RESOURCES vs RESERVES: Towards a Systems-based understanding of Exploration and Mine Project Development and the Role of the Mining Geologist

Transcription

1 RESOURCES vs RESERVES: Towards a Systems-based understanding of Exploration and Mine Project Development and the Role of the Mining Geologist John P. Sykes MAusIMM PhD Candidate / Adjunct Research Fellow Centre for Exploration Targeting Curtin University / The University of Western Australia johnpaul.sykes@postgrad.curtin.edu.au Systemic Thinking Allan Trench FAusIMM Professor, Progressive Risk & Value Centre for Exploration Targeting Curtin University / The University of Western Australia allan.trench@curtin.edu.au AusIMM 9 th International Mining Geology Conference, th August 2014, Adelaide, Australia

2 The problem: Breaking the explorationmining feedback loop What are you looking for?? MINE BUSH What do you want me to find?? Slide 2 of 23

3 Linking exploration & development McCuaig et al concerned about communication of geology to other professions during project development: Encouraged use of risk as a language Geologists need to be better communicators & have wider knowledge Now concerned about the flow of information in the opposite way from mining to geology/exploration to aid targeting: Recommendations however remain the same But hopefully also some additional, new ideas Slide 3 of 23

4 Exploration will have to consider economics from the beginning McKelvey Reserve Box Theoretical Reserve Box RESERVES RESERVES RESERVES RESOURCES ECONOOMIC FEASIBILITY RESOURCES ECONOOMIC FEASIBILITY GEOLOGICAL CERTAINTY GEOLOGICAL CERTAINTY Based on: CRIRSCO (2013); Sykes & Trench 2014 Slide 4 of 23

5 Contained Nickel (Mt) Nickel Grade (%) What does economic mean nowadays? Technical vs Political Risk? Size, Grade & Political Risk for Top 10 Largest Nickel Projects Weda Bay, Indonesia Data: Schodde; Fraser Institute Dumont, Canada (QC) 1 st Quartile 2 nd Quartile 3 rd Quartile 4 th Quartile Kalgoorlie (Heron), Australia (WA) Zebediela, South Africa Jacaré, Brazil Gag Island, Indonesia Mount Margaret, Australia (WA) Maturi, USA (MN) Turnagain, Canada (BC) Sulawesi, Indonesia Slide 5 of 23

6 Increasing environmental & social problems at mine projects 2003 Active (Advancing) Stalled due to socio-political & environmental reasons Stalled due to "lack of progress" or economic reasons Data: Schodde; Fraser Institute the primary factors that govern whether a given project is developed will be social, economic, and environmental in nature. - Mudd, Weng & Jowitt, 2013 Slide 6 of 23

7 System dynamics: economies of scale vs environmental footprint A large, low grade deposit in a developing country without an established mining culture Needs Increased Scale to be Economic Increasing Social & Environmental Footprint Trench et al Greater Project Risk Slide 7 of 23

8 Contained Copper (Mt) Copper Grade (%) Actually Quantity vs Quality Size, Grade & Political Risk for Top 10 Largest Copper Projects st Quartile 2 nd Quartile 3 rd Quartile 4 th Quartile Pebble, USA (AK) Resolution, USA (AZ) Udokan, Russia Oyu Tolgoi, Kamoa, Mongolia D.R. Congo Cobre Panamá La Granja, Peru Los Sulfatos, Chile El Pachon, Argentina Tampakan, Philippines 0.00 Slide 8 of 23

9 But we ve always known this! Now a miner, before he begins to mine the veins must consider seven things, namely:- the situation, the conditions, the water, the roads, the climate, the right of ownership and the neighbours. - Agricola, 1556 Image: Wikipedia Slide 9 of 23

10 What s different nowadays? Development that meets the needs of the present without compromising the ability of future generations to meet their own needs. Bearable Social Sustainable Equitable - Brundtland Commission, 1987 Viable Slide 10 of 23 Based on: Elkington (1999); Eggert (2013)

11 Moving from hierarchies to systems in mining incorporating accessibility RESERVES RESOURCES ECONOOMIC FEASIBILITY RESERVES RESOURCES ECONOOMIC FEASIBILITY GEOLOGICAL CERTAINTY GEOLOGICAL CERTAINTY Source: CRIRSCO (2013); Sykes & Trench (2014) Slide 11 of 23

12 Mineral exploration needs to focus on undiscovered, accessible reserves DISCOVERED ECONOMIC but INACCESSIBLE UNDISCOVERED INACCESSIBLE but ECONOMIC DISCOVERED ACCESSIBLE and ECONOMIC UNDISCOVERED but ACCESSIBLE ECONOMIC ECONOMIC FEASIBILITY (Behind) DISCOVERED but INACCESSIBLE UNECONOMIC DISCOVERED ACCESSIBLE but UNECONOMIC UNDISCOVERED UNECONOMIC but ACCESSIBLE UNDISCOVERED UNECONOMIC but ACCESSIBLE RESOURCES UNDISCOVERED INACCESSIBLE and UNECONOMIC GEOLOGICAL CERTAINTY Source: Sykes & Trench (2014) Slide 12 of 23

13 But, how do we measure accessibility? 1. Establish which non-technical factors influence mine projects 2. Count the frequency with which these non-technical factors affect mine projects 3. Calculate how these non-technical factors constrain the economic evaluation model inputs 4. Use system dynamics to determine how the factors link together Nobody made a greater mistake than he who did nothing because he could only do a little. - Sydney Smith, 1849 It is better to be vaguely right, than exactly wrong. - Carveth Read, 1898 Slide 13 of 23

14 A truly systemic approach will require a understanding of the future What will copper mines look like in ? Source: Schodde (2014) Slide 14 of 23

15 Share of Global Cu Mine production Paradigmatic change is rapid and Data estimated from: Crowson, % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% United Kingdom Chile USA Other complex Low cost drilling Mechanisation Globalisation Flotation Dynamite Airborne geophysics Steam power Better work practices 20 th century copper mining technology, innovation & discovery package Improved smelting & refining Sources: Schodde, 2010; Lynch, 2002 & various personal communications to the author SXEW The corporation Porphyry geological model Major public infrastructure Computation in Bingham Canyon was something of a joke only barren quartz rock flecked with a trace of copper. Nobody could make money out of so little. the world s most famous mining man [Chief Engineer for the Guggenheims] turned up his nose. It was ridiculed by the most respected mining journal of the day. The shovels started in June (Lynch, 2002) Slide 15 of 23

16 In a multi-disciplinary environment communication is critical Language of exploration (probability focused risk & value) Exploration Geologist Language of geology Mining Engineer Mining Geologist Management Language of mining (optimisation focused risk & value) Non-technical Professionals Metallurgist Information flows considered in this paper Information flows considered by McCuaig et al. (2000), Stephenson & Vann (1998) and Stephenson (1990) Information flows not considered by any of these papers Slide 16 of 23

17 Knowledge empathy is critical for effective communication 1. A lack of interest in, or knowledge of the full mining process by geologists. Inter-disciplinary Knowledge 2. As a result of this, geologists generally do not focus their inputs towards issues critical for other members of the mining team. 3. [Thus] Few geologists effectively communicate their results The results are that the appropriate status of geology in the mining industry, [is] not fully realised. - McCuaig et al., 2000 Focused Knowledge Broad Knowledge Systemic Thinking Slide 17 of 23

18 Mining geologists will have to become broad & interconnected thinkers Focused Knowledge: discussions within the profession that build a deeper understanding of the subject. Broad Knowledge: knowledge of and discussions with different industries and other academic disciplines, which may help your own profession. i.e. petroleum industry, pharmaceutical industry, organisational theory, sustainable development, space exploration. Inter-disciplinary Knowledge: discussions between different relevant professions within an organisation or project. Systemic Knowledge: various thinking techniques that help connect the other types of knowledge ( focused, inter-disciplinary and broad ) together. i.e. soft & hard systems theory, scenario planning, lateral thinking & problemitisation. NB: there is more knowledge outside of a field, than there is within it. Slide 18 of 23

19 However such motherhood ideas are difficult to implement in reality Slide 19 of 23

20 Changes may be required to personal development for mining geologists How do mining geologists gain inter-disciplinary, broad & systemic knowledge? In-house training programmes for the majors Can the AusIMM help everyone else? Well positioned for inter-disciplinary knowledge development Rotations through different teams at the majors Two streams (Advanced & Inter-disciplinary) on conference courses & fieldtrips Co-authoring of papers between multiple disciplines Inter-disciplinary themes at conferences or inter-disciplinary conferences How do we develop broad and systemic knowledge? Again, in-house training programmes for the majors Joint conferences and fieldtrips petroleum, sustainability, ecology, arts, NASA? Specific broad acknowledge acquisition unit/event? Needs to align with KPI s, funding & CP program Slide 20 of 23

21 Conclusions Effective exploration requires mining professionals to communicate the parameters of an economic mine back to exploration professionals A common language is therefore required for mining professionals economic risk and value is suggested Mining geologists will be a critical link between mining and exploration The parameters of an economic or world class mine however appear to have changed by sustainable development Mining geologists will therefore have to be conversant in a wide range of disciplines (including many unrelated to mining to help break paradigmatic thinking) Such motherhood solutions are frequently suggested at conferences. Implementation of them is another matter. The industry will have to help mining geologists both acquire and use such knowledge Slide 21 of 23

22 Systemic Thinking Thank you Slide 22 of 23

23 Further reading Sykes, J.P Finding the copper mine of tomorrow: Exploration targeting for copper reserves, not resources. AusIMM New Leaders Conference. Perth, Australia. August. [ABSTRACT] Sykes, J.P., & Trench, A., Resources versus Reserves: Towards a systems-based understanding of exploration and mine project development and the role of the mining geologist. AusIMM Ninth International Mining Geology Conference. Adelaide, Australia. August. Sykes, J.P., & Trench, A., Finding the copper mine of the 21 st century: Conceptual exploration targeting for hypothetical reserves. Society of Economic Geologists Conference. Colorado, USA. October. Trench, A., Packey, D., & Sykes, J.P., Non-technical risks and their impact on mining. AusIMM Monograph 30 on Mineral Resource & Ore Reserve Estimation. Chapter 7: Risk in Resource and Reserve Estimation. Slide 23 of 23