energy and electric vehicles. Both globally and locally, mining leaders must manage in a more complex and fast-paced landscape. Along with the traditional risks of the sector, such as commodity price and access to reserves, we now see new threats involving digital disruption, emergence of non-traditional minerals into the market, access to water and energy, health and safety issues, and climate change. The KPMG Mining Risk Forecast shows that these play a critical role in the risk landscape. PRODUCTIVIT Y This year’s KPMG Forecast continued to identify productivity as a critical issue for a company’s future success. Cost pressure

AC C E S S T O K E Y TA L E N T For the first time in our annual KPMG Forecast, access to key talent emerged in the top 10 as a key risk, particularly in the context of attracting the right skills to innovate, analyse data and deploy technologies into the business. Linked to this is the need to manage evolving workforces. Data scientists, or geopolitical specialists, were cited as ‘highly important’ or ‘somewhat important’ by respondents to the survey, with 39 per cent confirming that a workforce capability involving emerging technologies was highly important. C R E AT I N G VA L U E The overwhelming response to the KPMG Mining Risk Forecast was that a positive sentiment for the mining sector remains. More often than not, respondents saw many of the opportunities that present themselves as companies set about managing risks. While macroeconomic threats continue to prevail, respondents identified that new and evolving markets in the renewable energy sectors and global infrastructure investment provided optimism. The rapid evolution of technologies continues to offer new solutions to many of the sector’s challenges, particularly in productivity reserves and in the sustainability of the mining industry as it strives to keep people safe and protect the environment.

– 13 –

F E AT U R E D

Mining and modern slavery BY DR LEEOR A BLACK, PR INCIPAL, STR ATEGIC R ISK AND R EPUTATION, DELOITTE

Australian miners face new reporting requirements on human rights – here’s why and what to do about it.

odern slavery is one of the worst forms of human rights abuse. Australia now has legislation that engages the private sector to help make an impact on the problem. Australia’s Modern Slavery Act 2018, which came into force on 1 January 2019, applies to entities with annual revenues of A$100 million or more. Similar legislation in New South Wales applies to entities with $50 million revenue or more. For Australia’s leading mining companies, attention to human rights is already well embedded in their policies and procedures. Both Rio Tinto and BHP have been reporting on their approach to human rights for years, and Fortescue’s Andrew Forrest has been among the most vocal global champions for strengthening businesses’ approaches to modern slavery. Mining companies often face complex human rights issues due to their large operational footprints that include remote regions populated by Indigenous communities or regions with weak preexisting governance practices. Common human rights risks for mining companies include Indigenous rights, access to water and health impacts of mining, treatment of workers and impacts on local communities, provision of security, human trafficking and sexual exploitation around mining camps, artisanal mining, displacement of peoples and other land issues, and the risk of resource revenues being used to fund corruption and conflict. Human rights include civil, political, economic, and social and cultural rights, such as the right to life, the right to freedom of association or the right to health. They were first recognised following

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World War II and The Universal Declaration of Human Rights, and were added to in later international treaties. Human rights have been turned into local laws in some countries, and are featured prominently within sustainability guidelines for companies, such as the OECD Guidelines for Multinational Enterprises and the UN Global Compact. In 2011, the United Nations adopted the UN Guiding Principles on Business and Human Rights, which underpins Australian legislation. Modern slavery occurs at the extreme end of a continuum of labour rights exploitation. The slippery slope may begin with substandard or unsafe working conditions, and can deteriorate into practices where a worker cannot refuse or stop work due to threats and coercion. The term ‘modern slavery’ describes situations where threats, coercion and deception are used to deprive workers of their freedom. The Australian legislation defines eight different types of modern slavery: trafficking in persons, slavery, servitude, forced marriage, forced labour, debt bondage, the worst forms of child labour, and deceptive recruiting for labour or services. An estimated 16 million people were victims of forced labour exploitation imposed by private actors in 2016. Mining and quarrying are thought to account for 11 per cent of forced labour exploitation, while construction accounts for approximately 18 per cent. Most victims suffered from multiple forms of forced labour and coercion, including withholding wages, threats of violence against the person or family, physical violence, being locked in their living quarters, and withholding of passports.

AUSTRALIAN RESOURCES & INVESTMENT

A B O U T T H E M O D E R N S L AV E R Y AC T The Modern Slavery Act 2018 requires entities to publish an annual report starting with their first financial period from 1 July 2019, FY20 for companies with a financial year close, and mid 2021 for companies with a calendar year financial close. First reports are due by 31 December 2020. The reports must be submitted to the Department of Home Affairs, where they will be published on a publicly accessible website that will be of keen interest to investors, regulators, employees, civil society groups and others. The Minister for Home Affairs has the power to name and shame companies that do not comply. Financial penalties are not included in the current legislation, but may be considered when it is reviewed in three years’ time. For now, the government is hoping that the threat of reputational damage will be enough to spur on good practices. The reporting requirement is focused on large businesses and other entities that have the capacity to drive change throughout their supply chains; however, smaller businesses can choose to voluntarily comply. The seven mandatory criteria require every statement to: 1. identify the reporting entity 2. describe the reporting entity’s structure, operations and supply chains 3. describe the risks of modern slavery practices in the operations and supply chains of the reporting entity, and of any entities it owns or controls 4. describe the actions taken by the reporting entity and any entities it owns or controls to assess and address these risks, including due diligence and remediation processes 5. describe how the reporting entity assesses the effectiveness of these actions 6. describe the process of consultation with any entities that the reporting entity owns or controls (a joint statement must also describe consultation with the entity giving the statement) 7. any other relevant information (for example, training that has been given to employees and suppliers, or reporting on specific cases). The legislation is consistent with the UN Guiding Principles on Human Rights that describe three pillars of human rights: the state duty to protect, the corporate duty to respect, and the duty to remediate human rights abuses where they occur. Companies can potentially cause, contribute to or be complicit in human rights abuses. R I S K S O F M O D E R N S L AV E R Y An entity may cause, contribute to, or be directly linked to modern slavery: Cause – for example, your entity may own or manage an asset or operation that uses exploited labour Contribute to – for example, your entity may knowingly or unknowingly facilitate modern slavery by asking a contractor to find the cheapest possible labour and then turning a blind eye to exploitative practices

Directly linked – for example, through business relationships with suppliers, joint venture partners or customers your entity may be linked to their exploitative practice. The Modern Slavery Act 2018 is essentially a transparency measure – by asking companies to report on the risks of modern slavery in their operations, supply chains and their actions to address these risks, the government hopes to encourage companies to investigate modern slavery and ask their suppliers to do the same. The Act does not prescribe particular actions a company should take, nor how deep into supply chains an entity needs to go. Deloitte takes a rights-based view of business approaches to modern slavery, which means we consider the rights of victims of modern slavery to be the most important driver of company responses. Therefore, we recommend against knee-jerk reactions to sack suppliers who may be causing or contributing to modern slavery, as this is likely to drive victims deeper into poverty that has made them vulnerable to exploitation in the first place. Instead, we recommend developing remediation plans in collaboration with other parties, such as NGOs or local bodies best placed to support victims. Typical actions companies are taking to prepare for reporting under the Act include: human rights risk assessments reviews of policies, codes of conduct and supplier contracts with a view to strengthening them where needed development of supplier engagement plans to help suppliers to address or mitigate risks employee and supplier training internal audit of risks and controls relative to modern slavery development of contingency plans for if/when problems are found. INVESTORS WILL ASK QUESTIONS Investors are among the stakeholders most likely to be asking questions about the human rights practice of Australian miners. The United Nations Principles for Responsible Investment (UNPRI), which represents institutional investors with more than $89 billion assets under management and includes more than 150 Australian members, has endorsed the UN Guiding Principles for Business and Human Rights, and has published guidance to investors on how to engage with extractives companies on human rights issues. Australian superannuation funds are considering how they will address modern slavery risks in their investment portfolios. When it comes to investments in Australian equities that are also liable under the Act, we may expect a relatively light touch. But those investments that fall outside the requirements of the Act can expect increased requirements to demonstrate an effective approach to identifying and mitigating human rights risks. Investor activism is likely to increase. Mining companies should focus on developing a road map for compliance with the Modern Slavery Act.

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F E AT U R E D A R T I C L E

Canyon eyes bauxite dominance Patience is paying off for Canyon Resources (ASX: CAY) as it continues to build confidence in its Minim Martap bauxite project in Cameroon as a tier-one global asset.

anyon Managing Director Phil Gallagher negotiated for three years to be granted the Minim Martap project, and the company is now developing its impressive credentials. Since acquiring the project in August 2018, Canyon has upgraded high-grade bauxite resource to JORC 2012 standards; defined a very high-grade resource of more than 250 million tonnes of 50.8 per cent bauxite with low reactive silica within existing resources; defined 70 new bauxite targets; and identified capacity on an existing rail line to get the bauxite to port. Resources entrepreneur Tolga Kumova signed on as Canyon’s strategic adviser in November, aiming to draw on the experience he’s gleaned with different companies. This includes Syrah Resources, where he led the company from exploration and to developing one of the world’s largest graphite mines at Balama, as well as his 15 years spent in stockbroking and corporate finance. His expertise will help Canyon to realise the potential of its project. Kumova believes that Canyon’s work to date at Minim Martap shows

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it is ‘certainly the highest-quality bauxite deposit in the world’. ‘I suspect it will grow to many billions of tonnes at the highest grade in the world,’ Kumova says, suggesting that the project’s potential makes Canyon a takeover target. ‘Tier-one deposits don’t come along every day. With a resource of 250 million tonnes at 50 per cent aluminium oxide, producing 10 million tonnes per annum would give Minim Martap a 25-year mine life.’ Initial results from Canyon’s 2019 aircore drilling campaign – aiming to increase the scale, grade and categorisation of Minim Martap’s existing project resource (550 million tonnes averaging 45.5 per cent total aluminium oxide and 2.06 per cent silicon oxide, JORC 2012), as well as test new and untested targets at Minim Martap – demonstrated the project’s thick, high-grade, low-contaminant bauxite from surface. ‘Results from our drilling continue to validate our view that the Minim Martap project is a very high-grade, lowcontaminant bauxite deposit. It’s exciting that the drilling rig has consistently drilled holes substantially deeper than

the depth of resources previously reported on the bauxite plateau and with higher grades,’ Gallagher says. ‘We are confident that we will be able to increase the scale and grade of the existing resource, and will soon commence work on the untouched large southern bauxite plateau on the Minim Martap and Makan permits that were identified by Canyon’s recent LiDAR survey, which identified 70 new target bauxite plateau.’ A rail assessment completed by Canyon, in conjunction with its infrastructure partner Mota–Engil Africa, concluded that the existing line from Minim Martap to Douala has capacity to transport commercial bauxite quantities. Based on a site and data review, Mota–Engil confirmed that the existing Camrail rail line could transport 10 million tonnes per annum of bauxite from the Minim Martap project to the Kribi Deep Water Port. Kumova says the potential rail capacity to port elevated the project’s status. ‘A 10-million-tonne capacity on the rail line means this will potentially be a top five bauxite producer globally of the highest quality in the world,’ he says.

AUSTRALIAN RESOURCES & INVESTMENT

‘WHITE GOLD’ IN A GREEN REVOLUTION Australian Resources & Investment’s Allan Stoneham was lucky enough to visit Altech Chemicals’ Johor project for a closer look at the new HPA facility.

ltech Chemicals’ Managing Director, Iggy Tan, and his team recently treated investors, stakeholders and selected media to a site visit of its high-purity alumina (HPA) plant under construction in Johor, Malaysia. With electric cars hitting the headlines during the recent federal election campaign, HPA is the new ‘it’ resource. A key ingredient in synthetic sapphire for LEDs, HPA is increasingly being used as the coating for lithium-ion battery separators to make batteries safer – but as yet, there’s not enough of it that’s reliably available. Enter Altech, which started building its HPA plant in February at the Tanjung Langsat Industrial Complex in Johor. The company will ship ore from its kaolin mine in Meckering, Western Australia, across the Indian Ocean to its Malaysian HPA

facility in a move backed by German investors and a major global investment bank. These project stakeholders were among the site visit attendees, along with investors, financiers, engineers and expert chemical analysts from around the world. Until recently, Altech’s Meckering mining lease was part of a century-old wheat and sheep farm in the Wheatbelt. The abundance of the white clay mineral (kaolin) on the company’s property looks like snow at first glance, yet it is poised to become ‘white gold’ in a green revolution. ‘We’re on the cusp of a global hunger for HPA from lithium-ion battery manufacturers, so it’s an exciting time to be involved in a project like this,’ Tan told me on the visit. ‘HPA will change how we drive and how we live.’

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F E AT U R E D

With electric cars hitting the headlines during the recent federal election campaign, HPA is the new ‘it’ resource L–R: AR&I’s Allan Stoneham with Altech Chemicals’ Managing Director, Iggy Tan

During the site visit, Tan provided a corporate update on the site of the HPA plant to potential equity and joint venture partners, as well as representatives of KfW IPEX-Bank, Macquarie Bank, Melewar Group, CIMB Bank, Petra Capital and EPC contractor SMS group GmbH of Germany. Tan also covered the stage-one construction plan – which is well underway after only a few months – the status of project financing, corporate funding and the option of introducing a joint venture partner at project level. He told us about the plan to initiate stage-two construction, followed by a site safety briefing and induction by the appointed EPC contractor SMS group. For some stakeholders and investors, including me, the site visit was the first time we had been not only to the plant location within the Tanjung Langsat Industrial Complex, but also to Malaysia. Being given the opportunity to see the beginnings of a future world-class HPA production centre in the flesh was a truly eyeopening experience. Some of us were surprised at the scale of industrial development in Johor, and the established infrastructure and services available, especially within the Tanjung Langsat

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Industrial Complex. It was also very impressive to see how easy it was to travel from Singapore airport to Johor. We were informed during the tour that Altech is exploring the possibility of selling up to 50 per cent of the project to an industry joint venture partner to share the final project equity funding. The company also disclosed that it plans to conduct regular investor and stakeholder site visits to its HPA plant as construction activities continue. Anchored by new German investors, after the site visit, Altech raised A$18 million to support the continuing of its stage-two construction plan, which includes third-party and supplier engineering, advancing various civil loads in the plant, and finalising current stage-one construction activities. ‘It’s going to be an amazing world-class HPA production centre,’ Tan said. ‘We have the potential to generate over US$133 million of earnings a year before interest, tax and depreciation. ‘It is therefore critical to maintain construction momentum at our HPA plant site, and we are delighted that the placement participants share the same view,’ Tan said. ‘Watch this space!’

F E AT U R E D

— ANALYSIS — WITH REGINA MEANI Zinc’s place on the renewable energy road.

THE HISTORY OF zinc and its uses can be traced back to 1400 BC, when it was first alloyed with copper to produce brass. The metal’s usefulness has expanded exponentially since then, and is important not only within the industrial metals arena but in biochemistry and nutrition. While one of its primary uses remains galvanised steel, it is used in sunscreen, cosmetics medicines, fertilisers, cars and aerospace. As we find ourselves on the renewable energy road, zinc is a growing factor within our environmental consciousness debate with its battery applications. The price for zinc has become a stand-out within the commodity sector and may continue to be a strong performer. The price built a strong eight-year base between 2008 and 2016, when it broke upwards and then reached US$3600 per tonne in January 2018. A minor peak formed in reaction to resistance and registering overbought momentum. The price pulled back and found support from its base in the $2300–2500 zone. Trending upwards from September 2018, the price rose to $3000 in April this year and has paused in a momentum slowdown. This phase may continue to influence the price over the near term, with support around $2700 and then more importantly at the near-term trend at $2580. Beyond this, a return to the upswing would see the price test old barriers at $3000 and then $3600–3800, and potentially towards the peak around $4.60. This scenario would be placed at risk on a fall through $2300. Redflow Limited, an Australian company (ASX: RFX), produces small 10-kilowatt-hour zinc-bromine flow batteries

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that work during harsh conditions. They are designed for high-cycle-rate, long-time-base stationary energy storage applications within the residential, industrial, commercial and telecommunications sectors. The extent of its applications is from a single battery installation through to grid-scale deployments. Redflow’s smart, self-protecting batteries offer distinct advantages within the renewable energy environment. These include secure remote management, 100 per cent daily depth of discharge, tolerance of high temperatures, a simple recycling method, no susceptibility for thermal runaway and a sustainable energy delivery throughout their operating life. The share price for Redflow has experienced a roller-coaster ride from its heady heights in late December 2010 at $1.19. From there, it fell precipitously to reach a low at 3 cents in mid 2013, where it catapulted upwards to stall around 14.5 cents in February 2014 before swinging higher to 37 cents in October that year. A pullback occurred before the stock once again pulsed higher to 63 cents in June 2016, where the combination of resistance and overspent momentum turned the tide with the price tumbling into a steep downward slide. The downward trend is still influencing the price but it has reached a significant support zone and the momentum signals suggest that a turnaround may be possible. A move up through 5 cents would have positive implications for a test of the next barrier at 7 cents and then more importantly at 9 cents. At this level, the price would be testing the downward trend and a breakthrough would have significant implications for a new upward path for the stock.

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F E AT U R E D

Adani Australia still absolutely committed Adani remains as committed as ever to the development of its Carmichael coal mine in central Queensland’s Galilee Basin, despite the noise from anti-coal activists and delays in the Queensland Government’s approvals process.

he planned 10-million-tonne-per-year thermal coal mine, 165 kilometres north-west of Clermont and more than 300 kilometres from the often activistcited Great Barrier Reef, has been an Adani ambition for nine years. The latest setback for the project came in early May when the Queensland Department of Environment and Heritage Protection requested an eighth round of revisions to the project’s environmental requirements, continuing to frustrate Adani’s development plans. But Chief Executive Officer of Adani Mining Australia Lucas Dow is not perturbed. ‘We are absolutely committed to seeing it through. Obviously, we have had a few hurdles along the way, which we have cleared. ‘And we are not down in the mouth or concerned about the latest hurdles that have been put up by the Queensland Government,’ Dow says.

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‘We will just move through the new requirements methodically and in a scientific and fact-based manner. So, if anything, I would say our resolve has strengthened,’ Dow says. ‘One of the great strengths about the Adani Group is its tremendous resolve and conviction to see projects like this through.’ Adani Australia is part of India’s Adani Group. To date, it has spent in excess of $3.3 billion on the project, including acquiring and developing the Abbot Point coal terminal near Bowen as Carmichael’s export port. Another $2 billion is to be funded by the Adani Group for the mine and rail components of the Carmichael project. Dow says that the approval delays and action against the project by climate activists – who are opposed to coal more broadly – flew in the face of the reality of Australia’s status as a coal exporter, and the developing world’s growing demand for coal in its energy mix.

‘Australians need to face the reality that if the coal doesn’t come from here, it will come from other jurisdictions. ‘Coal is abundant. So the simple premise that shutting the Queensland or Australian coal export industry will materially impact the climate challenge is just nonsense,’ Dow says. ‘The reality is that the coal will be sourced from elsewhere and more telling, that coal will be from jurisdictions where it is of a lot poorer quality.’ He says that in contrast, Carmichael coal would emit, on a like-for-like basis, about one-third less than one of the main alternatives to Australian supplies – Indonesian coal. ‘So, if you accept that coal will continue to be required and burnt, the world should be using the best quality and beyond that, ensuring it is produced in a responsible way,’ Dow says. He says Australian coal is the answer. Notwithstanding the delays at Carmichael, Dow says that a ‘great thing’ about Australia is that it has some of the most stringent environmental regulations across the globe. Dow noted that in Adani’s home country of India, coal imports stood at 137 million tonnes in 2017, of which Australia supplied only three million tonnes. He says the Australian coal industry has left itself exposed to the sort of mythology that has dogged Carmichael. ‘We have spent a lot of time and effort now to ensure that people have the facts, and we are addressing the mythology,’ Dow says. ‘[However], as a career miner, I [believe] that the industry needs to collectively think more about occupying the space moving forward. ‘The reality is that as a coal producer, we don’t create demand. The market is pre-existing, and it is continuing to grow in places like India and throughout South-East Asia.’

Australia

F E AT U R E D P R E S E N TAT I O N

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NO TO NAYSAYERS Adani boss Lucas Dow has a message for the myth-makers, doomsayers and opponents who think the Carmichael mine is unviable and beyond the ability of the company.

O LUCAS DOW, CEO, ADANI MINING

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ur project stacks up, it’s profitable, it will happen, and it’s sustainable, Dow told the Sydney Mining Club in February. ‘The modelling has been done and the stark reality is that Carmichael is going to sit in the lowest cost quartile within those markets in which we will compete. ‘Our strip ratio long-run average is less than four. That makes it profitable and low cost for us.’ The coal market is just as vibrant and suggestions that it was in structural decline were well off the mark. Demand is growing in Asia and will continue to do so. ‘The proclamation that coal is dead is greatly exaggerated,’ he said. At the moment, China has 100 gigawatts of coalfired power projects either committed or proposed in locations such as Thailand, Vietnam and Pakistan. The so-called death of coal is one of the myths and exaggerations that have been used to attack Adani over the eight years that Adani has been in Townsville and Brisbane, fighting to build the mine and rail project in central Queensland. In 2017, India imported about 137 million tonnes of thermal coal, but only about three million tonnes came from Australia. ‘So, there was 134 million tonnes imported into India in 2017 that Australia could have contested,’ Dow said. ‘We didn’t (contest), and it meant that it came from somewhere else. And that’s the part that irritates the hell out of me as a Queenslander and as an Australian. ‘The reality is that in 2017, global coal consumption rose by one per cent, with India having the most accelerated growth in that space at a rate close to five per cent. Coal isn’t going to go away. It’s going to be a key element of the base load, particularly in developing countries.’ There are countries willing to jump into any thermal coal market that Australia vacates or chooses not to compete in.

‘South Africa has been pushing for market share, [and] so has America and Russia. The reality is that the demand is there, so the fundamental question is – who is going to supply it?’ Dow said. ‘Closing off the Galilee Basin is simply not going to stop the demand. ‘Our opponents would have us close down the whole industry, and the reality is that the activism we have seen at Adani is an existential question for the industry. If it wasn’t us, it would be someone else being targeted. ‘Being able to supply into new and growing markets like India represents the opportunity that sits before us. This is why we are so fixated on the Galilee Basin and why we will not be cannibalising the Hunter Valley.’ Among the many myths is that the Carmichael mine is a threat to the Great Barrier Reef. Dow told the story of an Adani executive who was seated on a flight next to a PhD student who said she hated Adani because it was going to physically mine the Great Barrier Reef, which is more than 300 kilometres from the actual site. The student was corrected and vowed to tell her friends not to fund the activists. It was an example of how the project has been the subject of a deliberate and constant campaign of lies and distortions, some about the project itself and others about coal in general. ‘We don’t expect everyone to agree with us. All we ask is that their opinions are based on facts,’ Dow said. There are also constant claims about Adani threatening the viability of the Hunter Valley mines. ‘The Hunter Valley coal quality is premium. We are not quite at that level, but we are a close follower in terms of quality. ‘We have a different market and that’s why India, Vietnam and Bangladesh are particularly attracted to our coal.’

AUSTRALIAN RESOURCES & INVESTMENT

Coal isn’t going to go away. It’s going to be a key element of the base load, particularly in developing countries Elements of the anti-coal movement grew out of the initial approvals for the Carmichael project, which were for a mine producing 60 million tonnes a year. That’s where it earned the tag of a mega-mine. Since then, production has been scaled back to 10 million tonnes, and the mega-mine tag is no longer valid. There are several coal mines significantly bigger than Carmichael. The Clermont mine produces 13.6 million tonnes per year, Blackwater 14.6 million tonnes and Callide 12.5 million tonnes. At Mount Arthur in the Hunter Valley, production is at 19.7 million tonnes. ‘We are just another mine,’ Dow said. ‘When I came on board, my team asked me what my vision was. I said: to be another boring miner. We simply want to get on with it. That’s our focus now.’ Dow said that one of the key issues for the Galilee Basin was its access to rail. The original plan was for Adani to build its own rail line, but this would have been in competition with the nearby Aurizon track. ‘We’ve stepped away from that. What was going to be 400 kilometres of track is now 200 kilometres, and we will connect into the Aurizon network and then connect through to Abbot Point. ‘It’s a very simple logistics chain.’ Dow said connecting to the Aurizon track will occur through a regulated process. ‘They have a legal and regulated undertaking to provide access to any user who wants it.’

Adani’s decision to reconfigure the rail component will allow them to start earlier and with lower capital demand. About $3.3 billion has already been spent and another $2 billion will be funded through the Adani Group’s resources to build the mine and rail. During the ramp-up, there will be about 1500 construction jobs, and the modelling by the Queensland Resources Council shows another 6750 will be created indirectly. ‘Queensland has the second-highest unemployment rate in the country, and the key employment hubs for us – Rockhampton and Townsville – are crying out for these jobs,’ Dow said. ‘This project will directly benefit these communities and deliver real opportunities for the folks who live there.’ This article is based on Lucas Dow’s presentation to the Sydney Mining Club on 7 February.

ROCKHAMPTON

ADVANCEROCKHAMPTON.COM.AU

Central Queensland’s Mining Services Hub 505537A_Rockhampton I 2449.indd 1

10/5/19 10:19 am

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MINE DE VELOPMENT

The business case for interoperability BY GAVIN YEATES, PR INCIPAL, GAVIN YEATES CONSULTING PT Y. LTD.

While interoperability has been a topic of interest to mining companies for over two decades, it is only now that technology has advanced to a point that both enables interconnectedness and allows true interoperability. The interest in interoperability is because mining companies see value in it, thus they believe there is a business case.

lack of interoperability between systems, processes and data is not unique to the mining industry. Other industries also suffer from a lack of interoperability, and it is recognised that this is not a technology problem, but rather a market failure. Our inability to interoperate across the value chain is a societal, cultural and organisational problem. Suppliers often treat system interfaces and data as their property, not their customers. There is a disincentive to share and open up systems, with many suppliers making more money by not sharing. This is an incentive problem and thus a market failure. We have a vision for the future of mining where there is a zeroentry, fully automated, fully integrated mine that is designed for automation from its inception; where the mining method is tailored

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and scaled to the ore body; where variation in execution is reduced by automation; and where we are able to fully harness the flow of information. This vision requires interoperability of equipment, systems and data. This vision delivers safer, low-capital intensity, with lower operating cost and a significantly lower environmental footprint, thus generating significant value to mining companies across a number of dimensions, as well as delivering value to governments and communities. There is a growing realisation that if mining companies keep on doing what they are currently doing, they will not get to this vision and thus will not capture the value. Mining companies continue to optimise the silos rather than the full value chain. The industry continues to tolerate friction at the interfaces often disguised as

AUSTRALIAN RESOURCES & INVESTMENT

expensive stockpiles. Management continues to focus on the discrete steps or the equipment (for example, load and haul) at the expense of optimising the whole. This focus on equipment over process, in addition to ignoring key process constraints along with KPIs that are set to protect the status quo, holds mining companies back from achieving the vision and leaves significant value behind. The mining industry is facing a burning platform from structural drivers that will encourage change and a transformation that will result in an inflexion point in performance. The demand for metals is continuing to rise. According to Richard Schodde (Minex Consulting June 2017), ‘The industry will need to produce more copper in the next 26 years than the human race has mined in entire human history’. The rate of discovery of new mines has dropped significantly over the last decade, and the size of those deposits that have been found is also dropping. The grades of known and producing mines is also declining, and this is being compensated for by increasing volumes (of lower-grade material), resulting in more trucks, more concentrators, more waste, more water, more energy and higher costs for less metal. The industry is facing having to go deeper in more difficult ground conditions and with more complex metallurgy. This reduction in grade and the increasing difficulty will continue into the future, and will require a fundamental change in how mining is done. There will need to be a move from bulk mining to more selective mining methods, from grinding all material to fine particle size before separation, to separation at coarser size with coarse waste rejection, along with a move from the use of physical energy to increasing the use of chemical energy for extraction. Mining companies are faced with greater regulation and compliance, with risks being controlled with policies and procedures rather than engineering controls. Removal of people from hazards through zero-entry mining will become an imperative. Social licence to operate is now the greatest challenge facing mining companies, both in maintaining existing operations and even more so in developing new mines. Current practice in the mining industry is siloed and disconnected. Due to the lack of interoperability, data is still extracted to ASCII CSV files from one application that supports a single process, and then imported into different applications for the next process with associated loss of information between functions. There is no underlying platform, no holistic view of the value chain, data is lost at the interfaces, there is no feedforward simulation across all functions and no feedback loop with the associated loss of learning. The value loss and friction at every boundary is enormous. The business case for interoperability plays into the following: safety and licence to operate with the potential to automate mines and remove people, and design mines with lower footprints higher revenue to mine more selectively (resulting in higher grades and more metal) and operate with greater utilisation to produce more metal with the same equipment lower operating cost, by reducing friction, lower stockpiles, reduced rehandling, reduced rework and ensuring higher efficiency

The value for a mining company starts and ends with the ore body. The ore body is alone in being unalterable – everything else can be changed lower capital intensity, where higher utilisation and rehandling reduces equipment; ultimately, when mines are redesigned for zero entry, significant capital can be saved (for example, steeper slopes, less ventilation, no second means of egress etc.) mine life, mine schedule and reserves increase where automation and interoperability allow operations to proceed into areas that cannot be mined if they were manned. The value for a mining company starts and ends with the ore body. The ore body is alone in being unalterable – everything else can be changed. Suppliers are often too focused on equipment rather than the core process, which is the extraction of valuable metal from the ore body. Suppliers are too focused on point solutions rather than integrating into an ecosystem that supports multiple processes across the whole value chain. CRC ORE has taken steps in this direction through its Integrated Extraction Simulator (IES) – a platform for whole-of-value-chain optimisation that is already adding significant value (>US$1 billion) for some mines (King and Adair IMARC 2018). The value derived from interoperability is not linear, and is not continuous with increasing levels of automation and interoperability. There are significant discontinuities (steps) in value when: we remove the last person from inside the mining area and we can redesign the mine for no people we redesign the equipment and mining method with autonomy from concept, resulting in swarms of smaller selective equipment that can operate in extreme conditions. It is when the industry commits to doing things very differently that creates a step change in value. The suppliers have only just started to redesign equipment for automation with no cabs, all electric, forward and reverse all-wheel steer, and more. The industry has yet to address the scale of autonomous equipment, with much smaller/cheaper equipment likely. Further, the industry is yet to redesign the mining method, process and mine layout to take account of autonomous operations. We are now just starting to see some suppliers begin to open up their systems via application program interfaces (APIs) to enable some levels of interoperability. This interconnectedness brings with it significant cybersecurity challenges that are yet to be fully addressed either by mining companies or by suppliers. There is value in interoperability, and mining companies need to capture this value. The journey toward interoperability and full value chain integration has just begun.

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MINE DE VELOPMENT

Boots for Australian miners Featuring world-leading innovative technologies, Blundstone mining boots stand up to the harshest conditions.

lundstone has worked directly with miners who have experienced firsthand the environment they operate in, allowing their designers to create a purpose-built boot that stands up to the toughest conditions. This collaboration between Blundstone and miners resulted in the #980, the benchmark product that has fundamentally changed the way mining boots are made. The #980 has picked up numerous awards, including the Museum of Applied Arts and Sciences (MAAS) Award and Best in Category (Product Design – Commercial and Industrial) at the coveted Good Design Awards 2015 – Australia’s oldest and most prestigious award for design and innovation. Winners were selected from a record-breaking 370 entries from all around the world. ‘The 980 Underground Mining Boot represents a true understanding of the end user. This is design excellence in every regard. For a project to be recognised at this level means that without doubt, it is the best of its kind in the world,’ a judge commented. It doesn’t disappoint from a wearer’s point of view, either. ‘In my 18-plus years in the mining industry, I’ve never seen a pair

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of boots made to suit the conditions of an underground mining environment, nor had that immediate comfort factor (including surface boots). My feet remained dry [and] comfortable, and the boots were extremely easy to tighten and remove. Not to mention how lightweight they were. The lacing system allowed me to suitably tighten the boot around my foot and ankle, so when walking on uneven ground, I didn’t feel my ankle rolling,’ reviewed Kirsty, a Supply Coordinator. While it’s high praise, it’s hardly surprising. Once Blundstone discovered exactly what miners needed in their safety boots, they went ahead and made it. W H Y T H E BLU N DSTON E #980 I S T H E U LT I M AT E M I N I N G B O O T Ultimate in protection

The #980 is packed to the hilt with safety features that are purpose-built to stand up to the harshest conditions. The boot’s steel-toe cap provides optimum protection against impact, cuts, penetration and rolling forces. The fully enclosed metatarsal guard utilises XRD® Technology, providing extreme impact protection for the most extreme environments. The moulded XRD

metatarsal guard is soft and lightweight, enabling outstanding protection without compromising on all-important foot flexibility and comfort. A nonmetallic penetration-resistant insole provides extra protection as the ceramic fabric is sewn directly on to the upper, thus enabling protection to 100 per cent of the surface of the sole (compared to 85 per cent average protection from steel plate resistant midsoles). The unique design is capable of resisting perforation by small diameter nails and other objects. Made from composite textiles, it is created using multiple layers of fabrics containing high-tenacity yarns. After plasma treatment, which renders the fibres more porous and hydrophilic, the various layers undergo ceramic treatment. The plasma treatment improves attachment and compactness of the ceramic particles, providing a higher degree of hardness and mechanical, physical and chemical resistance, while retaining all the flexibility of textile. This makes the penetration-resistant midsole lightweight, ergonomic and so comfortable that you won’t even know it’s there — until you need it.

AUSTRALIAN RESOURCES & INVESTMENT

Ultimate fit for purpose

The #980 is made from a unique, highquality patented leather that’s soft and pliable, yet offers superior waterproofing, abrasion, puncture and tear resistance to that of other leathers. To increase protection against liquids, a waterproof membrane is used in the lining of the boots. This prevents penetration but allows sweat vapour to pass through, ensuring that your feet stay dry. The durable rubber outsole offers slip resistance across a wide range of surfaces — while being heat resistant to 300°C, and highly resistant to cuts and abrasion. The #980 has been designed to standard AS/NZS2210.3:2009 Classification I and Standard ASTM F2413-17, including electrical shock resistance (Clause 5.5). Electrical hazard– resistant footwear provides the greatest protection against electrical hazards. This type of footwear is insulated to help ground electricity from accidental contact with live circuits or electrical equipment. It is a common misconception that metal in a boot is bad when working around electricity. The reality is that metal is conductive when it’s in contact with other metal; however, steel toes and shanks are enclosed by non-conductive materials, such as leather and rubber, and are

therefore safe to wear in environments where live circuits are present. It is important to remember that the level of electrical hazard protection of your footwear is severely lessened when there’s excessive wear on the outsole, or exposure to wet and humid conditions. If a safety toe becomes exposed in footwear, it is rendered unfit for wear in any type of environment. U n r i va l l e d u n d e r g r o u n d c o m f o r t

While the #980 is built to protect in the most extreme environments, that doesn’t mean that they’re not some of the most cushioned boots you’ll ever slip on. Every pair has a high level of ankle support and stability control, while being extremely comfortable and watertight. The luxury Comfort Arch footbed is antibacterial, breathable and washable, and features revolutionary XRD Technology. Also referred to as XRD Extreme Impact Protection, this lightweight, thin and breathable cushioning material has been

engineered for repeated impact absorption. It absorbs up to 90 per cent of energy with every step taken, reducing workplace fatigue and orthopaedic problems in the lower back, legs and feet. The Boa® Fit System provides custom comfort and allows you to get your boots on and off fast, no matter what the conditions, without ever having to remove your gloves. Instead of laces, which can tear after getting wet, or zips that can break after accumulating mud, the Boa Fit System uses aircraft-grade steel and is free of the stretch, weight and pressure points of traditional closure systems. The laces are contained within the system, keeping them out of your way and thus reducing trip hazard risk. The dial is microadjustable so you can achieve a precise and custom fit that’s consistent all day. Since its inception, the #980 has been updated and upgraded to incorporate new technologies, ensuring it remains the best in its field and the boot of choice for many Australian miners.

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MINE DE VELOPMENT

Hot-dip galvanizing – sustainable protection for steel in the resources industry

ot-dip galvanizing (HDG) is a factory-applied zinc coating that has been used to protect steel from corrosion for well over 100 years. In Australia, there are around 40 galvanizing plants located close to all the major centres and many in rural locations; providing galvanizing services ranging from bolts to major resources projects using state-ofthe-art equipment. But did you know that it is also one of the most sustainable methods for construction in the resources industry? Galvanized structures can be designed to be re-used by using bolted connections, making them modular, demountable and readily transportable. This reduces waste and, with a coating life of more than 50 years in many locations and applications, products can be re-manufactured for use elsewhere. If the structure can’t be re-used, all steel and zinc can be 100 per cent recycled for re-use without downcycling. The use of HDG also reduces or eliminates the requirements for maintenance painting, providing a safer

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and more productive workspace with less downtime. The robustness of HDG coatings in harsh mining environments means that they are less susceptible to mechanical damage, thereby reducing the risk that the structural integrity of the mining assets will be compromised over time by corrosion, otherwise exposing personnel to hazards and asset owners to breach of duty of care. The Australian HDG industry is a world leader in environmental management with a strong commitment to recycling. Members of the Galvanizers Association of Australia (GAA) have developed an independently verified Environmental Product Declaration (EPD), based on the product category rules of EN 15804 (available in mid 2019). This is a first for the Australian coatings industry, and it is the first industry-wide hot-dip galvanizing EPD produced outside of Europe and North America. The GAA is committed to the availability of environmental data, and the Australian HDG, steel and international zinc

industries have all published life cycle inventory data to assist in the planning for your next investment. Galvanized coatings also provide predictable performance in atmospheric conditions, and when embedded in soil and concrete. These are referenced in multiple Australian and international standards. Painting HDG steel for safety or durability is also easy to specify, and the GAA provides guides for end users. Design for durability is simple, as HDG and thicker coatings than what is referenced in the standards are often available. For example, on most structural steel, it is possible to specify a 50 per cent increase in the coating thickness, providing a 50 per cent increase in durability for when the environment is highly corrosive. For more information, and to download technical information on hot-dip galvanizing, sustainability and durability of galvanized coatings, visit www.gaa.com.au.

Durable, rugged and a long life.

Red sea urchins are believed to be almost immortal. These small, spiny creatures are known for their long life and some are believed to live for more than 200 years. This is something they have in common with hot dip galvanizing. Compared to any other protective coating for steel, hot dip galvanizing is unmatched in its superior corrosion resistance, strong and tough coating, proven performance, and lifetime cost benefits. This durable and rugged coating makes it the ideal solution for steel in any environment.

Compare the life span of hot dip galvanizing against other forms of coating on our durability estimator by scanning the QR code or at gaa.com.au/durability-of-galvanizing-estimator/

www.gaa.com.au

T R A N S P O R T, E Q U I P M E N T & M A C H I N E R Y

Energy-efficiency improvement in mine railway operation using AI BY DR ALI SOOFASTAEI, ARTIFICIAL INTELLIGENCE CENTR E, VALE, AUSTR ALIA

he mining industry consumes an enormous amount of energy globally, the main part of which is conservable. Diesel is a key source of energy in mining operations, and mine locomotives have significant diesel consumption. Train speed has been recognised as the primary parameter affecting locomotive fuel consumption. As part of my research, an artificial intelligence (AI) look-forward control has been developed as an online method for energy-efficiency improvement in mine railway operation. An AI controller will modify the desired train-speed profile by accounting for the grade resistance and speed limits of the route ahead. The travel time increment is applied as an improvement constraint. Recent models for mine train movement simulation have estimated locomotive fuel burn using an indirect index. An AI-developed algorithm for mine train movement simulation can correctly predict locomotive diesel consumption based on the considered values of the transfer parameters in this paper. This algorithm finds the mine locomotive subsystems and satisfies the practical diesel consumption data specified in the locomotive’s manufacturer catalogue. The model developed in this study has two main sections designed to estimate locomotive fuel consumption in different situations by using an artificial neural network (ANN), and an optimisation section that applies a genetic algorithm (GA) to optimise train speed to minimise locomotive diesel consumption. The AI model proposed in this paper is learned and validated using real datasets collected from a mine railway route in Western Australia. The simulation of a mine train with a commonly used locomotive (GM SD40-2) on a local railway track illustrates a significant reduction in diesel consumption along with a satisfactory travel-time increment. The simulation results also demonstrate that the AI look-forward controller has faster calculations than control systems that use dynamic programming. The research reviewed in this study demonstrates that lookforward control algorithms do not consider vehicle speed limits

Figure 1. Mine train model

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in segments of the route ahead. In some cases, the developed algorithms suggested increasing vehicle speed before reaching an uphill segment, but technically it is not correct to increase velocity when approaching a curved route or other speed limits in a segment. Moreover, the look-forward control method has not been applied practically in the field of mine railway transportation. The present study aims to use the look-forward control approach to increase energy efficiency in mine railway transportation. The proposed AI prediction and optimisation algorithms can be applied to reduce mine locomotive fuel consumption. M I N E T R A I N M OV E M E N T S I M U L AT I O N Examining the algorithms developed for mine train movement simulation reveals that fuel burn is estimated by indirect indexes, and that no practical model has been developed to test locomotive and railway transportation fleets in the mining industry. Therefore, the present study develops an innovative AI algorithm for mine train movement simulation to estimate locomotive fuel burn more accurately. This algorithm considers all the mine locomotive subsystems that play critical roles in generating and transmitting power. The main block diagram of the proposed model is presented in Figure 1. The components of the mine train system, including the wheels, final drive, electric motor, generator, and diesel engine are illustrated in Figure 1. In the developed AI model, mine locomotive fuel burn is estimated based on the specific fuel burn graphs completed by locomotive manufacturers as a function of the diesel engine’s torque and speed. Thus, the developed model can estimate locomotive fuel burn more accurately than current models of mine train movement simulation. Mine locomotives use an internal control loop that has a diesel engine governor, a companion equipment, and a load regulator as the principal components. The real engine speed and train driver’s

AUSTRALIAN RESOURCES & INVESTMENT

Figure 2. Mine train speed AI controller

Figure 3. AI control system’s internal components

Figure 4. Look-forward window

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T R A N S P O R T, E Q U I P M E N T & M A C H I N E R Y

Figure 6. Optimisation result for selected railway path

Figure 5. Data processing in a neural-network model

throttle position control some of the external inputs of the governor. The governor controls the fuel-injector setting that regulates the load regulator position and engine fuel rate. The load regulator is primarily a potentiometer that controls the output power of the locomotive generator by changing the loading applied to the main engine. As the load on the main engine changes, its rotational speed will also change. This is sensed by the engine governor through a change in the engine speed feedback signal. The effect of this change is to adjust both the load regulator position and the fuel consumption rate. As a result, the diesel engine’s torque and speed will remain constant for any given throttle position, regardless of actual mine train speed on the route. A mine train driver can change the locomotive speed by using the brake handle or setting the throttle position. M I N E T R A I N O P T I M I S AT I O N The reviewed literature demonstrates that one of the best approaches to optimising effective parameters for mine train movement performance is to improve locomotive fuel consumption and travel time; however, these two parameters perform differently, which means that locomotive fuel burn reduction may lead to an increase in train travel time. Thus, it is complex to find an accurate parameter that can change mine train travel time to its corresponding locomotive fuel burn. Defining the objective function as locomotive engine diesel consumption and mine train travel time as a constraint is potentially one of the most effective proposed approaches to the optimisation problem of mine train operation. That is, the diesel burned by a locomotive engine must be minimised when the train travel time increment is less than a predefined limit. In the present study, mine train travel time restriction is considered at most a five per cent increase compared with the travel time achieved by following the initially desired speed profile. This profile is calculated by the mine train speed-limit signs on the route. Another limitation in the optimisation problem is the speed deviation from the initially desired speed profile. In this study, the speed-deviation limitation is considered 20 kilometres per hour below and above the initial desired speed. It should be noted that the initially desired speed profile is generally below the maximum permissible speed on the railway track. Thus, a 20-kilometres-per-hour deviation from the desired speed profile will not cause safety problems. AI CONTROLLER DESIGN An AI controller is designed to minimise mine train fuel burn. This controller has a wise system and changes the initially desired speed profile by using AI algorithms according to well-prepared road gradients and the train speed limits of the route ahead. For example,

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if there is an uphill segment in the route ahead, the desired speed should be increased before the uphill segment. As a result, the train can pass through the uphill segment with less effort. A simple structure for the proposed AI controller is presented in Figure 2. The speed controller is the main regulator that controls the braking and throttle position based on the received speed error from the desired locomotive speed profile. The proposed AI control system is divided into two components: the AI-designed unit and the AI controller. An AI controller block diagram is illustrated in Figure 3. As presented in Figure 3, the route gradient (grade resistance), initial desired speed, and speed limits are required to use the AI control system. The locomotive speed limit, curve radius, road gradient, and start and end points should be available in provided datasets for each route in the data lake. The AI-designed unit calculates the locomotive speed limit and the average gradient for a selected segment of the route ahead, known as the look-forward window. This window will be considered in the route segment ahead with a specified distance from the prompt position of the train (see Figure 4). In this window, previous control commands affect train speed. It is evident that the look-forward window is moving at the same speed in front of the mine train. The look-forward window immediately scans the route segments ahead. Therefore, the fluctuations in the route segments ahead are sensed by the opened window. The effect of each control command is anticipated to appear at the start point of its corresponding look-forward window. To estimate the average upcoming route gradients and locomotive speed limits, the route is discretised as a set of similarly spaced repeated points where the requested information is obtainable in the data lake. The second part of the AI-control algorithm is the AI controller. This unit performs as a feed-forward controller, and changes the initially desired speed profile based on the train speed limits and route gradient of the route ahead. The model of train movement is a complex model based on lookup tables and working limitations of the electric motors, generators and diesel engines. Therefore, the development of an AI controller may be more appropriate than the other models reviewed in the present study. AI models can be trained based on the heuristically applied experiences of mine train drivers. For example, if there is no locomotive speed limit in the route ahead and the route gradient is increasing, then the locomotive speed should be increased; however, if there is a locomotive speed limit in the route ahead and the gradient is increasing, then there is no need to increase the locomotive speed.

AUSTRALIAN RESOURCES & INVESTMENT

TA B L E 1 . L O C O M O T I V E F U E L C O N S U M P T I O N Throttle Position

Average Fuel Burn (l/h)

6.1

9.8

23.7

45.3

62.5

78.5

104.8

135.5

167.4

TA B L E 2 . L O C O M O T I V E F U E L C O N S U M P T I O N Real Fuel Consumption (l/h)

Minimised Fuel Consumption (l/h)

Fuel-consumption Improvement (%)

Min

Max

Min

Max

Min

Max

171

165

1.69

9.85

The locomotive’s energy is missed during the braking phase. As a result, using an AI controller can potentially help mine train drivers to reduce braking force through improved planning of the optimal speed to use in the different route segments. I M P L E M E N TAT I O N O F P R O P O S E D M E T H O D To test the proposed AI application, a mine locomotive was tested on a real railway track in a 100-kilometre segment of the Goldsworthy railway in Western Australia. The Goldsworthy heavy railway is 208 kilometres long, joining the Yarrie mine to Finucane Island near Port Hedland. The mine trains on the Goldsworthy railway track have 90 wagons per train. Each wagon transports up to 126 tons of iron ore. The mine locomotive model used by the study is the GM SD40-2, which is a commonly used model in the Australian railway transportation system. The present study analysed a set of real data collected over six months to estimate the amount of diesel burned by a locomotive in the selected segment of railway track in different conditions. The results of these analyses are presented in Table 1. The fuel burn of the mine diesel locomotive is at a constant rate in each throttle position. PREDICTION MODEL The construction of the planned ANN algorithm for function calculation is a feedforward multilayer perceptron neural network. The activation functions in the hidden layers (f) are the continuous, differentiable nonlinear tangents sigmoid. The schematic structure of the designed neural network is presented in Figure 5. To learn the proposed ANN model, 85,000 pairing data were randomly selected from the 175,000 values of the collected real data. To examine network accuracy and validate the model, 90,000 independent samples were used. The results show good agreement between the actual and estimated values of locomotive fuel consumption. The achieved results demonstrate that the developed ANN model can estimate locomotive fuel burn with an acceptable error. The fitness function produced by ANN is fed to the developed AI optimisation model that’s aimed to optimise the train speed in different segments of railway track to minimise the fuel burned by the locomotive. O P T I M I S AT I O N M O D E L This study has developed a GA algorithm to optimise train speed to allow locomotive diesel consumption to be minimised. In this model, the fitness function is created by the developed ANN to feed to the GA algorithm.

Using an AI controller can potentially help mine train drivers to reduce braking force through improved planning of the optimal speed to use in the different route segments R E S U LT S The first step in running the developed optimisation model is defining the minimum and maximum value of the variable (train speed). The range of possible values for variables in the established model is based on the collected real dataset. The parameters used to control the established models are R2 and MSE. The value of MSE was very close to 0, and the value of R2 was approximately 0.96 after the 57 generation. These values did not change until the GA model was stopped in the 63 generation. Further, the values of the control parameters were constant after the 57 generation, but the model continued all processes until the 63. This is because a confidence interval was defined as the model to find reliable results. Figure 6 presents the rate of locomotive fuel consumption before and after optimisation for a selected railway path. The rate of locomotive fuel consumption changes based on the road profile and grade resistance. The result shows that increasing the road grade increases locomotive fuel consumption, and creates a considerable reduction in train speed. The lowest level of fuel consumption for the locomotive is predicted for the flat segments where the grade resistance is equal to zero and in some segments of railway path that have a negative grade. Table 2 presents the range of locomotive fuel consumption in real and optimised conditions (before and after using the developed model) in the investigated case study in Western Australia. The results presented in Table 2 confirm that using the proposed and validated AI model can provide practical help that will allow the operation team to reach the minimum 1.69 per cent and maximum 9.85 per cent energy-efficiency improvement in mine railways. For more information, email ali@soofastaei.net or visit www.soofastaei.net.

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ENVIRONMENT

ELECTRIC CARS CAN CLEAN UP THE MINING INDUSTRY – HERE’S HOW BY ELSA DOMINISH, SENIOR R ESEARCH CONSULTANT, INSTITUTE FOR SUSTAINABLE FUTUR ES; AND NICK FLOR IN, R ESEARCH DIR ECTOR, INSTITUTE FOR SUSTAINABLE FUTUR ES, UNIVER SIT Y OF TECHNOLOGY SYDNEY

rowing demand for electric vehicles is important to help cut transport emissions, but it will also lead to new mining. Without a careful approach, we could create new environmental damage while trying to solve an environmental problem. Like solar panels, wind turbines and battery storage technologies, electric vehicles require a complex mix of metals, many of which have only been previously mined in small amounts. These include cobalt, nickel and lithium for batteries used for electric vehicles and storage; rare earth metals for permanent magnets in electric vehicles and some wind turbines; and silver for solar panels. Our new research (commissioned by Earthworks) at the Institute of Sustainable Futures found that under a 100 per cent renewable energy scenario, the demand for metals for electric vehicles and renewable energy technologies could exceed reserves for cobalt, lithium and nickel. To ensure that the transition to renewables does not increase the already significant environmental and human impacts of mining, greater rates of recycling and responsible sourcing are essential.

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R E C YC L I N G C A N O F F S E T D E M A N D F O R N E W M I N I N G Electric vehicles are only a very small share of the global vehicle market, but their uptake is expected to accelerate rapidly as costs reduce. This global shift is the main driver of demand for lithium, cobalt and rare earths, which all have a big effect on the environment. Although electric vehicles clearly help us by reducing transport emissions, the electric vehicle and battery industries face the urgent challenge of improving the environmental effects of their supply chains. Our research shows that recycling metals can significantly reduce primary demand for electric vehicle batteries. If 90 per cent of cobalt from electric vehicle and energy storage batteries was recycled, for instance, the cumulative demand for cobalt would reduce by half by 2050. So what happens to the supply when recycling can’t fully meet the demand? New mining is inevitable, particularly in the short term. In fact, we are already seeing new mines linked to the increasing demand for renewable technologies. C L E A N E N E R GY I S N O T S O C L E A N Without responsible management, greater clean energy uptake

AUSTRALIAN RESOURCES & INVESTMENT

has the potential to create new environmental and social problems. Heavy metals, for instance, could contaminate water and agricultural soils, leading to health issues for surrounding communities and workers. Most of the world’s cobalt is mined in the Democratic Republic of the Congo, and around 20 per cent of this is from artisanal and smallscale miners who work in dangerous conditions in hand-dug mines. This includes an estimated 40,000 children under 15. Rare earths processing requires large amounts of harmful chemicals and produces large volumes of solid waste, gas and wastewater, which have contaminated villages in China. Copper mining has led to pollution of large areas through tailings dam failures, including in the United States and Canada. A tailings dam is typically an earth-filled embankment dam used to store mining by-products. When supply cannot be met by recycling, we argue that companies should responsibly source these metals through verified certification schemes, such as the IRMA Standard for Responsible Mining. W H AT W O U L D A S U S TA I N A B L E E L E C T R I C VEHICLE SYSTEM LOOK LIKE? A sustainable renewable energy and transport system would focus on improving practices for recycling and responsible sourcing. Many electric vehicle and battery manufacturers have been proactively establishing recycling initiatives and investigating new options, such as re-using electric vehicle batteries as energy storage once they are no longer efficient enough for vehicles. But there is still potential to improve recycling rates. Not all types of metals are currently being recovered in the recycling process. For example, often only higher value cobalt and nickel are recovered, whereas lithium and manganese are not. While electric vehicle manufacturers are beginning to engage in responsible sourcing, many are concerned about the ability to secure enough supply from responsibly sourced mines. If the auto industry makes public commitments to responsible sourcing, it will have a flow-on effect. More mines would be encouraged to engage with responsible practices and certification schemes. These responsible sourcing practices need to ensure they do not lead to unintended negative consequences, such as increasing poverty, by avoiding sourcing from countries with poorer governance. Focusing on supporting responsible operations in these countries will have a better long-term impact than avoiding those nations altogether. W H AT D O E S T H I S M E A N F O R AU S T R A L I A? The Australian Government has committed to supporting industry in better managing batteries and solar panels at the end of their life. But stronger policies will be needed to ensure re-use and recycling if the industry does not establish effective schemes on their own, and quickly.

Many electric vehicle and battery manufacturers have been proactively establishing recycling initiatives and investigating new options, such as re-using electric vehicle batteries as energy storage once they are no longer efficient enough for vehicles Australia is already the largest supplier of lithium, but most of this is exported unprocessed to China. This may change, however, as the battery industry expands. For example, lithium processing facilities are under development in Western Australia. Mining company Lithium Australia already owns a battery component manufacturer in Australia, and recently announced it acquired significant shares in battery recycling company Envirostream. This could help to close the loop on battery materials and create more employment within the sector. HUMAN RIGHTS MUST NOT BE SIDELINED The renewable energy transition will only be sustainable if human rights are made a top priority in the communities where mining takes place and along the supply chain. The makers of electric cars have the opportunity to lead these industries, driving change up the supply chain and influencing their suppliers to adopt responsible practices. Governments and industry must also urgently invest in recycling and re-use schemes to ensure the valuable metals used in these technologies are recovered so that only what is necessary is mined. This article is republished from The Conversation (http://www.theconversation.com) under a Creative Commons licence. Read the original article at https://www.theconversation.com/ electric-cars-can-clean-up-the-mining-industry-heres-how-115369.

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WAT E N V IERROM NA MNE A NG TE M E N T

A new radar level transmitter for the water-supply and sewage industry

VEGA radar level transmitters are proven in service and continually developed.

he VEGAPULS WL S 61 radar sensor is ideal for all simple applications in the water-supply and sewage industry. Featuring a wide range of mounting options, it is an especially cost-effective radar solution, as it can be readily integrated into new and existing installations. Just as with the VEGAPULS WL 61, which has been available for several years with a large installed base, the new VEGAPULS WL S 61 offers a design optimised for use in the water-supply and sewage industry. Radar technology offers numerous advantages compared to ultrasonic sensors, which used to be standard in this industry. For example, radar functions independently of weather influences, including strong sun, wind, fog or rain. In addition, no compensation is needed for variations in the signal transmission time due to air temperature fluctuations. With an accuracy of +/- five millimetres, the VEGAPULS WL S 61 covers a wide range of applications. This sensor is particularly suitable for level and flow measurement in water treatment plants. Its excellent

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focusing enables it to be used in pumping stations and rainwater overflow basins, for flow measurement in open channels, and for level monitoring. The sensor’s robust housing is wearresistant and maintenance-free, and its high degree of protection, IP 68 (two bar), also makes it suitable for applications where the sensor may be temporarily submerged. The unit complies with the latest level probing radar (LPR) standard, and is approved for open-air use without restrictions or special attachments. In the development of this new sensor for simple measurement tasks, VEGA drew on its many years of experience. Already, there are more than 40,000 VEGAPULS WL 61 sensors successfully used worldwide in the water-supply industry. An entirely new feature is bluetooth wireless operation from a smartphone or tablet (and/or a PC with PACTware) when combined with a bluetooth USB adapter; this makes commissioning and diagnostics even simpler. Corresponding display and signal processing units enable the display of measurements

and provide the relay outputs needed, for example, to control a pump. For more information, go to www.vega.com/wls61. TECHNICAL DATA Measuring range

Measuring accuracy

+/- 5 mm

Cable length/material

12 m / PUR

Process temperature

-40–600C

Process pressure

-1–2 bar

Process connections

Thread G 1 ½ ‘‘

Housing protection type Output signal Operation Ex approvals

IP66/68 (2 bar) 4–20 mA App or DTM via Bluetooth none

Low-cost level measurement. Radar sensor for water management. Reliable level measurement in water treatment facilities, pump stations and rain overflow basins. Open channel flow measurement and water level monitoring.

VEGAPULS WL S 61 ▪ Measuring range up to 8 m

▪ Can be used outdoors without restriction ▪ Flood-proof IP 68 housing

▪ Operation via Bluetooth with Smartphone, tablet or PC

Further information: www.vega.com/wls61

Phone 1800 817 135

GOLD

THE NEW GOLD BUGS BY ANTHONY FENSOM

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AUSTRALIAN RESOURCES & INVESTMENT

Central bank buying is boosting gold demand, even amid fluctuating prices for the precious metal. With merger and acquisition (M&A) activity spurring investor interest, the outlook appears golden – particularly for Australian producers.

old prices have fluctuated in 2019 as geopolitical tensions have waxed and waned, and as markets have pondered the monetary policy plans of the US Federal Reserve. On 26 April, spot gold was trading at US$1287 (A$1830) an ounce, after having climbed as high as US$1346 (A$1913) in February, and dropped as low as US$1265. CENTRAL BANK BUYING Moves by central banks in China, India and Russia to increase their gold reserves have brightened the outlook for the yellow metal. The highest central bank buying in 50 years drove four per cent growth in gold demand in 2018, which reached 4345 tonnes, according to the World Gold Council. Central banks added 651 tonnes to their official gold reserves in 2018, up 74 per cent on the previous year and the second-highest yearly total on record, the UK-based industry group said in a 31 January release. Russia, which is ‘de-dollarising’ its reserves, bought 274 tonnes in 2018, the Council says. Turkey also increased its gold reserves by 51 tonnes, with Kazakhstan adding nearly the same. China has also expanded its gold reserves, which now account for 2.4 per cent of total reserves, or 1852 tonnes. Should it maintain its current rate of buying, it could end 2019 as the top buyer after Russia. India’s central bank is also expected to join China and Russia in adding to its holdings. The Reserve Bank of India (RBI) reportedly could acquire around 47 tonnes this year, with its current reserves already at an all-time high of almost 609 tonnes. Overall, official purchases could reach 700 tonnes in 2019, led by these countries along with Kazakhstan, Iran and Turkey, according to Citigroup. ‘There seems to be some form of pattern, not just the RBI, that central banks tend to increase gold reserves when the global macroeconomic environment is uncertain,’ OCBC economist Howie Lee told Bloomberg News. ‘It’s no coincidence that one of the biggest buyers of gold in recent months was China, which is in the midst of trade tensions with the

China has also expanded its gold reserves, which now account for 2.4 per cent of total reserves, or 1852 tonnes. Should it maintain its current rate of buying, it could end 2019 as the top buyer after Russia United States, and may have been seeking to diversify its trillions of dollar reserves.’ M & A AC T I V I T Y Corporate and investor activity has also been heating up in the gold sector. In late April, US-based Newmont Mining finalised its US$10-billion takeover of Canada’s Goldcorp, becoming the world’s largest listed gold miner. The Newmont–Goldcorp merger followed Barrick Gold’s earlier US$5.4-billion acquisition of Randgold Resources, sparking speculation of further M&A activity, including AngloGold and Gold Fields. ‘Divestments from the recent Barrick–Randgold tie-up and the proposed Newmont–Goldcorp merger will likely deliver assets into the market,’ said Macquarie analysts in a January report. ‘With most Australian producers already sitting on substantial cash balances, an additional boost from higher gold prices over the next couple of years could set the stage for some aggressive bidding.’ PRICE RISE Macquarie suggested that the gold price could reach US$1400 an ounce by year’s end, rising further in the first quarter of 2020 to around US$1425. With the local currency weakening against the US dollar, gold prices could top a record A$2000 an ounce, boosting earnings for local producers.

– 41 –

GOLD

Diatreme Resources’ former Tick Hill gold project in Queensland

Others seeing higher prices ahead include London-based consultancy Capital Economics, which sees gold reaching US$1350 an ounce by year end on safe-haven buying by investors. ANZ Research sees gold prices averaging US$1324 an ounce in 2019, rising to US$1426 next year and US$1434 in 2021. ‘We believe gold remains a preferred portfolio diversifier at this stage of the economic cycle. Renewed optimism for the global economic growth is again pushing equity markets higher, but the risk of a correction remains, which should support the investment demand for gold,’ said the Australian bank in a 10 April report. It also noted that the Federal Reserve’s shift towards a more accommodative monetary policy should keep the US dollar weaker – ‘the key ingredient for gold prices’. It expects physical demand and exchange-traded fund buying to increase, while ‘ongoing geopolitical issues’ are expected to maintain ‘robust’ central bank buying. AU S T R A L I A : O U T P U T B O O S T The Australian Government’s forecaster also sees a bright outlook for the precious metal. In its March 2019 ‘Resources and Energy Quarterly’, the Office of the Chief Economist projected that gold prices would rise gradually over the next five years to an average of US$1428 an ounce by 2024, ‘as gold’s status as a safe-haven asset fuels investor demand over the short term and world mine supply declines from 2020’.

– 42 –

It sees Australia’s gold exports reaching nearly $22 billion in the 2020 fiscal year, driven by higher prices and export volumes. Australia, the world’s second-largest gold producer, is expected to see output climb to 346 tonnes over the same period, which will be driven by new mines and expansions. Among the new mines, Gold Roads’ Gruyere gold mine is expected to come online in the first half of 2019, with other new projects including Capricorn Metals’ Karlawinda mine, expected for 2020. Expansions include Newcrest’s Cadia Valley mine, Northern Star’s Jundee Operation and Evolution Mining’s Cowal mine. Increased industry confidence is shown by rising gold exploration spending, which increased by 19 per cent in 2018 to $891 million, or 41 per cent of total exploration expenditure. Western Australia remained the centre of activity, accounting for 72 per cent of gold exploration spending. East coast miners, however, are also stepping up activity, including explorers such as Rimfire Pacific Mining, which is targeting the historical mining district of Fifield in central New South Wales. In April, Diatreme Resources concluded the sale of its Tick Hill gold project near Mount Isa, Queensland, to Perth-based Berkut Minerals, with Berkut eyeing an initial public offering of its Australian gold assets. For Australia’s gold miners, rising prices, and increased central bank and investor interest point to a prosperous outlook for China’s Year of the Pig, despite volatile markets.

GOLD

Cardinal Resources’ significant discovery Cardinal Resources is fast approaching a development decision on its Namdini gold deposit in northern Ghana.

he 2014 discovery of the Namdini gold deposit ranks as one of the biggest undeveloped gold deposits held by an ASX-listed company, a situation reflected in Cardinal winning this year’s prestigious Thayer Lindsley Award from the Prospectors and Developers Association of Canada (PDAC). The Award goes to companies that have made a ‘recent significant mineral discovery anywhere in the world’. Given that Namdini’s reserves stand at 5.1 million ounces of gold from a seven-million-ounce resource base, the Award was no surprise. Cardinal Managing Director Archie Koimtsidis says that the discovery had attracted global interest from the industry because unlike southern Ghana, where big gold mines are common, northern Ghana was an orphan up until Namdini’s discovery. ‘I first found gold there over 20 years ago, and no-one believed me because it wasn’t supposed to be there. And here we are now, with seven million ounces in resources and a decent

– 44 X ––

regional exploration land package that may have another discovery or two on it,’ Koimtsidis says. The development of Namdini is beginning to take shape this year. A final feasibility study into its development is expected to take place shortly. Cardinal aims to then make a final development decision in the December quarter after arranging project finance, and expects to have what will be one of West Africa’s biggest gold mines in production in 2022. ‘Pending the release of the feasibility study, all of the balls are up in the air. They will drop soon enough, though,’ Koimtsidis says when asked about the likely outcome of the study. ‘But what I can say is that the recent pit optimisation, which increased reserves to 5.1 million ounces, forms the base of the financial modelling and mining scheduling. ‘We would like to think that as a result of getting a few extra ounces from the pit optimisation (up from 4.8 million ounces previously), we will come

in at least close to our pre-feasibility study economics,’ Koimtsidis says. The pre-feasibility study (based on 4.8 million ounces) was released in September last year. It envisaged a 9.5-million-tonnesper-year mining and processing operation costing US$414 million. Annual production from a highergrade ‘starter’ pit covering the first two and a half years was estimated at 361,000 ounces at an all-in sustaining cost of US$599 per ounce. Total project payback was put at 1.8 years, assuming a US$1250-per-ounce gold price. On a life-of-mine basis, annual production was put at 294,000 ounces over 14 years. The release of the feasibility study will clear the way for completion of Namdini’s financing package. In the meantime, the hunt for another big deposit has had some early success, with the Ndongo East prospect, 25 kilometres from Namdini, returning high-grade shallow hits, which are being followed up.

GHANA - WEST AFRICA

5.1 Moz

ORE RESERVE Developer ASX - TSX : CDV

cardinalresources.com.au

GOLD

Positive results for Kairos Minerals Pilbara explorer Kairos Minerals has set out to follow-up its exciting exploration results at its Croydon conglomerate gold project, as well as advance its Mount York hard-rock gold deposit in light of strong Australian dollar gold prices.

ike other explorers in the region, the start to Kairos’s 2019 field season was delayed because of heavy rains associated with Cyclone Veronica. But Kairos Executive Chairman Terry Topping says this year’s more groundbased field season kicked off in earnest in early May after the upgrade of existing access tracks. He says that a key focus in the new field season was to follow up the outstanding results achieved recently from a helicopter-borne regional sampling program, which defined targets along a 22-kilometre corridor within the company’s 100 per cent owned tenements at Croydon. In the December 2018 quarter, encouraging gold assay results were returned from 253 stream sediment samples collected at Croydon, which sits in the central part of Kairos’s broader 100 per cent Pilbara project area. Topping says the results, including a peak gold value of 12.3 grams per tonne of gold, confirmed the widespread distribution of gold anomalism across the Croydon project. More than 46 per cent of the samples returned a positive result for gold, with the sampling program following on from the gold nugget ‘patches’ discoveries

– 46 X ––

announced by Kairos towards the end of last year. Kairos collected a total of 447 gold nuggets with a combined weight of 30.3 ounces from the six newly discovered patches identified to date. ‘The nuggets were discovered via follow-up metal detecting and confirm the exceptional exploration potential over at least 22 kilometres,’ Topping says. The Pilbara’s conglomerate gold nugget potential rose to prominence in 2017 when Canada’s Novo Resources Corp – a C$340-million company – reported the recovery of watermelon-seed-shaped gold nuggets from the Pilbara region’s extensive conglomerate beds. Topping says that Kairos has now unearthed both disseminated and nuggety or coarse gold from multiple stratigraphic horizons. He says the nuggets recovered to date were either the flattened watermelonseed-type or the rounded ones with regular shapes. Topping also reminded investors that Kairos is one of the main hard-rock gold players in the Pilbara thanks to its Mount York deposit, 100 kilometres east of Croydon. A producer of 125,000 ounces between 1994–1998 under a different name and ownership, Mount York’s resource

base was doubled by Kairos last year to 643,000 ounces (14.4 million tonnes grading 1.39 grams per tonne). The resource is spread across a number of deposits that remain open along strike and at depth, with Topping saying there was an ‘outstanding opportunity to further increase the resource and target higher-grade mineralisation at depth’. A new drilling campaign at Mount York is planned for 2019, with the company spurred on by historically high Australian dollar gold prices.

GOLD

The (un)necessary golden trigger BY PR ZEMYSLAW R ADOMSKI, CFA, SUNSHINE PROFITS

Nothing happened. And that was all the gold market needed.

– 48 –

AUSTRALIAN RESOURCES & INVESTMENT

hese sentences appear to be contradictory and senseless. But they’re not, and understanding the connection between them is imperative for anyone who aims to make money in gold and keep their stress levels under control. Knowing what it means will help you invest in general, but this may be particularly important for those interested in the precious metals sector. Gold is viewed as a safe-haven asset. When wars break out, people buy gold. When a major economic crisis hits, people flock to gold. When you’re James Bond and you need to convince a bad guy that you have something valuable in your briefcase, you mention gold coins. To put it simply: gold is particularly valuable in extreme circumstances. This seems obvious, but once we dig into implications, things get more interesting. Since gold rallies and declines during extreme situations, people – no surprise here – expect it to rally or decline when something extreme happens. Here’s where it gets tricky. As a consequence to the above, people tend to expect that something significant needs to happen for gold to rally or decline, and that’s incorrect. When you hear a good joke, you laugh or smile. Do you expect yourself not to laugh or smile, if you don’t hear a good joke for months? Absolutely not. The reason is that there are many reasons to laugh or smile. You can see a beautiful sunset, get a promotion at work, or hear something pleasant said by your loved ones. There are more reasons for you to smile, so it’s obvious that you don’t need to wait for a joke and can smile whatever the reason. It’s the same with gold. Just because gold is likely to rally or decline based on some extreme situation, it doesn’t mean that it can’t rally or decline based on something else. Stating that gold rallies or declines during extreme situations doesn’t mean that it’s the only time that it rallies or declines. Yet, this is what precious metals investors often focus on. And no wonder. We live in the information age where we are bombarded with ‘breaking news’ at least twice per day. Just look at any ‘economic calendar’ online – it will have at least five events on any given day, usually more than 10, and this doesn’t even count the earnings reports. While being force-fed information through mass media, it’s not surprising that investors keep looking for the key news or triggers that will make gold soar or plunge. This mechanism is being reinforced by the media themselves. After each big move in gold, they report that ‘gold declined on this and that’ or ‘gold rallied on this and that’. In many cases, the description of the driver behind gold’s price move may be correct, but it’s relevance will be tiny compared to what investors should be really focused on. In late March 2019, the Federal Reserve (the Fed) became significantly more dovish, which is theoretically a good reason for gold to rally. Of course, that was presented as the explanation behind gold’s upswing that followed. What was most important was not the change in the Fed’s approach, or the fact that gold moved higher, but by how much it moved higher. Gold should have soared by tens of dollars and started a major rally. Instead, gold topped in the next several days and now – writing this in the second half of April – it’s well below the price levels that preceded the Fed’s dovish surprise. This weakness in reaction is the meaningful sign, not the news or the explanation. It has profound implications, and this is something that should be discussed in the mass media, but it won’t be described there

Just because gold is likely to rally or decline based on some extreme situation, it doesn’t mean that it can’t rally or decline based on something else because it’s easier to just focus on one of that day’s economic or financial news stories. If gold ignored the trigger and moved lower anyway, then perhaps triggers are not as important as it seems at first sight? That is indeed the case. If not news and triggers, then what? There are many tools to predict the gold prices, but for the sake of simplicity, let’s stick to the basics. The markets move from being overbought to oversold and vice versa so they tend to overshoot and undershoot to extremes. It’s as simple as that – in the above context, it can also be understood that there is an inherent cyclicality in the market, and that’s what we should view as the default. Direct consequence is the fact that if nothing happens, the market will not stay in place – it will follow its cycle. Whether that will be a move up or down depends on the stage of the cycle that the market is currently in. In case of gold and the current situation, it’s been in a down cycle since the 2011 top. This is most likely because during the 2015 bottom, gold wasn’t hated enough and precious metals investors (those who either consider purchases or are already invested) were not bearish – they were eager to buy more and expected higher gold prices. This is documented by the surveys and confirmed by longterm technical signs and analogies. Therefore, since gold hasn’t truly bottomed yet, its down cycle remains in play. So, what needs to happen for gold to move lower? Nothing. Gold is moving back and forth because new bullish fundamental developments keep popping up. But as soon as gold has nothing bullish to rally on, the price is likely to resume its default move – which is currently to move down. If we see bearish news, gold is likely to slide quite sharply. After the final and scary bottom, gold’s default mode will become a rally. Then it’s likely to trade sideways in light of bearish news – but it seems that we are still months before the start of this stage. So, what needs to take place for this to happen? That’s right: nothing. Przemyslaw Radomski, CFA, is helping gold investors through his newsletter company, Sunshine Profits, and through his role as the Portfolio Manager at Sunshine Gold Investment Fund, LP.

– 49 –

GOLD

Gold pour by Kalamazoo from the Mixy trial mining at Snake Well

Kalamazoo plans high-tech approach Kalamazoo Resources is about to launch a carefully planned high-tech hunt for gold at its Castlemaine project in central Victoria’s ‘golden triangle’.

he program of geophysics and drilling comes as Victoria has recaptured its reputation as a source of high-grade gold. This is due to the spectacular 2.3-million-ounce Swan Zone discovery at depth by Kirkland Lake Gold at Fosterville near Bendigo, 40 kilometres from Castlemaine. Kalamazoo is out to emulate Kirkland’s success at Castlemaine, with the company acquiring control of the entire field last year after the previous Singapore-based owner walked away after paying stopstart attention to the old goldfield. Castlemaine ranks as the third biggest goldfield in Victoria behind Bendigo and Ballarat, with a production history of 5.6 million ounces. Kalamazoo Executive Chairman Luke Reinehr believes that it has more high-grade gold to give, particularly in light of Kirkland’s Fosterville success. ‘I would suggest that if you want to discover the next Fosterville, the high-

– 50 X ––

grade Castlemaine goldfield is a very good place to start,’ Reinehr told the Melbourne Mining Club in March. Kalamazoo Exploration Manager Luke Mortimer told Australian Resources and Investment that the company is planning a targeted and high-tech approach to improve the likelihood of success. ‘We’ve elected to go down a route of geophysics (induced polarisation and drone aeromagnetic surveys) to better define where we drill our holes. ‘So far, we have identified several areas of interest of up to two kilometres by two kilometres in size. They have been chosen because they have prospective fault structures with known mineralisation, or they are strike extensions of mineralised structures,’ Mortimer says. ‘We hope to complete the geophysics over the next couple of months on several of the prospects. The aim is to follow up with drilling, hopefully at the start of August. ‘We know they are mineralised because the area is just riddled with hard

rock workings. Some of the shafts are 40 metres deep, and we know the oldtimers would not have gone down that deep for small change,’ Mortimer says. ‘What is important to note from the Fosterville example is that the surface expression is no real indication of what may lie beneath.’ Kalamazoo has also expanded its regional footprint by taking up a big ground position at Maldon, another historic high-grade gold producer, about 10 kilometres from Castlemaine. ‘It is a good geographical fit for us, and also has high-grade gold in lines of reef and old workings on part of the Muckleford Fault, which is not undercover. It is the same story as Castlemaine in that it hasn’t seen any modern geophysics,’ Mortimer says. Reinehr says Kalamazoo was well placed to fund the Victorian push after raising $7 million from the sale of its Snake Well gold project in Western Australia.

GOLD

Potential game changer for NTM Gold NTM Gold has set out to substantially increase the gold resource base at its Redcliffe project near Leonora in Western Australia, with the exciting Hub discovery to be the focus in 2019.

ast year, exploration across the Redcliffe project led to a 94 per cent increase to 534,000 ounces in its gold resource base across a number of deposits. NTM Managing Director Andrew Muir emphasises that the new resource number – the first since 2012 – not only represented a big increase (257,000 ounces), but that it was just the start of the story. ‘It is definitely not the final resource number, as all of the deposits are still open at depth,’ says Muir. ‘It should be viewed as very much a work in progress in that the expectation is that all of the deposits will grow in time. ‘We have 170 square kilometres of ground, and we think that less than 20 per cent of the ground has been effectively explored. ‘As we have 534,000 ounces already, we think we are going to find a lot more gold as we continue to explore,’ Muir says. After last year’s resources update, NTM switched to a more greenfields style of exploration while looking for new deposits at Redcliffe. The greenfields program tested 12 targets, of which six returned intersections in the order of one gram of gold per tonne.

– 52 X ––

Stand-out results were returned from the Hub prospect in the central part of the Redcliffe project. But while the initial drilling showed that the Hub had mineralisation of substance, there was a complicating factor. ‘We have this criss-crossing dyke, which cuts through the mineralisation,’ Muir says. ‘However, we came in and did some more drilling to the north of the dyke and it returned some of the best aircore results I think I’ve ever seen.’ Best results included 10 metres at 23.3 grams per tonne from 55 metres, 10 metres at nine grams per tonne from 65 metres, and five metres at 1.9 grams per tonne from surface in different holes. ‘So, it extended the mineralisation to the north significantly, plus there are some fantastic grades within it,’ Muir says. ‘Not only was the grade excellent, but we have 1000 metres of strike in which the mineralisation can be traced all the way through. ‘We are not saying that the entire thing is going to have high-grade mineralisation the whole way along, but it does show that we are onto a big system,’ Muir says.

He says the Hub could be a potential game changer for the company because of its combination of strike length, the grade of the mineralisation and its near-surface starting position. ‘It means we might be able to add ounces to our resource base pretty quickly.’ Drilling resumed in late April to further test the northern extension of the Hub.

REDCLIFFE GOLD PROJECT

Darlot

Strategic Location • Northern Goldfields region, WA. • Four processing plants within trucking distance.

Outstanding Potential • +170km2 of tenements with large areas untested. • +0.5Moz resource already with substantial growth potential

Multiple Opportunities to Outperform

Significant gold deposits Gold processing plants

Optionality for significant re-rating by: • Discovery success and resource build. • Participate in regional M&A. • Becoming an independent gold producer.

Granitoid Greenstone

Thunderbox

50km

Redcliffe Gold Project

Mt Morgans

Excellent Discovery Track Record

Active Systematic Exploration

• Averaged a discovery per year since 2017.

• Substantial drill programs underway.

• High grade intercepts.

• New targets and deposit extensions.

• Efficient - 70% of funds going into the ground.

Gold occurences

WESTERN AUSTRALIAN GOLD EXPLORER EXCELLENT DISCOVERY TRACK RECORD POISED FOR GROWTH

Leonora GP Gwalia

Leonora

www.ntmgold.com.au ASX: NTM

GOLD

GOLD FIGHTING FED AND DOLLAR HEADWINDS BY GAVIN WENDT, MINELIFE PT Y LTD

‘Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves.’ — Norm Franz

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AUSTRALIAN RESOURCES & INVESTMENT

n this report, I’ll discuss gold’s ongoing tussle with the US Federal Reserve (the Fed) and the US dollar, as it fights for stability in the wake of near-term market gyrations. Let’s look at the performance of gold over the past three years, as I believe it’s quite instructive of the metal’s resilience. Gold has traded as high as $1344 on the COMEX futures contract so far in 2019 after hitting a 2018 high of $1365. Last year’s peak created a double top in the gold futures market, as the price hit the same high during January and April. If we look back to 2017, gold reached a peak of $1358, while a year earlier in 2016, gold peaked at $1377.50. What this tells us is that there is a lot of congestion in the gold market in terms of price between the $1340 and $1380 levels, with each attempt to make a new high just falling short. Despite this, what is significant is that gold continues to move higher with respect to all of the leading currencies. This is reflected in the long-term charts of gold in the dollar, euro and yen terms, which all indicate bullish price trends. While gold has failed to rise above the $1380 level, it has demonstrated resilience, which is a sign of underlying demand. Gold has been in a consolidation pattern, and it may be only a matter of time before it finally builds the energy to move appreciably higher and breaks to the upside on a technical basis. As Figure 1 shows, gold has weakened below $1300 in the aftermath of the release of the minutes from the most recent Federal Open Market Committee (FOMC) meeting. Both price momentum and relative strength metrics have declined to the lower area of neutral territory. As a reminder, the Fed at its FOMC meeting cancelled its projections for increases in the Fed Funds rate in 2019, and reduced next year’s outlook to only one 25 basis point increase in 2020. At the same time, the central bank announced that it would end its Balance Sheet Normalization program, which had supported the price of gold. After the most recent FOMC meeting, market sentiment shifted to expectations for a rate cut as the next move by the central bank; however, this notion was dispelled when the latest Fed minutes had no mention of any support for a decline in rates on the immediate horizon, which led to an increase in interest rates and a drop in the price of gold below $1300. President Trump and members of his administration have been highly critical of Fed Chairman Jerome Powell and members of the FOMC due to their hawkish approach to monetary policy in 2018. On more than one occasion, the President has lamented that rate hikes and quantitative tightening have worked contrary to tax and regulatory reforms when it comes to economic growth. Recently, the President nominated Stephen Moore to the Fed, and Moore has advocated for an immediate 50 basis point cut in the Fed Funds rate. Larry Kudlow, the administration’s Chief Economic Adviser, echoed Moore’s call for a lower Fed Funds rate to undo the damage done to the economy during 2018. On a short-term basis, higher rates that are not the result of inflationary pressures tend to be toxic for the price of gold.

Figure 1

On a short-term basis, higher rates that are not the result of inflationary pressures tend to be toxic for the price of gold Higher interest rates do not favour the upside in the gold market for two reasons. Firstly, higher rates cause the cost of carrying a long position in gold to move higher. Like other assets, gold competes with bonds for investment capital. As the yield on fixed-income instruments increases, gold’s appeal tends to decline. Central banks around the world hold vast quantities of the yellow metal as part of their foreign currency reserves – therefore, there are no supply shortages in the gold market. As such, higher interest rates lead to a higher contango in the gold market, which means that the differential between prices for nearby and deferred delivery rises as interest rates move to the upside. When it costs more to roll or carry a long position in the yellow metal, it tends to cause selling or a lack of buying that would take the price higher. The second reason is that rising rates in the US increases the yield differential between the US dollar and other world currencies, causing the path of least resistance for the greenback to be higher. The longstanding inverse price relationship between gold and the dollar means that strength in the US currency typically translates to weakness in the price of gold.

– 55 –

GOLD

Figure 3 Figure 2

Figure 4

Time will tell how low the current selling will push the precious metal, and gold could need more time before it builds the strength to challenge technical resistance levels on the upside Gold reached its low in 2018 at $1161.40 when the dollar index rose to a new high above 95 in mid August; however, when the dollar index rose to another new high above 96 in December last year, gold did not fall to a lower low. Despite the wide interest rate differential between the dollar, the euro and the yen, there has been selling in the dollar each time the index attempts to climb above the 97 level on the dollar index. As Figure 2 shows, the dollar index reached a high above 97 in early March, just shy of the December peak, before falling back to a low just above 95 a fortnight later. The most recent attempt to rally took the dollar index above 97 a week ago. Time will tell if the index can power higher and through technical resistance, or if another retreat is on the cards for the greenback. The Trump administration has advocated for a weaker dollar starting on the campaign trail in 2016, as a lower dollar makes US exports more competitive in global markets. The dollar is likely a tool during the current trade negotiations with China and other trading partners around the world, so it should not come as a

– 56 –

AUSTRALIAN RESOURCES & INVESTMENT

surprise if the administration is putting words into action and selling the dollar each time it threatens to move to a new high on the dollar index. At his confirmation hearings, Secretary of the Treasury Steven Mnuchin spoke of the benefits of a weaker US currency. Secretary Mnuchin is intimately involved in trade negotiations and has his fingers on the pulse of the foreign exchange markets in his position as the leader of the Treasury. It is likely that US Government intervention in the dollar is preventing it from running away on the upside, given the 2.65–2.90 per cent short-term rate differential between the dollar, the euro and the yen. While rising rates are bearish for gold, the continued inability of the dollar to break to the upside could turn out to be a bullish factor for the yellow metal. At the same time, lots of uncertainty from an economic and geopolitical perspective underpin demand for gold, and central banks around the world remain net buyers of the yellow metal. Interestingly, while investors dither on gold in the short term, central banks are continuing to buy. China increased its gold holdings in March for the fourth straight month, with the People’s Bank of China raising reserves to 60.62 million ounces, or 1885 tonnes. Worldwide, global central banks bought a net 51 tonnes of gold in February, the largest monthly increase since October 2018, according to the World Gold Council (WGC). Russia also added another 18.7 tonnes of gold, or a 0.89 per cent increase, to its reserves in March. This increased the country’s total gold reserves to 69,700,000 ounces (2168 tonnes), or approximately 18 per cent of the central bank’s total reserves. During the first quarter of 2019, Russia acquired 56 tonnes of gold, while the country’s share of the US dollar in its reserves fell from 26 per cent to 22 per cent in 2018. Russia’s increased gold purchases is on the back of a decision to diversify away from the US dollar, and many other emerging markets are also increasing their gold reserves, as well. Last year, global central banks purchased a total of 576 tonnes of gold, the highest level since 2012, according to GFMS. As we have previously discussed, the most significant bullish factor in terms of gold is that years of accommodative monetary policy have weighed on the values of all fiat currencies. While we do not see the impact of historically low interest rates when looking at one currency against another, it does become apparent when measuring the dollar, the euro, and the yen against gold. As Figure 3 shows, since 2001, the dollar has depreciated against the yellow metal; the euro has declined against gold since 2003; and since 2001, gold has been rallying in Japanese yen terms. The bottom line is that the three fiat foreign exchange instruments that are the reserve currencies of the world have all depreciated in value against gold steadily for almost two decades. The trend in gold suggests that the current dip caused by slightly higher interest rates and even a stronger dollar will be a temporary phenomenon, and that any price weakness presents a buying opportunity in the yellow metal.

Lots of uncertainty from an economic and geopolitical perspective underpin demand for gold, and central banks around the world remain net buyers of the yellow metal Figure 4 is also hugely significant because it shows gold compared to the annualised returns of a range of different investment over the past 20 years. In summary, gold markets are currently in a consolidation phase. The price action in gold since August 2018’s low has been positive, despite US strength (typically a disincentive for gold price strength). It is clear that US authorities want to rein in the US currency, because it raises the cost of exports and makes the US less competitive. At the same time, US authorities are keen to minimise future upward movements in interest rates because, like a rising US dollar, rate rises can have a negative impact on domestic economic growth. The Trump administration has lamented on many occasions that rate hikes and quantitative tightening have worked contrary to tax and regulatory reforms when it comes to economic growth. We also have evidence of gold’s long-term strength of performance compared to other asset classes, which is just one reason central banks around the world are continuing to accumulate gold in strong volumes. Central banks are also cognisant of the fact that their money printing has severely undermined the value of fiat currencies worldwide. Gold is correcting after the recent Fed minutes, which have ended speculation that the central bank is about to cut interest rates. Time will tell how low the current selling will push the precious metal, and gold could need more time before it builds the strength to challenge technical resistance levels on the upside. There are more than a few signs that the yellow metal will find a bottom sooner rather than later, and we will be looking down rather than up at the $1300-per-ounce level. Gold is likely to recover in price terms once markets recognise that US dollar gains are limited and rate rises are off the agenda for the foreseeable future. I maintain a price outlook of $1250 to $1350 during 2019.

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GOLD

Argent Minerals eyes high-grade feed Argent Minerals’ strategy of giving its big Kempfield polymetallic project in New South Wales fresh momentum by adding in high-grade sources of gold is fast taking shape.

rilling at the initial high-grade gold target in the vicinity of the Kempfield deposit, Pine Ridge, got underway in mid April, with first results expected in late May/early June. The six-hole program is the first drilling at Pine Ridge in 20 years, and will test potential depth and strike extensions of historical high-grade hits. Those high-grade hits included 21 metres grading 5.6 grams of gold per tonne from 60 metres, and 10 metres at 4.1 grams per tonne from 51 metres. Argent’s hope is that Pine Ridge shapes up as a potential source of highgrade feed to sweeten the development economics of the Kempfield deposit. Argent Chief Executive Officer David Busch says it was well known that Kempfield has an oxide layer that is relatively low grade. ‘So, that’s the whole idea of looking around the region for high-grade gold. And there is plenty of that around, including in our tenements,’ says Busch. ‘It is a refocus by us. In the interim, we are after higher-grade gold, and so far, we like what we see. ‘Pine Ridge is in a belt where gold was pretty much discovered in Australia. And further to the north, you’ve got the two-

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Fraser and Chalmers gold stamper battery at the Pine Ridge Gold Mine, made in Erith, England

million-ounce McPhillamys gold deposit that Regis Resources is moving to develop.’ Argent is also targeting the western flank of the Kempfield deposit itself as a potential source of higher-grade gold to improve the overall economics of the deposit. Kempfield currently ranks as a 26-million-tonne polymetallic resource (silver, gold, zinc and lead). Silver and zinc alternate as the most important metals by value. The current resource equates to 100 million ounces of silver equivalent at 120 grams per tonne (giving the other metals a silver value), or 520,000 tonnes of zinc equivalent at two per cent. But a metallurgical breakthrough reported last year led to Argent establishing a compliant ‘exploration target’ for an additional 58–190 million ounces of silver equivalent grading 80–130 grams per tonne.

‘In our next round of drilling at Kempfield, we will be going after the copper-gold footwall and the potential for feeder zones out on the western flank,’ Busch says. Historic drilling in the gold-copper footwall yielded several high-grade intersections in a north-south trend, with best results including 10.2 metres at 1.5 grams per tonne gold from 28 metres. Drilling in the potential feeder zone area to the west of the main deposit will test for gold-copper mineralisation. It is an area that research recently confirmed as the location of a historical highgrade copper mine in the early 1900s. Across at West Wyalong, Argent is planning to follow up promising porphyry copper-gold exploration results after first conducting a gravity survey to refine drill targets.

ASX: ARD | ARDOA

High grade gold-focussed strategy

LACHLAN OROGEN KEMPFIELD COWAL

p High value gold exploration in well-endowed gold belt

CADIA

WEST WYALONG

p Signiﬁcant assets with market cap multiplier potential

McPhyllamys 2.3 Moz Trunkey Pine Ridge

p Kempfield (large JORC resource) + Pine Ridge/Trunkey gold belt p West Wyalong copper-gold prospect p Goal: boost Kempfield economics to viability p Metallurgical breakthroughs achieved 2018: separate commercial grade concentrates p Supplement Kempfield Ag/Au oxide layer with high grade gold p Satellite gold exploration: Pine Ridge Gold Mine drilling p Next: Drilling Kempfield gold-copper footwall and feeder zones p Kempfield central processing

Very high historical intersection grades

p Unlock signiﬁcant value in primary material

Historical high-grade gold intersections for the Pine Ridge Gold Mine include: p 21 m @ 5.6 g/t Au from 50 m (PR010) including 1.0 m @ 62.9 g/t Au from 59 m; p 10 m @ 4.1 g/t Au from 51 m (PR009) including 1.0 m @ 20.6 g/t Au from 52 m; p 10 m @ 3.7 g/t Au from 71 m (PR012) including 1.0 m @ 11.2 g/t Au from 76 m; p 18 m @ 2.4 g/t Au from 68 m (PR023) including 1.0 m @ 5.3 g/t Au from 77 m.

GOLD

Toweranna visible gold in TRC085D (3.97 metres at 24.45 grams per tonne of gold from 172.33 metres)

Material resource extension on the horizon De Grey Mining’s plan to grow its Pilbara gold project resource base in Western Australia from 1.4 million ounces to two million ounces by the end of the year is firmly on track.

onfidence that the two-millionounce target is in hand was boosted by exciting exploration results reported to the ASX in mid April. The results were from drilling at the Toweranna deposit, one of a cluster of deposits that make up the Pilbara project, 80 kilometres south of Port Hedland. Toweranna is the odd one out in the cluster. While the rest are shearhosted deposits, the mineralisation at Toweranna is hosted within a granite intrusion along its boundaries. Previous drilling by De Grey at the deposit has outlined a shallow resource of two million tonnes grading 2.2 grams of gold per tonne for 143,900 ounces of gold to a depth of 100–120 metres. Ahead of the latest drilling at Toweranna, De Grey placed an exploration target on the deposit from the surface to a 400-metre depth of nine million tonnes to 11.2 million tonnes at a grade range of 2.1 grams per tonne to 2.3 grams per tonne for 680,000 ounces to 800,000 ounces of gold. The latest drilling has highlighted the potential to extend the shallow resource to the east within the granite ‘plug’, as well as increase the resource at depth.

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Numerous thick gold zones were intersected to the east and below the existing resource base, and according to the company, they are ‘expected to support material resource extensions’. The best bulk intersection from the latest drilling at Toweranna was 136 metres grading two grams per tonne from 94 metres. This bulk intersection included new high-grade intersections of 26 metres at 3.07 grams per tonne (including five metres at 8.36 grams per tonne) from 94 metres and 29 metres at 4.38 grams per tonne (including one metre at 41.9 grams per tonne) from 201 metres. Other high-grade intersections reported below 100 metres included, amid numerous other intersections, six metres at 6.45 grams per tonne (including one metre at 20.3 grams per tonne) from 135 metres, five metres at 5.04 grams per tonne (including one metre at 22.9 grams per tonne) from 218 metres and three metres at 7.02 grams per tonne (including one metre at 18.4 grams per tonne) from 150 metres. Andy Beckwith, De Grey’s Technical Director, says Toweranna was a 300-metre diameter granite with stacked quartz veins.

‘It is the only one we know of in our area. The closet deposits we can compare the style of mineralisation with are Gold Fields’ Wallaby (eight million ounces) or Dacian’s Jupiter deposit (1.5 million ounces), elsewhere in Western Australia. ‘The beauty will be if the veining and structures go right through the entire granite. It is a question of how far down it goes and if it can be economic,’ Beckwith says. ‘We certainly want to know how big this thing is. That’s actually half our problem with all the deposits in our Pilbara project. We’ve got five big systems that are under drilled, yet we’ve already got 1.4 million ounces in resource, and are aiming for two million ounces,’ Beckwith says. The latest drilling results were in keeping with Toweranna making a big contribution to the expected growth in the overall resource base for the Pilbara project, now the subject of a preliminary feasibility study into a two-million-tonnes-per-annum mining and processing operation. De Grey are continuing to drill at Toweranna, with additional results ongoing.

The Pilbara Gold Project—1.4Moz & growing Targeting: 2.0Moz end 2019; 3.0Moz end of 2020. A West Australian Gold Company actively increasing its resource base at the Pilbara Gold Project, 80km south of Port Hedland. Management believes its target of 2Moz is achievable based on recent and ongoing results from drilling at Toweranna and Withnell. The company also expects to deliver a 2Mtpa Pre-Feasibility study by the end of 2019. Substantial increases in resources at Toweranna, together with its potential to upgrade the resource through ore sorting, could be transformational in nature for the project. Phone: 08 6117 9328

Email: admin@degreymining.com.au Web: www.degreymining.com.au

ASX: DEG FRA Code: WKN 633879

GOLD

Responsible investing and the importance of addressing climate change BY ANDR EW NAYLOR, DIR ECTOR, CENTR AL BANKS AND PUBLIC POLICY, WOR LD GOLD COUNCIL

Agnico Eagle Pinos Altos

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AUSTRALIAN RESOURCES & INVESTMENT

Climate change is a critical global issue. It is a regular fixture on the agenda of the G20, the Financial Stability Board, and the United Nations. Governments, businesses and investors all recognise the need to take action.

nder the auspices of the United Nations Framework Convention on Climate Change (UNFCCC), the 2016 Paris Agreement saw almost 200 governments commit to mitigate the impact of greenhouse gas emissions and climate change. More recently, the United Nations Intergovernmental Panel on Climate Change (IPCC) warned that tougher targets are required to avert significantly higher risks of extreme weather patterns, rising sea levels, and the catastrophic disruption of ecological systems and food production that climate change will bring. Australia is taking a lead with more than half of professionally managed financial assets having a ‘responsible’ mandate. In its Responsible Investment Benchmark Report 2018, the Responsible Investment Association of Australasia estimates that the assets under management of responsible investments in Australia is now $866 billion. Investors are taking a keen interest in both how businesses are reducing their carbon footprints and how climate change will affect business operations in the future. As gold has become an integral component of investment portfolios, the gold industry has a role to play in demonstrating how it addresses the challenges of climate change. Responsible gold mining companies are taking action to reduce their carbon footprints and meet broader environmental, social and governance (ESG) standards. This is through the adoption of more energy-efficient technology, the automation of production processes and a significant move towards renewables as a source of energy. In 2018, the World Gold Council released the report ‘Gold and Climate Change: An Introduction’. This research looked at gold’s carbon footprint, the investment implications for holders of gold who are concerned about climate change, the action the industry is taking to transition to a low-carbon economy, and the role of gold itself in environmentally friendly technologies. GOLD AND THE CARBON FOOTPRINT OF INVESTMENT PORTFOLIOS Gold is a scarce asset and, as with other precious metals, a significant amount of ore is mined and processed to extract gold. This can be an energy-intensive process. On a per volume basis, the production of gold has a relatively high carbon footprint; however, greenhouse gas emissions from the gold mining sector are significantly lower than other extractives industries, including coal, steel and aluminium. Our research also shows that on a per value basis, which is the carbon footprint per US dollar of gold, the gold industry has among the lowest carbon footprint of all mined products. The financial impact of holding gold in a portfolio is well understood – gold protects against risk, outperforms many other assets, and acts as a powerful financial diversifier. It is for these reasons that gold has become a mainstream financial asset. But

asset owners and managers are not only concerned about the financial impact of holding gold. They are increasingly keen to understand the impact that holding gold has on the carbon footprint of their overall investment portfolios. Preliminary research demonstrates that the gold mining sector’s carbon footprint in relation to the industry’s economic value – its contribution to global gross domestic product – is similar to that of the overall global economy on a per value basis. Over time, holding physical gold might reduce the overall carbon footprint of an investment portfolio, as once a gold bar is produced there is little incremental activity, and its carbon footprint diminishes over time. G O L D P R O D U C E R S A R E TA K I N G AC T I O N While the gold industry in total contributes fewer emissions than most other major extractives industries, gold producers continue to invest in new technologies and processes that will help to transition to a low-carbon economy. Some examples include using solar or hydro-electric energy sources to power mining operations, automating air control and optimising ventilation systems. The world’s first all-electric underground mine is a gold mine – the Borden mine in Northern Canada. GOLD AND NEW LOW- CARBON TECHNOLOGIES Some of the most interesting developments are around gold’s chemical properties and its use as a component in energy-efficient technologies. In particular, gold in a nanoparticulate form can potentially be used in a range of environmentally friendly technology, including gold being used as a catalyst to convert carbon dioxide into useful fuels, gold being used to enhance hydrogen fuel cell performance, and using gold in photovoltaic technology. These are just some examples of the interesting and innovative ways in which gold can play an important role in the process of transitioning to a low-carbon economy. A C O M P R E H E N S I V E A P P R OAC H T O E S G C O N S I D E R AT I O N S The World Gold Council is not limiting its focus to climate change alone. Working with our members, the world’s leading gold mining companies, and underpinned by existing widely respected approaches, we are developing the Responsible Gold Mining Principles. We believe that these address the key environmental, social and governance issues that are critical for the gold mining sector. At present, there is no overarching framework that sets out clear expectations for investors and downstream users as to what constitutes responsible gold mining. The Responsible Gold Mining Principles are designed to do just that. Rather than create a new standard, the Responsible Gold Mining Principles are intended to recognise existing approaches under a single framework. The principles reflect the commitment of the leading gold mining companies to responsible mining. It is our aim to launch these principles later this year. More work needs to be done as we address climate change and embrace a low-carbon future. Gold mining companies are taking action by investing in more energy-efficient technology and adopting more efficient mining processes. On a per value basis, the carbon footprint of the gold industry is comparatively low. Finally, gold is playing an increasingly important role in new environmentally friendly technologies that can help to address the challenges of increasing greenhouse gas emissions.

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GOLD

High gold connection at Apollo Hill deposit Saturn Metals is set to deliver a big increase in higher-grade gold ounces at its Apollo Hill deposit, near Leonora in Western Australia.

he resource upgrade will be based on the steady flow of strong exploration results that Saturn has been reporting from a stepped-up drilling campaign at Apollo Hill. More than 7000 metres has been drilled in the first four months of the year – with more planned – compared to 10,000 metres for all of last year. Spurring Saturn along has been the discovery – announced in April – of a new trend of higher-grade mineralisation in the hanging wall position of the Apollo Hill gold system. Best results included 10-metre grading of 5.78 grams of gold per tonne from 46 metres. The results highlighted the higher-grade nature of the mineralisation in that part of the deposit, upgraded in November last year to 20.7-million-tonnes grading of one gram per tonne for 685,000 ounces. The 180,000-ounce, or 36 per cent, increase in the November resource estimate was notable in that while the tonnages involved increased by 18 per

– 64 X ––

cent, the overall grade improved by 14 per cent to one gram per tonne. The improvements were in keeping with Saturn’s plan to boost Apollo Hill’s development credentials by making it both bigger and better. Saturn Managing Director Ian Bamborough says the ‘higher-grade architecture’ within – what has long been known as a big low-grade system – was ‘starting to appear in front of us as we put more drillholes in, and as our understanding increases’. ‘We are on a bit of roll as we get a clearer picture of just what is going on with the geology,’ Bamborough says. ‘We are starting to see some things in the geology that suggest it is stepping towards being a game changer. That’s why we have stepped things up with vigour.’ Bamborough says it was important to note that Saturn’s drilling was ‘thickening the system, and the hanging wall lodes are likely to fall within a pit shell’.

Saturn is working towards another resource update for Apollo Hill in August/September. The company listed in March last year through a $7-million public offering of the Western Australian gold assets of New South Wales–focused base metals developer Peel Mining, a 36 per cent Saturn shareholder. While Apollo Hill is its flagship asset, Saturn also has a 100 per cent owned regional ground position of 1000 square kilometres in the same geological setting as some of the biggest mines in the Leonora area. Drilling across five early-stage targets has returned what Bamborough described as ‘nice intersections’. ‘It’s early days with regional exploration, but we are seeing the potential for major corridors emerging,’ says Bamborough. At Bobs Bore, 3.5 kilometres east of Apollo Hill, a 400-metre-wide anomalous zone has been identified across the goldprolific Keith–Kilkenny shear zone.

ASX:STN

Next Generation Gold Company in a Multi Million Ounce Gold Province Diligently Working to Grow Our Resource Base The 100% owned Apollo Hill Gold Project near Leonora, Western Australia has an Indicated and Inferred JORC Compliant Mineral Resource of

20.7 Mt @ 1.0g/t Au for 685,000oz reported above a cut-off grade of 0.5g/t Au and variable shallow RL’s¹ Refer Saturn ASX announcement 19th November for table 1 and competent persons statements

Recent High-Grade Shallow Intercepts in the Apollo Hill hangingwall are providing an exciting new dimension to this major gold system. • 10m @ 5.8g/t Au from 46m incl. 5m @ 11g/t Au AHRC0124 • 6m @ 5.21g/t Au from 37m AHRC0127

WWW.SATURNMETALS.COM.AU P: (08) 6424 8681 E: INFO@SATURNMETALS.COM.AU

F EOAT G L DU R E A R T I C L E

Lake Roe project continues to grow The stature of Breaker Resources’ Bombora gold discovery at its Lake Roe project, east of Kalgoorlie in Western Australia, as one of the biggest greenfields discoveries in recent times has continued to grow.

part from latest drilling in July this year pointing to a significant upgrade of the 1.08-million-ounce resource, regional work has also highlighted the potential for the broader Lake Roe area to host additional deposits to become a new gold camp. Breaker Executive Chairman Tom Sanders says planning has already started for the next phase of resource drilling at Bombora, which is currently the subject of a pre-feasibility study (PFS) into an open cut development, with the PFS to be released two to three months after the July resource update. ‘After 220,000 metres of resource and exploratory drilling, the Bombora gold deposit remains open in all directions, and the results are consistent with a large new gold camp in the early stages of delineation,’ Sanders says. Breaker recently completed its 20th round of drilling, which targeted extensions to Bombora’s

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gold mineralisation to the north and south, and at depth. Sanders says that much of the drilling was designed to identify the outer limit of open-pit mining in preparation for finalising the PFS, and to reassess the resource classification of the mineralisation in several areas. Bombora’s potential as an underground mine has also produced promising results in several areas, with Sanders highlighting a best intersection of 6.82 metres grading 36.87 grams of gold per tonne. Sanders confirms that the resource update was taking longer than expected, prompting its rescheduling to July. But he’s not making any apologies for the delay as it was due to the scale of the deposit and the sheer volume of data that been accumulated. ‘It is vital that the company builds a strong technical foundation in preparation for the open-pit PFS,’ Sanders says.

‘There are three lode orientations and zones of stockwork mineralisation extending over three kilometres, and this necessitates taking additional time to build a robust and flexible resource for the upcoming PFS,’ he says. The current 1.08-million-ounce resource estimate was made in September 2018 and was an update from the maiden estimate in April 2018 of 624,000 ounces. Sanders highlights that Breaker has recently returned to exploration for new gold deposits outside of the main Bombora system but still within the 550-squarekilometre Lake Roe project area. ‘Before the Bombora discovery, there were no gold deposits or resources within a 35-kilometre radius. The discovery in mid 2018 of shallow, basalt-hosted mineralisation at the Crescent prospect (19 metres at 2.35 grams per tonne from near surface) has already demonstrated the potential for additional, and diverse, deposits within the camp,’ he says.

Drilling is go at Lake Roe Diamond rig

Breaker Resources NL Tel: +61 8 9226 3666 Email: breaker@breakerresources.com.au

www.breakerresources.com.au

COPPER

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AUSTRALIAN RESOURCES & INVESTMENT

Is peak copper back? The red metal may still be facing pressures, but the industry is betting that modern life can’t live without it, says Steve Freeth.

opper prices may still be being buffeted by China growth jitters or US trade war tensions, but the mood at the recent CESCO annual global copper get-together in Chile was upbeat. At the heart of the optimism were predictions that copper supply faces even higher disruptions this year, leading to a global deficit. Just how big depended on whom you asked. New research from Adroit Market Research shows that world copper demand is projected to reach more than 30 million tons by 2025, up from about 24 million tons from last year. In fact, no-one expects copper demand to ease as it becomes the go-to metal for the modern world – namely electrification and clean energy. New or expanded mines – particularly in Chile, the United States and Peru – have now been green lighted and are expected to add an extra one million tons to supply by 2024. Not everyone is convinced that this will be enough, though, especially in the next few years. Morgan Stanley is one of them. It’s made copper its top metals pick, saying it sees the market heading to a deficit of 406,000 tons this year and 187,000 tons in 2020. That’s in contrast to major CESCO sponsor CRU Group. The company dialled back an earlier deficit call, saying instead that the world will see a surplus – albeit small – for the next two years, a sentiment echoed by Macquarie Bank. CRU does, however, agree that deficits are looming, forecasting a 270,000-ton shortfall by 2023. There’s no doubt that supply faces some major challenges in the short term. Glencore, ERG Resources, Freeport and MMG have recently talked up mine disruption, while Chilean miner Antofagasta told Reuters at CESCO that climate and other delays will cut nearly a million tonnes off their copper production this year. The world’s biggest copper producer, Chile, is also reporting its lowest production levels in over two years. At the same time, stateowned miner Codelco is warning of falling rates if modernisation of the country’s ageing mines is delayed much longer. S M A R T, C L E A N W O R L D There were no disagreements between miners or analysts when it comes to copper demand. As a CRU spokesperson told CNBC at the conference, ‘Copper is going to be central to the green revolution’. While the jury may be out on just how long that revolution will take – particularly here in Australia, which has lagged the world on electric car take-up – there’s no denying that change is already here. Miners at CESCO were all talking up what it will mean for the global industry.

‘We know that the future of a modern, efficient digital world is copper,’ Don Lindsay, Chief Executive of Canadian miner Teck Resources Ltd, told the media at the conference. The smart home sector is one of them. Witnessing nearly 27 per cent growth this year, it’s expected to ship 1.6 billion devices by 2023 as consumers adopt multiple devices driven by huge companies like Alphabet, Amazon, Apple and Samsung. Two categories alone – Alphabet’s Nest thermostat and Amazon’s Alexa personal assistant – will consume around 1.5 million tonnes of copper by 2030, up from 38,000 tonnes today according to consultancy firm BSRIA. The company estimates that most smart homes use 1000 metres of wiring to connect devices for a total 20 kilograms of copper. Clean energy is another. The International Energy Administration says that over 55 per cent of copper consumption will come from energy transmission and distribution to 2040. The International Copper Association estimates that copper demand for wind energy in 2018 accounted for over 38 kilotons, and will reach nearly 50 kilotons by 2020 – a typical wind farm can contain as much as 15 million tons of copper. But electric vehicles glittered like no other at CESCO. Electric motors and batteries use up to three times as much copper as traditional cars, and in 2017, sales surpassed one million units and increased by over 50 per cent on the year before. Expect that trend to soar over the next decade as car companies commit to all electric fleets, governments support their production and sales with incentives, prices keep falling, and range and performance improve. In fact, market darling Tesla warned recently that the world faces an electric battery metals shortage, including for copper and nickel. That’s now occurring in the world’s biggest car market in China, responsible for 60 per cent of global electric vehicle sales and half of all charging infrastructure. Electric car production will rise by 53 per cent according to Citigroup, who says that copper for electric cars will make up two-thirds of demand growth for the metal between 2018 and 2030. COPPER TO THE WORLD All those trends will be on show at South Australia’s Copper to the World Conference on 17 and 18 June, where miners like BHP, Oz Minerals, Anglo American and Newcrest will speak in a session on mine innovation hosted by the International Copper Association Australia. Now in its third year and at the heart of the state’s efforts to dominate Australian mining, the conference aims to be as important to the copper industry in the Asia-Pacific region as CESCO is globally.

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COPPER

Aeris has big ambitions Aeris Resources has turned its attention to the exploration potential of its northern tenements at its Tritton copper project near Nyngan in central New South Wales.

he stepped-up exploration effort is part of Aeris’s growth strategy, which encompasses growth from its existing assets and/or through merger and acquisition (M&A) activity. Aeris’s Executive Chairman, Andre Labuschagne, says the Tritton copper operation underpinned the growth strategy. ‘It’s been doing well, and its cash generation is providing the funds to grow the business.’ Aeris recently upgraded FY2019 copper production guidance from Tritton (the underground Tritton and Murrawombie mines) to 25,500 tonnes (previously 24,500 tonnes) at a cash cost of A$2.75–2.90 per pound. The Tritton project is found in the southern half of Aeris’s broader 2160 square-kilometre tenement position in the region, where 750,000 tonnes of copper has been produced. ‘But the northern part of the tenement package, which hosts the same (mineralising) structure, hasn’t really been explored,’ Labuschagne says.

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‘So, as part of our emphasis on growth, we have started to focus our exploration in the northern part of the package.’ An airborne electromagnetic (EM) survey was flown over 617 square kilometres of the northern tenements in December 2018 and identified 25 EM anomalies, of which nine were ranked as ‘high-priority targets’. The hunt for new deposits in the northern tenements will begin to take place later this year when the first of the targets will be tested by the drill bit. ‘The likelihood of finding something new is much higher in a totally underexplored area, which hosts the same rock formations as down south,’ Labuschagne says. ‘The next step for us is to go to each one of those priority targets and do some soil sampling work, then a groundbased EM survey to refine the target. ‘I would assume the drilling would probably start in the next six months,’ Labuschagne says. The northern exploration effort comes as Aeris continues drilling at

one of the most anticipated exploration programs in Australia – its Torrens project in South Australia. The project lies on Lake Torrens, 50 kilometres north-east of OZ Minerals’ Carrapateena copper-gold deposit, and 75 kilometres southeast from BHP’s monster Olympic Dam copper-gold-uranium mine. The Torrens drilling program encountered early sand and water problems in the top 150 metres of overburden, but once the issue was resolved, drilling resumed on a high-priority target. The market was given a hint of Aeris’s M&A ambitions in March when Aeris revealed that it had made an offer to acquire the CSA copper mine in Cobar from Glencore for shares and cash. But in April, Aeris said it had been unable to come to agreeable terms with Glencore. Labuschagne says that the CSA talks sent the message that ‘we are looking hard for opportunities’.

Producing. Exploring. Growing. AERIS RESOURCES: PRODUCING COPPER AT TRITTON. EXPLORING AT LAKE TORRENS. AERISRESOURCES.COM.AU | ASX : AIS

MINERAL SANDS

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AUSTRALIAN RESOURCES & INVESTMENT

MINERAL SANDS HEATING UP In focus: mineral sands – one of the hottest commodities on the market.

– 73 –

MINERAL SANDS

HOT SANDS BY ANTHONY FENSOM

ineral and silica sands are currently among the hottest commodities on the market amid rising demand and constrained supply. For explorers and major producers alike, the upturn is spurring renewed investment as Australian miners capitalise on the improved outlook. NEW INVESTMENTS In April, global heavyweight Rio Tinto approved development of the $463-million Zulti South mineral sands project in South Africa, operated by subsidiary Richards Bay Minerals (RBM). The project is expected to start construction in mid 2019 and will produce highmargin zircon, rutile and ilmenite. ‘The long-term fundamentals of the market remain strong, and production from Zulti South will commence in time to fill a widening supply gap, ensuring RBM’s position as a leader in the sector and delivering strong returns to our shareholders,’ says Rio Tinto Chief Executive Jean-Sebastien Jacques. Closer to home, major mineral sands miner Iluka Resources launched the $275-million Cataby project in Western Australia, with its first heavy mineral concentrate produced in March. The mine is expected to produce around 370,000 tonnes of chloride ilmenite, 50,000 tonnes of zircon and 30,000 tonnes of rutile on average during its 8.5-year mine life. In addition, the Perth-based miner allocated $55 million to its Jacinth-Ambrosia project in South Australia’s Eucla Basin, with the funds helping it shift operations from the Jacinth North to the Ambrosia area in the fourth quarter of 2019, ahead of its originally planned 2022 move. Iluka has also ramped up planned expansions at its Sierra Leone operations, as part of some $330 million in investments set for 2019. Speaking at the company’s April annual general meeting, Iluka’s Managing Director, Tom O’Leary, noted that the zircon market ‘has been in good shape from a demand perspective…growth in demand

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for zircon is expected to outpace supply from existing operations over the medium to long term’. Pigment demand, which accounts for 90 per cent of the titanium feedstock market, is also expected to be solid in 2019, with demand again outstripping supply. Elsewhere, Sheffield Resources announced that it expected first production for late 2020 or early 2021 at its Thunderbird mineral sands project in Western Australia, coinciding with ‘an expected global zircon and titanium feedstock supply shortage’. Adding to the new projects, Image Resources completed its first shipment of heavy mineral concentrate in January 2019 from its Boonanarring project in Western Australia. Increased investor confidence has seen growing interest in previously undeveloped projects, including Diatreme Resources’ Cyclone zircon project. In November 2018, Diatreme announced positive definitive feasibility study (DFS) results for the Eucla Basin project, including an estimated net present value of $113 million. Capital costs were cut to $135 million compared to the previous estimate of $161 million obtained in 2016. ‘We are delighted by these results, which confirm that Cyclone’s economics are sound and the project is capable of attracting the necessary investment. In a market where zircon is entering a period of constrained supply, the development opportunity for Diatreme is immediately apparent,’ says Diatreme Chairman Gregory Starr. In January, the Brisbane-based company appointed corporate advisers Blackbird Partners to progress the project’s development, seeking either direct investment, a joint venture or project sale. Also on the east coast, Melior Resources commenced wet commissioning of its Goondicum ilmenite project in 2018. The Canada-listed miner aims to reach production of more than 10,000 tonnes per month at its Queensland operation by the end of the June quarter 2019.

AUSTRALIAN RESOURCES & INVESTMENT

PRICE RISES The burst of activity follows an upturn in mineral sands prices, thanks to rising demand and tightened supply. Iluka’s weighted average prices for zircon and rutile both increased in 2018, rising by 41 per cent to US$1351 per tonne and 21 per cent to US$952 respectively. In April, Iluka said it would maintain its zircon reference price at US$1580 per tonne for the six months until September 2019. The days of zircon trading below US$1000 per tonne, as seen in 2016, appear a distant memory. Industry forecaster TZMI sees zircon demand rising by 2.8 per cent per year through to 2026, while supply declines at a rate of 4.3 per cent, resulting in a substantial supply shortfall that miners are seeking to fill. ‘There has been inadequate investment in the industry over previous years, meaning that no new large deposits are coming online,’ Sheffield’s Managing Director, Bruce McFadzean, told Australian Mining. With Australia possessing the world’s largest economic resources of rutile and zircon, and the second-largest ilmenite resource, the local industry appears to have plenty of room for growth.

Silica has also attracted investor attention. Used in construction along with high-tech applications, such as solar panels, demand is seen rising by 7.2 per cent per year

SILICA SIZ ZLE Another sand, silica, has also attracted investor attention. Used in construction along with high-tech applications, such as solar panels, demand is seen rising by 7.2 per cent per year through to 2022, reaching total global revenues of US$9.6 billion, according to IMARC Group. Meanwhile, the global solar photovoltaic glass market is projected to reach US$48.2 billion by 2025, on the back of rising demand from the Asia-Pacific region along with North America, according to Bizwit Research & Consulting. Among those capitalising on the upturn have been Perth-based explorer VRX Silica. In April, it announced that it had received enquiries from 20 manufacturers across the Asia-Pacific region for the purchase of ‘significant tonnages’ of silica sand from its Western Australian silica sand projects. Perpetual Resources also enjoyed a share price surge after it acquired the Beharra silica sand project in Western Australia, located near VRX’s Arrowsmith North project. Diatreme Resources is also advancing its emerging Galalar Silica project in North Queensland, located near the world’s largest operating silica mine at Cape Flattery. In January, it announced bulk testing results showing that the project was capable of producing a premium-grade silica, suitable for high-tech applications including solar panels. A 22 per cent expansion of the project’s silica resource to more than 26 million tonnes also excited investors. ‘Chinese and other buyers are scrambling to obtain supply due to the huge demand rise for solar panels. Projects like Galalar that can satisfy the exacting product specifications and offer secure long-term supply are extremely attractive,’ Diatreme’s Chief Executive Neil McIntyre says.

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MINERAL SANDS

VRX Silica on track for big gain VRX Silica has set out to become a major supplier of silica sand to the Asia-Pacific region from its Arrowsmith and Muchea projects north of Perth.

he company is currently preparing submissions for environmental approvals, and is working on a bankable feasibility study into the projects, expected to be released in July/August. The fast pace of VRX’s entry into the silica sand market places it well ahead of other ASX-listed companies that have identified the sector as a high-growth one requiring new supply sources. The high-growth status is a result of growth in demand from traditional markets for silica sand (construction, glassmaking and foundries) and the fastergrowing demand in the less traditional markets (LED lighting, fracking sand and high-tech glass applications). The multitude of uses of silica sand means that there is no benchmark pricing for any particular quality. As a result, there is also a multitude of pricing points. VRX Managing Director Bruce Maluish says that silica sand is an ‘incredibly opaque market’. ‘It’s because there are so many types of silica sand, and so many products produced by so many different suppliers,’ says Maluish. Expected pricing for Arrowsmith is about US$35–40 per tonne, while

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the higher-grade Muchea (99.7 per cent silica dioxide in-situ) could fetch US$45–50 per tonne or more. VRX has already received strong expressions of interest in its silica sand projects from manufacturers of all types across the Asia-Pacific region. Initial marketing efforts by the company identified buyer interest covering more than 1.6 million tonnes of glassmaking silica sand, and almost 900,000 tonnes for foundry use. The company says that the resources at its Arrowsmith project, 270 kilometres north of Perth, and the Muchea project, 50 kilometres north of Perth, would be capable of meeting the tonnages and qualities sought. VRX reported in March that process circuit and engineering design for the processing plant likely to be installed at the operations had been completed. An independent expert estimated the cost of each two-million-tonne-a-year plant at $18.2 million. The all-up cost would be about $25 million when other items, including a contingency, are taken into account. Maluish says the key to the projects was their access to existing railway lines.

‘This is a bulk export commodity and it only works if the infrastructure is already in place,’ says Maluish. ‘Arrowsmith is connected up to Geraldton by a railway line, and Muchea is connected down to Kwinana. That’s critical.’ He says the preferred option was to develop the higher-grade Muchea first; but which will be the first will depend on the timing of the environmental approvals. ‘The one that gets approved first is the one we will fire up first,’ Maluish says.

Significant sand resources ready to supply a global shortage THIS WEEK IN ASIA

THE WORLD IS RUNNING OUT OF A RESOURCE, AND IT’S NOT OIL

A looming shortage of sand – a crucial resource once thought endless – could sink infrastructure projects, including those in China’s Belt and Road Initiative.

The world is facing a global sand crisis 31 DEC 2017

Kampot, in southern Cambodia, seemed an unlikely place for a development

boom. Its quiet and idyllic streets and neighbourhoods nestled on along the Praek Tuek Chhu River made the rapid pace of so-called progress in other parts of South-east Asia feel worlds away.

But that quiet was shattered seven years ago as a wave of infrastructure projects began to swell, including the restoration of a railway that linked to the capital, the refurbishment of colonial buildings and the construction of a resort in nearby by Bokor Hill. The rapid development that followed created a need for raw materials, especially one: sand to make cement and concrete. And in the quiet Kampot, the sight of to craft dredging barges, that extracted sand from the estuary ofmaking in between in order to effort a great the river, became frequent. evidence strongly suggests ucture workable policies. We are When people picture sand infrastr how y quantif ing sand is becom As development quesspread, that the extraction of seemingly idyllic beachanalyzing those endless sand and became spread across more this in many systems such as roads prosperous. During scarce inglysand Cambodia h a systems exporting throug deserts, was alsoincreas to Singapore, which endless es and time, an insatiable the habiappetitetions for the gs affect material buildinhad e, in . For exampl regionsartificial ch that to expand approa itslyterritory think through tion tandab integra islands. they unders them, d tats that surroun domestic deallows us to better underof it as an infinite resource. Vietnam impacts of extracting and mand for sand exceeds the the onomic socioec stand such But as we discuss in a ls construction minera country’s total reserves. If mental interactions just-published perspective as sand and gravel to build environ this mismatch continues, time. and es distanc over been in the journal Science, have structures the country may run out of those Based on what we have over-exploitation of global ked. Two years construction sand by 2020, overloo already learned, we believe supplies of sand is damago we created a working staterecent to ng accordi it is time to develop interaging the environment, group designed to provide ments from the country’s national conventions to tive endangering communities, an integrated perspec ction. Constru of y Ministr proregulate sand mining, use causing shortages and on global sand use. and trade. moting violent conflict. This problem is rarely In our view, it is essential to mentioned in scientific diss Skyrocketing demand, happen understand what cussions and has not been combined with unfetplaces where sand systemically studied. Media at the tered mining to meet it, is is mined, where it is used to this us drew n attentio recipe creating the perfect impacted points many and are ts issue. While scientis for shortages. Plentiful

7 The Conversation, September 8, 201

struction Sand crisis hits con urai workers hard in Msanad d (manufactured

worse is that MWhat has made things is available in scribed for river sand, pre sand), the alternative desirable. m fro far o als is its quality very less quantity and 2018 TNN | January 23,

rs e b m u n n i : sand f o t u o g n i ost m ’s Runn ld r o w e h t f o

ember 8, 2017 Al Jazeera Sept

of one n io t le p e d e h t e ry : sand. u t n e c t s We illustrat 1 2 e h t odities of m m o c r e ft a t sough nt resource,

d Demand for san leads to global ecological crisis

e an abunda might seem lik nd sa than its le hi W ce much faster erials in at pa m a d at te ed ac in tr m ex it is being are the mostrate. Sand and gravel A shore thing natural renewal the world. at globally, greN estimates th U ag e or th , el by av rt gr po d re d gravel are A 2014 s that sand an nnes of sand an ining to m l on al lli of The UN believe bi t en 40 rc an more th for up to 85 pe ght. year. gates, account easured in wei m ted ever8yFe , ld or extracng w e th bruary 2018 nd , ay ou ab ar ity Mo activ y oduction of activit uction constr ing Thanks to boom eathe, we pares to the pr br m e co w at r ai th e w th ho r, high dema Here’s e like ai mnd in Asia, sand is in t live sources. “It’s almost beco t it, but you can’ ou ab h other natural re uc m nd o Sa of r The economist don’t think to de un the fo Kiran Pereira, without it,” says Sand Wars. ry ta en the docum in g, or s. ie or St

An improbable global shortage: sand

@VRX_Silica

vrxsilica.com.au

Supplying Global Demand

P O TA S H

Australia’s first SOP project Kalium Lakes is close to giving the go-ahead for its $216-million Beyondie sulphate of potash (SOP) project in Western Australia’s East Pilbara region, creating a new Australian industry with import replacement implications.

he go-ahead for the premium fertiliser project is expected around June, and will lead to the commissioning and ramp-up of Beyondie’s first stage during 2020 in what is expected to be a 30–50 year project life. Australia currently relies on imports for its entire annual SOP requirement of about 75,000 tonnes per annum, making it the key market for Beyondie’s initial production due to freight cost advantages over imports. SOP is used for chloride-sensitive high-value crops and currently sells for US$530–550 per tonne on a cost and freight (CFR) basis. Prices have increased in recent years in response to the need-to-feed-the-world thematic, one that pits a shortage of arable land against the improving diets of Asia’s rising middle class, and forecasts of strong global population growth. Kalium Managing Director Brett Hazelden says that essentially, there is less

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land available for farming than what will be needed on a per capita basis. ‘So, it is all about becoming more efficient and achieving higher crop yields. And the only way to do that is to fertilise,’ Hazelden says. That thematic has given rise to a number of SOP projects being proposed by ASXlisted companies. But none are as advanced as Kalium’s at-the-brine-based Beyondie. ‘It has been portrayed as a race to first production to achieve first-mover advantage,’ Hazelden says. ‘But no-one else has a reserve, no-one else has done a bankable study, and we are the first to have environmental and native title approvals in place. ‘It means that we are ready to go with Australia’s first SOP project,’ Hazelden says. Beyondie is to start out at an annual production rate of 90,000 tonnes ahead of ramping up to 180,000 tonnes per annum from domestic and international sales. The initial annual output is to be sold to German fertiliser group K+S.

Beyondie’s development credentials were enhanced in optimisation studies during its engineering and design phase. Results of the optimisation works were reported in March and included a major improvement in potassium recovery from 72 per cent to 91 per cent, allowing the 10 per cent increase in the initial annual production rate to 90,000 tonnes per annum. The month before, Kalium agreed with the Northern Australia Infrastructure Facility for the provision of a $74-million infrastructure debt facility, and a $102-million project debt facility from German development bank KfW. The facilities have allowed Kalium to bring forward plans to build a gas pipeline and power plant for Beyondie, delivering cost reductions of $62–65 per tonne on the bankable feasibility study estimates. When that benefit is added to the recovery improvements, Beyondie’s life-ofmine operating costs have been restated at an even more robust US$178–207 per tonne.

Kalium Lakes Limited (KLL) is poised to become Australia’s first Sulphate Of Potash (SOP) fertiliser producer. Currently all of Australia's SOP is imported from overseas. The 100% owned Beyondie Sulphate Of Potash Project in Western Australia will produce a premium fertiliser for domestic and international use. It is currently the only Australian SOP project to have completed a Bankable Feasibility Study, established an Ore Reserve, secured a Binding Offtake Agreement, received key approvals and negotiated Low Cost Debt financing. KLL - a Low Cost, High Margin and Long Life operation. To discover more about this investment opportunity visit our website at: www.kaliumlakes.com.au

KLL

NICKEL

NICKEL: A METAL FOR THE FUTURE CONTENT PROVIDED BY THE NICKEL INSTITUTE

ickel is often considered as ‘the hidden metal’ because over 80 per cent of all global nickel production is used as a constituent in alloys, such as stainless steel, where it is unseen, while in plating (another important use) it is frequently concealed under the chromium finish that brings shine to wheel rims, bathroom fittings and a host of other everyday items. Even nickel batteries in electrical vehicles are labelled as lithium-ion, despite nickel and graphite being the main constituents. Despite this, nickel has a well-deserved reputation as an enabler of technology. Its properties of toughness, malleability and enhanced corrosion resistance allow for superior performance in difficult environments and at extreme temperatures. These characteristics make nickel an inevitable raw material in many innovative end uses, where it ensures longer life, less maintenance, higher functionality and increased efficiency. D I V E R S E S U P P LY C H A I N The nickel supply chain is diverse. Unlike metals such as aluminium, nickel ores are found in different geological and mineralogical formations at varying depths, with various percentages of nickel content, and often with other metals present. The processing techniques used depend on these variables that yield different rates of metal recovery. MINING, PRODUCTION AND USE Nickel ores are currently mined in more than 25 countries worldwide, with the Asia-Pacific economies accounting for more than 70 per cent of global nickel mine output. Indonesia, the Philippines, Russia, Australia and Canada are the biggest nickel mining countries.

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Primary nickel production is generally divided into two main product categories: 1. Nickel Class I is roughly 55 per cent of total mining output and describes a group of nickel products such as electrolytic nickel, powders and briquettes with a nickel content more than 99 per cent. 2. Nickel Class II accounts for around 45 per cent of output, and comprises nickel pig iron and ferronickel. These nickel products commonly have a lower nickel content and are used in stainless steel production where stainless steel producers take advantage of the iron content. Annual world production of nickel is around two million metric tons. In just 10 years, China has emerged as the global leader in nickel production. Over the past decade, global nickel output has increased by more than 65 per cent, while that of China has shot up by a factor of 13. Against a backdrop of recent annual average growth rates as high as 46 per cent, today more than one-third of global nickel production originates from China. NICKEL USES There are thousands of end-use products that contain nickel and nickel-containing stainless steel, such as batteries, jet turbines, pots and pans, electrical and electronic equipment, and water pipes. Nickel is usually converted into so-called first-use products, such as alloys, before then being manufactured into end-use products. RESERVES AND RESOURCES OF NICKEL ‘Given the wide range of uses in important existing and emerging

AUSTRALIAN RESOURCES & INVESTMENT

Global flows 2014

technologies, we are often asked if there is enough nickel,’ says Dr Mark Mistry, the Nickel Institute’s life cycle and nickel sustainability expert. ‘The key to this is understanding the difference between reserves and resources.’ As defined by the Committee for Mineral Reserves International Reporting Standards, ‘A mineral resource is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade, or quality and quantity that there are reasonable prospects for eventual economic extraction. A mineral reserve is the economically mineable part of a measured and/or indicated mineral resource’. ‘Such standards are important given the relevance of these terms for investors,’ explains Mistry. ‘The main difference is that reserves imply an increased level of knowledge and confidence. Mining companies convert resources into reserves by exploration. Therefore, in most cases, limitations in the availability of raw materials are less an issue of whether there is enough raw material in the ground, but rather whether there is enough production capacity available in a short time frame to satisfy a sharp increase in demand.’ Today, the world’s nickel reserves are estimated at 89 million tons, as recently confirmed by the United State’s Geological Survey, with around two million tons being mined annually. Resources in classical ore deposits are estimated at almost 300 million tons. Economic concentrations of nickel occur in sulphide and in laterite-type ore. Rich deposits are found in Australia, Indonesia, South Africa, Russia and Canada, which together account for more than 50 per cent of the global nickel resources. Australia’s share of global resources is around 15 per cent. ‘Along with the significant increase in nickel mining over the past three decades, known nickel reserves and resources have also steadily grown,’ adds Mistry. Driven by attractive commodity prices, various factors have influenced this evolution, including better knowledge and increased exploration activities in remote areas. According to Mistry, ‘Improved

technologies in mining, smelting and refining, as well as increased capacities, also allow for lower-grade nickel ore and more complex mineralogy to be processed economically’. Nine countries account for 75 per cent of global nickel reserves. Laterite-type (or oxidetype) resources are found in Indonesia, the Philippines, Brazil, Cuba Dr Mark Mistry, The Nickel Institute and New Caledonia. Sulphide-type deposits are present in South Africa, Russia and Canada. Australia, endowed with both sulphide and lateritetype ore deposits, has the biggest nickel resources together with Indonesia, accounting for 21 per cent of all known nickel reserves globally. Laterite-type ore deposits and mines are principally found in equatorial regions, and production from this type of deposits has steadily increased in recent decades. FUTURE NICKEL RESOURCES When it comes to future resources, there are also believed to be additional significant nickel deposits in the sea. Manganese nodules, which are found on the deep-sea floor, contain significant amounts of various metals, including nickel. Recent estimates indicate that there are more than 290 million tons of nickel contained in such deposits. The development of deep-sea mining technologies is expected to facilitate access to these resources in the future. Nickel’s unique combination of properties is why nickel-containing materials play such an important role in providing energy, transport, food and clean water to the world, and why they will continue to contribute to a durable and sustainable economy and society.

References: INSG www.insg.org Roskill End-use of Nickel Report 2008-2017. www.roskill.com Mudd and Jowitt (2014) – A detailed assessment of global nickel resource trends and endowments. Economic Geology v. 109 pp 1813-1841.

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NICKEL

Nickel markets delivering for Panoramic Panoramic Resources’ Savannah project in the East Kimberley region of Western Australia is on its way to capitalising on the widely forecast upturn in nickel markets.

avannah was shut down in 2016 when nickel prices crashed to US$4.35 per pound, but the improved outlook and pricing for the metal prompted Panoramic to commit to a restart in July last year. The first bulk nickel/copper/cobalt from the restarted Savannah was shipped to China in February, with the bigger Savannah North ore body – proved up during the shutdown – due to produce its first ore by the end of the year. The return to production plugs Panoramic into the electric vehicle (EV) and renewable energy storage revolution, underpinned by lithium-ion batteries. Nickel is a key metal in the leading battery technologies, as is cobalt. Meanwhile, EVs require a lot more copper than vehicles with internal combustion engines. Stainless steel remains nickel’s main market. But the battery market is creating a new wave of demand, with

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the lack of new nickel discoveries of the preferred sulphide type raising questions on how the demand will be met. Panoramic Managing Director Peter Harold says that EV and battery storage thematic was ‘very much still in place, and if anything, is gathering momentum’. ‘While the nickel price has been a bit frustrating, all the signs are positive. So, fundamentally, we are coming into a strong demand cycle and we will be getting into Savannah North at the right time.’ Resuming production has not been without its early challenges, most notably equipment and skilled labour shortages. ‘We have had some problems with the start-up, but we have resolved all of those and we are now pushing forward,’ Harold says. An operations update released to the market on 4 April showed that development rates had improved by 55 per cent and mining rates by

60 per cent. Metal recoveries were also headed in the right direction. Harold says the aim was to be mining and milling at a monthly rate of 60,000–65,000 tonnes from the Savannah deposit in the June 2019 quarter. Savannah North is due to come into production in the December quarter, and after a three- to six-month ramp-up, will carry total mining and milling rates to 75,000–85,000 tonnes per month. ‘It will be full capacity from mid 2020,’ Harold says. The updated feasibility study into the restart, released in October 2017, envisaged annual production of 10,800 tonnes of nickel, 6,100 tonnes of copper, and 800 tonnes of high-value cobalt (in concentrates). Forecast average life-of-mine operating cash costs were estimated at US$2.40 per pound of nickel, and using a base case nickel price of US$5.50 per pound, the internal rate of return (IRR) was put at 100 per cent.

SAVANNAH RECOMMISSIONED

FORECAST PRODUCTION 10,800tpa nickel | 6,100tpa copper | 800tpa cobalt

BACK IN BUSINESS AND LEVERAGED TO BATTERY METALS

www.panoramicresources.com.au | ASX: PAN | @Panoramic_Res

ZINC

BUILDING A SUSTAINABLE FUTURE WITH ZINC BY M ARY HELEN YOUNT, INTER NATIONAL ZINC ASSOCIATION

ustainability is a concept that has entered the global spotlight amid a changing climate and a growing world population. At its core, sustainable development translates to balancing environmental preservation with economic growth and social justice, while continuing to advance society. The concept of sustainability is more prevalent than ever in discussions around transportation, infrastructure and day-to-day practices. Governments and businesses around the globe are closely examining their respective processes in an effort to move toward more sustainable practices and create a greener future for generations to come, while also striving toward the success of the greater population. Guiding these sustainable actions are the United Nations’ Sustainable Development Goals (SDGs), a set of objectives addressing a broad range of challenges faced around the world that pertain to the future of sustainable development. The aim is to achieve each goal by 2030, and the message behind them is ‘To achieve a better and more sustainable future for all’.

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Zinc – with its key attributes of essentiality, durability, and recyclability – positions itself as a choice material within a sustainable society that’s seeking to make an impact with the SDGs in mind. The material itself, along with the entire industry, play a role in many of the SDGs, including, but not limited to, Good Health and Wellbeing; Zero Hunger; Industry, Innovation and Infrastructure; Affordable and Clean Energy; Responsible Consumption and Production; and Sustainable Cities and Communities. E S S E N T I A L F O R G O O D H E A LT H A N D WELLBEING, AND ZERO HUNGER Zinc is a naturally occurring element that is required by all living things to survive. It is abundant in nature, and natural levels of zinc vary from region to region as a result of various geological factors. Zinc plays an essential role in the biological processes of plants, animals and humans. In humans, zinc is vital for activating normal growth and neurological development from the early stages of life. Additionally, it

AUSTRALIAN RESOURCES & INVESTMENT

accelerates cell growth and enhances the immune system, protecting the human body from illnesses and helping to fight infections. Zinc can also reduce the longevity of common colds and diarrhoea. Humans receive the majority of their zinc intake from a balanced diet; however, not getting enough zinc can lead to serious health ailments. Zinc deficiency is an issue that affects over 1.2 billion people worldwide, mostly in developing countries and especially among young children. Without enough zinc in their diets, children’s immune systems are weakened and left vulnerable to conditions such as diarrhoea and pneumonia – the two biggest killers of children under the age of five. Other harmful effects of zinc deficiency include stunted growth and impeded intellectual development. For the pressing needs of pneumonia and diarrhoea, zinc supplements and oral rehydration salts can be administered to greatly reduce the duration and severity of these episodes, thus saving thousands of young lives. The global zinc industry recognises its responsibility to treat zinc deficiency and, together with the International Zinc Association, launched the Zinc Saves Kids initiative in support of UNICEF’s comprehensive micronutrient supplementation program to address zinc deficiency for at-risk children. The initiative began in Nepal and Peru, and is currently making an impact in Mexico. Through this initiative, as well as raising awareness of zinc’s crucial role in human health, the zinc industry is working toward the SDG of Good Health and Wellbeing. Zinc is also essential for crop nutrition. Fifty per cent of the world’s soils are deficient in zinc, making it the most common micronutrient deficiency in crops. When soils lack adequate amounts of zinc, there are significant reductions in crop yield, crop quality and nutritional value. Both the volume of food being produced and the dietary nature of the food are compromised, causing the consumers of the food to be much more vulnerable to zinc deficiency. According to the UN Food and Agriculture Organization, the global population will increase to over nine billion by 2050. To ensure that each person has enough food, the world must increase its agricultural output by 70 per cent. Knowing this, along with the ill effects of zinc deficiency, the International Zinc Association began its Zinc Nutrient Initiative, aiming to address zinc deficiency in soils, crops, and humans through increased use and awareness of zinc containing fertilisers. Project work began in China and India, and has expanded to several other countries, including Thailand and Malawi. Ensuring proper crop nutrition through use of zinc fertilisers is a simple, cost-effective, and sustainable method for improving food security and human health, and works toward SDG Zero Hunger. D U R A B I L I T Y E N A B L E S I N D U S T R I A L I N N OVAT I O N A N D I N F R AS T R U C T U R E , A N D A F F O R DA B L E C L E A N E N E R GY Another one of zinc’s notable qualities is its ability to protect steel from corrosion. While it is an extremely important and necessary material, steel will corrode in almost any environment when left unprotected for an extended period of time. When used as a coating

Another one of zinc’s notable qualities is its ability to protect steel from corrosion. While it is an extremely important and necessary material, steel will corrode in almost any environment when left unprotected for an extended period of time for steel, zinc provides durable cathodic protection and keeps corrosion at bay for years to come with little to no maintenance required. Sixty per cent of all zinc consumed goes toward protecting steel from corrosion, and is typically applied in the processes of galvanising or thermal spraying. By protecting steel from corrosion, zinc not only saves time and money, but also keeps steel structures in service for longer, thus significantly reducing waste and carbon emissions. Steel elements that commonly utilise zinc coatings include auto bodies, bridges, ships and rebar used underneath concrete. Zinc’s protective abilities make it a key material for achieving the SDG Industrial Innovation and Infrastructure. Structures used to harvest renewable energy are also commonly coated in zinc as a means of protection and life prolongment, which contributes to SDGs’ Affordable and Clean Energy. Galvanised steel is typically the material of choice for structures that support and align solar panels, and zinc is also a component of the solar cells themselves. Thermal sprayed zinc is also commonly used to prolong the life span of large offshore windmills and can be applied in the field. Zinc’s contributions to tomorrow’s clean energy market are unmatched by any other material of its kind. R E C YC L A B L E Z I N C F O R R E S P O N S I B L E CONSUMPTION AND PRODUCTION IN S U S TA I N A B L E C I T I E S A N D C O M M U N I T I E S At the end of a long service life protecting infrastructure, zinc metal’s unique metallurgical and chemical properties mean that it can be used and recycled again and again without loss of physical or chemical properties, allowing for maximum efficiency and re-use. Through this circular pattern of production, use and re-use, zinc positions itself as a contributor toward SDGs’ Sustainable Cities and Communities, and Responsible Consumption and Production. Zinc’s natural presence – in addition to its essentiality, durability and recyclability – make it a key resource for fulfilling the United Nations’ SDGs and an overall contributor to a sustainable future. Zinc is essential for sustainable modern practices and a balanced green future.

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OIL & GAS

Transferring LNG:

groundbreaking technology

onnect LNG, together with Naturgy Energy Group, successfully demonstrated the world’s first commercial LNG cargo transfer with a jettyless system. The operation, called Universal Transfer System (UTS™), was developed and patented by Connect LNG at the Port of Heroya in Norway. An LNG carrier (LNGC), located 100 metres from shore, off-loaded a cargo of LNG and its cryogenic flexible floating pipeline through the UTS to the shore-receiving facility. The jettyless transfer of LNG is sparking new thinking as to how the import and export of LNG may be possible without the cost and inflexibility of traditional fixed-jetty infrastructure. Eastern Australian states need to boost their LNG capacity for power generation to meet the predicted demand for cleaner energy. The current solution under consideration is to import LNG for these domestic markets. Australia, however, was recently declared the world’s largest exporter of LNG via the eight major export facilities located in Western Australia, Queensland and the Northern Territory. So, why would imported LNG be considered when Australia is a major supplier? One of the key reasons is the lack of specialised infrastructure needed to receive and off-load LNG at domestic ports. This would require the construction of fixed jetties or semipermanent moored floating storage and regasification units (FSRU), which generally also requires a jetty for long-term mooring. Further, to transport LNG from the major export facilities to domestic consumers, small- and medium-scale LNG carriers would need to be accommodated at the major export terminals that could tie up the facilities needed for large export vessels. The major terminals were not really designed to efficiently handle small- or medium-scale LNG shipping. UTS offers a number of solutions that could simplify and alleviate the bottleneck and costs associated with the off-loading infrastructure mentioned.

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W H AT I S U T S ? The UTS is a floating LNG transfer system, with a key element being a stabilised floating platform that is the interface between the LNG carrier and the shore-receiving or exporting facility. The UTS – together with an integrated floating pipeline – is deployed to the LNGC using a small tugboat or work vessel. The LNGC may be moored to a conventional multi-buoy mooring system and UTS is secured to the LNGC alongside by a (totally rope-free) vacuum mooring system. WHY UTS? UTS is a scalable solution tailored for small-, medium- and largescale operations, providing flow-rate capacities from 500–10,000 cubic metres per hour. It offers very significant capex savings of up to 80 per cent, compared with conventional fixed-jetty solutions. The system provides a new canvas for the designer and project developer at a fraction of the cost of either a fixed jetty or FSRU infrastructure for the following reasons: No fixed-jetty structure, platform or mooring dolphin construction and no loading arms are needed. There is no ecosystem interference or impact on the seabed, which should greatly simplify the permitting process. Dredging requirements are significantly reduced, or nonexistent, since the vessel can be moored well offshore, possibly in deep water. Separation of the LNG loading process from shore is possible. The UTS is unmanned during loading, which adds to a safer operating environment for personnel. Ocean operating conditions exceed those for a fixed jetty. A P P L I C AT I O N S Facilitating the import or export of LNG A visiting LNGC can be moored in deep water up to 800 metres from shore, and used to transfer LNG via the UTS and floating pipeline for import or export operations.

AUSTRALIAN RESOURCES & INVESTMENT

Common aerial hoses make the connection from the UTS to LNGC’s manifold. Industry standard safety systems between LNGC, UTS and the shore control centre are provided for emergency (loading) shutdown, emergency disconnection from the ship manifold and two-way communications. During LNG transfer, the UTS is unmanned, with all onboard systems being monitored and controlled by the operator from the shore control centre. System design allows for pre-cooling of floating cryogenic pipelines prior to mooring to minimise the loading time. Another application may be to utilise UTS for off-loading from a visiting LNG and transferring the cargo to a floating storage unit (FSU). Augmentation to a full-scale export terminal UTS provides additional loading capacity for an existing LNG storage facility. This may be applicable where a full-scale export terminal is required to deliver break bulk and spot cargo for small- and medium-scale shipments, leaving the main berths free for largescale shipments. WHEN AN FSRU IS NOT A VIABLE OPTION In many instances, communities seeking to make the switch from coal, oil or diesel to reduce greenhouse gas emissions and improve air quality are not able to justify the cost of FSRU together with the associated infrastructure requirements. LNG’s concept of the ‘deconstructed’ FSRU is to break down the transfer, storage and regasification into separate modules to provide the means to transfer, store and regasify without the cost and marine (environmental) impact of an FSRU. With UTS the key feature, it may prove to be substantially more cost-effective over an FSRU floating import terminal. The modular concept for storage and regasification provides a flexible solution, enabling expansion for future needs. There is an emerging demand to provide refuelling facilities for the rapidly increasing fleet of newbuild LNG-powered vessels, including cruise ships, container ships, bulk carries, ferries, tankers and offshore supply vessels. Designers and operators of LNG bunkering facilities face a number of safety and operational challenges that are distinctly different to those used for the traditional bunkering of oil and diesel. The safety regulations governing storage, handling and transfer of LNG for bunkering offers greater hazards, and must comply with the Hazardous Area Classification and the dedicated Safety Zone rules. The UTS offers a high degree of operational safety and flexibility in concept since LNG fuel is not contained or stored onboard the UTS platform. LNG can be transferred from either an onshore or floating storage tank via a floating flexible pipeline to the UTS platform, or by flexible hose to the vessel that is being refuelled. During refuelling, the platform is unmanned, and standard industry loading shutdown systems are being employed that meet the guidelines stipulated for a Zone 1 or Zone 2 hazardous area. As

UTS was developed and certified for small- and medium-scale LNG applications, it is easily adaptable for bunkering operations. N O T O N LY L N G Initially, UTS was developed for LNG transfer; however, the concept is readily adaptable and scalable for many other products, including oil, LPG, ethane, methanol, liquid carbon dioxide, and ethylene. CONCLUSION The traditional mindset has been to construct a jetty or quay to facilitate the transfer of LNG. Many projects do not pass the FEED stage as they are deemed unviable due to high infrastructure cost, complexities in obtaining approvals, changes in market conditions, or a combination of one or more of those factors. If the full potential for LNG is to be recognised, then the bottleneck in the LNG transfer chain requires new lean solutions to cut permitting time and infrastructure costs for LNG transfers. The versatility and capex advantages of the UTS concept over traditional solutions may offer designers and developers new and innovative ways to enable their projects.

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OIL & GAS

World’s strongest opportunity for low-risk commercial UCG Leigh Creek Energy (LCK) has set out to commercialise its namesake gas project in South Australia’s outback after confirming one of the biggest uncontracted proven and probable (2P) gas reserves in the eastern states’ gas market.

he confirmation of the scale of the gas reserve came with the independent certification of a maiden gas reserve estimate of 1153 petajoules. The certification followed Leigh Creek’s successful operation of a pre-commercial demonstration plant, confirming that a sufficient quantity and quality of syngas could be produced at the project to support commercial production. The demonstration facility achieved a peak flow rate of 7.5 million cubic feet per day, one of the highest for airblown synthesis gas (syngas) projects achieved anywhere in the world. The peak flow rate was well above the company’s one-million-cubic-feet-per-day commercial target. The success in confirming the big gas reserve comes as the eastern states grapple with a gas crisis brought on by the huge volume of gas being sucked up by the Queensland liquefied natural gas (LNG) export projects, and a lack of

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new discoveries being brought forward for development. The strategic nature of the 1153 petajoules maiden gas reserve has not been lost on investors. Its announcement prompted a sharp increase in Leigh Creek’s share market value, with more re-rating events likely as the company proceeds to commercialise the project. Leigh Creek’s Head of Corporate and Investor Relations, Tony Lawry, says the company is now putting its effort into ‘monetising this large energy resource’. ‘We are in joint venture arrangement discussions with a number of parties who want to fund and/or operate a fertiliser plant, or who want to buy and use methane.’ The energy project is based on the in situ gasification (ISG) of coal at depths below 500 metres at the former coal mine at Leigh Creek, 550 kilometres north of Adelaide. Also referred to as underground coal gasification (UCG), ISG converts coal

into syngas, which contains methane, hydrogen, carbon monoxide and nitrogen. The syngas can be refined into a variety of products, including natural gas, ammonia, urea and methanol. Legacy issues at earlier underground coal-gasification projects in Queensland have raised environmental concerns about the process. But an assessment report released by the South Australian Government in April 2018 into the Leigh Creek project, as part of the approvals process for the pre-commercial demonstration facility, says it was unreasonable to draw an association between the Queensland projects due to material differences related to the site suitability, operational practices and the level of regulatory oversight. The report says that the Leigh Creek site is one of strongest opportunities for low-risk commercial UCG anywhere in the world.

Listed (ASX:LCK) junior gas developer Leigh Creek Energy Limited has recently booked its maiden PRMS 2P Reserve of 1,153PJ, representing one of the largest uncontracted energy reserves available to the East Coast of Australia. LCK has multiple commercialisation paths for an asset of this size and quality. Two business options are being studied, both of which have significantly positive economic returns. These are the sale of synthetic natural gas into the Australian East Coast market and/or using the gas to manufacture ammonia-based fertiliser products.

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