ACI Num 3 2019 by Prime Creative Media

VOLUME 13 NUMBER 3 | 2019

Australian Resources & Investment GOLD FIGHTING FED AND DOLLAR HEADWINDS

CRACKING THE COPPER CODE

IN FOCUS: NICKEL’S SOARING RALLY

I L LU M I N AT I N G

LIFE AFTER MINING: LAND REHABILITATION

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AUSTRALIAN RESOURCES & INVESTMENT

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CONTENTS

I N T H I S I S SU E

4 4

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

lobal economic gloom G works against nickel’s surge, by Tony Featherstone

MINE DE VELOPMENT

26 Aggreko focuses on hybrid power solutions

28 Human-systems integration for

the effective implementation of automation, by Professor Robin Burgess-Limerick, The University of Queensland

Analysis with Regina Meani

ustralian miners can be at the A forefront of the emerging debate on responsible production, by Sam Hardy, Hughes PR

New frontiers, by Holly Bridgwater, Unearthed

orce Commodities bulks F up in Malawi

edefining collaboration in the R mining industry, by Joe Cucuzza, AMIRA International

20 Resource and energy exports tipped to hit new records

The future of jobs in mining

24 Consolidated Zinc edges closer to goals

40 ENVIRONMENT

40 The importance of water in mining,

by Chestere Eube Baring, Intelligence Partners

42 How’s our plant doing today? 43 Twice as safe under pressure

30 Sandvik announces

developments to interoperability platform for automation

F E AT U R E D

32 32

MINE SITE CLOSURE & R E H A B I L I TAT I O N

ost-mining landscapes that P continue to benefit communities

GOLD

44 Gold fighting Fed and dollar

headwinds, by Gavin Wendt, MineLife Pty Ltd

48 Spectrum Metals’ exploration yields results at Penny North

50 Oklo Resources strikes gold in west Mali

34 Life after mining: land

36 Sustainable closures,

54 Carawine Resources making

38 Mine the gap – the future of mine

56 Gold-coated fungi exhibits potential

rehabilitation, by Stephen Galilee, NSW Minerals Council

by Ciaran Lavery, Arcadis

site rehabilitation in Australia, by Dr Adam Cross, Curtin University

old price increase might just G be fool’s gold, by Jason Aravanis, IBISWorld

huge progress

on gold exploration and ore processing, by Tsing Bohu, Anais Pages, Anna H Kaksonen and Ravi Anand, CSIRO

58 Pyramid Hill: Chalice’s Holy Grail –2–

AUSTRALIAN RESOURCES & INVESTMENT

FOCUS

NICKEL’S S O A R I N G R A L LY There’s a glistening outlook for the metal.

60 COPPER

60 Copper out in front,

by Hal Stillman and Fleming Voetmann, International Copper Association

64 Orion Minerals sees the potential in the Prieska project

66 Cracking the copper code, by Steve Freeth

68 Galileo Mining builds on nickel and copper success

70 72

NICKEL

ickel’s lustrous gains, N by Anthony Fensom

82 C O B A LT

82 Mount Gilmore a major Corazon target

84 The cobalt code

86 GRAPHITE

86 Black Rock Mining’s enhanced Mahenge plan

88 MINERAL SANDS

88 A step forward for silica sand mining

90 HIGH PURIT Y ALUMINA

90 Alpha HPA doing it first

92 High purity alumina: another link for Australia’s battery mineral chain, by Warren Pearce, The Association of Mining and Exploration Companies

94 Altech Chemicals unveils equity strategy

96 HPA: can’t illuminate it,

can’t illuminate without it, by Toby Green, CRU Group

98 LITHIUM

98 Pan Asia Metals creating

value-adding opportunities

Nickel Mines leading the way

100 Good news for Hawkstone Mining

trong, hard and tough, S by the Nickel Institute

102 Lithium powers ahead, by Anthony Fensom

80 Cassini and OZ cashing in –3–

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

THE

Featherstone REPORT

GLOBAL ECONOMIC GLOOM WORKS AGAINST NICKEL’S SURGE BY TONY FEATHER STONE

But medium- and long-term prospects have been boosted by increasing use in electric vehicle batteries.

ith iron ore and gold prices flying in 2019, attention has turned to commodities that can rally further, notably coal, nickel and other base metals. Nickel starred in July, with its price soaring from US$5.50 per pound to above US$6.40 per pound by the month’s end. Predictably, nickel bulls believed that the gains signalled the start of the metal’s longawaited rally, underpinned by the electric vehicle (EV) boom and improving stainless steel demand. Technical and speculative buying reportedly drove nickel’s rally in July. The reiteration by Indonesian government officials of a ban on raw ore exports by 2022, and higher demand from Chinese firms, also pushed nickel to its highest price in more than a year – prompting fears that the nickel price was in ‘bubble territory’. Will nickel’s gains be short lived? As Australian Resources and Investment (AR&I) went to press, there were signs of exhaustion in the rally, and commodity analysts, most of whom underestimated nickel this year, warned that the price had run too far, too fast. They are probably right. After a near 20 per cent gain in a month, nickel was ripe for a pullback amid lingering US–China trade tensions; an escalation in the potential for conflict between the United States and Iran; and an increasingly gloomy global economy. Worldwide manufacturing output, measured by the global Purchasing Managers’ Index (PMI), slipped

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to a three-year low in July. Collated by investment bank JPMorgan, the global PMI was holding just above 50, the level that signals economic expansion. New manufacturing orders in May fell for the first time since 2012, however, suggesting sluggish manufacturing output, rising inventory stockpiles and softening commodity demand. US–China trade hostilities and waning business investment are hurting manufacturing. The three-year low in the global PMI coincided with rallying iron ore and thermal coal prices, and higher nickel and copper prices in the base metals. The extent of the commodity price rally is at odds with deteriorating global economic fundamentals, particularly in Europe. More countries are moving towards negative interest rates. Germany is selling 10-year government debt with a negative yield for the first time in three years; and France, Austria, Denmark, the Netherlands, Sweden and Switzerland have joined the club of countries, headlined by Japan, with 10-year bonds with negative yields. More than US$13 trillion was invested in negative-yield bonds worldwide as of July 2019, according to Bloomberg, as investors effectively paid these governments to hold their money. Negative yields signal potential economic distress, yet commodity prices are rallying. Commodity bulls are betting on continued falls in interest rates stimulating global economic growth and thus commodities demand. The US Federal Reserve was expected to cut rates by a quarter of a per cent in late July to support the US economy during trade

AUSTRALIAN RESOURCES & INVESTMENT

tensions and a slowing global economy. Earlier this year, the market consensus was for higher US rates. The odds favour a slowdown or pullback in the commodity price rally this year as global demand eases. But with governments worldwide launching more monetary and fiscal policy stimulus to prop up their economies, the commodity price rally may last longer than expected. N I C K E L W E L L P L AC E D Nickel’s gains this year have been a long time coming. After trading above US$9 per pound in 2014, nickel more than halved by late 2015, putting it among the worst-performing commodities. Nickel is historically volatile, but even by its standards the fall was large. Nickel is a relatively smaller commodity market, with global annual production of about 2.3 million tonnes. Indonesia accounts for just over a quarter of global nickel output, so policy uncertainty and sovereign risk add to nickel’s price volatility. Nickel is mostly used in making alloys, such as stainless steel, that coat other metals. The metal is particularly susceptible to Chinese economic activity and its metals demand – China is by far the world’s largest nickel consumer, accounting for about half of global output. The big hope for nickel is the EV revolution and soaring demand for passenger EV batteries in the next five years. Recent data shows that nickel is increasingly being used in EV batteries. First-generation EVs used lithium-ion batteries made with lithium iron phosphate and lithium manganese oxide. Neither had nickel in their chemistry. Second-generation lithium-ion batteries changed their chemistry to use nickel manganese and cobalt. These batteries had higher energy densities and thus greater distance ranges. The low range of first-generation lithium-ion batteries put people off buying EVs. In March 2019, China changed its EV subsidies, lifting the minimum EV range needed to qualify from 150 kilometres to 250 kilometres. This will support rising demand for longer-range lithium-ion batteries, with higher nickel content in China and elsewhere. China is responsible for half of global EV sales and is the largest EV battery manufacturer globally. EV manufacturers used 57 per cent more nickel in passenger EV batteries in May 2019 compared to a year earlier, according to Canadian research firm Adamas Intelligence. Concerns about the production security of cobalt (also used in batteries) have further helped nickel demand.

For years, nickel bulls have promoted the coming EV boom and its effect on the metal. With stainless steel accounting for just over 70 per cent of nickel use, the market was more focused on traditional drivers for nickel, such as Chinese highgrade steel demand. P R O D U C E R S R E S P O N D T O I M P R OV I N G M E D I U M -T E R M O U T L O O K The big unknown is whether nickel’s soaring rally this year is overdue recognition of its role in the EV boom, short-term technical buying or a catch-up with other commodities. It could also be a combination of each factor that suggests price gains will inevitably reverse in 2019. The best clues come from investment decisions. BHP confirmed in May 2019 that it will retain its Western Australian nickel business – a move that lifts the mining giant’s exposure to rising EV sales and nickel sulphide demand in the coming decade. The market had speculated that BHP would sell its Nickel West operation, which includes mines, a smelter and refinery. BHP CEO Andrew Mackenzie said at the Bank of America Merrill Lynch Global Metals, Mining & Steel Conference in Barcelona: ‘Nickel West offers numerous development options and potential enhancements to its resource position through exploration and processing innovation’. The business is now considered a core part of BHP. Specialist nickel miners are also reporting stronger Chinese interest in their production. One of Australia’s largest nickel producers, Western Areas, announced in July an offtake sale and purchase agreement with Sumitomo Metal Mining – a Japanese conglomerate – for the delivery of premium highgrade nickel sulphide precipitate. Like other nickel companies, Western Areas wants to ramp-up production in response to tightening supply conditions, and is hopeful of securing new offtake agreements on more favourable terms with Chinese customers given nickel’s outlook. On balance, nickel has a solid medium-term outlook (1–3 years) and excellent long-term prospects (3–5 years) as passenger EV sales rise. The main challenge is short term: a slowing global economy and the likelihood of constrained nickel demand for stainless steel. Read more about nickel’s soaring rally on page 70 of this edition.

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.

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F E AT U R E D

— ANALYSIS — WITH REGINA MEANI The gold to silver ratio rule. WHEN THINKING ABOUT buying precious metals, most of us turn immediately to gold, and in the 12 months since August 2018, that strategy would have seen a benefit of almost 25 per cent; but silver is the precious metal that is sometimes forgotten in our investment strategies. If we look at the gold to silver ratio rule (GSR) prior to the 20th century, the simple rule was that gold and silver were interchangeable at 15 to 1. The introduction of fiat currencies and the dropping of silver as a backing for currencies saw a widely fluctuating ratio in the 20th century. Over the past 30 years, there has developed a broad range where gold is considered cheap around 45, and silver a buy above 85. Chart 1, courtesy of Silver Bullion, highlights the major highs and lows. The current ratio (late July 2019) is around 85, after being as high as 93.5 earlier in the month. This ratio suggests that it is silver’s time to shine. It is an amazing fact that silver is one of the most useful metals, as its chemical uniqueness and antimicrobial properties see trace elements used in electronic and digital products, and medical appliances. It is interesting to note here that these trace amounts of silver are never replenished or returned to stockpile. In the same period from August last year, the silver price has only gained 16 per cent, so perhaps there is some catch up. Looking at the spot silver price, we find that the downward trend from July 2016 was broken with the rise through US$15.50 early in July 2019, suggesting that there is the potential for the price to test higher barriers located at $17–17.50, and then higher around $18.50 and $20, with the possibility of extending the rise towards $25. A drop back into the $14–15 zone may change or negate this scenario. A similar downward trend to that for the silver price (in this case, from August 2016) was broken on the share price chart for Silver Mines Limited. A project overview for the company boasts that the Bowdens Silver project is the largest undeveloped silver deposit in Australia, with substantial resources and a considerable amount of high-quality technical work completed. The share price has already more than doubled between May and July this year, and it has broken two downward trends: the first in December 2018, and the second a confirmation break in July 2019. While a barrier has been approached around 9–10 cents and a pause to consolidate may occur, a breakaway through this barrier would suggest the potential for the stock to rise towards 15–16 cents and possibly beyond towards 25 cents. The risk would be a drop back beneath 6.5 cents, which could endanger the new upward path.

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Chart 1

Chart 2

Chart 3

F E AT U R E D

Australian miners can be at the forefront of the emerging debate on responsible production The electric vehicle boom is coming.

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AUSTRALIAN RESOURCES & INVESTMENT

A BY SA M HAR DY, HUGHES PR

ccording to BloombergNEF, there will be 10 million EVs on the world’s roads by 2025, with 57 per cent of passenger vehicle sales projected to be electric by 2040. This revolution has been made possible by advances in lithium-ion battery technology, allowing EVs to travel longer on one charge. Parallel to this, we are seeing the emergence of a growing industrial and residential battery-storage market – also powered by lithium-ion technology. But this energy storage transition has not been painless, particularly for the auto sector, which is keen to promote the ethical and sustainability merits of its emerging EV models. The past two years have brought the sector face to face with the realities of the oftenchallenging production environments of the key input materials to lithium-ion batteries. R I S I N G M E D I A A N D N G O S C R U T I N Y; GROWING PUBLIC INTEREST Non-government organisations (NGOs), most notably Amnesty International, and global media, ranging from the Financial Times to CNN, have undertaken major investigations into the social and environmental impact of mining in key tech metals, with cobalt being the core focus. With more than two-thirds of global production concentrated in the Democratic Republic of the Congo (DRC), cobalt production is exposed to several risks, including human rights abuses, modern slavery and child labour. It is this final risk that has triggered global attention on production standards, forcing companies to take a far more assertive approach to supply chain due diligence, and take a more strategic approach to battery sourcing. Not being able to identify and manage risks in your cobalt supply chain is no longer acceptable to the market. EMERGING GLOBAL RESPONSE In response, action by original equipment manufacturers (OEMs) and battery manufacturers has begun to coalesce around the Organisation for Economic Co-operation and Development Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (OECD DDG). The guidance states that companies must map their supply chains, identify risks and engage with suppliers to improve practice. Companies must also demonstrate the action that they have taken publicly. For cobalt, given the DRC context, this is not an easy task, but it is achievable. Several tech and auto firms, including Apple and Daimler respectively, have now mapped

cobalt supply chains from their battery supplier through to mine site, identified risks, and put in place rigorous responsible sourcing programs. From the upstream, we are also seeing increasing coordination in action to address the responsible sourcing challenge set by the market. In addition to a demand from downstream clients to demonstrate responsible production, a key driver to reform is the London Metal Exchange (LME). Last year, the world’s pre-eminent metals exchange declared that it would launch new requirements for all metals traded on the LME to prove that they were sourced responsibly. Industries ranging from copper to aluminium have all launched new major initiatives or frameworks aimed at, and enabling, miners to assess and report on their own operations, and demonstrate good practice to buyers in their supply chain. In the cobalt industry, for example, the Cobalt Industry Responsible Assessment Framework (CIRAF), which is being trialled this year, will enable cobalt miners to prove that they are aligned with global good practice on responsible production and sourcing, with annual public reporting being a mandatory requirement. (Read more about the CIRAF on page 84.) AN OPPORTUNIT Y FOR AU S T R A L I A N P R O D U C E R S For Australian miners, the emerging responsible sourcing dynamic should be viewed as an opportunity. Australian producers benefit from huge comparative advantages linked to strong and stable governance and regulatory environments, and high environmental and safety standards at operational level. Crucially, Australian miners benefit from a complete absence of the human rights and child labour risks seen in parts of Africa; and the absence of labour rights and community relations issues faced not only by miners in Africa, but also by those in key production centres in Latin America, including Chile and the ‘lithium triangle’ in Central America. D E M O N S T R AT I N G G O O D P R AC T I C E T O T H E M A R K E T This position as a global leader in sustainable and ethical production should not be taken as a given. Firstly, Australia’s commodity sector is fallible. Challenges do remain, including the ongoing environmental risks and impact related to tailings and water usage. Secondly, Australia’s commodity sector needs to be more assertive in demonstrating good practice. Industry

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F E AT U R E D

For downstream OEMs, full supply chain traceability in key inputs, including battery metals and conductors such as copper, is the longterm goal in the context of responsible sourcing and media attention is focused on the risks and issues prevalent in large parts of the global commodity sector, while good practice is often ignored. Australian miners must get better at demonstrating action publicly and aligning action with global best practice. The copper sector is a case in point. In addition to the imminent responsible sourcing requirements from the LME, the International Copper Association (ICA) has just launched the Copper Mark, a voluntary assurance program for copper miners, smelters and refiners. The Copper Mark companies are assessed against a set of responsible production criteria aligned with the OECD DDG and the UN Sustainability Goal 12; responsible consumption and production. By completing processes such as the Copper Mark, and publicising the risk assessment and management action their operations have been subjected to, Australian miners can meet the key global good

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practice requirements and position themselves as industry leaders. Additionally, there is an opportunity for Australian miners and intermediaries to play a stronger role in the drive towards greater supply chain transparency and traceability. For downstream OEMs, full supply chain traceability in key inputs, including battery metals and conductors such as copper, is the long-term goal in the context of responsible sourcing. This is driving exciting technological advances in supply chain monitoring. Companies like RCS Global Group are pioneering mobilebased technology, which allows even the most remote mine site to deliver real-time monitoring and incident reporting; the company is also piloting a blockchain-backed traceability system enabling batches of certified, responsibly produced materials to be tracked digitally through an entire supply chain from mine to market. Its cobalt pilot, powered by IBM, with partners that include Huayou Cobalt, LG Chem, Ford and Volkswagen, will prove to be a game changer for the sector if successful. Australian producers should be following this lead. The production environment, and the dynamics of the Australian commodities supply chain, make it the perfect setting for early adopters of traceability and monitoring technology. Revelations about child labour in the DRC and ongoing concerns about environmental impact and safety, demonstrated by the recent devastating dam collapse at Vale’s Brumadinho iron ore mine, are just two examples of what has triggered blanket global coverage in the media and widespread scrutiny not only from campaign groups, but by consumers, as well. This is a challenge for the mining industry, but it is also driving positive change by making the global commodities sector more transparent and more responsible. Australian miners should be at the centre of this positive trend, and should be doing more to engage and collaborate with downstream brands who also want to play more of a role in improving standards of production in the raw materials they rely on. The opportunity is there. Now is the time to act.

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Rick Squire Portfolio Manager ACORN CAPITAL

Matt Griffin Co-Portfolio Manager AMP CAPITAL

David Baker Managing Partner BAKER STEEL CAPITAL MANAGERS

Jim Copland Executive Director Small Caps IFM INVESTORS

John Forwood CIO LOWELL RESOURCES FUND

Peter Rozenauers Portfolio Manager ORION MINE FINANCE

Matt Fifield Managing Partner PACIFIC ROAD CAPITAL

Julian Babarczy Portfolio Manager REGAL FUNDS MANAGEMENT

Martin Boland Director TAURUS FUNDS MANAGEMENT

Jeremy Bond CIO TERRA CAPITAL

Guy Keller Commodities Analyst TRIBECA INVESTMENT PARTNERS

Daniel Hynes Senior Commodites Strategist ANZ RESEARCH

Sophie Lu Head of Metals & Mining BLOOMBERG NEF

Paul McTaggart Kevin Xie PhD China Economist Director, Pan-Asia COMMONWEALTH Metals & Mining CITI RESEARCH BANK

Paul Wiggers de Vries Senior Base Metals Analyst CRU

Warwick Grigor Chairman FAR EAST CAPITAL

Gavin Wendt Founding Director MINELIFE

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F E AT U R E D

NEW FRONTIERS Mining the data for our next big mineral discovery. BY HOLLY BR IDGWATER, INDUSTRY LEAD – CROWDSOURCING, UNEARTHED

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AUSTRALIAN RESOURCES & INVESTMENT

conomic mineral deposits have become increasingly difficult to find. During exploration, the iterative process of collecting different datasets, followed by geological interpretation, can take an extremely long time. Vast amounts of data are collected and processed, very often without any significant mineral discovery. Therefore, explorers are seeking new approaches to solve this problem, and to develop innovative processes and ways of working that can drive up the discovery rate. This will speed up the exploration life cycle, resulting in a more efficient and sustainable future for mineral exploration. HARNESSING THE POWER OF THE CROWD Having previously worked for a decade as a geologist in resource exploration and definition, I believe that leveraging open data and crowdsourcing initiatives can transform this lengthy and intensive geological process. Geologically speaking, a key advantage of crowdsourcing is the ability to assess an area of ground much faster. Instead of accessing a few opinions, you have access to hundreds (and potentially thousands) of opinions, and you can use that collective brainpower in a short period to collate many different interpretations and see where potential targets might be. All the different data collected has the potential to give signals and indicators, and using the crowd to analyse it in different ways gives the best opportunity to highlight points of difference and generate new thinking to help find the prized needles in the haystack. O P E N DATA A N D A $ 1 - M I L L I O N I N C E N T I V E UNEARTHS BURIED TREASURE In February 2019, modern mining company OZ Minerals partnered with energy and resources open innovation platform Unearthed to launch the Explorer Challenge. Through this unique and online crowdsourcing competition, the challenge and accompanying data was made available digitally to geologists, geoscientists and data scientists from around the world, who then competed to deliver the best solution. The three-month journey to the data-driven discovery concluded on Friday 31 May 2019, with more than 1000 global participants from 62 countries digging through more than six terabytes of public and private exploration data from OZ Minerals’ Mount Woods tenement, in northern South Australia. In addition to being awarded a A$1-million prize pool, the winning models from the Explorer Challenge will be tested in real life. Top targets are scheduled to be drilled by the end of 2019, with the prospect of unearthing the next big Australian mineral deposit. The submissions to the Explorer Challenge displayed an amazing range of analytical and geological approaches. From cutting-edge machine learning to advanced physical modelling, the submissions represented thousands of hours of work in developing and applying robust techniques applicable to the problem of target generation.

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F E AT U R E D

Data scientists and geologists join forces to tackle the Explorer Challenge

Bringing data scientists and geologists together for this challenge has resulted in novel ways to apply modern data science techniques, such as machine learning, to geological problems in a meaningful and explainable way. OZ Minerals Chief Executive Officer Andrew Cole says that despite exploring extensively around Prominent Hill over the past decade, they still haven't hit a deposit. ‘We needed to find fresh insights and ways of working smarter with our data. The innovators who participated in the Explorer Challenge have provided approaches to mineral exploration that we never would have imagined internally, including ways to fuse datasets together, combining multiple layers of information, and making predictions based on the extensive datasets,’ he says. First-prize-winning Team Guru, comprising data scientist Michael Rodda, environmental scientist Jesse Ober, and process engineer Glen Willis, earned themselves A$500,000 for their innovative, yet grounded, approach to data-science-driven mineral exploration. The team developed interpretable machine learning models for mineral exploration using geochemistry, geophysics and geology. Rodda explains that model interpretability isn’t as exciting as deep learning, but it is far more valuable to a business for practical implementations of machine learning. ‘Winning first prize gives our team the confidence in our data science abilities, and cements our passion for shaking up mineral exploration. We definitely plan to keep chipping away at this problem, as we’ve barely scratched the surface of the value we could potentially get out of the data,’ Rodda says. At Unearthed, there is a lot of excitement surrounding the incredible range of solutions submitted by these pioneers that can generate high-quality exploration targets in an efficient way, and we are thrilled to see both the winning teams and OZ Minerals hitting paydirt.

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M I N E R A L E X P L O R AT I O N 4 . 0 Looking more broadly at the potential industry impact of competitions such as the Explorer Challenge, it will be interesting to see if the mineral exploration business model will undergo a fundamental shift as access to precompetitive data and applications of machine learning increase. Many industry professionals and mining companies are beginning to realise that their true competitive advantage in exploration is speed, not necessarily data or technological intellectual property. I believe that the ability the crowd gives you to generate new ideas, develop solutions and automate processes is something that can make a big difference and provide a competitive advantage. Crowdsourcing open data in this way provides a unique opportunity to combine hundreds of models and targets from independent experts into one exploration model, boosting confidence in the targets generated. This previously unseen model to combine diverse thought into consensus could significantly increase discovery rates. From an investment perspective, increased use of data science in the exploration process is likely to increase confidence in targets for economic mineralisation. It also enables geologists to explain target confidence more quantitatively, which ultimately reduces the risk for investors. Consensus is a particularly unique way of building confidence in exploration targets and opportunities, which investors could use as a new way to assess projects to invest in or acquire. About the author Holly Bridgwater is an exploration geologist, crowdsourcing lead at Unearthed and an advocate for industry adoption of open-data initiatives. Most recently, Bridgwater worked with OZ Minerals to deliver the Explorer Challenge. For more information, visit https://unearthed.solutions/u/competitions/explorer-challenge.

AUSTRALIAN RESOURCES & INVESTMENT

F E AT U R E D

Force Commodities bulks up in Malawi The land-locked African nation of Malawi is not well known as a hub for mining. This is all about to change, however, with ASX-listed Force Commodities accelerating headlong towards near-term, high-grade silver and lead production at its Tshimpala project.

orce has snapped up an initial 51 per cent stake in Tshimpala in July this year, and is now ticking off a number of key milestones on its way to near-term production. This includes securing offtake, planning an exploration campaign and stocking up on top-tier talent. Recently, the company made a series of sweeping hires, adding metals trading specialist Simon Grant-Rennick to the board, as well as strengthening its Malawian management team with an operations manager, country manager and exploration manager. The Malawian management team will add more than 55 years’ experience in resources. Importantly, all new members understand what it’s like to work in Africa, having overseen mining operations in the continent across a range of commodities. With the team locked down, Force is now fully focused on rolling out exploration work on the project, consisting of drilling, pitting, sampling, mapping and electromagnetic (EM) surveys to identify the source of the Tshimpala project’s prolific artisanal workings. Recent geological mapping and ground EM surveys have identified over 25 priority areas prospective for high-grade lead and silver mineralisation. ‘With the acquisition of our majority interest in the Tshimpala project now complete, we are now primed to begin our phase-one exploration and development

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programs,’ Force Managing Director Jason Brewer says. ‘I look forward to updating shareholders as we progress with our exploration and development programs, and in our ongoing discussions regarding the sale of product into the international markets from the Tshimpala project,’ Brewer says. In an impressive move for a market junior, Force has brokered an offtake agreement with Swiss-based Transamine, one of the world’s largest traders and suppliers of raw materials. Under the agreement, Transamine has agreed to purchase all of the lead and silver produced by Force at the Tshimpala project on an ongoing basis.

Force has also already negotiated a transport deal with Bolloré Transport and Logistics – a subsidiary of the global giant Bolloré Group – to truck its ore 45 kilometres from the mine site to Bolloré’s Lilongwe depot. Here, it will be off-loaded and then transported to one of the deepwater ports in neighbouring Mozambique. From there, Bolloré will ship the material to Transamine’s key customers via ports in Asia. The offtake and transportation agreements follow an encouraging trial mining operation at Tshimpala, where more than a 100-tonne bulk sample was transported to South Africa where it returned exceptionally high assays, averaging 60.48 per cent lead and 735 grams per tonne silver.

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F E AT U R E D

Redefining collaboration in the mining industry The increased focus on collaboration has perhaps been the single most important strategic shift that has accompanied the significant technological change in the mining industry over the last decade. CEOs frequently refer to the need for collaboration; however, in my view, collaboration has become a cliché – a buzzword where the meaning is somewhat diffused.

T BY JOE CUCUZZA, M ANAGING DIR ECTOR, A MIR A INTER NATIONAL

here is an enormous body of literature on collaboration. For example, at the time of writing (25 July 2019), googling the word ‘collaboration’ resulted in 1.79 million hits (as a comparison, when I checked back in December 2017, there were 525 million hits). Moreover, there is a lot of evidence to suggest that collaboration is necessary in order to drive innovation – particularly transformational innovation. There are great examples, specifically in the digital space, of collaboration leading to some remarkable innovations, including the internet.1 The Oxford English Dictionary’s definition of collaboration is ‘the action of working with someone to produce something’. In my view, this definition is hopelessly inadequate in describing the true nature of collaboration. So, in order to inject some rigour in what we are talking about, I would like to suggest a more practical and well-rounded definition 1 The Innovators by Walter Isaacson, author of Steve Job’s biography

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as: ‘Collaboration is the sharing of resources and information so that a group of individuals (or organisations) can work together to co-create something new, in support of a common goal that improves some measure of each individual’s (or organisation’s) success’. Most would agree that collaboration, as defined above, must be built on a foundation of mutual trust and transparency. Working arrangements that do not exhibit such characteristics will be purely transactional, and are unlikely to lead to sustainable commitment and thus to a substantive innovation that will turn the dial, except perhaps through serendipity. There is no doubt that individuals or organisations can work together in different ways; people can still work together, even if they do not share a common vision. If this arrangement, however, is accompanied by the sharing of resources and information in

AUSTRALIAN RESOURCES & INVESTMENT

support of each other’s independent goals, or to accomplish part of a broader non-business critical goal, then this is best described as ‘cooperation’. An example of this may be where exploration data in a camp/district is shared between competitors to improve one’s ability to effectively explore in one’s own tenement, or in developing standards, open-source and other ‘industry good’ endeavours, such as building a cross-industry framework for skills development. Another example may be where a mining company works with an original equipment manufacturer (OEM) to adapt and/or develop a piece of technology for application in the mining company’s operations. It is interesting to speculate whether the many mining company OEM arrangements that have been reported in the media as collaborations are actually cooperations. The big difference between collaboration and cooperation, as defined herein, is that the former is difficult (at least at the beginning of a partnership), and the latter is relatively easy. According to the Australian Bureau of Statistics (ABS)2, companies that collaborate are most likely to do so with clients/buyers (37 per cent) or their 2

ABS http://www.abs.gov.au/ausstats/abs@.nsf/mf/8158.0

suppliers (36 per cent) – although, it is not obvious that the meaning of collaboration used by the ABS is equivalent to that defined previously. Intuitively, one would expect that it is much easier to collaborate with someone you know. It is one thing working with colleagues in a workplace – where people share the same culture, vision and objectives – it is another to work with people from different organisations, perhaps with different cultures or languages, particularly if there is no prior history of working together. Why is it important to distinguish between collaboration and cooperation? One key difference is that the management intensity and oversight required is different because the stakes are much higher. Joint ventures are a type of collaboration; in these arrangements, the partners generally operate as one entity with bilateral management. Most strategic alliances in which organisations still operate as independent entities can best be described as cooperation. In my view, another important difference relates to the desire of companies to attain a competitive advantage. Collaborative relationships can lead to a significant competitive advantage for the

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F E AT U R E D

partners; however, mining companies that strive for a sustainable competitive advantage from technology may be disappointed. The metaphor I use to describe competitive advantage is that it is like an ice sculpture; hard to achieve, beautiful to behold and ephemeral in nature. No-one has a mortgage on knowledge or ideas, or exclusive access to bright minds and infrastructure. The world is an interconnected solutions space in which technologies are easily adapted (copied) and adopted. Furthermore, people are mobile; one cannot bottle up ideas for very long. In the current volatile, uncertain, complex and ambiguous business environment, competitive advantage in the mining industry is transient, as the hyper-fast evolution of technology, accompanied by disruption, is exacerbating this. It is possible to take steps to prolong one’s competitive advantage, but, in most instances, the technology becomes the cost of doing business, with digitisation and automation being prime examples. Of course, it is true that some companies can implement technologies faster and more effectively than others. The industry can harness the potential of collaboration to achieve more than productivity gains (having moved on from the focus on increased throughput during the mining boom), by focusing on industry-wide efficiency gains that will benefit all companies rather than give any one a competitive advantage. True collaboration permits more effective use of resources and can leverage off of the skills, know-how and funds from the various partners, and it can lead to real innovation. Such collaboration is necessary to address the existential challenges facing the mining industry, such as waste, or finding a solution that leads to effective mine closure without leaving any liabilities for the environment, local community or government. Some challenges are simply too big, too costly and too risky to solve on one’s own, not to mention that it will not guarantee a sustainable competitive advantage. To be able to address such problems collectively will require a change in mindset – an important part of this is the need to think beyond the two- to three-year horizon, and this will require patient investment. The solutions to the challenges mentioned above are not going to be solved through a weekend hackathon, either. The latter have very different intent and purpose. So, exactly how can a CEO make collaboration work? Firstly, we should recognise that developing reliable and sustainable connections and linkages between industry and researchers capable of tackling the grand challenges in a multidisciplinary way is not straightforward. Sure, potential ideas can be garnered through an open innovation approach, but converting ideas or embryonic technologies into implementable and scalable solutions that can be applied to both existing operations and legacy mines is certainly not straightforward. A proven way of developing and maintaining these

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True collaboration permits more effective use of resources and can leverage off of the skills, know-how and funds from the various partners, and it can lead to real innovation linkages is through trusted and independent intermediaries whose purpose is to facilitate these connections, and who have the processes and experience to make them happen. Secondly, a shared vision, trust and a blend of scientific discovery and practical invention will be necessary to succeed. Thirdly, true collaboration is hard work, and active project management of the multidisciplinary research team is essential for success. In the case of the exploration and mining sector, AMIRA International has, since 1959, played a central role in facilitating partnerships between industry and academia. Going forward, I am sure that this will grow, as the long-term success of the industry depends on increased collaboration across all fields. ACKNOWLEDGEMENTS: The author would like to thank Richard Schode and Adele Seymon for reviewing a draft of the document and making constructive suggestions. About the author Joe Cucuzza has led AMIRA International for the past seven years. Since joining the organisation, Cucuzza has facilitated and managed a wide breadth of research and development partnerships, which have delivered significant benefits to the industry at large. Cucuzza has worked in developing solutions to problems right across the minerals value chain. Critical to this success has been developing strong networks across both mining companies and the research community around the world.

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RESOURCE AND ENERGY EXPORTS TIPPED TO HIT NEW RECORDS A

ustralia’s Chief Economist reported in June that the nation’s resources and energy exports are set to hit a new record of $285 billion in 2019–20, before falling back in 2020–21. The increase in earnings has been driven by a spike in iron ore prices and a surging gold sector. The June quarterly report said that thermal coal was facing a tough climate, with prices deteriorating, and predicted that gold would replace thermal coal as Australia’s fourth-largest export in 2019–20. It also warned about uncertainties caused by US–China trade tensions. Against such a backdrop, there has never been a better time to hear from some of the world’s foremost mining experts, as they discuss global and Australian opportunities and challenges. In Western Australia alone, there are projects either under construction or committed to with a value of around $113 billion. Replacement iron ore mines, a planned LNG expansion and a buoyant gold sector are driving an increase in employment. At a time when the resources industry in Australia is enjoying a resurgence, more than 300 mining and resources experts will be in Melbourne this October for Australia’s largest mining event. Microsoft, BHP, Rio Tinto, Mitsui, Anglo American and South32 are just some of the companies that will discuss industry issues and trends, including the opportunities that are attracting investors across the globe; leadership and trust in the digital age; critical

considerations for doing business in 2020; what is affecting the global mining industry; avoiding digital disappointment; and getting the mix right in the mines of the future. FMG will discuss cyberthreats and protecting data; the Minerals Council of Australia will deliver an outlook on battery metals; the skills shortage and skills of the future will be examined; and opportunities in Latin America and Africa will be explored. The International Mining and Resources Conference and Expo (IMARC) 2019 will cover the entire mining supply chain, from exploration, investment, production and optimisation, to new technologies and global opportunities, with this year including new focus areas on energy, the environment, workforce engagement, and mine and plant optimisation. Around 7000 mining and resources professionals will attend and participate in over 130 hours of content, with five concurrent conferences, and four workshops and masterclasses. With Victoria as a global leader in the delivery of product and service solutions for the Australian and overseas resources sectors, Melbourne is the ideal location for this global event that attracts attendance from over 100 nations. The mining equipment, technology and services (METS) industry is one of Australia’s largest export sectors, with Victoria taking a strong share of the sector’s exports with revenue at about $17 billion. Attendees will hear how Australia is leading the way in intelligent mining and improved production, with a case study on Australiabased Resolute Mining’s Syama mine in Mali – the world’s first fully automated mine. The latest mining discoveries, equipment, innovations and cutting-edge technologies will also be on display across the 1.2 hectare expo floor, with over 260 exhibiting companies. To continue to achieve such high export numbers, miners can’t do this alone. It is a collaborative approach, and with participation from more than 400 mining companies and 35 international mining ministers, IMARC provides a unique opportunity for the thousands who will attend over three days (29–31 October) to capitalise on the growth within the sector. IMARC is where global mining leaders connect with technology, finance and the future. Now in its sixth year, it is Australia’s largest mining event bringing together over 7000 decisionmakers, mining leaders, policymakers, investors, commodity buyers, technical experts, innovators and educators from more than 100 countries to Melbourne for four days of learning, dealmaking and unparalleled networking. For more information, visit https://imarcmelbourne.com.

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WHERE GLOBAL MINING LEADERS CONNECT WITH TECHNOLOGY, FINANCE AND THE FUTURE.

The International Mining and Resources Conference (IMARC) is where global mining leaders connect with technology, finance and the future. Now in its 6th year, it is Australia’s largest mining event bringing together over 7000 decision makers, mining leaders, policy makers, investors, commodity buyers, technical experts, innovators and educators from over 100 countries to Melbourne for four days of learning, deal-making and unparalleled networking. BHP, Rio Tinto, Anglo American, Mitsui, Newcrest and OceanaGold are just some of the companies you will hear from at the conference. With a programme covering the entire mining supply chain, from exploration, to investment, production to optimisation through to new technologies and global opportunities. Alongside brand-new conferences on energy, the environment, workforce engagement as well as mine and plant optimisation. The free exhibition will feature over 260 leading companies across the 12,000m2 expo floor showcasing the latest mining projects, equipment and innovations the industry has on offer. Dyno Nobel, Sandvik, K92 Mining, Komatsu, Yokogawa, HATCH and Downer Group are just some of the companies you can expect to meet.

VISIT IMARCMELBOURNE.COM TO CLAIM YOUR FREE EXPO PASS, OR RECEIVE A FURTHER 10% OFF CURRENT RATES WITH THE DISCOUNT CODE MA1200ARI 6TH ANNUAL

INTERNATIONAL MINING AND RESOURCES CONFERENCE

Workshops: 28 October 2019 Conference & Exhibition: 29 - 31 October 2019 Melbourne Convention & Exhibition Centre Founding Partners

F E AT U R E D

The future of jobs in mining Australia’s minerals industry is an exciting and vibrant sector, with diverse jobs and opportunities to attract a wide array of talent.

nvesting in our people, skills and innovation is critical to delivering a more globally competitive minerals sector that provides fulfilling careers in highly paid, highly skilled jobs. There is an increasing number of job opportunities on offer in our world-leading minerals industry. These include cuttingedge roles in innovative tech-driven fields, such as data science and mechatronic engineering, as well as new opportunities for the existing workforce to upskill and take on new roles. Research for the Minerals Council of Australia by consulting firm Ernst & Young (EY) found that 77 per cent of jobs in the Australian mining sector will be enhanced or redesigned within the next five years due to technological advancements. The research found that Australian education and training systems need to be modernised to deliver higher-certification and fit-for-purpose degrees. New technology and innovative practices will enhance the performance and productivity of 42 per cent of Australian

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mining jobs, with a further 35 per cent of occupations being redesigned and upskilled, which will lead to more valuable employment opportunities. EY’s study also identified that Australia’s education and training system needs to be modernised by offering improved course structures, and enhanced movement between universities and the vocational education sectors. Future university degrees will need to have a mix of the latest scientific, technical and trade skills, along with soft skills like collaboration, team building, communication and creativity. A decade-long investment by industry and government in general skills that incorporates mathematics, data analytics, computing and change management will boost productivity in the minerals sector. Traditional jobs are also increasingly being augmented with new technology. For example, a shot firer working on a drilling team will have the opportunity in Australia’s future minerals workforce to use drone technology to monitor automated rigs.

Mining engineers are already upskilling to include areas such as change management and communication. Our mining operations are already more data driven, requiring programming and analytical skills. Future working arrangements will also be more flexible, providing greater incentives for prospective applicants from diverse backgrounds to consider a career in the mining industry. The composition of the current and future minerals workforce will continue to evolve, with the increasing need for technical skills in data analytics, robotics and artificial intelligence. There will also be greater collaboration, creativity and social science skills to deal with changing community expectations. As our industry continues to evolve to meet the needs of a rapidly changing world, one thing remains constant: our need for the best people who want diverse and challenging careers that last a lifetime.

‘Cattle on the rehab land are performing as well, if not better, than the cattle on the non-mined land.’

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ZE I NAT CURED F

Consolidated Zinc edges closer to goals After commencing production at its Plomosas zinc mine in Mexico last year, Consolidated Zinc (ASX: CZL) is moving closer to achieving its production goals.

ts plans to produce 2000 tonnes of zinc per month from the Plomosas mine are on track, after the company switched its focus to the semi oxide mineralisation (SOX) available in the mine. The SOX material contains nearly double the grade of mineralisation at Tres Amigos, where Consolidated Zinc mined previously. The SOX area is also wider and easier to access with mechanised mining methods and can be mined at a lower cost, which is a boon for the company. Consolidated Zinc exceeded the 7000-tonne-per-month mark in May 2019, demonstrating that it is not too far off achieving its 2019 production goal. Having signed a new processing agreement with the nearby Aldama Plant, Consolidated Zinc is now busy de-bottlenecking Aldama to boost output. It has already doubled processing capacity from 100 tonnes per day to 200 tonnes per day, with a goal of hitting 300 tonnes per day following the installation and commissioning of additional floatation banks. By the end of June 2019, Consolidated Zinc had also created a 6500-tonne-plus

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stockpile of material at Plomosas, awaiting transport to the processing plant. Consolidated Zinc’s Managing Director, Brad Marwood, who joined the company in early 2018 as CEO before being appointed to the Board in February 2019, has plenty of experience ironing out production teething problems, having overseen mining operations all around the globe. ‘There have been some challenges at Plomosas as the ore body was not wellknown when we started production, but we now have a better understanding,’ Marwood says. SOX material processed at Aldama to date averaged 17.5 per cent zinc, 11.2 per cent lead and 62.2 grams per tonne silver, and resulted in a high-quality concentrate, free of deleterious elements to smelting and refining. ‘The Aldama concentrator was proven to perform and operate efficiently during June, and with the establishment of steady state operations, Consolidated Zinc is expecting solid cash flows from the Plomosas mine in the third quarter of CY 2019,’ Marwood says.

Consolidated Zinc is also eyeing a boost to its resource base with further exploration at Plomosas. ‘We want to create value for our shareholders, and we believe we can do that by defining more than 500,000 tonnes of zinc-equivalent mineralisation at Plomosas within the next two years,’ Marwood says. The company believes that Plomosas, which produced more than two million tonnes grading 22 per cent zinc and lead during 30 years of mining last century, has an immediate exploration upside with a seven-kilometre-long unexplored mine sequence held within its current leases. It wants to get to work mapping and drilling this ground and is planning for a resource update in 2020. ‘Plomosas is one of the world’s highest-grade, lowest-cost mines and is in a region that is well-mineralised but under-explored. We believe there is further potential for discoveries, and we are hoping to fund more exploration across our landholding over the next few months,’ Marwood says.

Consolidated Zinc (ASX: CZL) is operating one of the world's highest-grade zinc mines at Plomosas in Chihuahua, Mexico Commenced mining at Plomosas in September 2018 and ramping up to 10,000 tonnes per month of zinc production in 2019 Plomosas has immediate exploration upside with an unexplored 7km mine sequence within CZL's mining leases

Level 13, 37 St Georges Terrace, Perth, WA, Australia 6000 T: +61 8 9322 3406

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T RI N AN M E SDPEOVRET, L OMPAMCEHNI TN E R Y A N D E A R T H M O V I N G E Q U I P M E N T

Aggreko focuses on hybrid

power solutions

Aggreko’s hybrid solutions are becoming the pillar of change within the mining industry when it comes to reducing carbon footprints.

s energy prices continue to increase, so does the cost of running a mine. Operations continue to become more remote and intense than ever before, so it’s important for companies to find ways to cut costs and improve productivity at the same time. It’s not uncommon for companies to turn their attention towards fueland power-generation costs in order to figure out ways to reduce them. Enter: Aggreko’s hybrid solutions. Aggreko has been working in partnership with mining companies to develop a futureproof energy source that is also a worthwhile investment for onsite power providers. Hybrid power generation for onsite mining operations are proving to be more effective as the technology continues to be developed. Sometimes grid infrastructure is not available in remote areas – or supply is insufficient – so having another power source is essential. Along with this, volatile commodity prices make it extremely difficult for mining companies to plan income and therefore expenditure. Mining companies must

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adapt to the changing landscape and offer portable, modular solutions that can provide the reliability that longerterm solutions or the grid can supply. Aggreko’s hybrid solution prioritises the alternate power source when in use, and the diesel or gas generator kicks in when intermittence occurs. This means that the thermal operators only work at much lower loads, massively reducing fuel costs, as well as operational and maintenance requirements. ‘This unique energy package combines solar, thermal and battery storage that’s seamlessly integrated and managed by our powerful software platform – guaranteeing system availability and optimising its existing thermal assets’ life,’ says Aggreko AusPac Managing Director George Whyte. ‘Integrating these hybrid power solutions to existing thermal power generation systems can heavily cut mining companies’ energy costs.’ Where a mine would previously run on 80 per cent diesel power, for example, this could eventually be reduced down as far as 20 per cent. As an example, Gold Fields’ Granny Smith gold mine in

Laverton, Western Australia, is using a combination of gas, solar and battery storage as a way to reduce its carbon footprint and use renewables for at least 20 per cent of the mine’s life. Aggreko was awarded the contract to integrate 7.3 megawatts of solar power generation and two megawatts/one megawatt per hour of battery storage with the existing gas supply as a hybrid power station. ‘Using the latest hybrid energy technologies will enable Gold Fields to significantly lower its total cost of energy and reduce its carbon footprint, while demonstrating its ongoing commitment to both environmental sustainability and innovation within its operations,’ says Whyte. ‘All of this without compromising the reliability of the power supply and productivity of the mine.’ Not only does Aggreko have the largest fleet of generators in the world, but it also has over 50 years’ experience operating microgrids across the world successfully. For more information, please visit www.aggreko.com.au.

No matter what your mining challenge, we power through it Wherever your mine is located, you can rely on Aggreko to provide reliable power and temperature control solutions, quickly and affordably. With over 50 years’ experience and the world’s largest rental fleet, we provide turn-key services that grow with your mine throughout its entire life-cycle. Whether you need a 15 kVA generator during maintenance, or a 20 MW power package to run an entire mining facility, we will work with you to deliver tailored solutions that match your requirements, wherever and whenever they are needed.

Call us to learn more 1300 929 031

MINE DE VELOPMENT

Human-systems integration for the effective implementation of automation BY PROFESSOR ROBIN BURGESS-LIMER ICK, SUSTAINABLE MINER ALS INSTITUTE, THE UNIVER SIT Y OF QUEENSLAND

n addition to improving productivity, increased automation has considerable potential to reduce safety and health risks by removing people from hazardous situations. Automation, however, does not remove people from the system – it just changes the tasks that they undertake. For the system to function safely and effectively, these new tasks must be designed with human abilities and limitations taken into account. The choice of which functions should be automated requires consideration of the capabilities and limitations of humans. People are good at perceiving patterns; they adapt, improvise and accommodate quickly to unexpected variability. People are not good at precise repetition of actions or vigilant tasks. System design

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requires more than allocating functions to person and machine; rather, the challenge is to identify how the operators, supervisors, maintainers and automated components can collaborate effectively to perform the functions required. The impact of automation on current and potential future employees also requires examination to ensure that the change is managed for optimal safety and health outcomes. These objectives may be achieved through using human-systems integration (HSI) processes during system design and introduction. HSI refers to a set of systems engineering processes, originally developed by the US defence industry, to ensure that human-related issues are adequately considered during system planning, design, development and evaluation.

AUSTRALIAN RESOURCES & INVESTMENT

HSI is a continuous process that should begin during the definition of requirements for any automation project, continue throughout system design, and throughout commissioning and operation in order to verify that safety goals have been achieved There are six core domains of HSI that are relevant to the introduction of automation in the resources sector: 1. staffing 2. personnel 3. training 4. human-factors engineering 5. safety 6. occupational health. Staffing relates to decisions regarding the number, and characteristics, of roles that will be required to operate and maintain the joint human-automation system. The personnel and training domains concern, respectively, the related issues of the characteristics of the personnel who will be selected to fill those roles; the extent and methods of training; the competency assessment involved in preparing personnel to obtain and maintain the competencies required for safe operation; and the maintenance of the joint human-automation system. Rather than being decreased, training requirements for operators interacting with highly autonomous systems are likely to be increased to ensure that the operation of the automation is fully understood. For example, automated-system controllers need to understand system hazards and logic, the reasons behind safety-critical procedures, potential results of overriding controls, and how to interpret feedback. Skills for solving problems and dealing with unanticipated events are also required, while emergency procedures must be overlearned and frequently practiced. The design of training should encompass a structured process, incorporating a training-needs analysis, leading to the definition of the functional specifications; an iterative design component incorporating usability testing; and evaluation. The use of simulation is a promising method for allowing trainees to be exposed to rare events, and for competency assessment. Human-factors engineering encompasses the consideration of human capabilities and limitations in system design, development, and evaluation. In the automation context, this is particularly important in the design of interfaces between people and automated components. Methods employed in human-factors engineering include task analyses and human performance measures (e.g. workload, usability and situation awareness), as well as participatory human-centred design techniques. The safety domain includes the consideration of the safety risks – such as those addressed in ISO 17757:2017 – that are associated with autonomous earthmoving equipment and mining machines, and that are outlined in the Department of Mines and Petroleum’s Safe Mobile Autonomous Mining in Western Australia Code Of Practice. Relevant

methods include traditional risk analysis and evaluation techniques, such as hazard and operability studies (HAZOP), layers of protection analysis (LOPA), failure modes and effects analysis (FMEA), and functional safety analyses and systems-theoretic process analysis (STPA). STPA, in particular, may be useful for the analysis of complex systems involving automated components, because both software and human operators are included in the analysis. STPA is a proactive analysis method that identifies potential unsafe conditions during development, and avoids the simplistic linear causality assumptions inherent in HAZOP, LOPA and FMEA. Safety is treated as a control problem, rather than a failure prevention problem, and unsafe conditions are viewed as a consequence of complex dynamic processes that may operate concurrently. STPA also includes consideration of the wider dynamic and organisational context in which the automated system is situated. The health domain encompasses the use of risk-management techniques, and task-based risk assessment in particular, to ensure that the system design minimises the risks of adverse health consequences to system operators and maintainers, and, indeed, anyone else potentially impacted by the system activities. These analyses should encompass all operational and maintenance activities associated with the autonomous component or system. One health issue associated with the introduction of autonomous systems to mines and quarries is the potential impact on the mental health of control room operators tasked with interacting with autonomous systems. Stress associated with high or low cognitive workloads, potentially combined with reduced social interactions and low control of workload, and/or production pressures, may lead to adverse mental health consequences. An overall focus on HSI includes consideration of interactions and potential trade-offs between decisions made in different domains. For example, decisions regarding automation and interface complexity may influence personnel characteristics and training requirements, as well as the anticipated number of people required for system operation and maintenance. Systems engineering involves three stages: analysis, design and development, and testing and evaluation. HSI incorporates human-centred analysis, design and evaluation within the broader systems-engineering process. That is, HSI is a continuous process that should begin during the definition of requirements for any automation project, continue throughout system design, and throughout commissioning and operation in order to verify that safety goals have been achieved. Of course, a complete system safety program must extend beyond the system design and commissioning, and continue for the entire life of the system.

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MINE DE VELOPMENT

Sandvik announces developments to interoperability platform for automation Sandvik Mining and Rock Technology recently announced it is developing an interoperable platform for its world-leading automation system for underground loaders and trucks – AutoMine®.

hese changes won’t just be applicable for Sandvik equipment owners. ‘As a world leader in underground automation, we have a responsibility to make this game-changing technology easier for the mining industry to implement,’ says Patrick Murphy, President of Rock Drills and Technologies at Sandvik Mining and Rock Technology. ‘While we feel that customers will achieve the highest level of performance when they purchase Sandvik equipment, we recognise the need to unlock automation’s full potential for all equipment, regardless of the manufacturer. Customers with mixed fleets will have the full power of AutoMine® behind them as well.’ Sandvik Mining and Rock Technology released its interoperability policy in April 2018, outlining the principles by which Sandvik systems can communicate within a digital ecosystem, including data accessibility, fleet data compatibility, data rights and control, and data privacy. The addition of AutoMine® for underground loaders and trucks to this policy is the next step in Sandvik’s continued journey to set the industry standard for mine automation and digitalisation. ‘In their desire for the optimal safety, productivity and profitability of their mining operations, our customers are looking to digital technologies to enable optimised processes,’ says Murphy. Sandvik’s digital offering ranges from systems for autonomous equipment and features, such as the AutoMine® platform, to systems for process management and optimisation, and tailored data analytics solutions. Sandvik understands the essential role its systems will play within the larger digital ecosystem at each of its customers’ sites; Sandvik systems will

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be able to interface and exchange data with other systems around the operation, ensuring that the value of the data can be unlocked. ‘Our customers have naturally asked that they can access equipment health and productivity data from the solutions that we provide them,’ Murphy says. ‘While interfaces are not available for all equipment models today, these will be progressively rolled out as new products come to market; however, today there are already over 1000 machines connected to our ecommerce platform, My Sandvik, as well as the more advanced OptiMine® mining process optimisation platform.’ With the rapid development of interoperable platforms and customer uptake comes the question of data security and ownership, particularly when customers choose Sandvik to process data on their behalf, which is often commercially sensitive.

‘The data interoperability policy outlines how data can be accessed, depending on the customer’s fleet (i.e. at equipment level, at server level on site or within the cloud) and, of course, how it is protected,’ says Murphy. The Sandvik data interoperability policy is designed to ensure the highest levels of data privacy and security, while ensuring that the customer retains all rights to information related to the use and application of their equipment. The policy has been designed with the General Data Protection Regulation (GDPR) in mind. ‘Sandvik has been leading the market in automation for decades, with more than 400 pieces of equipment using AutoMine® around the world without an injury,’ says Murphy. ‘As more customers embark on their digital journeys, interoperability will be a requirement. We are proud to leverage our experience to further digitalisation in the mining industry.’

VISIT US AT IMARC BOOTH G15

YOUR INTEROPERABILITY PARTNER Sandvik is partnering with other industry leaders to create the most advanced and innovative digital solutions for your operation. Visit us at IMARC 2019 and immerse yourself in Sandvik’s interactive digital ecosystem. Hear from our partners at the Sandvik Collaboration Corner at our stand to learn how our industry partnerships and digital capabilities can revolutionise your operation. For the first time at IMARC, we will also introduce our minerals processing offering, including a presentation on de-dusting solutions in plant operations in the newly-introduced Minerals Processing stream. Visit us at Booth G15 to learn more about Sandvik’s leading range of products, services and automated solutions for the mining, construction and quarrying industries. ROCKTECHNOLOGY.SANDVIK

D IETVEEC LO PS MUERNET & R E H A B I L I TAT I O N MINE S LO

Post-mining landscapes that continue to benefit communities Australian mining companies understand that land rehabilitation is fundamental to responsible mining.

he mining industry recognises its responsibility as a temporary custodian of land to contribute to sustainable land-use outcomes. Mining rehabilitation is critical to the ongoing community acceptance of mining. That’s why the Minerals Council of Australia (MCA) is featuring a great story on rehabilitation, mining and farming working together in the industry campaign, ‘There’s more to Australian mining’. The campaign was filmed at New Hope’s New Acland mine in Queensland’s Darling Downs, where industry-leading environmental credentials were formally ratified through Queensland Government certification of 349 hectares of progressively rehabilitated mined land. New Hope has been progressively rehabilitating New Acland Mine since operations began in 2002, with rehabilitation commencing immediately behind mining operations. Five years of scientific cattle grazing trials conducted on the rehabilitated land indicate that cattle on mined land perform as well or better than cattle on unmined land. New Acland benefits from one of Australia’s most ambitious and practical land management programs, led by the Acland Pastoral Company (APC). Established by New Hope in 2006, APC provides a progressive rehabilitation program to return mined land to agricultural and conservation uses while contributing to the region’s agribusiness industry. To date, about 400 hectares of land has been rehabilitated. Innovative cattle grazing trials and a local tree species planting program are also in progress. Newmont took ownership of the decommissioned Woodcutters lead-zinc mine in the Northern Territory as part of its 2002 acquisition of Normandy. The company has continued decommissioning, and rehabilitation and monitoring activities at the site in partnership with the area’s traditional owners, the Kungarakan and Warai people. Work is guided by the Woodcutters Agreement, which details local employment, training and stakeholder

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commitments. Newmont’s aim is to return the land to traditional owners when agreed closure criteria and objectives are met. Peabody has progressed rehabilitation of its Wilkie Creek site in Queensland’s Surat Basin following the completion of coal mining in 2013 with most rehabilitation now complete. This includes backfilling of open-cut voids, reshaping of dumps and undergoing demolition and

associated works. Included within the final landform planning process are paddocks and cattle watering systems to support the end land use of grazing. Extensive community engagement continues to inform the planning for postmine land use with grazing trials, including more than 50 cattle on a rehabilitated backfilled pit, delivering positive results for neighbouring graziers.

AUSTRALIAN RESOURCES & INVESTMENT

At Anglo American’s Dawson Mine, the company pioneered the use of blasting techniques to successfully reshape void highwall into final landform position in 2013. Pre- and post-blast surveying was undertaken to provide accurate estimates of how much reshaping and material was required for final landform. The area is currently being monitored for plant growth and species richness. Monitoring will continue every three years for progression to a stable state, and the area is expected to be ready for grazing activities in around four to five years. At the time, very few trials had been conducted using this sophisticated and innovative technique. Across the Australian minerals sector, planning for rehabilitation takes place long before mining commences, and rehabilitation is undertaken progressively during the life of a mine wherever practical. The industry’s approach to land rehabilitation has improved significantly over past decades – an evolution driven by sustained investment in land rehabilitation techniques, evolving corporate values, community expectations and government regulation. While much progress has been made, the industry is continuing its efforts to improve rehabilitation methods to ensure mining’s compatibility with current and future land uses.

During development and operation, mines bring significant benefits to regional areas through economic development, capacity building and infrastructure. Mining operations, however, are finite in nature and mining is only one of many alternative land uses over time. The industry aims for previously mined land to be made available for farming and other future economic activity, conservation or community use. Rehabilitation methods and leading practice techniques have been driven by sustained and substantial company investment in research to strengthen the science underpinning rehabilitation methods. Australian mining companies have significant in-house expertise in rehabilitation and closure planning. Where necessary, nationally and internationally recognised specialists are also engaged to review and provide input into rehabilitation and closure programs. These efforts ensure that the community benefits extend beyond taxes, royalties, jobs and investment during operation to include a post-mining landscape that has ongoing social, economic or conservation values. Costs also include financial assurance (security bonds), which provide a monetary safeguard to protect government from

incurring unfunded liabilities should a company be unable to meet its rehabilitation obligations. The provision of a security bond does not remove a company’s obligation to rehabilitate land. Mine rehabilitation is highly regulated, better implemented and more accountable than ever before. Most abandoned mine sites were developed long before modern mining regulation. This does not reduce the importance of addressing the abandoned mine issue. Government efforts should be pragmatic and focus on those sites that present the highest risks to community health and safety, and the environment. The minerals industry has been an active contributor on the issue of addressing abandoned mines, and in recent years, the MCA has also sponsored and participated in forums on abandoned mines. The minerals industry wants to continue working cooperatively with governments and the community to manage or minimise the environmental, social and economic impacts of abandoned mines. The MCA is proud to highlight examples of successful mine rehabilitation on its website at minerals.org.au/minerehabilitation-case-studies.

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M I N E S I T E C L O S U R E & R E H A B I L I TAT I O N

LIFE AFTER MINING: LAND REHABILITATION BY STEPHEN GALILEE, CEO, NSW MINER ALS COUNCIL

ehabilitation could be described as the hidden face of mining. In fact, many people in New South Wales have probably driven past former mine sites without even knowing it. That’s because the aim of good rehabilitation is to make formerly mined land look like it has never been mined at all. Mining operations in New South Wales use less than 0.1 per cent of the state’s land; however, the industry recognises that the land used for mining activity must be returned to a condition that meets the New South Wales Government’s strict rehabilitation standards. Rehabilitation involves rebuilding or regenerating mined land to a safe and stable landform. In some cases, mature rehabilitated land may actually be in better condition than neighbouring unmined land, due to the scientific decisions made by mining rehabilitation experts. This includes the land shape, addition of fertile topsoils, minerals, fertilisers, plant species and ongoing monitoring. Rehabilitation techniques vary from mine to mine, depending on the individual site’s needs and what is planned for the land’s postmining use. Rehabilitation can take a variety of forms. For example, the land can be returned to bushland or be developed as grazing land for agriculture after mining has finished. Thousands of hectares of rehabilitated land are spread across the Upper Hunter, and much of it is indistinguishable from surrounding areas of land that have never been mined. Rehabilitation experts in the mining industry take great care in selecting species of native trees and grasses to plant that suit the Upper Hunter’s ecosystem, and that are in accordance with the mine’s agreed final landform and use.

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About 36 per cent of all the land that has been, or is currently being, mined in the Upper Hunter has been rehabilitated. The number grows every year as rehabilitation progressively follows mining operations. This progressive rehabilitation occurs when rehabilitation is undertaken during mining operations. As mining activity moves into new areas, the recently mined land is progressively rehabilitated, often within metres of the active mining operation. No matter what technique is used, if quality rehabilitation is undertaken, the community can receive additional benefits, which include employment, new business ventures, and the potential provision and use of new assets and landscapes when mining has finished. DIALOGUE GRAZING TRIALS The Upper Hunter Mining Dialogue (the Dialogue) has studied the sustainability of rehabilitated land to be used as commercially productive pasture after mining has ended. The Dialogue was established in 2011 as a partnership between the mining industry, state and local governments, and the local community, and seeks to work together to reduce the impacts of mining in the Upper Hunter, while maximising the benefits. A key project undertaken by the Dialogue has been the Cattle Grazing Study. This involved grazing cattle on paddocks that had been rehabilitated after mining and comparing the results to cattle grazed on nearby paddocks that had never been mined. The study was initiated by the Dialogue in response to stakeholder questions regarding the sustainability and profitability of rehabilitated mine land being returned to pasture, and to assess the potential for

AUSTRALIAN RESOURCES & INVESTMENT

Yancoal cattle grazing trial

heavy-metal residues contaminating soil, pasture and livestock. The study was designed and monitored by the New South Wales Department of Primary Industries, in collaboration with the Dialogue’s Joint Land Management Working Group, with funding support from the Australian Coal Association Research Program (ACARP). Ongoing guidance was provided by an advisory committee comprising representatives from agricultural groups, local farmers, environmental groups, state and local government, and the mining industry. Cattle were grazed in two stages on unmined and rehabilitated paddocks at the Hunter Valley Operations (HVO) mine near Singleton, and at BHP’s Mount Arthur Coal mine outside of Muswellbrook. In both sets of trials, the cattle that were grazing on rehabilitated sites gained more weight and had better fat cover than the cattle that were grazing on the adjacent unmined sites. These advantages helped the cattle on the rehabilitated sites to gain a much higher return on investment compared to their analogue counterparts. Importantly, all results were independently monitored and compared, and involved regular monitoring of the cattle’s health through blood tests, as well as regular soil and pasture monitoring. This provided valuable information on the growth rates and feed quality of the rehabilitated land. No heavy-metal toxicities were identified during the study. There was also no change in ground cover and no increase in weeds, and there was a higher amount of diverse pasture species present on the rehabilitated sites than expected. The successful results of the grazing study are important, as they demonstrate that cattle grazing on formerly mined land can be sustainable and profitable in the long term after mining is completed, provided that planning is undertaken to rehabilitate the land for grazing purposes. O T H E R P R OJ E C T S In addition to the grazing study, the Dialogue has also investigated the potential beneficial uses of final voids after mining. This included a review of post-mining land uses domestically and internationally. This research identified a range of potential uses of voids that could be explored in different mining communities, including: agriculture aquaculture entertainment facilities forestry and horticulture housing

Drill core

industrial use power generation recreation and tourism waste management water supply and irrigation wildlife habitat. Another important project recently endorsed by the Dialogue seeks to examine the potential use of rehabilitated mined lands, including mapping out key considerations, time frames and challenges to mining companies in the transition to final land uses, which could include commercial activities rather than a return to native bushland. Recognising the future challenges that rehabilitation and mine closure pose for the mining industry, the NSW Minerals Council has also established an industry working group focused on achieving a coordinated industry approach towards legislation, policies and procedures relevant to mine rehabilitation and closure. A key outcome of the working group has been the exchange of key learnings and rehabilitation information between industry participants via a series of site rehabilitation tours across New South Wales. Quality rehabilitation projects are also regularly showcased through the NSW Minerals Council’s annual environmental excellence awards. These awards celebrate the best outcomes and most innovative solutions that the New South Wales mining industry continues to deliver in managing the environment and ensuring that the land used by mining operations can have a long and productive post-mining use for future generations. For more information, visit nswmining.com.au or miningdialogue.com.au.

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D IETVEEC LO PS MUERNET & R E H A B I L I TAT I O N MINE S LO

Sustainable closures BY CIAR AN LAVERY, ARCADIS

While all mining plans address mine closure with an appropriate budget to meet environmental objectives, there are mostly insufficient funds in escrow accounts to provide a solution that will meet all stakeholders’ goals.

umerous mines in Australia are either in care and maintenance, or in closure planning. This has led to large numbers of derelict mines, where principals have been unable to reinstate mines to ensure environmental sustainability, as well as to thousands of mines in mine closure where ongoing monitoring and maintenance costs are causing a national burden. There is insufficient state and federal funding to promote Australia’s need for environmental integrity. In fact, the funding for these derelict mines is so limited that the only possible improvement is ensuring basic safety and preventing death. So, how can the contaminated site and remediation liabilities be investigated and managed in a sustainable manner, making them achievable and deliverable? AG R E E I N G O N T H E E N D P O I N T

Miners often inherit arid-zone mining areas with contamination levels of one

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million parts per million (the ore body), and should not be required to provide a pristine environment post-mining. The focus needs to be on leaving a mine site without any further degradation to environmental values. The development of appropriate site-specific assessment criteria to facilitate investigation is integral to determining appropriate risk levels. Further, development of realistic clean-up criteria is key to achievable, reasonable and purposeful remediation. The closure strategy must be firmly focused on an agreed end point and determined before mining begins. This includes appropriate budget allocation for closure, along with solutions for when there is sufficient funding during mine operations in order to avoid a rearguard reaction and achieve stakeholders’ goals. Understanding and agreeing upon the appropriate clean-up level to be achieved for soil and groundwater avoids changing expectations and requirements

from stakeholders, ensuring basic environmental values within the bounds of the harsh environment, which the miners have inherited. THE TRIAD

In recent times, the large mining houses have favoured an innovative approach and a community of practice – the Triad process. The Triad is an enhanced systematic project management approach involving stakeholder engagement and dynamic work strategies, and designed to challenge previous assessment tools. Combined with innovation in sampling and analytical technology, the Triad favours rapid assessment tools that provide a large set of data using economic field tools to understand risk. These include: • X-ray fluorescence (XRF) to scan metals over large areas quickly • downhole geophysical logs, which provide data on groundwater

AUSTRALIAN RESOURCES & INVESTMENT

permeability and flow without expensive pumping tests • revegetation studies, which will potentially remove contaminants in soil to be uptaken by appropriate land species.

of their contaminated site liabilities. The available time frame is allowing for innovative long-term solutions, along with the opportunity for research and development options.

A RC A DIS C A SE ST UDIES

Western New South Wales coal mine (Hunter Valley, New South Wales) Current mine closure in the western coal fields of New South Wales has involved the ex-situ bioremediation of hydrocarbonimpacted soils, as well as stakeholder engagement to potentially fill the mine void with asbestos-impacted material. This strategy may save the client tens of millions of dollars, and represents a low-risk and sustainable alternative to moving asbestoscontaminated material to a landfill.

A major hard-rock mining smelter refinery and concentrator operation (Western Australia) This project utilised the Triad process by engaging with all stakeholders, including communities that may have been affected. A risk approach was adopted to ensure that high-priority risks were addressed. The analytical tools used to assess contamination relied on XRF and in-situ downhole profiling devices, which have enabled the characterisation of groundwater velocities and the potential impact to their party users outside the mine site. A mineral sands facility (Western Australia) This long-term mineral sands facility is approximately halfway through its expected life cycle. Numerous historical areas of potential environmental concern were identified, while the regulator (the Department of Water and Environmental Regulation) has also classified a number of areas as ‘potentially contaminated – investigation required’. Early development of a long-term contaminated site strategy, comprising progressive investigation and remediation, is being implemented at the site. This is allowing the site to identify significant problems and risks early, plan long-term solutions and budget for the management

S U S TA I N A B L E R E M E D I AT I O N SOLUTIONS FOR MINE CLOSUR E

A whole-of-life strategy, using innovative assessment tools, that also advocates sustainable assessment and remediation throughout the mine’s life cycle, allows operators to develop their approach in a local, legal, policy, socio-economic and environmental context. The assessment tools offered in ‘Soil quality – sustainable remediation’ (ISO18504) provide a holistic measure to benchmark against the definition of sustainable remediation. Sustainable solutions include: • Conversion of open voids, which provides landfill opportunities at a great saving to state budgets. • Asbestos-containing materials and waste rock can be put into mine voids to save significant dollars spent dumping it into overcommitted landfills.

• Conversion of devastated land to a water resource capable of transforming the land use for agriculture and ecotourism. For example, sailing and rowing courses, as well as drought relief for the irrigation of pastures or crops. • Phytoremediation effectively pumps metals out of the soil. The efficacy often depends on favourable climatic conditions, and may not work in arid areas if there is not enough soil moisture to draw out the contaminants. • Long-term bioremediation facilities can help the progressive remediation of a range of contaminants. Shorter-term remediation projects to manage similar contaminants (e.g. volatiles) are often cost- and energy-intensive. Sustainable remediation, development and regeneration do not need to be an impenetrable barrier in order to ensure that the environment is protected from the often harsh pre-mining environment. Rather, the determination to adopt sustainability as a key driver for life cycle management (and closure) provides the opportunity to integrate the social, economic and environmental values in a measurable way to ensure successful outcomes. Ciaran Lavery has 13 years’ experience in the environmental science field, covering a range of associated technical disciplines, with a primary focus on strategic planning for site closure. This comprises contaminated land investigations and remediation, acid sulphate soil investigations, water and air quality monitoring, and contaminant spill response.

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M I N E S I T E C L O S U R E & R E H A B I L I TAT I O N

Mine the gap – the future of mine site rehabilitation in Australia BY DR ADA M CROSS, R ESEARCH FELLOW, ARC CENTR E FOR MINE SITE R ESTOR ATION, CURTIN UNIVER SIT Y

he recovery or repair of degraded ecosystems is becoming a major international focus, particularly after disturbances like mining. An estimated 6500 active mines operate across Australia1, with another 1000 in care and maintenance (including one for nearly 100 years), and more being approved each year.2 Mines impact upon significant areas of our country; the area disturbed by mining in Western Australia, for example, is at least 11,000 square kilometres3, which includes more than 20,000 hectares in the Pilbara alone. 4 Less than a third of this area is considered to be ‘under rehabilitation’3, however, and a large and growing gap has been identified between regulatory, community and traditional owner expectations, and the capacity of companies to deliver appropriate ecological recovery.5,6 Ecological recovery is the process of repairing degraded land through a variety of approaches based on different goals and expectations for the end land use.7 Confusion around terminology and practices has resulted in uncertainty for industry and environmental regulators8, with ‘rehabilitation’ – where the goal is to reinstate a degree of ecosystem functionality to a degraded landscape, which does not necessarily reflect native ecosystems – being used as a generic term for many years.8 Where native ecosystems have been removed for mining, however, the expectation on industry is to return areas to representative, selfsustaining native vegetation that represents ecological restoration. Ecological restoration is the process of assisting the recovery of

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an ecosystem that has been degraded, damaged or destroyed7 – a process that is crucially underpinned by some form of a reference ecosystem to guide recovery actions. Ecological restoration is challenging. It is not just a simple gardening exercise 6, and although both international and national standards exist for its practice7, variation in factors such as climate conditions, local vegetation and soils – even between mines in the same region – means that it must be undertaken as a knowledgedriven process.9 There are few regions of the world where this is more evident than in Australia, where reinstating biodiversity that has adapted to the specific conditions of our ancient and biodiverse landscape often requires significant study, careful management, and long-term investment. Although recent years have seen an increasing effort by some in the mining industry to achieve better environmental outcomes10, it is clear that the science-practice gap remains a significant impediment to industry achieving the standards expected of them by stakeholders. In an attempt to close the science-practice gap, leading research institutes, such as the Centre for Mine Site Restoration (CMSR, the $6.7-million Industrial Transformation and Training Research Centre funded by the Australian Research Council and based at Curtin University), have established models of industrydriven and on-demand research to develop robust restoration approaches and technologies that are relevant and applicable to any region.

AUSTRALIAN RESOURCES & INVESTMENT

Ensuring that the cost-effective restoration of resilient, native ecosystems can be achieved at a landscape scale requires a high level of collaboration between industry and science. For example, the CMSR represents a partnership between Curtin University, and research groups at the University of Western Australia and Kings Park Science, peak national restoration body the Society for Ecological Restoration Australasia and mining industry partners. The CMSR, along with national bodies, is building a knowledge hub for post-mining restoration that will ensure that the industry has access to timely and proven approaches. Key developments so far include the following: Developing better tools for mine-closure planning, including the recently published ʻA framework for developing mine-site completion criteria in Western Australiaʼ11, developed by the CMSR with the Western Australian Biodiversity Science Institute, which provides industry with clear guidelines for effective mine-closure planning. Improving seed-use planning, and the sourcing, enhancement and delivery of seeds to site. Seed availability and quality is one of the most significant impediments to repairing degraded landscapes at scale. Even conservative estimates indicate that many thousands of tonnes of native seeds will be required to re-establish vegetation across the footprint of land affected by mining in Australia, and these must be sourced without placing remnant natural ecosystems under greater pressure.12 Innovations are needed in translating agribusiness models of effective seed use that include developing sustainable native seed farms12, complemented by developing scalable, economical technologies to improve seed germination outcomes and the

delivery of seeds to ensure that industry has the right seed, at the right place, at the right time. Understanding the impact of mined material characterisation on native communities. Mined materials provide conditions that differ starkly from natural soils, which represent ecologically challenging conditions for the establishment of native plant communities.9,13 Innovations are underway that can turn mine wastes into a viable growth medium. Optimising tools for monitoring ecosystem development and restoration trajectories to ensure that industry can confidently plan for, and predict, success at early stages using reliable and accurate whole-of-ecosystem approaches. Ecosystems are complex, and overlooking components such as fauna can jeopardise returning resilient communities in supporting diverse plant and animal assemblages.14 Novel approaches, such as the use of environmental DNA15 and unmanned drones16 to analyse and predict ecological recovery, represent promising methods for reducing costs while improving the speed and accuracy of restoration monitoring. If Australia is to leave a positive environmental legacy for future generations, closer engagement between industry, science, regulators and stakeholders is needed for sustainable mine closure to be achieved. We need to train a generation of restoration professionals to be able to apply analytical and field skills anywhere in the world, and value-add to post-mining landscapes to ensure that in maximising environmental, social and cultural outcomes, we also develop new employment pathways that build engagement with traditional owners to provide new opportunities for connecting communities with country.

References: 1. http://minedexext.dmp.wa.gov. au/minedex/external/common/ appMain.jsp. 2. http://www.tai.org.au/content/ dark-side-boom. 3. http://www.dmp.wa.gov. au/Environment/MiningRehabilitation-Fund-MRF-4906. aspx. 4. Merritt & Dixon (2011) Science 332:424-425. 5. Lam, Erskine & Fletcher (2015) Ecological Management & Restoration 16:186-195. 6. Stevens & Dixon (2017) Environmental Science & Policy 72:52-54. 7. McDonald et al. (2016) Society for Ecological Restoration, Washington. 8. Cross, Stevens & Dixon (2017) Plant and Soil 421:1-5. 9. Cross et al. (2018) Plant and Soil (In Press) https://doi.org/10.1007/ s11104-018-3876-2. 10. Cross et al. (2018) Environmental Earth Sciences 77:256. 11. Young et al. (2019). Western Australian Biodiversity Science Institute, Perth. 12. Nevill, Cross & Dixon (2018) Current Biology 28:R1378-R1379. 13. Cross et al. (2019). Plant and Soil (In Press) https://doi. org/10.1007/s11104-019-04021-0. 14. Cross et al. (2019). Pacific Conservation Biology (In Press) https://doi.org/10.1071/PC18079. 15. Fernandes et al. (2018). Restoration ecology 26:1098-1107. 16. Buters, Belton & Cross (2019). Drones (Published online).

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ENVIRONMENT

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AUSTRALIAN RESOURCES & INVESTMENT

THE IMPORTANCE OF WATER IN MINING BY CHESTER E EUBE BAR ING, SENIOR INTELLIGENCE ANALYST, INTELLIGENCE PARTNER S; AUSTR ALIAN WATER ASSOCIATION, SPECIALIST NETWOR K COM MITTEE FOR WATER IN INDUSTRY

ater is a significant element across industry and the community. It plays a strategically important role in the Australian economy and the mining industry. Throughout more than 200 years of existence, the Australian mining industry has gained in-depth experience in the mining of minerals, including nickel, copper, bauxite, gold, silver and other rare earth materials. Increasing demand for growth in mining has elevated the need for water conservation, which has required the adoption of innovative solutions through technology and science. WAT E R C O N S U M P T I O N I N M I N I N G T O DAY Earlier this year, the Minerals Council of Australia released a report titled ‘The next frontier: Australian mining policies’. The report provides an outlook on how the Australian mining industry engages in water consumption, and the ways in which it works towards low water use in industry. It was recorded by the Australia Bureau of Statistics that in 2015–2016, the mining industry contributed 3.7 per cent of Australia’s overall water consumption (down 0.2 per cent from the previous year). It has also been reported that the Australian mining industry has seen the highest increase in value for water use across all industries, including manufacturing and agriculture. WAT E R M A N AG E M E N T C H A L L E N G E S According to scientific research and predictions, by 2030 climate change and incremental population growth will decrease water availability and accessibility. These erratic effects are caused by inappropriate water usage that leads to water pollution, water contamination, drought and even soil erosion. Water is an integral substance in the mining industry, it is primarily used to process minerals through dust suppression and slurry transport. Inappropriate water use, especially in regard to water extraction in underground mining, can affect groundwater level stability, and can cause pollution in nearby rivers and other basins. These are the challenges that are currently being faced by the mining industry. I M P R OV I N G S U S TA I N A B L E WAT E R M A N AG E M E N T Sustainable water management is necessary within industry in order for water development goals to be met within mining operations. With proper training, water policies and responsible use of water equipment, sustainable water management is possible. In order to

achieve these goals, and to continue to strive towards effective water management, water conservation and data management, there are a number of strategies and techniques that can be adopted. Water stewardship strategy: This strategy will help to improve water management and build awareness around risks and opportunities regarding water scarcity levels and business stability. Water Information Management Solution (WIMS): This tool will help mining operations to privately store data on water levels, help to analyse water haziness and turbidity, and to use data in reporting, locating problems and solving issues. Groundwater and surface water management: This involves identifying the risks and possible causes of local flooding, planning preventive measures in susceptible areas, and creating awareness around early detection in order to reduce damage and water pollution for local water resources. Strategic partnerships with water and wastewater organisations: This is an effective way to promote and implement water efficiency programs for sustainable water in the mining industry through professional and strategic partnerships. Working towards the Sustainable Development Goals (SDGs) set by the United Nations (UN): Through partnership and involvement with government, the mining industry can stay on track and be proactive in its approach to achieving the UN’s Sustainable Development Goals. Engaging with the SDGs will also assist in extending operations in the long term. The Australian Water Association has a range of dedicated specialist network committees, one of which is the Water in Industry network. This network aims to assist people and industries in providing information on how to maximise and manage water resources in order to achieve a sustainable workplace, especially in the mining industry. As leaders in environmental stewardship, the network promotes best practices for adopting sustainable water use, and encourages research and development surrounding water use in industry. The network believes that these aims and goals towards the mining industry are the key to environmental change, and in working towards being efficient water users. Every day, our world is changing, and we have a responsibility to use our water resources sustainably. Without water, the mining industry could not exist, therefore, water is a substance that is integral to the Australian mining industry’s future and success.

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ENVIRONMENT

How’s our plant doing today? Three VEGA initiatives for secure and flexible process automation lead straight to Industry 4.0.

he term Industrial Internet of Things (IIoT) refers to networked machines or production facilities, including the associated measurement technology. Its most important advantages include the ability to react quickly to inefficient processes or problems, saving time, and using smart machine data to control production and operating processes,

as well as entire value chains, more efficiently. All this should be possible in near real time, with the help of intelligent monitoring and decision-making processes. That’s the theory, but what does the actual implementation look like from the perspective of a field-instrument manufacturer like VEGA? U S I N G T H E W H E E L I N A N E W WAY INSTEAD OF R EINVENTING IT

In the area of measuring and monitoring of level and pressure, VEGA is ready to meet the individual requirements of the process industry. ‘We are consistently modular. This is a big advantage because on this basis we can get started at any time,’ explains Product Manager Stefan Kaspar. ‘We don’t have to reinvent the wheel to meet our customers’ current requirements.’ VEGA relies on bridge technologies such as bluetooth. These are future-oriented, scalable solutions that can be integrated into existing systems. They can also provide new ones with a tailor-made basic security configuration that continues to grow with new capabilities. ‘It is important that users do not have to invest large sums up front, and that the solution can

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be seamlessly integrated into their existing systems without compromising their security,’ says Kaspar. W I R E L E S S I N T O T H E D I G I TA L T R A N S F O R M AT I O N

VEGA has a comprehensive offering of bluetooth technology that covers almost its entire sensor technology portfolio that uses a well thought-out, multistage concept. In this way, the company wants to react flexibly to different security requirements. Accordingly, the universal display and adjustment module PLICSCOM is available with or without bluetooth. In the bluetooth version, this function can be deactivated or reactivated at any time by a hardware switch. When used with multiple sensors, the radio function is optional. bluetooth is already securely encrypted at the interface level when using a PC, laptop, smartphone or tablet. In addition, sensor access via bluetooth is only possible with an access code. Wireless technology can also be applied to older devices from as far back as 2002, as PLICSCOM is backwardcompatible for the majority of VEGA sensors already in the field.

AUSTRALIAN RESOURCES & INVESTMENT

ENVIRONMENT

Twice as safe under pressure

EGADIF 85, a differential pressure transmitter developed with safety in mind, is VEGA’s new component for reliable, continuous control and monitoring of industrial processes. Its strengths lie not only in its functional safety, but also in the option of measuring differential and static pressure simultaneously with just one instrument. Housed in a compact single-chamber case, the transmitter is designed for economic efficiency and installation with low-space requirements. These features are flanked by particularly simple, intelligent operation, which is a major advantage in terms of error avoidance. VEGADIF 85 is now qualified and approved according to SIL-2 (SIL-3) for manufacturing processes that depend on certified components, simple, userfriendly operation and permanently transparent processes. UNAFFECTED BY STEA M

VEGADIF 85 uses differential pressure and a robust, universal measuring principle in many processes, especially for gases and steam. The pressure difference is determined by means of an orifice disc that narrows the flow in a pipe at a predetermined point. Flowing steam or gas builds up more pressure in front of the constriction point than behind it. The difference between the two values – before and after the restriction – can be used to deduce the quantity of gas that flows through. Differential pressure transmitters are characterised by their accuracy in measuring flow rates, even at pressures of only a few megabars. They also handle extreme temperatures easily. VEGA rounds out these advantages with a large number of available measuring ranges. Many different process fittings are available in conjunction with single- or double-sided chemical seals – denoted as CSS or CSB respectively. With this high-performing line of products, highly accurate fail-safe measurements can be realised even under the most challenging conditions. Detecting differential and static pressure with one instrument, VEGADIF 85 sensors are equipped with a second piezoresistive detector. They are the first transmitters of their kind that can measure both differential pressure and static pressure, and they can easily handle these two different measuring tasks in parallel. For example, they ensure a high degree of fail-safe pipelines by

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determining the dynamic pressure and the superimposed static pressure at the same time – a measuring task that has always required two separate pressure transmitters, until now. WHER E BLUETOOTH M A KES SENSE

Bluetooth is now available as an option for the new generation of differential pressure transmitters. Since it is part of the tried-and-trusted modular VEGA instrument platform plics®, it implements

safety precautions at various levels already proven in the field. These include current encryption modes at the interface level (i.e. via PC or smartphone) as well as the necessary access codes that protect the sensor from unauthorised access. Bluetooth is also something for older systems as the current display and adjustment PLICSCOM module is downward compatible for the majority of VEGA measuring instruments manufactured since 2002.

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GOLD

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AUSTRALIAN RESOURCES & INVESTMENT

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

‘If you don’t trust gold, do you trust the logic of taking a beautiful pine tree, worth about $4000–5000, cutting it up, turning it into pulp and then paper, putting some ink on it and then calling it $1 billion?’ – Kenneth J. Gerbino.

e’re reviewing interesting recent developments with respect to gold. According to the World Gold Council’s (WGC) midyear outlook, gold will likely shine over the next 6–12 months, as heightened risk meets easy money. Gold ranked as one of the best-performing assets through the first half of 2019, beaten only by stock markets – which have also been supported by the turn toward looser monetary policy – and oil. And if you combine gold’s gains through H1 2019 and Q4 2018, nothing beats it. While US stocks made significant gains in dollar terms over the first six months of the year, they actually lost values when priced in gold. Globally, central banks have clearly pivoted back toward easy money. The WGC projects that this turn, along with continued financial market uncertainty, will likely support gold investment demand and nudge prices generally upward. The WGC report offers a succinct summary of the 180-degree turn in monetary policy, noting that it happened rather rapidly. It also points out that the Federal Reserve (the Fed) doesn’t often act against market expectations.

‘Global monetary policy has shifted by 180 degrees. Less than a year ago, both Fed board members and US investors expected interest rates to continue to increase, at the very least through 2019. By December, the most likely outcome was for the Fed to remain on hold. Now, the market expects the Fed to cut rates two or three times before the end of the year. And while statements by board members, including Chairman Powell, are signalling a wait-and-see approach, the market has barely changed its forecast. The Fed may not do what the market asks, but it generally doesn’t like to surprise it either. In recent history, the Fed adjusted its funds rate in line with expectations whenever the market’s implied probability of such an outcome was 65 per cent or higher; the only notable exception was a rate cut announced during an unscheduled Federal Open Market Committee (FOMC) meeting in January 2008, when the global financial crisis began to unfold.’ The WGC report notes a number of significant risks in the market right now, including the potential long-term effects

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GOLD

of increased tariffs, tensions between the United States and Iran, uncertainty surrounding Brexit, and overvalued stock markets. Low interest rates are having the perverse effect of fuelling a decade-long stock market rally with only temporary pullbacks. This has pushed stock valuations to levels not seen since the dotcom bubble. Worryingly, in the event of a recession, central banks – including the Fed – may not be able to rely on cutting interest rates. Instead, they may need to use quantitative easing (QE) and, possibly, new non-traditional measures to reinvigorate the global economy. The WGC report also noted that a large portion of the world’s sovereign debt now carries negative real interest rates. As we highlighted in our previous commentary on gold, the current US economic expansion that began during June 2009 is set to become the longest in history. But it’s all the result of QE, or easy money, on a massive scale, which has had the nasty consequence of seeing US debt escalate at unprecedented levels. QE worked well in lifting asset prices, but was not so beneficial for the overall health of the US economy. QE was ultimately a massive ‘wealth transfer’ from the lower and middle classes to the rich, which has generated one of the most significant wealth gaps in US history, together with an asset bubble of historic proportions. In terms of overall borrowings, the US national debt passed $22 trillion for the first time earlier this year, and its manageability could have a big long-term impact on the US economy. At the same time, there are more immediate question marks over the longevity of the US stock market bull run, with various indicators suggesting that the expansion could turn into a contraction in the very near future – hence the desperate move by the Fed towards a likely rate cut. While we’ve seen the Fed funds rate increase from 0 per cent to 2.25–2.50 per cent over the last few years, these short-term interest rate levels are still extremely low by historical standards. But these modest interest rate increases have still managed to negatively impact the rate of US economic growth. How would the US economy cope if rates returned to anywhere near normal levels? Ultra-low borrowing rates is the only factor that has kept the US deficit from surging past $1 trillion annually.

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Figure 1. Gold v S&P500 Index

Which brings us back to gold, with the metal being the direct beneficiary of this stock market uncertainty. There is a strong inverse correlation between gold and the S&P – their respective bull cycles don’t occur at the same time. If the S&P is doing well, it’s likely that gold is stagnant or struggling to hold form. This is clearly reflected in Figure 1. Since August 2018, gold hasn’t looked back. With the Fed seemingly giving the signal that the next move in rates might be lower, there is likely anticipatory buying in gold occurring as declining real interest rates, declining economic growth and a declining stock market all make gold the go-to safe haven investment. The confluence of events is undeniable: M2 surging, economic growth slowing, inversion of the yield curve, real interest rates likely declining further as the prospects for a rate cut increase, high valuations in stocks, a concerning technical picture in the S&P, together with international trade and diplomatic tensions, have all resulted in gold making further strong gains. The conclusion to draw is that while there will be natural volatility in the gold market over the short term, the overall upward trend for the yellow metal remains intact, as investment and central bank demand remains robust. Accordingly, I’ve adjusted upwards my previous forecast trading range for gold for the balance of 2019 from $1250 to $1450.

GOLD

Spectrum Metals’ exploration yields results at Penny North Spectrum Metals’ pursuit of a high-grade gold exploration strategy at brownfield locations in Western Australia’s goldfields was rewarded in a big way in March with the Penny North discovery near Youanmi.

ocated 150 metres from the historic Penny West high-grade open pit, the discovery hole in Spectrum’s Phase I drilling program got pulses racing when an eight-metre intersection from 128 metres assayed an impressive 23.3 grams per tonne of gold. Spectrum Managing Director Paul Adams says that the property was acquired in December last year. Drilling first got underway in mid February and Spectrum has ‘essentially been drilling almost constantly ever since,’ Adams says. Immediate follow-up holes produced similarly impressive results, and Spectrum has since moved into a Phase II drilling program, and has completed preliminary metallurgical test work on composites of drill chips from the high-grade intersections. Penny West and Penny North are certainly good addresses to be looking for high-grade gold, with the broader Youanmi area estimated to have yielded 560,000 ounces since the first gold discovery just after the turn of the last century.

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Penny West itself ranks as one of the highest-grade open pits ever mined in Western Australia, with 121,000 tonnes grading 21.8 grams per tonne, yielding 85,000 ounces for previous owners Metana Minerals and Eastmet in a short 1991–92 mining campaign. The most recent drilling in the Phase II program has continued to return high-grade gold assays, with the Penny West and Penny North gold mineral system shown to extend 650 metres in strike length, and to a vertical depth of 230 metres. It remains open in all directions. The Penny North lode is displaying an apparent southerly high-grade plunge, much like the mineralisation associated with the Penny West lode beneath the open pit. ‘Mineralisation remains open to the north with additional holes planned with the aim of extending the mineralisation in a northerly direction,’ the company said in late June. The company’s exploration effort is being aided by the routine assessment

of the mineralogy in the drillholes by the panning of drilling chips from suspected lode positions. Spectrum says that the process gives an immediate qualitative assessment of the mineralogy and, in particular, the presence of galena and gold, which are associated with highgrade gold results at Penny West and at Penny North. ‘It means that where we have hit the lode, we are not waiting for assay results in order to plan additional holes,’ Adams says. He says that while it was not normally the done thing, it was working at Penny North because of the high-grade tenor of the mineralisation. ‘It gives us the confidence when we are planning our next step holes, that we are actually doing it in the right place.’ Adams says that investors can look forward to a constant news flow from the Phase II drilling program well into September.

METALS LIMITED

PENNY WEST PIT

High Grade Gold in Western Australia Spectrum Metals (ASX:SPX) is a WA-based gold company with two high grade gold assets. The company is focused on rapidly expanding its recently discovered Penny North high-grade project, near Youanmi. Penny North is emerging as one of the WA’s highest-grade recent gold discoveries and lies north of the well-known Penny West open pit mine that produced at an average grade of 21.8g/t gold. The mineralisation is currently open in all directions over a strike length of 650m.

spectrummetals.com.au

GOLD

Oklo Resources strikes gold in west Mali ASX-listed junior explorer with the blue-chip share register Oklo Resources has continued to notch up exploration success in its hunt for a multimillion-ounce gold discovery in Mali.

klo boasts the world’s biggest resources investor BlackRock as a 13.8 per cent shareholder, and the ASX-listed Mali/Australia gold miner Resolute Mining as a 10.6 per cent shareholder. Simon Taylor, Oklo Managing Director, says that the presence of the heavyweights on the register is a recognition of the potential of the company’s exploration projects. ‘They are there for a multimillion-ounce gold discovery,’ Taylor says. ‘The geology is fantastic, and there are some significant deposits in the region. It is elephant country, yet we believe it remains very, very under-explored,’ Taylor says. Oklo’s flagship Dandoko Project, and its nearby Kouroufing prospect, are in an under-explored part of west Mali, which is also home to Canada’s B2Gold’s 7.1-millionounce Fekola gold mine. Fekola was originally discovered by ASX-listed Papillon Resources, with Papillon being acquired by B2Gold in

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2015 for US$570 million ahead of the US$250-million mine being built. Oklo’s recently appointed NonExecutive Chairman, Mark Connelly, knows Mali and Fekola well, as he was Papillon’s Managing Director. ‘Oklo is a compelling opportunity to join forces with another well-credentialed exploration team, including my former Papillon colleague Andrew Boyd, that is successfully advancing a highly prospective yet under-explored portfolio of gold projects neighbouring Fekola,’ Connelly says. Dandoko, 30 kilometres east of Fekola, was Oklo’s first success. It has outlined a 12-kilometre-long gold corridor, with a 12,000-metre drilling program recently completed at the advanced Seko prospect, and more drilling to come at the end of the wet season. A new six-kilometre-long corridor was more recently outlined at Kouroufing, 20 kilometres south-east of Dandoko. Oklo recently reported the discovery of a second bedrock gold discovery at the Kome Target at Kouroufing.

‘Our strategy is to find the next big deposit in Mali. We have the team, we have the cash ($6.5 million) to do it, and we have the backers,’ Taylor says. Oklo has continued to increase its footprint in Mali through the acquisition of additional prospective ground in lowcost deals. The latest addition came from the exercise of an option to acquire a 65 per cent interest in the Kossaya project, with Oklo also holding an option to acquire the remaining 35 per cent by July 2020. Kossaya covers an area of 70 square kilometres within the Kenieba Inlier to the east of the Senegal-Mali Shear Zone (SMSZ) and in close proximity to Dandoko. The SMSZ and associated north-easttrending splay structures are spatially related to several major gold projects, including Fekola. Previously reported first-pass drilling at Kossaya defined a series of north-south trends with significant composite grades that warrant follow-up drilling.

GOLD

Gold price increase might just be fool’s gold BY JASON AR AVANIS, SENIOR INDUSTRY ANALYST, IBISWOR LD

The price of gold has surged over the past quarter, creating a beneficial operating environment for Australian gold miners. The outlook for the gold mining industry remains mixed, however, due to a decline in gold reserves at the time they are wanted most.

he price of gold has surged over the past two months, breaking through resistance at US$1300 per ounce to stabilise at a five-year high above $1400. In Australian dollar terms, this represents a record high of more than A$2000 per ounce. Why have prices risen now, and what does it mean for the future of Australian gold mining? F E A R , D E - D O L L A R I S AT I O N A N D O P P O R T U N I T Y C O S T For the investor, gold holds a special place in one’s heart. Although fiat currency is the dominant method of value storage in today’s era, and upstart spasmodic cryptocurrencies claim to be the future of commercial exchange, gold continues to appeal as a ‘safe’ means of holding wealth. Backed by more than 5000 years of use as a currency across cultures and continents, the shining yellow metal is perceived as a tested and everlasting store of value. In that context, it

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is no surprise that investors tend to hoard gold when faith in the fiat currencies of the modern age begins to falter. This is precisely what has been happening over the past quarter. Amid perpetually low interest rates and an unsettling increase in trade barriers between the world’s largest economies, fear is beginning to seep into financial markets after the longest economic expansion in the history of the United States. Clear evidence of this trend is the massive accumulation of gold by central banks. According to the Office of the Chief Economist, central bank gold bullion purchases increased by 74 per cent in 2018, to the highest level in the past 50 years. IBISWorld expects this rate to be higher in 2019. Many central banks hold some share of their wealth in the form of US debt, which is repaid in US dollars. This has become a source of

AUSTRALIAN RESOURCES & INVESTMENT

Gold Price $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200

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Figure 1. Gold price. Source: World Gold Council

AU S T R A L I A N O U T L O O K In such a positive environment for gold, it is unfortunate that Australian gold production is set to decline. Over the next five years, several prominent Australian gold mines are anticipated to be decommissioned due to rising operational costs and declining reserves. Normally, the exhaustion of gold mines is normal practice, as miners simply move onto the next resource to extract. Australia’s stock of known gold resources has been in significant decline for the past decade, which has left gold miners without a pipeline of projects to turn to when current activities cease. This unfortunate situation is a legacy of the last gold bull market in 2011. At the time, Australian miners aggressively expanded capacity through debt on the assumption that gold prices would remain elevated. Conversely, the halving of the gold price between 2011 and 2015 forced debt-laden miners to take heavy impairments, and significantly scale back expenditure. As mineral exploration was considered an expensive high-risk, high-reward activity, it was significantly reduced. As a result, a lack of meaningful discoveries over the past five years means that Australian gold production is set to peak at 346 tonnes in 2019–2020, before declining to around

Figure 2. Policy intereset rates. Source: Reserve Bank of Australia

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risk for central banks, as US President Donald Trump has ramped up rhetoric by calling for a devaluation of the US dollar in recent months. This has the potential to spark a race to the bottom, otherwise known as a currency war. In this scenario, central bankers would use monetary policy to lower the value of their national currencies and stimulate growth. If the Trump administration pursued this objective, the value of US Treasury bonds would fall in foreign currency terms. In this environment, IBISWorld expects that gold would represent a more secure store of value, as unlike currencies, the printing of money cannot dilute it. While demand for gold as a safe-haven asset is on the rise, the downside of holding it has also been falling. Typically, investors are loath to hold gold as they miss out on the dividends or yield available in equity and bond markets. This is the main reason the price of gold falls when economies are chugging along nicely. Despite this, the last decade has flipped this equation on its head. Amid permanently low interest rates, or even negative rates – as seen in Japan and Northern Europe – the opportunity cost of owning gold is now gone. When the Federal Reserve (the Fed) failed to increase interest rates in early 2019, and subsequently provided clear indications of a rate cut in the near future, the market received a signal that low-rate policy is here to stay. Although no clear indicators of a recession appear to be looming (apart from the inverted yield curve on US Treasury bonds), the global economy seems poorly positioned to counter whatever turbulence may be on the horizon. On top of all that, the market also has to contend with Judy Shelton, Trump’s latest nominee for the board of the Fed, who is a renowned proponent of a return to the gold standard. Although this has virtually no chance of happening, it does underscore IBISWorld’s view that 2019 is a good year to hold gold.

Forecast

Figure 3. Australian gold production. Source: Office of the Chief Economist, Resources and Energy Quarterly March/June 2019 June 2019 publication for historic data, March for forecast to 2024

250 tonnes in 2023–2024. This would shift Australia from being the world’s second-largest gold producer to its fourth. In light of this fact, Australian gold miners are now trying to make up for lost time. Gold exploration expenditure increased by 18 per cent in 2018, and is at its highest level in a decade. Even if major gold resources are quickly discovered, this is unlikely to provide sufficient support to the industry. Gold discoveries can take up to a decade to be developed into operational mines, by which time the current period of heightened prices may have passed. Despite the benefit of a rising gold price, the gold mining industry is likely to struggle for the foreseeable future. Overall, although 2019 is shaping up to be an excellent year to hold gold, the outlook for the gold mining industry remains mixed, due to a decline in gold reserves at precisely the time when they are wanted most. For an investor, great care should be taken in choosing how to get exposure to a rising gold price.

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GOLD

Carawine Resources making huge progress Carawine Resources’ shareholders are in for exciting times as the newly listed explorer sets about drilling multiple targets in Western Australia’s remote Paterson Province.

he Paterson Province has become an exploration hotspot thanks to Rio Tinto’s big Winu copper-gold discovery and the Havieron goldcopper discovery by the London-listed Greatland Gold. Listed in December 2017 after raising $7 million, Carawine was spun-out by Western Australian mineral sands developer Sheffield Resources to pick up the running on gold and base metal exploration projects in Western Australia and Victoria. The looming drilling program in the Paterson Province will follow a successful drilling program at Carawine’s Jamieson gold project in north-east Victoria, which will lead to a maiden resource estimate being released before the end of the year. Back in Western Australia’s Fraser Range, Nova mine owner Independence Group is funding the hunt for the region’s

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Hill 800 drill rig

AUSTRALIAN RESOURCES & INVESTMENT

Paterson project

Hill 800 – coarse gold in drill core

Victoria – Carawine geologist at core shed

next big nickel-copper-cobalt discovery, in a joint venture under which it can earn a 70 per cent interest in Carawine’s tenements by spending $5 million by the end of 2021. Because it is a recently listed company, Carawine is unusual for an ASX explorer, as it only has 55.8 million shares on issue. After announcing in July that it had identified more drill targets in the Paterson Province, Carawine was valued by the market at $7.8 million (14 cents per share). Carawine Managing Director David Boyd says that the company is excited by the upcoming drilling program in the Paterson Province, and the return to

Jamieson for more drilling late this year/ early next year. Boyd makes the point that Carawine was on the scene in the Paterson Province long before Rio Tinto confirmed its Winu discovery in February this year. Rumours of the discovery in 2018 triggered one of the biggest pegging rushes in recent history. ‘We were picking ground up well before any Winu rumours came out. It wasn’t completely open, but we were able to do some selective pegging rather than just peg vast tracks of land,’ Boyd says. Boyd says it’s important to note that Carawine is able to pick tenements where the region’s extensive cover is relatively shallow. ‘On our tenements, the basement rocks range from 30–120 metres deep. For a junior like us, it means we don’t have to go through 500 metres of cover before getting to the host rocks.’ Boyd says that the plan is to begin testing some of the targets with the drill bit before the end of the 2019 northern field season in September/October. ‘A signature of the recent Winu and Havieron discoveries has been bullseye magnetic anomalies located either over or adjacent to gold and copper mineralisation. We have identified a number of similar magnetic anomalies, representing an important and exciting step for the company.’

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GOLD

Gold-coated fungi exhibits potential on gold exploration and ore processing BY TSING BOHU, ANAIS PAGES, ANNA H K AKSONEN AND R AVI ANAND, CSIRO

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AUSTRALIAN RESOURCES & INVESTMENT

ver the past few decades, geomycology has attracted increasing interest, and is becoming a rapidly growing scientific field. This is thanks to the rapid evolution in DNA and RNA sequencing technologies, and geochemical and mineralogical approaches. One aspect of geomycology – fungi-metal interaction – is an interdisciplinary topic with many environmental studies focusing on metal precipitation and immobilisation.1 Geomycology therefore firmly relates to economic geology and resource extraction, bearing great potential for exploring economic mineral deposits, such as gold ore. Scientists from CSIRO Mineral Resources, CSIRO Land and Water, Curtin University, Murdoch University and the University of Western Australia recently revealed the redox interaction between gold and indigenous fungi in the Boddington gold mine, in Western Australia.2 Fungal isolate fusarium oxysporum can initiate gold oxidation under Earth surface conditions, which is of significance for dissolved gold species formation and distribution. While further research is ongoing, the study showed huge potential to apply the gold-oxidising fungi on gold exploration and ore processing, which may be able to develop effective, low-cost and environmentally friendly technologies. Gold concentrations in mineable deposits range from approximately 1–100 parts per million. Primary (hypogene) gold ore is formed from the deposition/ precipitation of high-temperature hydrothermal fluids. These either originated deep in the Earth’s crust or were circulating meteoric waters heated at shallower levels. Ore bodies that are formed from these systems are the most commonly mined deposits. Gold that is transported and precipitated in the surface, or the weathering environment, is referred to as secondary or supergene gold. Secondary gold occurs in soil, weathered rocks, stream sediments and placers. In Australia and certain continents, ore bodies are covered by transported overburden. Exploration in such areas is remarkably difficult.3 The gold and fungi research revealed that indigenous fungal diversity in the surface soil positively correlates with in situ gold concentrations. Hypocreales, the order of the goldoxidising fungus, show the highest centrality in the fungal microbiome of the auriferous environment. These results indicate that the diversity and the network pattern of the gold-oxidising fungi may be effective proxies for gold exploration. Mine processing industry has traditionally used cyanide for leaching gold from ores and concentrates. Microorganisms have played a role in some mining

Fungal isolate fusarium oxysporum can initiate gold oxidation under Earth surface conditions operations to oxidise refractory sulphidic gold ores and concentrates for liberating gold from sulphide matrix before cyanidation. It has been estimated that biooxidation is applied to recover approximately five per cent of gold.4 The microbes commonly used for sulphide mineral pre-treatment include acidophilic bacteria and archaea, which oxidise ferrous iron and reduced sulphur compounds as an energy source to generate ferric iron and sulphuric acid for sulphide mineral dissolution. More recently, there has been increasing interest in using microbes for gold leaching as a more environmentally friendly alternative compared to chemical cyanidation. Scientists have explored the potential of biologically generated leaching agents, such as thiosulphate, iodide, organic acids and biogenic cyanide. Microbes can also be used to remove carbonaceous minerals, which otherwise rob gold that has been leached out from the ore.5 The current gold and fungi research revealed that fungal metabolites, such as superoxide and carbonyl-rich ligands, plausibly play a role in gold oxidative dissolution, providing a new way for extracting and/or recovering gold from ores, concentrates and waste materials, such as the electronic kind. Despite the recent major discoveries in the field of geomycology, much remains to be discovered in this space. Over the next decade, it is anticipated that new studies in geomycology will become vital to portray a more holistic picture of biological diversity, activity and function, deepening our understanding of the complex interconnections between eukaryotic microorganisms and the Earth’s materials. International programs, such as the International Ocean Discovery Program (IODP) and the International Continental Scientific Drilling Program (ICDP), are opening a new window of opportunities to study fungi-metal interactions in extreme environments, the complexity of the deep microbiome and the limits of life. By pushing forward the boundaries of research in geomycology, major scientific and industrial breakthroughs will be enabled.

References: 1. Gadd, G. M. Geomycology: biogeochemical transformations of rocks, minerals, metals and radionuclides by fungi, bioweathering and bioremediation. Mycol. Res. 111, 3–49 (2007). 2. Bohu, T. et al. Evidence for fungi and gold redox interaction under Earth surface conditions. Nat. Commun. 10, 2290 (2019). 3. Wakelin, S. et al. Assessing microbiological surface expression over an overburdencovered VMS deposit. J. Geochem. Explor. 112, 262–271 (2012). 4. Kaksonen, A. H. et al. Recent progress in biohydrometallurgy and microbial characterisation. Hydrometallurgy 180, 7–25 (2018). 5. Kaksonen, A. H., Mudunuru, B. M. & Hackl, R. The role of microorganisms in gold processing and recovery—A review. Hydrometallurgy 142, 70–83 (2014).

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GOLD

Pyramid Hill: Chalice’s Holy Grail Chalice’s hunt for Victoria’s next big gold discovery at its Pyramid Hill Project to the north of Bendigo is zeroing in on three large-scale target areas identified in the group’s initial reconnaissance drilling program.

anaging director Alex Dorsch says drilling is expected to restart in September and while the size of the next program was still to be decided, it is likely to involve another 20,000 metres of additional drilling. Excitement is building around the next drilling campaign after Chalice’s initial 39,000-metre reconnaissance drilling program returned multiple gold hits from the top of basement rocks ‘hidden’ by the region’s extensive cover of Murray Basin sediments. ‘We think the results from the reconnaissance drilling program were pretty significant, given the lack of any previous drilling anywhere near the targets,’ Dorsch says. The program outlined three strikeextensive mineralised trends on wide-spaced drill lines – the Karri, Ironbark and Beech targets. The next drilling campaign will involve tighter spaced and step-out drilling on the ‘virgin’ targets, virgin in the sense that the drilling will not be in and around historic gold occurrences like much of the exploration effort in Victoria by others.

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Dorsch says the broad zones of gold and pathfinder elements encountered in the reconnaissance drilling were significant given its wide-spaced nature. ‘To have three laterally extensive areas of gold anomalism under shallow cover defined so early is promising,’ says Dorsch. ‘Gold exploration under cover requires a slightly different approach to normal mineral exploration, with a first pass of shallow drilling to the top of the basement essentially aimed at providing a geochemical vector to mineralised systems. ‘From there, we will drill on tighter and deeper spacing, continually refining and strengthening the vector. Importantly, other gold discoveries undercover in this region originated from similar low-level anomalous gold and pathfinder intercepts on widespaced shallow aircore drilling. ‘This gives us confidence that our systematic approach to exploration at Pyramid Hill is the best way to vector towards mineralisation which could ultimately lead to a world-class high-grade gold discovery.’ The program will again only proceed after consultation with local landowners,

with Dorsch saying Chalice ‘fully acknowledges the primary land use in the area is agriculture, and we work closely with farmers to ensure we have minimal impact’. Chalice is well funded to continue the Victorian push, with an estimated $19 million in cash at hand. Its finances have been further strengthened with the recent sale of its gold projects in Quebec to the new Osisko Miningbacked company – known as 03 Mining – for C$12 million in shares and a royalty. Dorsch says Chalice had ‘done exceptionally well to recoup in shares what we spent in the ground’. ‘It’s not often that an explorer can achieve that on an early stage exploration project, so we are pretty pleased. The deal allows us to focus on our lower-cost Australian exploration plays.’ Chalice has further expanded its Australian portfolio with a recent nickelsulphide acquisition in the Kimberley region of Western Australia. The acquisition forms a second district-scale land holding – the King Leopold nickel project – and opens up a new district-scale nickel exploration opportunity to complement its high-profile gold exploration activities in Victoria.

Exploring for greenfield discoveries in Australia’s frontier high-grade gold and nickel provinces A dominant player in the Bendigo goldfields with a ~5,140km2 land holding District-scale Nickel Sulphide project in the frontier west Kimberley region Cashed up for active drilling and advanced exploration

WWW.CHALICEGOLD.COM

ASX:CHN

TSX:CXN

CONNECT WITH CHALICE

COPPER

Copper out in front BY HAL STILLM AN, DIR ECTOR, TECHNOLOGY DEVELOPMENT AND TR ANSFER; AND FLEMING VOETM ANN, VICE PR ESIDENT OF PUBLIC AFFAIR S, INTER NATIONAL COPPER ASSOCIATION

The copper industry is leading in precision mining.

Image by Freeport-McMoRan

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AUSTRALIAN RESOURCES & INVESTMENT

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COPPER

eveloping reliable industrial technology that withstands the rigours of the mining environment is not easy. It requires large capital investments, long time frames, and multidisciplinary technological expertise to reduce risk and assure performance. Innovation in this environment is challenging for all involved. Rising demand for copper to enable the global transition to clean energy presents an opportunity for copper miners to transition to cleaner and more effective mining technologies. The copper mining industry is leading the development and adoption of precision mining – meeting the world’s copper needs with the least possible environmental and social disturbances. Extracting copper with minimal disruption to the surrounding environment is a timely challenge. The world needs to move toward greater sustainability in mining, and more copper is required to complete the global movement toward clean energy. The copper industry is exploring a range of technologies to promote sustainable mining, including several supported by the Aurus III venture fund portfolio. Aurus III is a $65-million, copper-centric venture fund in Santiago, Chile, supported by miners including Mitsui, Codelco, and the Chilean innovation organisation, CORFO. A BREAK THROUGH IN ORE SORTING Today, several mines are using MineSense ore-sorting technology. MineSense offers precision technology applicable to shovel and conveyor sorting that separates rock worth processing from rock not worth grinding. More than 10 years of R&D went into the development of sensor packages and analytics. Copper mines in Canada, Australia and Chile are adding precision ore sorting into their operations. The positive consequences are substantial: 40 per cent less tailings, 25 per cent less grind energy and 25 per cent reduction in water use. D I G I T I S E D P R E C I S I O N O P E R AT I O N S Precision mining requires knowledge and the adaptability to rapidly evolve operational methods based on machine learning and artificial intelligence (AI) so techniques that knit together disparate IT systems add immense value. TI Mining integrates data from a mine’s existing design, a geotechnical model and a sensor network to provide real-time, AIenabled 3D monitoring and management of geotechnical conditions, the haulage fleet, slope control, and structural instabilities. It provides alternative scenarios for recovering the desired production level from unanticipated conditions. ProactiveOffice’s software integrates the digitised mine. It cleverly uses the Excel output available from virtually every business and technical software system to produce a comprehensive view of projects and operations. These innovations were initially developed in partnership with Chilean mines: Collahuasi, Minera Escondida, Codelco and Anglo American.

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P R E C I S I O N B E N E F I C I AT I O N T E C H N O L O GY The new beneficiation technology, developed by CiDRA, is finding its first use in the copper industry. Current flotation processes achieve good mineral recovery with the optimal particle sizes (in the range of 40–90 microns), but recovery can suffer at very fine particle sizes and falls off dramatically as particle size increases. CiDRA’s process technology recovers coarse particles, as well as particles of all sizes. Less grinding is needed, resulting in 30 per cent increased throughput, 20 per cent less grind energy, higher copper production, and higher profitability. This is made possible by the insight that solid media with a selective, reversibly sticky surface that attracts and then releases mineral particles can outperform flotation. For companies producing concentrate, CiDRA offers a new way to derive more value from existing assets by incrementally replacing the flotation process. S TA B I L I S I N G D U S T Dust challenges miners and is therefore not desired in precision processes. Aguamarina started with the insight that the same process that living organisms use to form solid surfaces can be applied to form a solid road surface from tiny particles. Water with a customised mix of bacteria is applied to the ground. Within a short time, the bacteria unite with the surface particles to form a stable, high-friction surface with the capacity to support mining trucks. The same process applies to stabilising soil used in

AUSTRALIAN RESOURCES & INVESTMENT

Many government policies support energy efficiency, renewable energy and decarbonisation, which leads to increased demand for copper

other earthen structures. The result is 80 per cent less dust from haul roads and 30–35 per cent less water consumption for haul roads. Customers include copper miners BHP, Antofagasta PLC, Codelco and Freeport-McMoRan. M OV I N G F U R T H E R O U T I N F R O N T If a mining company were to implement several of these precision mining technologies, the results, aside from the profitability bump, would be dramatic and valuable: 50 per cent fewer tailings, 45 per cent less grind energy and 35 per cent less water for the same amount of copper. Historically, only a few major changes have occurred in mining and processing. While digital transformation and mining vehicle electrification is prevalent, the basic techniques and processes remain essentially unchanged: rock is mined, ore is processed, and metals are extracted with ever-increasing efficiency. The copper industry is gearing up to develop the next generation of mining. With support from three major copper mining companies (all International Copper Association members), the XPRIZE Foundation will be launching the Zero Waste Mining challenge, focused on developing a novel copper mining method to produce metallic copper with minimal environmental impact. With funding to innovators in the range of $25 million, the expectation is that within five years, teams will be demonstrating breakthrough tailings-less techniques to produce copper.

K E Y TA K E AWAY S F O R AC T I O N Many government policies support energy efficiency, renewable energy and decarbonisation, which leads to increased demand for copper; however, the bulk of mining policy is still focused on the regulation and management of mines as they currently operate rather than on incentivising innovation in mining. Only incentivising copper end uses is insufficient. Governments should also support the development of innovative ways to produce the copper required by policy decisions. Copper miners are combining innovations in precision mining to achieve a technology transition. Regulators, governments and the public should recognise the effort that copper industry participants are making to accelerate innovation. Implementing new technologies and initiatives in precision mining can transform the perception of copper mining as an industry that is causing negative environmental impact, to an industry that is providing an essential element for the transition to a clean-energy future. About the authors In addition to Hal Stillman’s role in the International Copper Association (ICA) as Director, Technology Development and Transfer, he is a member of the investment committee of the Aurus III venture fund, which is focused on innovations in the copper industry; supports the XPRIZE Foundation’s Zero Waste Mining challenge; and is a Senior Advisor at United States Department of Energy’s Argonne National Lab. Fleming Voetmann, who is based in Denmark, is ICA’s Vice President of Public Affairs. Voetmann works closely with members to understand how their organisations are adapting to reach the UN’s Sustainable Development Goals. Voetmann is a prolific communicator on Twitter (@fvoetmann) and LinkedIn on topics such as energy efficiency and sustainability challenges. Source materials from Copper to the World conferences.

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COPPER

Orion Minerals sees the potential in the Prieska project Orion Minerals is marching towards making a final investment decision on a $378-million development of its flagship Prieska copper-zinc project in South Africa’s Northern Cape province.

ne of the few base metal development projects of scale held by an ASX-listed junior mining company, Prieska emerged with flying colours from a bankable feasibility study (BFS) into its development in late June. The BFS returned strong project economics with non-discounted free cash flows, estimated at $1.1 billion pre-tax. The internal rate of return was put at 38 per cent pre-tax. Orion Minerals Managing Director Errol Smart says that project financing negotiations were ongoing with a number of banks, potential equity providers and concentrate offtake customers. ‘We would hope that towards the end of this year we would get to a final investment decision. But it is subject to a lot of negotiation,’ Smart says. ‘What is gratifying at the moment is how many parties are banging on our door. So it is not like we have to find the source

X –– – 64

of the money… the sources of the money are all there and are shouting to be heard,’ Smart says. The BFS was based on a 10-year foundation phase capable of delivering payable metal production of 189,000 tonnes of copper and 580,000 tonnes of zinc at an all-in sustaining margin of 44 per cent. Smart says that, importantly, the capital payback period is short at just under three years from first production. He added that while the BFS was based on a 10-year mine life, Orion believes that the life of Prieska ‘will far exceed the foundation phase’. ‘We have ongoing work to demonstrate that potential in the coming months. There will be some underground drilling that needs to be done, but it is really about mine scheduling,’ Smart says. ‘We have 9.3 million tonnes of resources that we did not include in our base case plan. It is currently in the inferred

resources category, but we are working on demonstrating that it can be brought in to the mine plan,’ he says. Smart says that Orion has also identified a number of potential project optimisations to the foundation case presented in the BFS. ‘They are things that are a little bit more opportunistic and will depend on negotiations with suppliers. Depending on how the negotiations go, there is the potential to materially reduce the capital requirement and the time lines for long lead time items.’ While Orion is planning a modern operation, Prieska was a big producer in the past under previous owner Anglovaal. It successfully mined more than 47 million tonnes of zinc-copper mineralisation from 1971 to 1991. Mining only stopped because metal prices at the time were not conducive to pushing much more beyond the original 45-million-tonne mine plan.

NEXT GENERATION Leveraging new generation technology and existing infrastructure to deliver a new operation in the footprint of a historic mine

30.49Mt RESOURCE Prieska Total Mineral Resource of 30.49Mt @1.2% Cu and 3.7% Zn

POSITIVE BFS June 2019 BFS confirms long life, high margins from “Foundation Phase” 2.4Mtpa development, delivering 189kt copper and 580kt zinc over 10-year mine life

STRONG ECONOMICS BFS outcomes include A$1.1B pre-tax free-cashflow; Pre-tax NPV8% of A$574M; All-in-sustaining margin of 44%

COPPER

CRACKING THE COPPER CODE There’s a new urgency to look for copper in greenfield sites in order to meet growing demand, and technology is providing a helping hand, says Steve Freeth.

hen the world’s number two miner, Rio Tinto, announced at the start of the year that it had discovered a potential tier-one copper mine in Western Australia, it created global headlines. The headlines keep coming, as the company ramps-up efforts at the Winu site in the Paterson Province. Rio’s copper and diamonds boss, Arnaud Soirat, recently told the media that the company will confirm whether it has a long-term interest by Christmas. Rumours of Winu’s ‘colossal’ potential have circulated since 2017, when drone and aerial images created something of a media and investor frenzy. The excitement isn’t hard to fathom, given that any new copper discoveries, let alone a reasonably easy-to-mine, tier-one find, don’t come along very often. It took what Rio has called a ‘suite of new-age technologies’, the capacity of supercomputers and a whole lot of data to identify a greenfield site geographically before sending in drilling teams. And that looks like the future of exploration.

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FROM BROWN TO GREEN It’s no secret that most of the world’s current mines were discovered last century and are fast facing their use-by date as grades fall. The need to keep expanding supply to meet growing world demand – rising two per cent per year by most estimates – has largely fallen to existing brownfield sites as they expand, attempt to get more from less, or explore close by. Exploration budgets have fluctuated since the 1990s, but wilted following poor copper prices after 2012. S&P Global Market Intelligence shows that global exploration budgets for nonferrous metals have since risen, growing 19 per cent to $10.1 billion in 2018, and forecast to climb a further five per cent to 10 per cent in 2019. Copper exploration was second only to gold in 2018, and attracted $2.1 billion of the global budget, double the $1.1-billion copper allocation in 2017. Chile, the world’s biggest producer, is also the world’s biggest explorer, spending $576.2 million on copper exploration last year. Most of that spend was done by the majors at existing brownfield

AUSTRALIAN RESOURCES & INVESTMENT

sites, but Chile’s government has just launched a policy to boost joint ventures between juniors and majors in new areas. Australia, the world’s fifth-biggest producer, was third with 9.3 per cent of global exploration spend, with the Australian Bureau of Statistics (ABS) reporting that expenditure jumped by 26.6 per cent to total $563.4 million in 2018, the highest level since 2013. IBISWorld estimates that Australia’s exploration activity is now entering a period of growth, with copper leading the pace in Western Australia, Queensland and South Australia. Needless to say, Latin America saw more than half of all new copper discoveries, with Chile and Peru accounting for 46 per cent of the global total found since 1990. Even so, new sites have proved frustratingly scarce – only nine new discoveries were made between 2012 and 2015 – leading S&P to claim that the world is facing a supply crunch 20 years from now, the approximate time to get copper from exploration to commercial production. Copper prices may still be facing trade wars and China growth headwinds, but there’s an industry consensus that prices will rise given high demand and progressively falling supply. That scenario is ushering in a new enthusiasm for exploration globally, and is making assessing greenfield sites the new priority for both big and junior miners. N E X T- G E N E X P L O R AT I O N Rio Tino’s Winu was found as part of the company’s $250-million global exploration program this year – up from $231 million in 2018 – with the bulk of the money being spent on copper in a new phase that combines new technologies and rejigged strategies to re-look at greenfields like Paterson, long thought of as a gold province. ‘About five years ago, we made the pitch that we were going to need to take the teams and very purposefully send them back to greenfields so that we could restock the early-stage pipeline,’ Stephen McIntosh, Rio’s Group Executive of Growth and Innovation, told the Australian Financial Review recently. BHP also kept copper exploration budgets steady in recent years before raising its yearly spend by 29 per cent, with nearly all of its $900-million budget set on finding new copper deposits. That paid off spectacularly with drilling at South Australia’s Oak Dam – not yet an official project – by using advanced geophysics modelling technology to find hidden resources, part of the company’s technology-led exploration in Australia and overseas. And it’s not just the majors doing well out of the new mood. Minors have always carried the load when it comes to risky exploration in untried areas, but they look set to benefit either from their own sites or from joint ventures with majors hoping to piggyback on their most promising efforts. OZ Minerals did just that with a range of deals with juniors. On top of the Avanco Resources takeover, the company has agreed to pour millions into Red Metal’s six projects – including the Yarrie project near Winu – $36 million into a joint venture with Cassini Resources, and a ‘loan carry’ deal with Minotaur Exploration. Lots of other smaller explorers are also in the Paterson area and have

been buoyed by the early results, including Rio’s joint venture partner, Antipa Minerals, as well as Encounter Resources and Artemis Resources. But new technologies may also be fuelling other potential copper hotspots around the country. Under the Australian Government’s four-year, $100-million Exploring for the Future program, the first dataset from a range of high-tech surveys by Geoscience Australia – including the world’s largest airborne electromagnetic survey – identified a relatively unexplored region spanning the Northern Territory–Queensland border as having potential for a whole new copper province. ‘There is great potential to find the next big deposit under cover, and we are taking the lead in delivering high-resolution geoscientific data and products to address major information gaps and prospectivity questions, particularly in greenfield regions,’ Geoscience Australia’s Chief of Resources Division, Dr Andrew Heap, said late last year.

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COPPER

Galileo Mining builds on nickel and copper success Boasting the support of legendary prospector Mark Creasy and the significant potential for Nova-style nickel sulphide at its Fraser Range project, Western Australian nickel-copper hopeful Galileo Mining (ASX: GAL) continues to prove its pedigree as one of the country’s top early-stage exploration companies.

nlike many of its peers, Galileo Mining is cashed-up, holding $7.1 million in the bank, and possesses a unique knowledge of the Fraser Range, with Galileo Mining Managing Director Brad Underwood having served as Exploration Manager of the Creasy Group for eight years. In that time, Underwood found the Silver Knight gossan and led the team that undertook discovery drilling at the deposit. Now, this highly successful team is on board with Galileo on the hunt for another Nova or Silver Knight in the Fraser Range. Galileo holds 492 square kilometres across two areas in the Fraser Range, which is a 67 per cent owned joint venture with the Creasy Group.

X –– – 68

The company hasn’t been afraid to act on its extensive knowledge, rapidly homing in on its prospects through an accelerated exploration campaign at its Lantern project, located 60 kilometres from the unfolding Silver Knight deposit, as well as its Empire Rose project, which is just 30 kilometres from the Nova mine site. Most recently, Galileo completed a moving loop electromagnetic survey (MLEM) at Lantern to follow-up on successful first-pass aircore drilling. The MLEM survey revealed a highquality target with peak conductive results running along a large 1500-metre trend, estimated to be 340 metres below surface. Galileo’s initial drilling showed host rocks similar to those at the Silver Knight and Nova deposits with best results from

that maiden campaign, returning 27 metres at 0.18 per cent nickel and 0.17 per cent copper from a 47-metre depth. The company will be hoping to top these results in its next drilling program, which is set to take place in September. ‘The Lantern prospect is developing into a large-scale target, with many of the characteristics typical of magmatic nickelsulphide deposits,’ Underwood says. ‘Aircore drilling has already demonstrated that we have the right rock types, and our recent work has moved us closer to defining areas with the potential to contain economic mineralisation. ‘A second round of aircore drilling is scheduled to commence in September, and we look forward to updating the market with new results.’

AUSTRALIAN RESOURCES & INVESTMENT

Providing additional upside, Galileo continues to quietly build up its 100 per cent owned Norseman project with a series of early copper discoveries at the Subzero prospect. The Norseman project, similarly located in south-east Western Australia, currently has a 25-million-tonne JORC resource containing over 26,000 tonnes of cobalt and 122,000 tonnes of nickel. Additional prospecting by Galileo has resulted in the discovery of a high-grade copper gossan with encouraging amounts of the red metal, which is demonstrating potential to transform its tenements into a significant copper play. Prospecting at Norseman has produced assay results as high as 19.9 per cent copper from oxide surface samples. The sampling also revealed multiple iron-rich gossan rocks with up to 1.1 per cent copper. The region was subject to historic prospecting activity with a 13-tonne bulk sample extracted in 1953 at an average grade of 8.36 per cent copper. The old prospecting shaft and two prospecting pits are still visible at the site, with mapping demonstrating that the target position extends over two kilometres around the old workings. In 1971, Barrier Exploration completed diamond drilling approximately 1.3 kilometres

south-west of Subzero, which identified layers of volcanic material – the same prospective host rock – and showed that large sections of the area are covered by shallow alluvial material. This prevented traditional prospecting techniques and the cover thins towards the east where the historic workings are located. While at an early stage, the company has defined extensive targets through a high-powered MLEM survey, using modern exploration techniques not available to early explorers. The geophysical survey revealed a large conductive body adjacent to the high-grade surface samples, which runs for over two kilometres along the strike of the prospective outcrop. Conductive rocks are highly soughtafter targets in copper exploration as the sulphide minerals, which can contain copper, provide an excellent response to geophysical survey methods. In keeping with its aggressive exploration strategy, Galileo has committed to immediately drilling the new prospective conductor. The initial campaign will drill to a depth of approximately 100 metres below surface, enough to understand the outcropping

copper gossan, as well as testing the top of the deeper conductive body. ‘The Subzero prospect represents a classic drill target with a copperrich gossan on surface underlain by a conductor at depth,’ Underwood says. ‘The magnitude of the conductor suggests the possibility of a large mineralised system, and we plan to commence drill testing the area in August. ‘Galileo is an active and wellfunded mineral explorer that aims to make discoveries to create value for our shareholders. ‘Previous explorers focused on gold and nickel exploration around Norseman, providing us with the opportunity to drill an untested copper target with potential for considerable value creation.’ Upcoming drilling at Subzero will be watched closely as the company continues to affirm its place as one of the best junior exploration plays on the market. With the company holding deep connections to Mark Creasy in the Fraser Range, as well as a highly prospective copper target at its Norseman project, Galileo continues to offer an unmatched value proposition from an Australian junior explorer.

Y– ––69

NICKEL

NICKEL’S S O A R I N G R A L LY There’s a glistening outlook for the metal.

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AUSTRALIAN RESOURCES & INVESTMENT

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NICKEL

NICKEL’S LUSTROUS GAINS BY ANTHONY FENSOM

urging prices have boosted confidence among Australia’s nickel miners, helping lift market values and spurring increased investment. And with the silvery-white lustrous metal now seen having a leading role in the electric vehicle (EV) revolution, even better times may lie ahead for the world’s sixth-largest producer. In mid July, nickel prices jumped to a one-year high, above US$15,000 (A$21,700) per tonne, driven by demand from both industrial buyers and speculators. Analysts attributed the rise to a 10 per cent increase in China’s stainless steel production in the first half of 2019, together with a looming ban on Indonesian nickel exports set for 2022.

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In May, the global nickel market deficit widened to 12,500 tonnes from a shortfall of 7500 tonnes in the previous month, while London Metal Exchange inventories dropped by nearly half to their weakest level since 2013. While analysts such as Citi and Commonwealth Bank have expressed caution over the short-term outlook, they remain bullish on the medium to longer term. Among the bulls, ANZ Research sees the nickel price rising from US$12,610 per tonne in 2019 to US$15,510 in 2020 and US$16,150 the following year. In a June 2019 report, the Australian bank described nickel as a ‘preferred metal, because of strong demand from the battery sector’.

AUSTRALIAN RESOURCES & INVESTMENT

After dropping into a supply deficit in 2016, the supply shortfall could continue through to 2025 due to growing demand from stainless steel and lithium-ion battery markets. CONSUMPTION GROW TH In its June 2019 Resources and Energy Quarterly, the Office of the Chief Economist projected prices averaging US$12,800 per tonne in 2019, rising to US$14,400 by 2021. ‘World consumption growth is expected to outpace production growth, drawing on stock levels and leading to a greater deficit in the world,’ the report said. ‘There is potential for nickel consumption to boom, as EV battery manufacturing picks up and technological advances are married with market developments, supportive policy and changing consumer preferences.’ The report points to rising demand due to growing stainless steel production, in addition to battery manufacturing. World consumption is seen rising from 2.3 million tonnes in 2018 to 2.7 million tonnes in 2021, with healthy growth in the major markets of China, Japan and Indonesia. While nickel used in batteries currently only accounts for three per cent of total consumption, changes in battery technology are expected to lift the proportion of nickel used, ‘which, combined with significantly higher battery production, is expected to open new opportunities for nickel producers from the 2020s onwards’. S&P Global has noted that many automakers are moving towards batteries with cathodes containing 80 per cent nickel, thanks to the metal’s ability to provide increased energy density, as well as extend vehicle range. In a 24 July release, consultancy firm Wood Mackenzie suggested that the electrification of transport would lift demand for battery metals, including nickel, which could face a supply crunch by the mid 2020s. Wood Mackenzie expects global electric car sales to account for seven per cent of all passenger vehicle sales by 2025, 14 per cent by 2030 and 38 per cent by 2040. Commenting on nickel, Wood Mackenzie Research Director Gavin Montgomery says: ‘While high-nickel ternary batteries will mean higher corresponding demand for nickel, like cobalt, our long-term deficits are becoming more feasible. Much of this is due to growing capacity in Indonesia, to serve both the stainless steel sector and emerging battery demand. ‘Although the battery sector share of nickel demand is much smaller than other metals, getting the quantity of nickel that EVs will need by the mid 2020s will be a challenge. A low nickel price has hindered any project development, and with lead times often up to 10 years, investment needs to happen now.’ Glencore expects EV nickel consumption to grow from five per cent of all nickel production in 2020 to 18 per cent by 2025 and 59 per cent by 2030. Even if Indonesia lifts its ban on exports, the miner expects the current deficit to continue through to 2030.

PRODUCTION RISE In Australia, the Office of the Chief Economist noted growing nickel production in the March quarter 2019, including the start of operations at Panoramic Resources’ Savannah mine in Western Australia. Domestic mine production is seen reaching 212,000 tonnes by fiscal 2021, up from 150,000 tonnes in fiscal 2019, including new production from BHP’s Nickel West project in Western Australia. BHP Chief Executive Andrew Mackenzie has described Nickel West as a ‘future growth option, linked to the expected growth in battery markets and the relative scarcity of quality nickel sulphide supply’. With production rising along with prices, nickel exports are forecast to grow at an average annual rate of 11 per cent to reach $5 billion in fiscal 2021, up from $3.5 billion in fiscal 2019. Consistent with higher prices, exploration activity has risen since late 2017 and has remained strong, reaching nearly $50 million in the March quarter. Among those capitalising on the improved outlook is Western Areas, which has signalled plans to expand output, having signed a new offtake agreement with Japan’s Sumitomo Metal Mining. The company’s new Odysseus mine in Western Australia is expected to produce its first nickel ore in 2022, adding to current operations at its Forrestania project area. Mincor Resources also flagged plans to raise up to $23 million to fast track the restart of high-grade nickel sulphide mining near Kambalda, in Western Australia. First Quantum Minerals signalled the potential restart of operations at its Ravensthorpe nickel-cobalt operation as early as the first quarter of 2020, should prices continue to rise. Among recent merger and acquisition (M&A) activity, in June, Chalice Gold Mines acquired private nickel explorer North West Nickel, eyeing exploration projects in the west Kimberley region, while in May, Auroch Minerals targeted Minotaur Exploration’s Saints and Leinster nickel projects near Kalgoorlie. Listed producers have enjoyed valuation gains, including Nickel Mines, which floated last August in a near $500-million initial public offering. The Indonesia-focused miner has seen its market capitalisation rise to nearly $900 million, thanks to growing nickel prices and higher output at its mine in Central Sulawesi. Another recent market debutant, Galileo Mining, has reported ‘promising’ results from its Fraser Range project in Western Australia. Other miners with exposure to nickel have seen share price gains, including Independence Group, Mincor Resources and Regis Resources. WILL NICKEL CONTINUE TO SHINE? Much will depend on Indonesia’s planned export ban, together with the US–China trade war and the outlook for stainless steel. Yet, with the anticipated growth in demand from EVs, nickel appears to have a far brighter future than many miners could have ever envisaged.

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NICKEL

Nickel Mines leading the way Nickel Mines has successfully transitioned from being a project developer, to becoming a globally significant nickel producer from operations in Indonesia – all within a year of the company listing on the Australian Securities Exchange.

s full production is achieved, Managing Director Justin Werner says Nickel Mines is looking forward to reporting ‘strong financial results’ from its nickel pig iron (NPI) interests in Central Sulawesi. Originally a producer of laterite nickel ores from its 80 per cent owned Hengjaya mine, Nickel Mines was prompted to seek out a bigger future as an NPI producer following Indonesia’s 2014 ban on the export of unprocessed ores. Nickel Mines’ listing on the ASX in 2018 and the formation of a strategic partnership with the world’s biggest steelmaker, China’s Tsingshan, have been key elements in the company’s transformation. The company’s NPI interests are located in the integrated stainless steel facility known as Indonesian Morowali Industrial Park (IMIP), which was developed by Tsingshan – a response to the export ban and now home to 24 rotary kiln electric furnace (RKEF) lines. NPI is produced in a pyrometallurgical process (perfected in China in the early 2000s) using laterite nickel ores like that produced by Nickel Mines at its 80 per cent owned (and since resumed) Hengjaya mine, which barges ore around the coast to the IMIP. Nickel Mines’ recasting as an integrated NPI producer at the IMIP has seen it emerge with a 60 per cent interest in two RKEF lines owned in the Hengjaya Nickel

– 74 X ––

joint venture with local interests, and a 60 per cent interest in two RKEF lines held by the Ranger Nickel joint venture with a Tsingshan subsidiary. Nickel Mines reported in July that the June 2019 quarter ‘saw a continuation of Hengjaya Nickel’s seamless ramp-up towards full capacity, with the current

production run rate now comfortably exceeding the targeted run rate’. Nickel production for the June quarter was 4386 tonnes at an average NPI grade of 14 per cent, at an average cash cost of US$7725 per tonne (the company’s attributable share was US$2632 per tonne). The company’s average realised price for the quarter for its nickel in NPI was US$12,059 per tonne compared with the LME average of US$12,266 per tonne. Importantly, and as reflected in those figures, NPI producers enjoy superior payabilities on the contained nickel in their product than is the case with nickel concentrate producers. That is because the stainless steel producers pay near market price for the nickel in NPI because they are essentially getting their iron ore units for free. In nickel concentrates, they pay for 65–75 per cent of the contained nickel. The Ranger kilns are in the process of being ramped-up to full production. ‘The June quarter was a remarkably busy period for the company that saw significant advances made towards fulfilling our growth objectives,’ Werner says.

WWW.NICKELMINES.COM.AU

Emerging as a Significant Global Nickel Producer NICKEL MINES LIMITED (NIC) IS AN ASX LISTED COMPANY THAT IS FAST EMERGING AS A SIGNIFICANT PLAYER IN THE GLOBAL NICKEL INDUSTRY. IN COLLABORATION WITH SHANGHAI DECENT, A GROUP COMPANY OF TSINGSHAN, THE WORLD’S LARGEST STAINLESS STEEL PRODUCER, NICKEL MINES HAS ESTABLISHED A MAJORITY (60%) OWNERSHIP POSITION IN 4 RKEF (ROTARY KILN ELECTRIC FURNACE) LINES WITHIN THE INDONESIA MOROWALI INDUSTRIAL PARK (IMIP). NPI (NICKEL PIG IRON) PRODUCED FROM THE COMPANY’S RKEF LINES SERVES AS FEEDSTOCK TO TSINGSHAN’S FULLY INTEGRATED 3MT PER ANNUM STAINLESS STEEL OPERATIONS.

Investment Highlights What’s on Offer STRATEGIC PARTNERSHIP WITH A GLOBAL INDUSTRY LEADER • Collaboration Agreements executed with Shanghai Decent to build, own and operate 4 RKEF lines producing in excess of 33Kt of nickel metal per annum on a 100% basis; • Shanghai Decent has made a substantial investment into Nickel Mines and is the now the Company’s largest shareholder.

SIGNIFICANT BENEFITS FROM A UNIQUE PARTNERSHIP • Industry low levels of capital intensity for the construction of nickel capacity; • First quartile NPI operating costs resulting from the ability to source abundant supplies of high-grade nickel ore and cheap thermal coal for reliable power generation; • Superior nickel payabilities compared to concentrate peers (payabilities > 95%); • Material corporate income tax concessions granted by the Indonesian Government.

ABILITY TO LEVERAGE IMIP INFRASTRUCTURE • The IMIP is a fully permitted industrial zone jointly sanctioned by the Indonesian and Chinese Governments; • The IMIP is the largest vertically integrated NPI/Stainless Steel facility in the world supported by world class infrastructure and logistics featuring an on-site coal fired power station, substantial port facilities and 5-star guest hotel.

STRENGTHENING NICKEL MARKET FUNDAMENTALS • Nickel demand expected to grow 2-3% over medium to long term underpinned by steady outlook for stainless steel and growing EV battery market; • Forecast supply deficits for the foreseeable future and consensus long term Nickel price forecasts well above spot pricing.

WORLD CLASS NICKEL RESOURCE • Nickel Mines also hold an 80% interest in the long-life, high grade Hengjaya nickel mine located in Morowali Regency, Central Sulawesi, Indonesia just 12 kilometres from the IMIP; • The Hengjaya mine hosts a JORC compliant resource of: - 37.5M dry metric tonnes at 1.81% nickel (~680k tonnes of contained nickel); - 180.0M dry metric tonnes at 1.30% nickel (2.3M tonnes of contained nickel).

LEVEL 2, 66 HUNTER STREET SYDNEY, NSW 2000 INFO@NICKELMINES.COM.AU

NICKEL

Strong, hard and tough The many ways nickel-containing alloy steels deliver. ARTICLE CONTR IBUTED BY THE NICKEL INSTITUTE

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AUSTRALIAN RESOURCES & INVESTMENT

ost nickel production is destined for stainless steel, but a significant eight per cent is used in the production of alloy steels, which are needed to deliver specific characteristics for specialised and often critical applications. Alloy steels include a wide variety of iron-based materials. Nickel content ranges from very low – approximately 0.3 per cent in some alloy steels – and up to as much as 20 per cent in maraging steels. Each alloy is designed for some combination of greater strength, hardness, wear resistance or toughness than plain carbon steels. They are typically used in equipment that delivers power, and forms and cuts metal, or are used at low temperatures where carbon steels lack adequate toughness. For simplicity, alloy steels can be divided into several types, with specific properties for specific end uses. Nickel alloy steels are essential in the construction of tools and machinery that enable industry to make other tools and machinery.

81.3

CHARPY IMPACT (KEYHOLE-NOTCH) FT-LB

Ni 54.2

TOOL STEEL Tool steel is a term applied to a variety of high-hardness, abrasionresistant steels used for applications, such as dies (stamping or extrusion), cutting or shearing, mould making, or impact applications like hammers (personal or industrial). Their heat treatment is similar to hardenable low-alloy steels. Air-hardened tool steels reduce distortion caused by the rapid water quenching, and they possess a balance of wear resistance and toughness. Plastic-mould tool steels are low-carbon steels that are shaped and then carburised, hardened and then tempered to a high surface hardness, which makes them ideal for injection moulds and die-casting dies.

-300 (-185)

-200 (-129)

0% N i

2 .2

H A R D E N A B L E L O W - A L L OY S T E E L These steels constitute a category of ferrous materials that exhibit mechanical properties superior to plain carbon steels. This is achieved by the addition of alloying elements, such as nickel, chromium, and molybdenum, followed by a quench (rapid cooling) and temper heat treatment. These elements, when dissolved in austenite prior to quenching, increase hardenability. Nickel complements the hardening effect of chromium and molybdenum, and is important in providing toughness to the hard-martensitic microstructure that results from the quench and temper heat treatment (Table 1).

3. 5

JOULES

-100 (-73)

27.1

0 (-18)

100 (38)

TEMPERATURE °F (°C) Figure 1. Effect of nickel on impact toughness of normalised and tempered half-inch plates of low carbon steel

H I G H - S T R E N G T H , L O W - A L L OY ( W E AT H E R I N G S T E E L ) The finer grain structure of these steels results in increased strength compared to plain carbon steels. This finer grain is achieved by influencing transformation temperatures so that the conversion of austenite to ferrite and pearlite occurs at a lower temperature during air-cooling. At the low carbon levels typical of high-strength, low-alloy (HSLA) steels, elements such as silicon, copper, nickel and phosphorus are particularly effective for producing fine pearlite. The addition of chromium, copper and nickel produces a stable rust layer that adheres to the base metal and is much less porous than the rust layer that forms on ordinary structural steel. The

75 M M (3 ”) D I A R O U N D BAR

Y I E L D S T R E N G T H M PA (K S I)

TENSILE STRENGTH M PA (K S I)

AISI 4340 annealed

588 (86)

752 (110)

AISI 4340 ASTM A434 class BD

847 (124)

963 (141)

AISI 1045 normalised

410 (60)

629 (92)

% E L O N G AT I O N

Table 1. Comparing typical mechanical values for AISI 4340 in the annealed, and quench and tempered condition to AISI 1045 carbon steel

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NICKEL

STEEL T YPE

G R A D E (U N S)

OTHER

AISI 4340 (G43400)

0.4

1.8

0.8

bal

Transmission gears, shafts and aircraft landing gear

AISI 4320H (H43200)

0.2

1.8

0.5

bal

Gears and pinions that are surface-hardened for wear resistance but possess a tough core

AR450

0.26

0.70

1.0

bal

Abrasion-resistant plate for chutes, dump liners, grates, ballistic plates

Tool steel – air-hardened

A9 (T30109)

0.5

1.5

5.0

bal

Mo, V

Tool steel – plastic mould

P6 (T51606)

0.1

3.5

1.5

bal

Zinc die-casting and plastic injection moulding dies Provide higher strength-to-weight ratio than plain-carbon steel and greater atmospheric corrosion resistance for use in bridge construction

Hardenable low alloy

High-strength low-alloy (HSLA) ‘weathering steel’

A588 Gr C (K11538)

0.1

0.35

0.5

bal

Nickel steel

9% nickel steel (K81340)

0.13

9.0

bal

Maraging steel

Maraging 300 (K93120)

0.03

18.5

bal

Cr, Cu, V

A P P L I C AT I O N S

Drawing and forming dies, shear blades

Cryogenic applications, such as liquefied natural gas (LNG) storage

Co, Mo, Al, Ti

Rocket motor casings, airframes, power shafts, aircraft landing gear, injection moulds, dies

Table 2. Typical chemical composition of some notable nickel-containing alloy steels

result is a much lower corrosion rate, which allows these steels to be used uncoated. Table 2 shows the difference in mechanical properties for ASTM A36 carbon structural steel and ASTM A588 Grade C HSLA structural steel. NICKEL STEEL Ferritic steels with high nickel content, typically greater than three per cent, find extensive use in applications involving exposure to temperatures from 0°C to -196°C. Such applications include storage tanks for liquefied hydrocarbon gases, as well as structures and machinery designed for use in cold regions. These steels utilise the effect of nickel content in reducing the impact transition temperature, thereby improving toughness at low temperatures. In carbon and most low-alloy steels, as the temperature drops below 24°C (75°F), strength and hardness increase, while tensile ductility and toughness decrease. Nickel improves low-temperature toughness, as illustrated by the Charpy impact results in Figure 1. First applied in liquid oxygen containment vessels in 1952, nine per cent nickel steel has since mainly been used for the inner shell of liquefied natural gas (LNG) tanks. It is selected instead of austenitic stainless steels, due to the combination of high-strength and reliable fracture toughness at very low temperatures (down to -19°C). M A R AG I N G S T E E L Maraging steels are low-carbon iron-nickel alloys, containing approximately 18 per cent nickel and additionally alloyed with cobalt, molybdenum, titanium and other elements. These alloys are quenched to martensite followed by a precipitation-hardening heat treatment at 480–500°C, which promotes precipitation of intermetallics, such as Ni3Mo and Ni3Ti. These steels possess high fracture toughness, and their impact on fatigue strength indicates that they are useful for repeated impact-loading situations, such

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YIELD STRENGTH M PA (K S I) MIN

TENSILE STRENGTH M PA (K S I) MIN

% E L O N G AT I O N MIN

ASTM A36

250 (36)

400 (58)

ASTM A588 Gr C

345 (50)

485 (70)

GRADE

Table 3. The difference in mechanical properties for ASTM A36 carbon structural steel and ASTM A588 grade C high-strength low-alloy structural steel

as in electromechanical components. The relatively low-heat treatment temperature results in much less distortion than the quenching of hardenable low-alloy steels, making them desirable for long, thin parts. Though the amount of nickel used in these alloy steels is less significant than in stainless steel production, their variety is extensive, and industrially they are important enablers. To help engineers and specifiers determine the best material for their application, the Nickel Institute provides free technical advice. For more information, visit www.nickelinstitute.org.

T H E D E S I R A B L E P R O P E R T I E S O F M A R AG I N G STEELS CA N BE SUM M A R ISED A S:

• ultra-high strength at room temperature • simple heat treatment, resulting in minimum distortion • superior fracture toughness compared to quenched and tempered steel of similar strength level • easily fabricated with good weldability.

AUSTRALIAN RESOURCES & INVESTMENT

GLOSSARY OF TERMS

Austenite is the atomic structure of steel that exists above 727°C. It is a non-magnetic solid solution of iron and carbon. Cementite is a compound of iron and carbon with the formula Fe3C. As the carbon content of steel increases, so does the amount of cementite, and likewise the amount of pearlite with an accompanying increase in strength. Increasing carbon content is the easiest means to increase mechanical strength and hardness, but with increasing strength, there is an accompanying decrease in toughness. Note: Reducing grain size (making it finer) also increases mechanical strength without an accompanying decrease in toughness. Charpy impact is a standardised test that measures the amount of energy

absorbed by a standard-size metal coupon when it fractures. Ferrite is the atomic structure of steel that exists below 727°C. Ferrite has a lower carbon solubility than austenite, and thus when steel is cooled below 727°C, excess carbon is tied-up as cementite and is layered with ferrite to form pearlite. Thus, at room temperature, steel microstructure consists of pearlite islands in ferrite. Hardenability is the ability of a steel to achieve a certain hardness at a given depth after rapid cooling (quenching). Martensite is a magnetic structure of steel formed by quenching of austenite at such a high rate that carbon atoms do not have time to diffuse out of the crystal structure in large enough

quantities to form cementite. As a result of the quenching, the austenite transforms into a highly strained structure that is supersaturated with carbon, which increases mechanical strength and hardness. Pearlite is a lamellar structure composed of alternating layers of ferrite and cementite. Precipitation hardening is a heat treatment technique used to increase the mechanical strength or hardness of malleable metals by promoting the formation (precipitation) of a dispersion of fine particles of metallic compounds (intermetallics) that stiffen the metal’s crystal structure. Toughness is the ability of a material to absorb energy and plastically deform, thus resisting fracturing when stressed.

Maraging steel is a high-performance material that can be found in the face or entire head of premium golf clubs

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NICKEL

Cassini and OZ cashing in Cassini Resources (30 per cent) and its joint venture partner OZ Minerals (70 per cent) are closing in on a multi-decade development opportunity at the West Musgrave nickel-copper-cobalt joint venture in Western Australia.

ichard Bevan, Managing Director of the Perth-based Cassini, says momentum at the joint venture was ‘still flat chat’, with a pre-feasibility study into a development expected to be released in late August/early September. Cassini acquired West Musgrave, Australia’s biggest undeveloped nickelcopper deposit, in 2014 for a knockdown price from BHP. It subsequently joint ventured the project with OZ Minerals in 2016, with OZ now having earned a 70 per cent stake by spending $36 million on exploration and development studies. A scoping study released in November 2017 pointed to a bottom-quartile-cost copper producer (after nickel credits) from an initial eight-year mine life, with a clearview mine life extending to beyond 15 years. Average annual production was estimated at 25,000–30,000 tonnes of copper and 20,000–25,000 tonnes of nickel from a potential $730–800million development.

X –– – 80

Assuming confirmation of a robust project, a definitive feasibility study could lead to a final investment decision in early 2021 and first production in 2023. West Musgrave’s potential multi-decade production credentials were enhanced in June when Cassini – as the joint venture’s exploration operator – announced exciting drill results from the One Tree Hill prospect, 15 kilometres south-west of the project’s main Nebo-Babel deposits. ‘We were really excited by the results,’ Bevan says. ‘The intersections included reasonably thick zones of good-grade copper mineralisation a lot closer to surface than we thought would be the case.’ Importantly, geophysical modelling previously used by Cassini would not have picked up the zones. ‘It is another opportunity for further mineralisation out there that can add value to Nebo-Babel deposits. It gives us confidence that once we get an operation out there, it could be a multi-decade opportunity,’ Bevan says.

Follow-up drilling at One Tree Hill is planned to start in August. While the major potential of the West Musgrave project (and the joint venture’s satellite deposits/prospects) unfold, Cassini is setting out to do some gold exploration on its own account at Mount Squires. The project area – held 100 per cent by Cassini – is close to One Tree Well, which sits inside the Cassini–OZ joint venture ground. A 50-kilometre-long structure at Mount Squires has been the subject of minimal drilling in the past by previous owners. That is despite a stand-out hit in 2009 of 15 metres grading 2.3 grams per tonne from 31 metres, including five metres at 4.7 grams per tonne from 34 metres. Bevan says the first Cassini holes at Mount Squires were being planned for August. ‘For us strategically, it is a good foil to the nickel-copper joint venture. It’s 100 per cent Cassini so there is leverage there for Cassini shareholders.’

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C O B A LT

Mount Gilmore a major Corazon target Corazon Mining is busy defining drill targets in a hunt for large intrusive-related copper-cobalt-gold deposits at its Mount Gilmore project near Grafton in northeastern New South Wales.

hile Mount Gilmore is known for the historic and cobaltdominant Cobalt Ridge property, geochemical sampling has uncovered a 22-kilometre trend, which Corazon believes could represent a district-scale exploration play for intrusive-related deposits. Managing Director Brett Smith says that the anomalies identified by the geochemical sampling have very much become the focus at Mount Gilmore. ‘We are dealing with a big alteration zone. Whether that translates into a big deposit is what we will try and prove with drilling,’ Smith says. An induced polarisation (IP) ground geophysical survey was due to be completed by the end of July. The survey was aimed at defining areas of interest to be followed up with more targeted survey work. Smith says that the IP targeting method has been used with great effect in the exploration for concealed sulphide deposits elsewhere in New South Wales. ‘The current survey is testing areas of extensive high-tenor copper-cobalt-

X –– – 82

silver anomalism in surface soil samples covering large areas of favourable alteration and outcropping sulphide mineralisation,’ Smith says. The alternation zones include breccia styles typical of the Cobalt Ridge sulphide deposit, which sits at the southern end of the prospective 22-kilometre trend, as well as assemblages typical of intrusion-related sulphide deposits. Ahead of the future drilling program on the new targets, Corazon has increased its equity in Mount Gilmore to 80 per cent by acquiring an additional 29 per cent from the project vendor – the privately held Providence Gold and Minerals. Exploration excitement is also building at Corazon’s other main focus: the Lynn Lake nickel-copper-cobalt project in Manitoba, Canada. Lynn Lake is a historical mining centre, with various deposits mined until its closure in 1976. Corazon consolidated the ground position in 2015, and in October last year, updated the resource estimate to 110,300 tonnes of

nickel, 51,400 tonnes of copper, and the first time inclusion of 5200 tonnes of highvalue cobalt. The new resource estimate represented a 60 per cent increase in total tonnes, and a 35 per cent improvement in nickel and copper metal from the previous 2015 estimate. It was based on five known deposits, with another 11 remaining to be assessed. While handy, Corazon is keen to add to the existing resource base by tapping Lynn Lake’s exploration potential for new deposits using a new geophysical processing technique – Magnetic Vector Inversion (MVI). Corazon says the MVI enhancement of an existing technology can identify known (previously mined) ore bodies and resource areas down to at least 600–700 metres below surface. ‘The potential for new discoveries is obvious; however, there are also numerous historically drill-defined targets in the mining area that have yet to be properly tested,’ Smith says.

C O B A LT

THE COBALT CODE A good practice management framework for cobalt-sourcing risks.

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AUSTRALIAN RESOURCES & INVESTMENT

esponsible and sustainable production practices have been at the top of the agenda for many large-scale mining companies since the late 1990s. Responsible mining programs have been developed collectively to help to improve public awareness, address concerns for the environment, improve occupational health and safety, and introduce the broader concept of sustainability. On 9 January 2019, the Cobalt Institute (CI), which represents over 70 per cent of cobalt produced globally, launched the Cobalt Industry Responsible Assessment Framework (CIRAF). Through a more transparent and consistent approach to cobalt due diligence and reporting, CIRAF enhances the ability of cobalt producers and buyers to assess, mitigate and report on responsible production and sourcing risks in their operations and supply chain. By providing a good practice framework on how to respond to nine priority risk areas, the CIRAF consolidates due diligence action being taken by companies across the cobalt industry to meet the expectations of civil society, the media, other stakeholders and the cobalt market. It also creates a platform for the cobalt industry to share good practice in responsible production and sourcing, and allows external stakeholders to follow the progress being made across the priority issue areas identified by the framework. ‘The CIRAF builds on the longstanding commitment of the CI and its members to implement and demonstrate sustainable and responsible practice,’ says David Weight, President of the CI. He adds, ‘The framework will consolidate action being taken by individual cobalt producers, and will provide participants with a consistent management framework for conducting enhanced risk management and a coherent approach to reporting that action to the market’. Following the launch, the framework is now being applied by CI members in an initial implementation year. While not a standard or certification scheme, the CIRAF provides a management tool and will enable participants to demonstrate that they are aligned with global good practice on responsible production and sourcing, with annual public reporting being a mandatory requirement. W H AT I S C I R A F A N D H O W D O E S I T W O R K ? The framework represents the collective efforts of global cobalt producers and buyers to take a proactive approach in strengthening and demonstrating responsible practice on four risk categories covering nine key material risk areas. The risks areas include: environment (air, water and soil environmental impacts, and biodiversity impacts) occupational health and safety (OHS) and working conditions human rights (as defined in Annex II of the Organisation for Economic Co-operation and Development Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (OECD DDG): conflict and corruption, human rights impact and child labour) community (ASM, livelihoods and resettlement). The management framework for risk assessment and mitigation, outlined in the CIRAF, is consistent with leading global standards on responsible resource and human rights due diligence, including

the OECD DDG and the UN Guiding Principles on Business and Human Rights. ‘The CIRAF puts the cobalt industry at the forefront of industry good practice in responsible production and sourcing, and offers a mechanism for participants to demonstrate alignment with the OECD DDG. It also underlines the commitment of global cobalt producers and buyers to deliver coherent and transparent information on responsible production and sourcing aligned with the due diligence expectations of the market,’ explains Weight. Participants must assess which risk areas are material to their cobalt operations and supply chain where applicable, and demonstrate, through annual public reporting, the presence of a policy and due diligence management system, as well as existing responsible production/sourcing standards that they are already applying. As a baseline requirement, CIRAF participants undertake an annual assessment and third-party assurance of their operations, policy and due diligence management system for the human rights category of identified material risks. The CIRAF approach will considerably improve facilitation on cobalt responsible production and sourcing due diligence, while also making coordination and engagement between cobalt buyers and upstream producers more straightforward. NEX T STEPS Following the launch, the framework is being applied by CI members in an initial implementation year. According to a survey of CI members conducted in April this year, more than 50 per cent of the respondents already have a policy and due diligence system in place for human rights – a mandatory requirement of CIRAF – while just under 20 per cent claim that they will have met the mandatory requirement by the year’s end. The CI is organising member workshops and webinars to facilitate the implementation process and the exchange of good practices. Through the first year of CIRAF’s implementation, further consultation will be undertaken as the initiative goes into practice. The framework’s adoption will be monitored and reviewed by the CI and RCS Global. Furthermore, CIRAF aims to promote supply chain sustainability across a wide range of raw materials and minerals, and intends to share the knowledge and experience of CIRAF to support similar initiatives in other industries. Therefore, discussions with industry groups and standard-setting bodies to align, replicate and scale CIRAF are ongoing. Various stakeholders have also been invited to join an informal stakeholder dialogue group that will review and discuss CIRAF progress through 2019. For further information, please refer to www.cobaltinstitute.org/ assets/files/News/English-CIRAF-External-Primer_12-04-2019.pdf. The Cobalt Institute is a non-profit trade association composed of producers, users, recyclers and traders of cobalt. It promotes the sustainable and responsible production and use of cobalt in all its forms. For more information, visit www.cobaltinstitute.org.

– 85 –

GRAPHITE

Black Rock Mining’s enhanced Mahenge plan Black Rock Mining has expanded the scope of its Mahenge graphite project, in Tanzania, in response to strong interest from end users in the project’s premium large flake production

he enhancement to the company’s October 2018 definitive feasibility study into Mahenge’s development was released in July, and envisages the addition of a fourth production module and a compressed development schedule. Chief Executive Officer John de Vries says the enhancement was ‘ultimately a customer and financial markets-driven outcome’ in response to a number of Mahenge’s competitive advantages. Those advantages were outlined to future customers during pilot plant trials, which were conducted by Black Rock in Canada and China. de Vries says that the results from the pilot plants highlighted, to Chinese end users in particular, the significant value in use of Mahenge’s graphite concentrate. The pilot plant confirmation work is a key point of difference in Black Rock’s planning for the development of Mahenge – one of the world’s biggest graphite resources, which is 450 kilometres

X –– – 86

by road from Tanzania’s biggest port, Dar es Salaam. Another critical element in Black Rock’s de-risking of the development, compared with others in the graphite sector, is its modular approach. It’s what the company calls its ‘crawl, walk, run’ development strategy. Now that a fourth production module has been added to the Mahenge development plant, the development strategy has been updated to ‘crawl, walk, run, sprint’. de Vries explained that under the modular strategy, Black Rock would build the first 85,000-tonnes-per-annum production module and, assuming demand and prices were supportive, it would then move on to a second module, followed on the same basis by a third and fourth. ‘But if the demand and prices are not so good, we would focus on paying off the bill for the first module and bide our time. ‘We don’t need to build a massive thing on day one. We are in charge of when we

make those expansion decisions. It is the quality of the ore body that allows us to take the modular approach,’ de Vries says. ‘Our approach is the Goldilocks approach – where the first module is big enough to be investable but small enough to be fundable.’ de Vries says that there is a sweet spot for Mahenge concentrates (60 per cent of the material is premium-priced large flake) in the graphite market, because its high purity means that end users will not have to subject the material to an intermediate acid treatment step to achieve final product. Targeted steady-state annual production increases from 250,000 tonnes per annum from the original plan, to 340,000 tonnes per annum under the enhanced four-module plan. First production would be possible in 2021, subject to financing. ‘We are continuing to move down the financing runway,’ de Vries says.

MINERAL SANDS

A step forward for silica sand mining The emergence of a strong show of Chinese customer support has buoyed Diatreme Resources’ plan to become a silica sand producer from its Galalar silica project in Far North Queensland.

iatreme Chief Executive Officer Neil McIntyre says that the memorandum of understanding (MOU) signed with China’s Fengsha Group in mid July was ‘extremely significant’. Under the MOU, Galalar could potentially supply the privately owned Fengsha Group with 500,000 tonnes per annum of photovoltaic-grade silica sand – used to make solar panels. Fengsha is China’s biggest processor and supplier of photovoltaic and specialty high-end silica sand, which is used in the manufacturing of photoelectric glass, thinfilm transistor (TFT) glass and high-end automotive paints. McIntyre says that the MOU also covered the potential for an additional 250,000 tonnes per annum of silica product, subject to confirmation that chemical processing of Galalar product in China can achieve particularly pure specifications (less than 50 parts per million and 30 parts per million iron oxide). McIntyre says that it was important to note that the MOU terms included technical support on product development, market access and logistics. It also covers the potential for direct investment in Galalar by Fengsha. ‘The agreement is a major step forward for a potential new silica sand mine in north Queensland, supplying premiumquality silica to Asia’s fast-growing solar panel market,’ McIntyre says. Somewhat uniquely in the Australian mining industry, the traditional landowner group, Hopevale Congress, has a 12.5 per cent free carried interest in the Galalar project. ‘They’ve been fantastic with us and in our dealings with government. They are really keen to see something happen on the ground,’ McIntyre says. Diatreme’s tenements in the broader region surround the world’s biggest operating silica mine, Mitsubishi Corporation’s 2.5-million-tonnes-perannum Cape Flattery mine. The MOU with Fengsha, which is currently non-binding and has a 12-

X –– – 88

Helicopter survey of Diatreme’s Galalar silica sand project in Far North Queensland

month term, comes as Diatreme has been working on completing a scoping study for the development. ‘We can move quickly as it is a relatively simple project in mining terms. It is a homogenous resource through the dunes, and the market is screaming out for the very particular product we are looking at producing,’ McIntyre says. The progress at Galalar comes as Diatreme works on concluding the previously announced sale or partnering process for its zircon-rich Cyclone mineral sands project in Western Australia’s Eucla Basin. Mineral sands is a very different business to silica sand. Zircon’s main use is in ceramics (tiles and sanitary ware) and in casting/foundry applications.

A definitive feasibility study for Cyclone’s development was released in November last year. It found that a $135-million development would enjoy a capital payback period of 2.7 years. ‘It is an unusual project in that it is fully permitted and ready to go. It is in a market that has an appetite, in particular, for zircon,’ McIntyre says. With Cyclone one of a handful of zircon-rich discoveries in the past decade, Diatreme is confident of unlocking value from the project amid constrained supply and growing demand. And with Galalar picking up speed, the Brisbane-based miner is suddenly painting an extremely bright outlook.

WE’RE READY TO GET RACING As Asia’s next wave of growth gathers pace, silica sand from Diatreme’s emerging Galalar Silica Project in North Queensland will be used in all things glass, from advanced photovoltaic panels to millions of new windscreens. Our foot’s to the floor. Our eyes are facing forward. And we have the strategic roadmap to get to the future in front.

Diatreme’s Galalar Silica Project is located near the world’s largest operating silica sand mine at Cape Flattery in North Queensland.

Total Resource (Indicated & Inferred) increased to

The global silica sand market is estimated to reach nearly

30.2Mt > 99% SiO2

US$10 billion in annual revenues by 2022.

The global solar PV glass industry is estimated to reach

US$48.2 billion by 2025.

DIATREME.COM.AU ASX:DRX

Proven capability of supplying premium-quality silica for solar PV market

H IPA GH PURIT Y ALUMINA

Alpha HPA doing it first The start of pilot plant trials in Brisbane has moved Alpha HPA closer to the commercialisation of its unique process for the production of high purity alumina (HPA).

he company’s pilot plant has been underway since early July, and was expected to lead to the dispatch of commercial qualification samples to selected end users in August. Managing Director Rimas Kairaitis says confidence was running high that the pilot plant would confirm the company’s industry-disruptive HPA First processing technology, which can deliver high-volume HPA production at low cost. Unlike existing HPA production processes that use aluminium metal or mined kaolin as their starting point, the feedstock for HPA First is readily available aluminium chemical feedstocks. Due to its potential to produce HPA at much lower costs, Alpha HPA has kept details of the HPA First process under wraps. But Kairaitis says that it is a highly selective solvent extraction process at atmospheric temperatures and pressures. ‘We believe the processing technology is robust and, because of the expected low costs of production, it is going to be very

X –– – 90

disruptive to existing and other proposed processes out there,’ Kairaitis says. HPA is the pure form of aluminium oxide, and is a critical part of batteries in the revolution underway in electric vehicles and the storage of renewable energy. HPA-coated separators between the anode and cathodes in batteries provide thermal stability (preventing fires) while allowing ionic exchange. A new growth area is the use of an HPA coating on the electrodes themselves. Apart from strong growth in demand from the battery sector, HPA is enjoying demand growth from its use in LED lighting and sapphire, or scratch-resistant glass. The decision to proceed to pilot plant confirmation and customer acceptance of the HPA First process was triggered by the ‘compelling’ business case demonstrated in Alpha HPA’s updated prefeasibility study, released earlier this year. The pre-feasibility study assumed HPA pricing of US$25,000 per tonne and project capital expenditure of US$149

million for an operation producing 10,200 tonnes per annum of the high-value product at 99.99 per cent (4N) purity from 20,400 tonnes per annum of aluminium feedstock. Unit cash costs were estimated at US$5123 per tonne after by-product credits and annual pre-tax cash flow was estimated at just under US$200 million. Critically, sensitivity analysis indicated that the project would be able to withstand HPA prices as low as US$10,000 per tonne. The ability to produce 4N purity HPA is critical to customer acceptance and pricing of the product. Purity is determined by the concentration of trace elements in the alumina compound – e.g. iron, magnesium and sodium. Alpha HPA confirmed that capability ahead of the pilot plant trials using a solvent extraction mini-rig process. Assay results reported in April confirmed more than 4N purity and that the HPA was in a form required for battery applications.

HIGH PURIT Y ALUMINA

High purity alumina: another link for Australia’s battery mineral chain BY WAR R EN PEARCE, CHIEF EXECUTIVE OFFICER, THE ASSOCIATION OF MINING AND EXPLOR ATION COMPANIES

In the past three decades, the number of battery-powered devices in the world – such as mobile phones – has risen to more than seven billion, a figure that will continue to increase in the foreseeable future.

here are now more battery-powered devices on the planet than there are people, and the demand for batteries does not appear to be slowing down. Batteries are needed for almost every device, from your toothbrush to high-tech bicycle brakes. The rise in the use of mobile phones and other gadgets is matched by increases in electric vehicles (EVs) and renewable energy technologies, which all drive the exponential growth forecast in the global battery market. An independent report released by the Association of Mining and Exploration Companies (AMEC) in January last year suggests that the lithium-ion battery value chain will grow from $160 billion in 2017, to $2 trillion in 2025. Each battery will require lithium, vanadium, cobalt, graphite, copper and nickel in far greater quantities than ever experienced. For example, a battery-powered vehicle demands twice the volume of copper than that of a combustion engine, due to all the wiring needed. These vehicles will also require many more magnets and other specialty products that enable batteries to perform more effectively and safer. One of these is the new kid on the lithium-ion battery block: high purity alumina (HPA). HPA is a high-grade form of non-metallurgical alumina, with a purity level of 99.99 per cent or above. It is the critical ingredient required for the production of synthetic sapphire, which is used to manufacture LED lights and scratch-resistant sapphire glass. This gives it a unique position in the market, as there is no substitute for HPA when it comes to manufacturing synthetic sapphire. It is also used directly in the manufacturing of lithium-ion batteries. HPA has a number of properties that makes it a unique material critical for use in batteries. It has a high melting point, and thermal and electrical insulative properties make it ideal as a component for coating separators in lithium-ion batteries, making them safer to use and extending the battery life.

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Traditionally, HPA has been produced by using bauxite to create a refined aluminium metal, which is then processed further to create HPA. The process to turn it into aluminium metal alone is costly and energy-intensive, then there is the additional energy required for processing the metal to HPA; this has meant that HPA has often been overlooked. With it now being an essential component in increasing the safety of lithium-ion batteries, producers have discovered better, more energy-efficient and economical ways to produce it. Many of these newer methods of processing eliminate the need for the aluminium metal stage. AMEC member and emerging HPA producer FYI Resources has done just this, cutting out the added expense and energy use through its innovative processing flow sheet. By bypassing the traditional expensive, energy-intensive method and using feedstock from its 100 per cent owned Cadoux kaolin deposit, the company can significantly reduce the production cost of HPA by creating a product of extremely high quality and consistency. It is also drastically more cost-efficient, enabling the company to reliably supply a growing and developing battery market. FYI Resources is doing its part to bring down the price of the battery component and hopefully allow markets cheaper access to better products, making downstream processing more appealing for Australia. Independent testing on FYI’s Cadoux feedstock has produced HPA ranging from 99.996 per cent to 99.9993 per cent, well above the company’s target of 99.99 per cent purity, making it one of the world’s highest-quality and highest-purity HPA producers. With its resources estimated at 16.1 million tonnes at 22.2 per cent aluminium oxide, it is capable of having a mine life of more than 50 years. It’s difficult to overstate how much the global response to climate change depends on these minerals. The unique properties of products like HPA make solar panels, wind turbines and hydro-electric motors

AUSTRALIAN RESOURCES & INVESTMENT

safer and more productive. Without these, the world’s efforts to reduce carbon emissions will stall. This path is quite clear, and demand for more electric EVs and more batteries for energy storage is increasing by the year. One report predicts that by 2040, 55 per cent of all new car sales and 33 per cent of global fleets are expected to be electric. Australia is currently mining over half of the lithium by value globally, but our involvement past that stage falls quickly. We’re exporting what we are mining, and other countries are capitalising on the downstream value of the chain. Australia has the opportunity to be a world leader in the battery processing chain, and to realise much greater value from our minerals and from the development of high-quality, low-cost products like HPA. We can’t just leave this up to industry; the government needs to come to the party, too. It needs to be proactive with policy settings, prioritise all battery mineral–related projects, and explore opportunities to coinvest and incentivise. We often just focus on the obvious: the number of jobs and the investment into the economy. While these are RC drilling, May 2018 hugely important, we also need to be proud of the direction we’re heading in. Value-adding to our battery minerals is a huge step for Australia, and one in the right direction. As an industry, we are always looking at how to be more innovative – FYI Resources’ HPA project is a prime example. We consider how we can better manage our environment, how we can develop our communities, and, most importantly, how we can contribute to a better future; the development of battery minerals as a path forward to low-emission energy does just that. How much domestic processing of minerals occurs is a choice for the state and federal governments. How far downstream each miner progresses depends on a wide range of factors, including weighing the

cost of regulation, third-party payments and expected time frames. Almost all of these costs are within the control of the government. While the cost of doing business will underpin decision-making, before that choice is made, the government needs to clearly stake-out a leadership role by creating stable and transparent policy settings that entice investment. We have all the minerals necessary, the expertise and a highly skilled workforce to undertake the work; but we need all tiers of government to work together and show leadership to facilitate this opportunity before another country capitalises. It all makes for a very attractive global investment.

– 93 –

B AT T EPRUYRM LS H IGH I TAT Y EARL IUAM INA

Altech Chemicals unveils equity strategy The German equity market has emerged as a key backer of Altech Chemicals’ push to become a leading producer of high purity alumina (HPA).

he move comes as commodity analysts predict much stronger demand growth (and prices) for HPA, stemming from the LED lighting and lithium-ion battery sectors, with demand growth for HPA as a coating on thermal separators that are used in lithium-ion batteries particularly strong. In mid July, Altech Managing Director Iggy Tan unveiled the company’s German/ European equity strategy. Tan says that the strategy is advantageous to existing Altech shareholders, and should assist in financial closure to funding for its planned 4500-tonne-per-annum HPA plant in Malaysia. In a two-step process under the equity strategy, Altech has acquired a 29 per cent stake in Frankfurt-listed Youbisheng Green Paper AG (YAG) for a combination of cash and shares. YAG’s name is being changed to Altech Advanced Materials AG, and it will soon set about raising sufficient funds to exercise a right to acquire up to a 49 per cent stake in Altech’s HPA project for US$100 million (A$142 million).

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YAG is to pay Altech a non-refundable fee in cash for the project aquisition right, while Altech has agreed to buy back YAG’s project stake at the six-year anniversary of financial close, by paying a buy-back price that delivers YAG a return of 15 per cent per annum. Tan says that the deal would be less dilutionary for existing shareholders compared to the option of Altech raising capital at the company’s current share price, plus it enhances project and company valuation. ‘Europe has correctly identified commodity risks along the lithium-ion battery materials supply chain, and has expressed a desire to support industry players to ensure security of supply,’ Tan says. As part of its project financing activities, Altech recently commissioned an HPA market outlook report from CRU Consulting, an independent commodity research analyst, based in London. Altech announced the results of CRU’s work in early July, a key finding was that unconstrained demand for the high-

quality HPA market segment that Altech is targeting (4N+), was significantly stronger than CRU had forecast in a previous market report, completed in 2018. The previous report estimated HPA demand at 92,900 tonnes per annum by 2025. In its recent report, CRU estimated that HPA demand could grow 30 per cent annually from 19,000 tonnes per annum in 2018, to 272,000 tonnes per annum in 2028. But it says that the supercharged growth would be constrained by limited HPA supply availability, and that a spike in HPA prices would likely result from a largescale deficit. Tan says that the CRU report highlights the strong demand profile for HPA. ‘Basically, there are not a lot of new plants currently under construction to meet the forecast growth in HPA demand,’ Tan says. CRU says that Altech ‘should be able to adapt its product mix to meet developments in the market, allowing it to maximise its ability to place all of its output once it begins operating, and to target the industry offering the highest purchase prices’.

HIGH PURIT Y ALUMINA

HPA

Can’t illuminate it, can’t illuminate without it BY TOBY GR EEN, SENIOR CONSULTANT, CRU GROUP

f any reader were to type high purity alumina (HPA) into their search engines, they would see that CRU Group has been highlighting some pretty remarkable demand growth prospects in this market for some time. I wrote my first published piece on this ceramic more than a year ago, and have been waiting ever since for either the penny to drop, or the hammer to fall – which is to say that either someone would step forward with a critical and heretofore unimagined piece of information that would discredit our analysis, or else a horde of investors would pile in to reap the benefits of the commodity growth story of the next decade. And yet, to date, neither of these has really happened. For a market that’s driven by batteries and light-emitting diode (LED) lighting, it seems tough to develop a buzz or shine a light on it. So, what have we learnt over the past year of examining the HPA market? In the most recent study CRU conducted – supporting Altech Chemicals through a financing exercise – we had an opportunity to take our level of coverage much deeper than we had previously, and to test our hypothesis that this material was highly sought after in lithium-ion batteries and LEDs. In the former, HPA is used to either coat or impregnate the separators that stop the whole battery from short-circuiting: doing so roughly doubles the temperature that the separator can withstand. Now, this isn’t particularly important, unless you were, say, fixated on increasing the energy density of the battery so that it carried more charge for its weight – essentially the main goal for all electric vehicle (EV) makers. The more energy you pack into a volume, the higher the temperatures involved: that is the entire principle that has driven an industry-wide shift towards ceramic-coated separators for EV applications. And while many producers have settled at present for a 99.9 per cent purity alumina that falls just shy of the threshold of ‘HPA’, it is nevertheless well known that the lower your impurities, the higher your battery cycle life and charge. Meanwhile, on the lighting side, LEDs have continued to transform the global lighting market as part of ongoing efforts to reduce energy consumption – both for cost/energy

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savings and in order to meet greenhouse gas emissions targets. Synthetic sapphire (essentially a melted and re-crystallised form of HPA) is used in the production of LEDs and acts as the ‘substrate’ onto which the LED circuitry is mounted. This substrate is the direct starting point for the entire LED manufacturing process: it must allow heat to dissipate away from the diode, but not interfere with the electrical circuitry; ideally, it would be extremely hard and chemically inert, as well. Synthetic sapphire is near perfect for this purpose, which is why, to date, it has been used in more than 90 per cent of global LEDs. Moreover, most substrate wafers (a large disk from which individual LEDs are cut) have been historically limited to two-inch diameters due to the technical difficulty of growing and cutting a larger cylinder of sapphire; however, there are numerous reasons a larger substrate wafer would reduce costs in the LED manufacturing process. So, what is the LED industry calling for? Larger sapphire wafers. How do you create these? Start with purer HPA. Does this increase input costs? Yes. Are these more than covered by the cost savings of using an eightinch wafer? Absolutely. Our research into these two sectors, as well as a host of lesserknown uses of HPA and sapphire (polishing semiconductors, supporting catalysts, and creating scratch-proof watch faces) led us to only one conclusion: demand for this material is going up, and fast – very fast. In fact, if it were readily available to the market at any volume, we would probably consume 14 times as much of it in 2028 as we do today. But there’s the rub: HPA is not ‘readily available’. It is, in fact, quite challenging to produce a product with less than 0.01 per cent of impurity at a commercial scale, and history is littered with failed market entrants – most recently, Canada’s Orbite Technologies, although POSCO also had a short-lived experiment in 2015. All that isn’t to say that no-one has picked up the message. In fact, a fair few mining and processing juniors have recognised the worthiness of this pursuit, and have either sought out appropriate mineral resources, or else added ‘extract an HPA product’ to the list of their chemical engineers’ responsibilities.

AUSTRALIAN RESOURCES & INVESTMENT

Several projects now exist that are seeking to exploit kaolin – aluminous clay – resources as a fairly easy precursor for HPA production – Altech Chemicals, FYI Resources, Gulf Minerals and Andromeda Metals are among those based here in Australia. Still, others have begun to pursue HPA via a solvent extraction process, either as the main target or a by-product; again, Alpha HPA and King River Resources are among the Antipodeans pursuing this model. In addition to the juniors, some of the major commodity trading houses have begun to turn their attentions to this niche market: most famously, Mitsubishi Corporation has inked a supply agreement with Altech Chemicals, but CRU is aware of at least one other company of comparable scale that is considering a similar arrangement.

The first challenge, both for these producers and anyone considering a tilt at this fascinating market, is finding out whose process can be scaled up from laboratories and pilot plants into fully fledged commercial operations capable of supplying thousands of tonnes per annum of 99.99 per cent pure alumina to battery-makers and sapphire manufacturers. The second will be finding consumers in China, Japan and South Korea who trust the quality and consistency of their product – no mean feat, given how many have been mis-sold lower-quality material in the past. Any producer who can successfully jump these hurdles, however, is sure to be well rewarded, with achievable prices currently at almost double the cost of production – and trending up. If you are looking for a new show, this is one to watch.

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LITHIUM

Pan Asia Metals creating value-adding opportunities With a particular focus on South-East Asia, specialty metals group Pan Asia Metals (PAM) is advancing towards an initial public offering on the Australian Securities Exchange.

lanning for the initial public offering (IPO) follows a search of more than five years by PAM for projects with the potential to be positioned in the bottom tercile of the cost curve, as well as having value-adding processing potential close to major industrial centres. The hunt for the right projects has been focused on the South-East Asia tin–tungsten belt, which runs from southern Myanmar, through Thailand, Malaysia and down to the tin islands in Indonesia. This belt is globally significant but is essentially unexplored, especially for lithium. PAM is one of very few companies active in the region, and continues to enjoy first-mover advantage. PAM Managing Director Paul Lock acknowledges the difficulties in assessing if an early-stage project meets the company’s strict criteria in the absence of scoping or pre-feasibility studies. ‘We do that by looking at the proximity of the mineralisation to the surface, the cost environment, the grade and the potential processing route,’ says Lock.

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PAM has also adopted a portfolio approach, replacing lesser projects with better ones to continually improve the overall quality of its portfolio. While the process continues, PAM’s lead assets coming into the company’s IPO phase are in Thailand – the Reung Kiet lithium project, near Phuket, and the Khao Soon tungsten project to the east. PAM has conducted diamond drilling and other exploration at both projects, which has delivered some compelling results. Both projects are drill-ready, and more substantive exploration, infill and extensional drilling is required. The type of mineralisation at Reung Kiet is lepidolite, hosted in pegmatite. Lepidolite is increasingly being seen as a lowercost alternative – via hydrometallurgical processing – to the more traditional brine, hard-rock and clay lithium sources. The project plugs PAM into Thailand’s auto industry, the ninth biggest in the world. The country has an advanced electric vehicle (EV) policy framework,

steering key auto manufacturers into EV and EV battery manufacturing. Khao Soon is a high-grade tungsten project, with its high-grade wolframite mineralisation amenable to simple gravity and magnetic processing. Significant tungsten mineralisation has been identified in the weathered zone, where an exploration target of 15–29.5 million

Pan Asia Metals Managing Director Paul Lock

AUSTRALIAN RESOURCES & INVESTMENT

With its geology and geographic positioning, Lock says PAM is one of the few exploration companies with a realistic pathway to manufacturing lithium carbonate and/or lithium hydroxide, and tungsten derivatives tonnes at 0.2–0.4 per cent tungsten trioxide has been estimated, much of it supported by drilling. Recent induced polarisation geophysics has identified a number of compelling fresh rock targets underlying these zones. ‘We estimate that the average head grade of the Khao Soon tungsten mine was 2.2 per cent tungsten trioxide when it was operating in the 1970s,’ Lock says. PAM is also targeting Malaysia and Myanmar. ‘We select our exploration assets primarily on the basis of their potential to be competitively positioned on the capex and opex cost curves, as well as their potential to take us downstream, as it is not the mining and mine gate sales that interests us. It’s the opportunity to value-add and

gain exposure to a new set of opportunities. If we think a project can get there, then we are very interested,’ Lock says. ‘Positioning on the cost curve and value-adding are core fundamentals of our strategy. The potential to value-add is a key advantage of specialty metals in South-East Asia,’ Lock says. ‘It is very difficult to realistically embark on a strategy of value-adding bulk and base metal projects, unless you have a project with unusually special attributes. Whereas for specialty metals, this is not necessarily the case; however, geography has an important role to play in this strategy.’ With its geology and geographic positioning, Lock says PAM is one of the few exploration companies with a

realistic pathway to manufacturing lithium carbonate and/or lithium hydroxide, and tungsten derivatives. According to Lock, ‘PAM has the only lithium projects in South Asia. PAM’s projects are situated inbetween the industrial and manufacturing hubs of Thailand and Malaysia. ‘Thailand and Malaysia are low-cost, complex industrial economies – being positioned near these industrial centres provides PAM a cost advantage, and direct access to all required inputs and nearby markets for all of its outputs. This in itself is a key differentiator for PAM relative to its peers.’ For more information, email Paul Lock at paul.lock@panasiametals.com.

PanAsiaMetals

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LITHIUM

Good news for Hawkstone Mining The development potential of Hawkstone Mining’s Big Sandy lithium sedimentary project in Arizona is set to come into focus with the planned release of the company’s maiden resource estimate in late September.

anaging Director Paul Lloyd says Hawkstone aims to progress to a Maiden JORC Resource that will allow Hawkstone to proceed to a prefeasibility study, noting at the same time that less than 10 per cent of the flat-lying sedimentary deposit had been tested by the drill bit to date. ‘We are really excited,’ Lloyd says. Once the maiden resource is released, Hawkstone plans to complete an environmental assessment plan so drilling can recommence in January/February next year. ‘There will be a substantial drill out of the deposit as part of the pre-feasibility study process,’ Lloyd says.

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Hawkstone has been moving quickly at Big Sandy, which was only acquired for a mainly share consideration in September 2018. It has since completed a 37-hole drilling program that successfully outlined extensions to the primary lithium mineralisation over a strike length of 850 metres, with mineralisation remaining open to the north, south and west. Located two-and-a-half-hours’ drive north-west of Phoenix, Big Sandy is one of a number of lithium sedimentary deposits found in Arizona and Nevada that are aiming to become a major new lithium supply source alongside the global industry’s established hard-rock and brine operations. In general, low-grade lithium sedimentary deposits benefit from low-cost open-cut mining, and the fact that little to no grinding and crushing is required. The processing of the lithium sedimentary using sulphuric acid in vats and precipitation to produce lithium carbonate, which currently sells for about US$8500 per tonne, is in contrast to the US$700per-tonne price fetched by the six per cent lithium concentrates produced by hard-rock operations in Western Australia.

Lloyd says getting the metallurgy right was the key to creating profitable lithium sedimentary projects. ‘It is not hard to come up with a resource of lithium sedimentary. It is all about the processing and how much sulphuric acid is used in the process. If the acid costs are kept down, profitability will follow,’ Lloyd says. ‘There will be a good news flow from this project.’ Industry consultant Roskill said last year that the prospects for lithium sedimentary projects ‘remain optimistic at present, as they exhibit some advantages over both lithium brine and mineral operations’. But it added that further studies and test work will ‘undoubtedly be required to remove uncertainties over their commercialscale development’. Roskill considered the Thacker Pass project of Vancouver-based Lithium Americas in Nevada to be the most advanced of existing lithium sedimentary projects. A staged development costing an initial US$580 million and capable of producing 30,000 tonnes per annum of lithium carbonate, rising to 60,000 tonnes per annum at a later stage, has been the subject of advanced studies.

LITHIUM

LITHIUM POWERS AHEAD BY ANTHONY FENSOM

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AUSTRALIAN RESOURCES & INVESTMENT

Australia’s lithium sector has powered ahead, driven by investment in new mines and exploration projects nationwide. And with analysts pointing to a looming supply deficit, the industry’s outlook appears bright given the global electric vehicle revolution.

n March 2019, Western Australian Premier Mark McGowan joined the sod-turning ceremony at US chemicals giant Albemarle’s lithium hydroxide processing plant in Kemerton, marking the latest investment in the state’s thriving lithium industry. ‘The Albemarle Kemerton plant is a $1-billion investment in Western Australia that will create 500 construction jobs and another 500 jobs in the south-west, once operational,’ McGowan said in a statement. ‘It will become Australia’s largest lithium hydroxide plant, with approval to produce up to 100,000 tonnes per annum of premium battery-grade lithium hydroxide.’ Already the world’s top producer of hard rock spodumene, the McGowan Government aims to capitalise on the state’s lithium resources with the launch of its Future Battery Industry Strategy and the creation of a lithium and energy materials taskforce. In April 2019, the $53-million Future Battery Industries Cooperative Research Centre was established in Perth, seeking to help make Western Australia a one-stop shop for battery materials. While some overseas markets are lagging, some 20 per cent of new car sales in Australia are expected to be electric vehicles (EVs) by 2030, increasing domestic demand for lithium, nickel, cobalt, graphite and battery technologies. Among Western Australia’s new producers, Altura Mining announced in July 2019 an offtake agreement with China’s Shandong Ruifu for product from its Pilgangoora lithium mine, which commenced commercial production in March. In May, Galaxy Resources reported its strongest month of production to date at its Mt Cattlin lithium mine, with annualised output of more than 260,000 tonnes ahead of its 180,000–210,000-tonne target. In the same month, Talison Lithium secured environmental approval for a $512-million expansion of its Greenbushes mine, increasing the world’s biggest lithium mine even further to an annual output of 2.8 million tonnes. Action heated up in the boardroom, too, with lithium miner Kidman Resources accepting a $776-million takeover bid by conglomerate Wesfarmers. The acquisition would give Wesfarmers control of Kidman’s 50 per cent stake in the Mt Holland lithium project in Western Australia. Activity, however, has not been restricted to Western Australia. In June, Core Lithium announced that it had received a positive environmental assessment for its proposed Grants deposit, south of Darwin, which is part of its flagship Finnis project in the Northern Territory. Further east, private explorer Strategic Metals Australia said in July that it had discovered a new lithium province in Georgetown, North Queensland, opening up the potential for Queensland to become ‘a significant miner and processor of lithium salts for battery manufacturing in the state’. The new projects and expansions follow projections by the Australian Government’s Office of the Chief Economist that domestic

lithum production will reach 335,000 tonnes by fiscal 2021 – up from 272,266 tonnes in fiscal 2019 – helping to boost export revenue to $1.4 billion. ‘EV sales have risen by more than 50 per cent, relative to the same point in 2018, and the rate of growth is accelerating,’ the department said in its June 2019 Resources and Energy Quarterly. Australia dominated output growth in 2018, with production commencing at Pilbara Minerals’ Pilgangoora mine, along with Altura’s mine and Alliance Mineral Assets’ Bald Hill operation – all in Western Australia. While the government forecaster sees lithium hydroxide prices easing in the short term, it points to demand growth likely outstripping supply by around 2023. Other projections also suggest an increasing supply shortfall by the early to mid 2020s, based on the demand from EVs together with battery storage.

While some overseas markets are lagging, some 20 per cent of new car sales in Australia are expected to be electric vehicles (EVs) by 2030, increasing domestic demand for lithium, nickel, cobalt, graphite and battery technologies OV E R S U P P LY M Y T H Dismissing the ‘myth of oversupply’, lithium analyst Joe Lowry suggests that US$12 billion (A$17 billion) in new investment is required over the next five years for supply to match growing demand. Australia’s Macquarie Bank has also switched from bearish to bullish on lithium, following plans by German automaker Volkswagen to buy €50 billion (A$80 billion) worth of battery cells, and ramp-up battery production in Europe and Asia. With Volkswagen’s plans adding to those of rival automakers, including Tesla, Toyota and others, Macquarie Bank now expects five

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LITHIUM

Exploration at Sayona’s Authier lithium project, Quebec, Canada

million EVs to be sold by 2025 and 10 million by 2030. The implications are for ‘a wall of demand coming for lithium from the EV sector’. A July 2019 report by Benchmark Mineral Intelligence points to the ‘increasing possibility of another major deficit in the market by the early 2020s’, with supply growth ‘far from meeting the needs of tomorrow’s EV expansions’. ‘The question in the lithium market is no longer whether spodumene or brine resources will be developed – both are needed to take us anywhere near the growth estimates of the next two to three years,’ says Benchmark’s analysts. ‘The new question is what other channels of supply will be developed to take us close to the demand forecasts for 2025 and beyond.’ Emerging research and consultancy company Wood Mackenzie has also projected a growing supply shortfall, suggesting it may arrive by the middle of the next decade. ‘Total passenger EV car sales, including hybrid electric vehicles (HEVs), were up by more than 24 per cent last year,’ the company says.

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‘Although HEVs had the smallest growth, they made up more than 60 per cent of EV sales. Wood Mackenzie expects global electric car sales (with a plug) to account for seven per cent of all passenger car sales by 2025, 14 per cent by 2030 and 38 per cent by 2040.’ Such projections are backed by Australian lithium companies, including those active overseas. Steve Promnitz, Managing Director of Argentina-focused Lake Resources, says new projects will be crucial in addressing the supply crunch. ‘Supply is simply not meeting the demand, and whether it’s hard rock from Australia or brine from South America, new lithium investment is critical to facilitating the green revolution in energy and transport,’ Promnitz says. Together with its current drilling near the world’s largest lithium brine resource, Lake Resources is also examining the potential for a revolutionary direct extraction method for its Kachi project. The process developed in Silicon Valley offers the potential for low-cost, high-quality production with minimal environmental impact. Other Australian miners are bringing their expertise overseas including Sayona Mining, which is developing its flagship Authier lithium project in Quebec, Canada. Sayona Mining’s Newly appointed Managing Director, Brett Lynch, says the project complements plans for the development of a complete lithium value chain in the province, including downstream processing. ‘Quebec is strategically located near growing North American markets, such as Tesla’s Gigafactories, with access to clean and green low-cost hydropower, infrastructure and skilled labour,’ Lynch says. ‘Australians are recognised across the world for their mining expertise, and it is this skill and experience that we are bringing to Canada, while also building world-class projects in Western Australia.’ For a sector that barely existed a few years ago, lithium’s growth has been truly transformative as the world switches onto the materials required to support the clean-energy revolution.

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