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ABSTRACT
At its most basic level, minerals project management may be broken down into a series of logical
chronological phases, described in this paper as: exploration, discovery; scoping and pre-feasibility;
feasibility and approval; project financing and commissioning; operation; expansion and closure.
Each phase has its own peculiarities and challenges, any one of which can potentially upset the
forward progress of a minerals project.
Reference is made to each of these project phases based on the author’s many years of first-hand
experience, in an attempt to identify issues within the project management spectrum where additional
caution may be warranted. Left un-addressed, these issues can cause undue delays in the project
timeline, ultimately delaying approval at significant project cost.
Finally, reference is made to the Mine Manager’s Handbook recently published by the AusIMM
which is an excellent project management resource, considered to be very relevant for minerals
treatment plant managers, whether the context be constructing, operating, expanding or shutting
down.
INTRODUCTION
We all recognise that minerals projects don’t just happen. They usually span years from discovery to
stable production, during which time many obstacles arise, each having to be overcome whether they
be technical, economic, environmental, regulatory or various external factors. It is not surprising,
therefore, that many projects do not survive this process. Given that mineral deposits are becoming
more elusive and either deeper or harder to find, logic suggests that worthwhile projects should not be
shelved simply because they could not overcome the manageable post-discovery hurdles.
Care therefore needs to be taken to identify the possible project “stoppers” and manage them
effectively before they materialise. The concept of project phases is developed in this paper with
appropriate reference to previous publications on this subject.
The identified chronological phases of a mineral project are frequently referred to in published
literature. For example, Noort and Adams (2006) refer to project phases in relation to the feasibility
study process. Van der Merwe (2008) presented a very similar view. In this paper, a somewhat
broader view is taken, commencing with a mineral deposit discovery and ending in mine closure.
Each project phase is summarised in the list below. They are expanded on by some personal
observations under each section which follows.
Where relevant, reference will also be made to previous MetPlant keynote addresses in this series,
with the aim of providing continuity with some of the excellent previous papers which touch on some
of the themes discussed here.
The project development phases discussed here are as follows:
Exploration;
Discovery;
Scoping, Pre-Feasibility & Definitive Feasibility;
Project Approval;
EXPLORATION
Reference here to mineral exploration is made in the general context of exploration activities carried
out prior to the making of an economic mineral discovery. More specifically, reference here is to the
exploration budget and how to manage it.
From a project management perspective, the questions often asked are, “How much should we spend
and over what period?” This issue often arises at the annual budget approval process. A theoretical
approach to these questions was proposed by Binon (1981) who described how to arrive at a budget
figure after establishing an agreed profit level and time frame.
In actual practice, however, the theoretical or optimum budget may not be available due to a shortage
of funds, especially for small capital explorers in a depressed share market. In such a situation the
above questions remain unanswered. This author has found it useful to start with the same objective
(deposit size, type etc.) and then to assign an acceptable maximum exploration cost, such as unit
cost/oz of precious metal or unit cost/t of economic mineral resource. In this way, the project manager
may determine the point where acquisition may be a cheaper alternative to grass roots exploration.
For example, if the exploration budget implies a gold discovery cost exceeding $50/oz (in the
ground), it might be cheaper to acquire already discovered mineral resources.
Unit discovery cost benchmarks are also recommended as a management tool when testing the
effectiveness of an exploration campaign.
Exploration funding can also be managed by introducing a joint venture (JV) partner to assume
exploration costs by way of a “farm-in”. This subject will be addressed later in this paper.
DISCOVERY
A mineral deposit discovery is the natural (though seldom achieved) endpoint of a mineral exploration
program. When a discovery is made, however, additional management issues can arise. For example,
is the deposit immediately economic or are there remaining issues (such as metallurgical) unknowns?
Is the market fully informed (as the discovery is clearly material)? What are the next steps?
Frequently, the market loses sight of the lead time to bring a project to production, with the
consequence that it loses interest, further impeding the availability of capital required for mineral
resource delineation, let alone feasibility.
A useful perspective on this can be gained from a paper by Duncan (1985), who described the
development plans for the Olympic Dam discovery at Roxby Downs, some ten years after the initial
discovery hole, (RD1) was drilled in 1975.
Another worthwhile example would be the history of the Paddington gold mine in Western Australia,
still working today. The early history is described by Nice (1986): the discovery was made in 1981,
the decision to develop in 1984, based on Measured and Indicated Resources of 5.6 Mt which later
were drilled out to reveal an orebody of 8.4 Mt @ 3.2g/t (based on a gold price of $310). The plant
was commissioned in 1985 at a throughput rate of 850,000 tpa. Being a less complex and smaller
project to Roxby Downs, the project lead time from discovery was approximately five years, 18
months of which was taken up by approval and construction.
This latter point is significant in the light of today’s far slower project approval/construction
timelines. It has been this author’s experience that stakeholder expectations (not just the public and
the local community, but also the regulators, permit issuers and engineers) need to be actively
monitored and addressed both widely and early. For this reason, specialists in this area should be
added to the management team as soon as the feasibility process seems inevitable.
Aspects of the 2012 edition of the Joint Ore Reserves Committee (JORC) Mineral Resource and Ore
Reserve reporting code (JORC, 2012) are relevant here, and readers are directed to clauses 37 – 40 of
the new Code.
The use of discounted cash flow (DCF) methods to arrive at a net present value (NPV) of a project
during the scoping and pre-feasibility stages is common practice in the minerals industry. If such
estimates of project value are used in these stages, it is likely that they will be based primarily on
Indicated and Inferred Resources (as was the case in the Paddington example above). Such estimates
should be considered to be for internal use only and not for external or public reporting.
The new Code requires a pre-feasibility study to have been completed before an Ore Reserve may be
reported (clauses 38 and 39). It follows from this that a DCF analysis could be reported along with
such an Ore Reserve announcement. Still being debated, however, are the conditions wherein Inferred
Resources should be included in the production schedule underpinning the DCF model. In a previous
MetPlant keynote, Card (2008) provided extensive reference to the AusIMM’s emerging economic
modelling guidelines.
It is the author’s view that Inferred resources only be used in DCF-based project evaluations under the
following conditions:
Scoping studies: not at all;
Pre-feasibility studies: in conjunction with (and following) Measured and Indicated Resources,
but only to assess “upside cases” and not be included in the “base case”;
Definitive feasibility studies: as for pre-feasibility studies.
In the case of mineral project valuations under the VALMIN Code (VALMIN, 2005), Inferred
Resources should similarly only be included in “upside cases” and not be included in the “base case”
evaluation.
Another potential issue arising from the 2012 JORC Code is centred on clause 51. This clause refers
to the inclusion of “in ground” mineral value in public reports. Such in situ or in ground financial
valuations must not be reported by companies in relation to Exploration Results, Mineral Resources or
deposit size. Whilst this is well overdue, a potential problem arises in relation to compliant use of the
VALMIN Code for mineral deposit evaluation. In this instance, “in ground” mineral value is still used
as one of the Rules of Thumb, described by Lawrence (1994). This author argues that in situ value
still be retained as a valid rule of thumb in mineral asset valuation work, but not in the context of
mineral resource reporting under the JORC Code.
PROJECT APPROVAL
Whether a project advances to the “go-ahead” stage is largely dependent on three factors:
The inherent techno-economic strength of the DFS, primarily through its financial argument;
The completeness of the DFS, often referred to as its “bankability” and
The speed of its approval by the project owners and regulators.
These aspects are discussed under the three sub-headings below.
Feasibility studies
The content of the DFS is not usually the cause of a project delay. The most likely causal factor is the
quality of the content. No attempt will be made here to discuss the optimal or recommended DFS
format. A detailed outline of this may be found in the Mine Manager’s Handbook (AusIMM, 2012).
Feasibility studies can be weakened by two critical factors: excessive contingency and failure to
recognise and satisfy the critical “bankability” issues. The first of these two factors has two
components:
Excessive conservatism in ore grade, productivity, and costs; and
Layer upon layer of uncontrolled contingency.
The second of these factors comes into play when the DFS is completed without establishing
achievement of critical bankability issues (sometimes referred to as “fatal flaws”). Usually these
include: an inadequate “resource tail” for the project; un-proven metallurgy; half-committed market
arrangements with customers; a failure to recognise the minimum set of environmental standards and
an unclear position as to the lender’s minimum lending terms.
For an account of project estimation conservatism leading to a complete project re-think, readers are
referred to Needham (1985), who described in detail why the original Kidston gold project was
uneconomic until a leaner approach was taken to every facet of the project. It was subsequently
successfully built and commissioned and operated successfully for many years.
It is suggested that detailed analysis of key project development and operating assumptions aimed at
discerning the true base case parameters, free of all contingency. Allocation of the project
contingency should then be added only when the absolutely bare base case has been attained and
validated.
Metallurgists have a key role to play here, as described by Whincup (2008), McCarthy (2002) and
other previous MetPlant keynote speakers.
Finally, the author recommends that, to avoid bankability gaps, a list of all key bankability
benchmarks (potential fatal flaws) are established for each section of the feasibility study, and
systematically addressed as the study advances. Unfortunately, some benchmarks may not be known,
such as the required liquidity ratios, hedging levels and debt service requirements of the lender.
Ultimately, these gaps may materially reduce the debt level that the project can achieve. In a tight
capital market, this factor alone may be a potential project stopper.
It is therefore recommended that where JV agreements in the future require this sort of clause, the
agreement should set out clearly the minimum standards for bankability status to be achieved, and
preferably with reference to an agreed independent third party to arbitrate, should there be no
agreement.
Readers will be familiar with the term “fast tracking” where feasibility study preparation, engineering
and approval are integrated so as to reduce project commencement delays. Often, this situation results
from a deadline of some sort to be met, such as tenure of the project tenements or logistic or climatic
issues. An excellent account of fast tracking was prepared by Hinz and Aseervatham (1999), citing
Rio Tinto’s experience with its Hail Creek, Baranji and Gokwe projects. The compression of tasks
which results from fast tracking increases the overall risk of a successful project risk and should, in
the author’s view, be avoided if possible.
Project approval
Project approval in this context has four significant stakeholders:
The project owners who are responsible for the equity funding;
The banks (or others) who are to provide the project debt;
The regulators (government or government agencies); and not least
The general public whose support for the project must be obtained.
It is worth remembering that the project owners cannot approve a technically and financially sound
project if their company in not capable of raising the equity proportion of the total project funding.
Often the equity to debt ratio is only known as negotiations for the project debt are advanced, and in
recent times, debt ratios as low as 20 to 25 percent have been offered as a maximum funding level.
Investment banks, which traditionally have offered project finance, are becoming less popular since
the Global Financial Crisis (GFC) as they have become progressively more risk averse and some
would say, more aggressive towards minerals ventures. Term sheets and loan agreements, in the
author’s view, have of late been characterised by unattractive terms such as: high fees; intrusive
security demands; tough liquidity coverage; challenging project ratios and recourse that places the
borrowing entity’s directors at significant risk.
Compounding this funding dilemma is the emerging issue of excessive project approval lead times. In
one recent example, approval for a NSW based gold project took more than 18 months for its DFS
and environmental plan to achieve final approval for site earthworks. By this time, the capital cost of
the project had increased by about $25 M and the gold price was in retreat. The subsequent
ramifications were significant as the reduced cash available for debt service (CADS) reduced the
available debt level, increased the required hedge cover whilst reducing the overall project rate of
return (IRR).
A notable description of the conventional regulatory process appeared in 1997 (Chamberlain, 1997),
where the concept of stakeholder groups was identified in the context of the approval of the Cadia
mine project in NSW. Readers interested in this subject in more detail are referred also to chapter 4 of
the Mine Manager’s Handbook (AusIMM, 2012).
Approvals can also be overturned by regulators, thus increasing uncertainty and project risk. This was
illustrated in 2010 when the Northern Territory government reversed its approvals and support for the
Angela Pamela uranium project (Australian Uranium Association, 2010), citing concerns expressed
by local residents. At the time of writing, the project remains stalled, further disadvantaged by a low
uranium price.
Finally, the importance of the support of the general public cannot be underestimated. The example
above serves to illustrate how pressure can be brought to bear on the regulators by a range of project
opponents. It is therefore considered essential to monitor, establish and maintain public support for
new projects if potential delays are to be avoided. The need for allocating high priority for this
activity is currently clearly reflected in the current opposition to coal seam gas (CSG) exploration on
pastoral land (no literature reference is suggested here, as any on-line CSG search will produce a
plethora of argument both for and against).
Equity finance
The common forms of equity are:
Free cash within the project company;
Cash raised by sale of existing assets;
Cash inflow from a farm-out;
Cash raised by rights issue or placement (dilutive); and
Cash raised by share purchase plan (SPP) (not dilutive).
Equity raising is vulnerable to the state of the share market and the project company’s share price. In
short, when the capital markets dry up, it is very difficult to raise the level of equity demanded by the
lenders of debt. This is one reason why funding is more complex than in the past, and why high levels
of project debt are becoming less attractive.
Bank finance
Conventional project debt arrangements consist of:
A project funding term sheet;
Credit approval;
A detailed loan agreement;
Drawdown of the loan funds; and
Post drawdown monitoring of repayments.
Project finance has lost much of its appeal in recent years for a range of reasons which the author
considers include: high fees; high levels of security; onerous debt service arrangements; conservatism;
inflexibility to the client’s timeframe and/or operational needs.
Export credit funding arises where the project’s product customer is able to make use of funds
provided by its host government (usually at a lower interest rate compared to conventional debt). For
example, the Ichthys LNG project in Darwin has an estimated $20 B capital cost. Of this, US$11.2 B
is to be provided by JBIC, EFIC, Nexi and five other ECA agencies in the form of direct loans or
guarantees. This actually resulted in the conventional debt being scaled back (Schuler, 2013).
Finally, customer terms might include advance payment for mineral output, a capital contribution to
the project itself, tied to supply arrangements, technology sharing, or the purchase of an equity share
in the project itself.
Commissioning
Project commissioning is often misunderstood by operating management. There are several stages
involved in this process. Luxford describes this process below.
“Construction completion involves completing installation and erection work. The phase is complete
when all components of the completed system have successfully passed inspection and testing to
verify they comply with the contract. The only equipment operation at this point is to check motor
rotation.
No-load commissioning involves testing and verifying that all equipment is ready to run, followed by
operation of all equipment under zero load conditions. At the completion of this phase, the plant has
achieved mechanical completion and is ready for commissioning. The plant is ready for handover and
is accepted by the owner. At this point, ownership is usually transferred to the owner and the defects
liability period commences. Wet commissioning then follows with the introduction of loads to the
plant. In the case of a process plant this would involve the loading of process media and introduction
of ore followed by:
adjustments and minor modifications;
process guarantee performance testing;
completion of as-built documentation; and
final punch list completion”.
Finally, it is recommended that the construction handover phase include a checking that all as aspects
of the PEP have been completed and that the EPCM engineer’s list of deliverables has been
completed and that those deliverables are in place.
OPERATIONS
An excellent account of mine (and mineral processing plant) operations management may be found in
the Mine Manager’s Handbook (AusIMM, 2012). Of the various headings dealt with in that text, the
author sets out below his observations of what are perhaps areas of potentially major project impact.
Regulatory considerations
For many years there has been confusion caused by the lack of congruence between the various
metalliferous and coal mining regulations across the Australian states. This began to change from the
2002 Conference of Chief Inspectors of Mines and has now reached the point where in April 2009 the
Workplace Relations Minister’s Council (WRMC) endorsed the creation of Safe Work Australia
(SWA), a new independent body charged with progressing the concept of harmonised work health and
safety laws.
Following on from that, the National Mine Safety Framework (NMSF) steering group is working with
SWA to develop mine specific regulations with national outreach and application. In effect, each state
was to have “mirror” legislation” in place by 1st January 2012, though only the NT and the ACT
actually met that deadline.
The end result will be that all states will adopt “core drafting instructions” but retain some freedom in
“non-core” areas. The resulting legislative approach has been termed “harmonised legislation”.
The three areas of key harmonisation may be summarised as follows:
roles, functions and powers under the model legislation (such as Managers and Mines Inspectors)
for mining operations;
management plans and records under the model (such as hazard analyses); and
duties (such as duty of care)and other requirements.
These three points are expanded upon in the Mine Manager’s Handbook (AusIMM, 2012) at
chapter 7, and familiarisation with them is recommended. The harmonisation process will be
completed before too long and it is recommended that minerals professionals keep apprised of
developments.
Operations management
Perhaps the most controversial aspects of operations management in the author’s experience have
surrounded issues to do with owner versus contract mining and joint ventures. Some observations on
these are offered below.
Joint ventures
The next issue of potential major project impact centres on joint ventures (JV or JV’s). For an
excellent general overview of JV’s in the minerals industry, readers are referred to Reynolds (1983).
In Reynolds’ view, the principal reason for the creation of JV’s is the need to share project risk. He
then describes the (presumably most significant) risks as:
project size in relation to the market;
financial magnitude of the project;
whether new technology is involved; and
lack of certainty.
In this author’s experience, a large proportion of minerals industry litigation has arisen out of JV
arrangements, simply because these unincorporated vehicles offer the greatest potential for divergent
participant interests. A worthwhile example is that of the original Ok Tedi JV where the three major
participants, BHPB, Amoco Minerals and the PNG Government had differing project development
priorities, namely: capital cost minimisation; maximised net present value and early production,
respectively.
It is probably a truism to suggest that farm-outs are only born of necessity – that is, when all other
options have been investigated and shown to be impracticable. The party farming out has to cede
some control (often total management) in order to see the project proceed, exacerbated by the farming
in party assuming autonomous control and paying scant regard to the new “minor participant”.
Unless, therefore, there is good will on both sides and strictly ethical behaviour, disputation is highly
likely. Should such disputation proceed to litigation, the possibility is real that the project may be
delayed for years.
The areas of disputation considered by this author to be most common include:
failure to prepare and adequate JV Agreement;
failure to provide for equitable voting rights on the JV Operating Committee (with regard to key
decisions such as the life of mine plan and annual budgets);
wilful abuse of JV terms as defined in the Agreement; and
lack of good faith by the Manager, possibly coupled with a failure to exercise a fiduciary duty to
the other party.
At the outset, therefore, it is strongly recommended that a detailed and painstaking review be applied
to all JV Agreement drafts, and that expert advice be obtained before they are executed. It is also
suggested that the disputes clauses in the Agreement be broadly worded and provide for specialist,
binding arbitration as opposed to litigation.
Operations reporting
Brief reference is made here to operations reporting, which, in the view of the author, have lacked
consistency over many years. There are many reasons for this, but at the very least, there has never
been a widely adopted template or other reporting convention to guide site operations personnel.
Sub-standard or otherwise deficient reporting has had the result that many mines have no adequately
detailed, permanent record of their month by month operations, going back in time. It is simply a
matter of sound management that adequate operation reports be prepared and appropriately backed up
and stored.
Readers are urged to adopt, as a minimum standard the pro-forma operations report format set out in
Appendix 3 of the Mine Manager’s Handbook (MMH, ibid).
Offshore projects
Minerals professionals of all disciplines will readily recognise the importance of identifying,
monitoring, fostering, maintaining and always improving stakeholder relationships on their project.
These issues are discussed in some detail in chapter four of the MMH.
Offshore projects introduce another dimension to the picture, where cultural or other norms may not
be as we, the expatriate skills providers, may well expect. It goes without saying that great care and
sensitivity is required in this situation and careful choice of staffing for foreign work is advisable.
Another issue that often arises is that of the project establishment coming ahead of basic regional
infrastructure such as power and water supplies, communications and associated basic services. In the
author’s experience, it is essential that the project address this imbalance in some meaningful and
ongoing way, accepting that, in principle, the prosperity of the regional stakeholder must advance in
line with the project itself, if stakeholder harmony and trust is to be maintained.
“Sustainable development” was studied by the Mines and Minerals Sustainability Development
Project (MMSD), which reported its findings (MMSD, 2002). There are useful observations in that
report which are still considered relevant more than ten years after its publication.
Ethics
A simple (Oxford) definition of a professional is: “a person engaged or qualified in a profession:
professionals such as lawyers and surveyors; a person engaged in a specified activity, especially a
sport, as a main paid occupation rather than as a pastime; a person competent or skilled in a
particular activity: she was a real professional on stage”.
Perhaps a more relevant definition for the minerals industry might read something along these lines:
“a person of specialised training or skills who, acting always with ethics, applies those skills for the
betterment of society and the industry, before him or herself”. This definition is manifest in the first
bullet point of the AusIMM Code of Ethics (AusIMM, 2013).
In this latter definition, it is implied that a professional is a degreed person; one qualified to become a
Member of the AusIMM or an equivalent professional institution, though there is no reason why
tradesmen, paraprofessionals and other service providers should not act “professionally”.
It is often assumed in general trade and commerce that the rules of ethics do not apply – or at the very
least have low priority – whatever those rules may be. Consequently, circumstances can arise where a
professional is confronted with disingenuous behaviour by others, and thus be tempted to adopt the
same tactics.
The Commonwealth Trade Practices Act (TPA) and its more recent replacement, The Competition
and Consumer Act 2010 (CCA, 2010), are silent on ethics but make the following requirement very
clear: in trade and commerce it is expressly prohibited to intentionally or unintentionally to engage in
any conduct which might mislead or deceive another party. This requirement covers a key part of
professional ethics (not acting in a misleading or deceptive way), but does not cover the entire
spectrum of ethical practices a professional must follow.
As a general rule, the best defence is what is termed the “due diligence defence” which, in plain
language holds that you cannot be guilty of misleading or deceptive conduct if you can show that
every effort was made not to do so. For example, peer review of reports or opinions, risk audits and
other forms of due diligence will be taken into account in this context. Mere disclaimers, absent the
above actions, will not achieve the same level of protection.
The obvious dilemma which emerges for professionals leading public companies is embodied in the
question: is his or her primary obligation to the (profit of) company shareholders or to the (betterment
of) the public? As long as company directors and executives continue to disregard this dual
obligation, corporate ethics will continue to lag behind the required standards of profession ethics.
PROJECT EXPANSIONS
Project expansions are becoming more and more commonplace, probably for two major reasons: the
high capital cost of start-ups making the “start small” approach attractive; and the simple economics
of increased capacity reducing unit production costs. Consequently, expansions of operating plants are
becoming a feature of a minerals project’s normal operating life.
In the past, however, the obviously disruptive practice of expanding an existing plant whilst
continuing operation at the old rate until “cut-ins” were complete, was rare. This is no longer the case
and it is suggested that modern day mining managers need to be equipped with the skills to recognise
the key requirements of an “internal” expansion and to resource the work appropriately.
In practice, all of the guidance set out under the Construction and Commissioning headings (earlier in
this paper) apply equally in this context, though operations managers often fail to recognise the fact
sufficiently. There is a tendency for operational and construction responsibilities to overlap unless the
Operations Manager takes organisational steps to separate the two activities, as recommended by
Luxford (2006).
These construction projects also require special care regarding fitness for work and inductions for
casual contractors associated with the construction work. Contractors who come onto the designated
construction site (as distinct from the mine site) need to be inducted and cleared for work even though
their site residence time may be as short as one day. Time must therefore be allowed for medical
screening and drug clearance, so as to ensure contractors do not commence work whilst their pre-start
screening results are awaited.
Finally, it is essential that any additional site regulations that apply pursuant to construction-related
(non-mining) regulations are clearly understood by all concerned.
PROJECT CLOSURE
Project closure (and, perhaps suspension of operations) is an integral part of the overall mining cycle.
Despite this, a search of the published literature on “mine closure” reveals a majority of papers which
focus on environmental compliance issue post operations. Whilst such compliance sits well as part of
the MMSD principles referred to earlier, the literature has little to say about sustainability in general
in the locations where mining has ceased. For example, it is difficult to find accounts of communities
which have not only benefitted from the mining operations themselves, but have also benefited
thereafter, by virtue of sustainable small business ventures and the like which have endured post
closure.
Readers interested in this aspect of the mining cycle are referred to McGuire (2003) who describes the
mine closure process at Rio Tinto’s Kelian gold mine in East Kalimantan. In that paper, the concept of
a Mine Closure Committee is introduced, along with the concept of involvement by the local (and
broader, regional) stakeholders in the committee’s work.
It is evident that much greater thought and detailed planning and resourcing needs to be applied to this
phase of the mining cycle in the future. The sustainable mining principles dictate that when mines
close, the land and the communities left where the mine once occupied ought to be better off for the
mine having been there, not just while the mine was in operation.
“The easy gains from Australia’s early 21st century mining boom are over, though large
and enduring benefits are still there to be secured from further resource-intensive growth
in emerging Asia.
Rebooting the mining boom calls for renewed policy focus on securing the next
generation of mining project investment and delivering on potential export volume
growth out to 2025.
That focus should be on tackling the “unfinished business” across Australia’s export
supply chain, from exploration and initial development through to final shipment, where
cost control, timeliness, flexibility and adaptability present critical challenges. It is only
by stripping out inefficiencies across our export supply chain that Australia can reap the
rewards on offer from the next phase of the boom.
As Marius Kloppers has observed, companies themselves need to do the heavy lifting to
make our mining projects more cost competitive. But they can only do so if the policy
environment provides the framework and tools for this to occur. At the moment, it
doesn’t”.
In order to “re-boot the boom”, then, governments at all levels must improve their understanding of
the industry – particularly now when it contributes to approximately fifty percent of national exports
and is increasing. At present, its level understanding, in the author’s view, is superficial at best and, at
worst, lacking in both breadth and depth when viewed in the context of its national economic
significance.
To illustrate the proposition, the industry can be viewed in a range of ways:
by commodity (base metals, precious metals, bulk commodities, industrials and so on);
by industry grouping (metalliferous, coal, petroleum, industrial);
by activity (exploration, production, or downstream processing); or
by size (small caps, mid-tiers producers and multi-nationals).
Each of these groupings require a profound understanding in order to formulate policy settings which
will not only be of benefit to those concerned, but will also address the structural efficiency areas
referred to by Ergas and Owen (ibid). It is the view of this author that those responsible for governing
and setting minerals policies must improve their understanding of, and liaison with our industry at all
levels and commit to a much higher priority level being accorded to the industry’s needs.
CONCLUSIONS
The personal observations of critical issues presented in this paper span the many phases of mineral
project development from exploration, through development, operation, expansion and finally closure.
In summary form, the critical issue identified are as follows:
Exploration: the market continues to lose site of the real lead time to develop a project following
its discovery ;
Discovery: stakeholders need to be identified and engaged with as soon as possible ;
Scoping, Pre-Feasibility & Definitive Feasibility: potential fatal flaws need to be identified and
resolved early in the process;
Project Approval: current processes are far too slow and completely uncompetitive when seen in
an international context;
Project Financing and Commissioning: conventional debt funding is losing its attraction, in
favour of alternative financing means;
Operations: issues of concern relate to Joint Ventures and corporate ethics;
Expansion: operational and construction responsibilities to overlap unless the Operations
Manager takes organisational steps to separate the two activities; and finally
Project closure: mine closure plans need to be detailed and involve a mine closure group of all
relevant shareholders.
ACKNOWLEDGEMENTS
The author wishes to thank the organising committee of MetPlant 2013 for the opportunity to present
this keynote paper. He also gratefully acknowledges the many authors cited in the paper, whose
contributions to the topics discussed in the paper provide an expanding pathway for those wishing to
concentrate further on any of the issues touched upon.
REFERENCES
As far as practicable, all of the references cited in this paper may be found on www.onemine.org and
downloaded for free by members of the AusIMM, SME or SAIMM.
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