Peak Mining and the Implications for the Management of Natural Resources

Dynamic Self Regulating System

This system is not growing and

has been stable for some time

Conventional Model for Sustainable Priorities

EconomicEnvironmentalSocialGovernance

$$$ have been the primary driver

The reasons why we mine ore should

be re-examined

A completely new

business model is

now appropriate

Business has been done a certain

way for the last 100 years. Now lets

do it for another 100.

Try this for size

Enough for everyone, for ever

If you are not considering all three of these things then you are not

sustainable

Case Study 2: Mogalakwena

Mogalakwena platinum mine in South Africa hit several sustainability limits

Operation expanded several times

Villages were sometimes moved to accommodate this

Operation was in direct competition with local population for water and power supply

Local population depended on mine operations economically

Multiple power shortages & water shortages

Mine site would occasionally crash local power grid

The mining corporation in question was not doing anything unusual in mining operational parameters (no unusual site restrictions)

In this case, the conventional mining process was in direct conflict with the sustainability of local population

This site put the spot light on thesustainability issue in all its forms

The impact of mining and processing minerals

Payal Sampat in a Worldwatch Institute report (State of the World 2003)

consumes close to ten percent of world energy, spews almost half of all toxic

pollution from industry in some countries, and threatens nearly 40 percent of the worlds undeveloped tracts of forestswhile generating only a small share of

jobs.

Mining empowers everything

else by supplying raw

materials for manufacture

and energy

Waste Dump MathematicsThe ratio of discarded earth and rock to marketable

gold is particularly high: according to Sampat,

about 300,000 tons of wastes are generated for every

ton of marketable gold, or roughly three tons of waste per gold wedding ring.

Mining and money

Mining is about money

Net Present Value (NPV)

Financial return over time is discounted

The faster the processing the better

High grading is considered good business

Low grade material is dumped on the waste heap

Leaving low grade ore behind sterilised is considered good as it raises NPV

Deposits are not fully exploited based on their metal

content. They are often reprocessed at cost.

40% Decrease in Multifactor Productivity

1800s North American ContinentLarge nuggets found in river beds

Yes thats a nugget of pure copper!

Smaller nuggets found in streams

Grade 15-20%Finally started to dig Cu out of the ground 1850s

Non-renewable natural resource use

Humans like most other biological organisms use the highest quality, richest and easiest to obtain resources first.

(Chris Martenson 2008)

The big squeeze and technology solutionsTechnology extraction

Andrew Mackenzie, Group Executive and Chief Executive Non-Ferrous Slide 25

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

0

5

10

15

20

25

30

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030

Cu production

Run of Mine grade

Flotation

Acidic leach, solvent extraction,

electrowinning

Central Africa Copper Belt peak

Copper production

(million tonnes per annum)

Run of mine grade

(Cu %)

Source: US Geological Survey (1900-83), Brook Hunt (1984 onwards).

Bacterial leaching

Bulk open pit mining

Flash furnace

Direct ore Reverberatory

furnace

In pit crushing

The next technological paradigm change is needed now

(Not kidding!)

Well, GOLLY! We arent growing new deposits are we?

Driven by increasing demand

Economies of Scale Has Carried the Industry

Global demand for mining resources can be tracked with steel consumption

Steel consumption is a good proxy for industrialisation

Controlled by economic crashes and geopolitical events

China is dominating the rest of the planet

China now dominates manufacturing and resource consumption

71.5

62.361.6

55.0

57.0

59.0

61.0

63.0

65.0

67.0

69.0

71.0

73.0

75.0

1980's 1990's 2000's

Ave

rage

A*

b

Comminution Impact Breakage A*b

Ore has been progressively getting harder

Softer

Harder

~3000 Drop Weight Tests

What does this

mean?

More power draw is required

to break the rock

Target Grind Size is Decreasing

1 mm

Target ore P80 = 150mm

10 mm

Target ore P80 = 4mm

Ore grain size becoming more disseminated

General form of the Energy-Size relationship

An exponential

increase in power draw

A decrease in

plant final grind

size P80

=A decrease in metal grain size

=

En

erg

y, k

Wh

/t

Hukki 1962

The numbers of new deposits discovered is falling sharply each year

65% of new ventures 2009/2010 were expansion projects

Data still being collected

There is no need to concern yourself about decreasing Cu grade and mining sustainability. The entire Andes

Mountain range in South America is one gigantic copper

deposit, with some areas more concentrated than others.

Yes costs of mining are going up, but that can be merely

passed onto the consumer through rising metal price.

The world always has and always will need copper. As

grade gets lower, we will just mine more tonnes. Mining

will never end. The economics will be forced to keep up.

This kind of thinking needs to evolve. The question is, into what?

Deposit Discovery Rates Falling

Economic goal posts are shifting for future deposits

Huge low grade deposits

Penalty minerals more prominently present in deposit that prevent efficient processing

Ever decreasing grind sizes (close size 10-20mm)

Operating on an economy of scale never been seen before (4MT blasted rock a day, 40% of which is ore!)

To stay economically viable, economics of scale have to be applied. Operations will double and triple in size.

All of this based on the assumption that there is no energy or water shortage

With a continuing grade of 0.5% this will require 20000Mt of Rock

With a decrease of grade to 0.2% this then requires 50000Mt of Rock

Copper Demand Outlook

Is this sustainable?

World Cu grade 0.5%

17Mt

3400Mt of RockWorld Cu grade

1.6%

Eventually the cost of dealing with the wastes will exceed the value of the metal

With current estimations the demand for copper will increase to ~100Mt by 2100

Apply economies of scale

Already the next generation is 2 and 3 times the size of

existing operation

Deep Crust Mining

Consider deposits more

than 3-5km deep underground

Mine Mars/The Moon

The logistics and technology required for this is considerable

Mine Asteroids in Space

The logistics and

technology required for

this is considerable

Mine Under the Sea

The logistics and

technology required for

this is considerable

Source: Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) 2008

Energy consumption in mining increased 450% in the last 40 years

Peak Coal

Zittel, W. et al, Fossil and Nuclear Fuels the supply outlook Energy Watch Group March 2013

Year 2020

This should frighten the hell out of any thinking politician

Peak Oil

The NET peakoil curve (or "Net Hubbert

Curve") is what really counts ... and

given that two-thirds of all global crude

oil supplies is now HEAVY SOUR (and

thus much more energy intensive to

refine), and only 1/3 is LIGHT SWEET

crude i.e., given that most of the low-

hanging fruit has already been extracted.

EROEI Ratio for

Oil extraction

Net Hubbert Curve

Oil supply conventional and unconventional

Source: The Oil Drum

Tar and oil sands have pushed back the peak of total oil

supply back 6-7 years

Year 2012

Oil spot price vs. global production

-transition point in behaviour Price $50 USD/barrel Price $147 USD/barrel

Peak Conventional Oil Production - 2006

International Energy Agency

http://makewealthhistory.org/2010/11/11/iea-peak-oil-happened-in-2006/

Source: EIA, en.wikipedia.org/wiki/Oil_Megaprojects, Tony

Erikson ace theoildrum.com

GFC

2008

World Crude Oil & Lease Condensate Production,

Including Canada Oil Sands

Oil Demand & supply & the GFC

GF

C

Oil is the ability to do work

GF

C

Oil Production Static

There are resource depletion limits

which heavily influence other processes

in negative feed back loops

Deep Water Drilling for Oil

More and more effort expended to extract oil of

poorer quality

Oil producing countries past their peak

Source: Ludwig-Bolkow Systemtechnik GmbH 2007 HIS 2006; PEMEX, petrobas ; NPD, DTI,

ENS(Dk), NEB, RRC, US-EIA, January 2007 Forecast: LBST estimate, 25 January 2007

Production stable

Number of rigs

going up

Has Saudi Arabia Peaked?

Energy Density of Oil

1 litre of Petrol = 132 hours of hard labour

Put 1 litre of petrol in your car

Drive it till it runs out

Push car back to start point

At $15/hour

1 litre of petrol = $1981.20

EROEI(The song and dance needed to get the energy)

Conventional Oil 12-18:1

Tar Sands Oil 3:1

Shale Oil 5:1

Coal 50-80:1

Conventional LNG gas 10:1

Shale Gas 6.5:1

Hydro Power 20-40:1

Solar Power 2-8:1

Wind Power 18:1

Conventional Nuclear 5:1 including the energy cost of mining U (10:1 as quoted)

Some Perspective

European medieval

society EROEI was

Approx 1.5:1

Biogas 1.3:1 Bio-ethanol 1.3:1

Quantity of Energy at Application

Current oil demand is 87.4 Mb/day or 31.9Gb a year

This translates to a little under 62 GW of energy

The average coal power station outputs 650MW

The average gas power station outputs 550 MW

The average Nuclear power station outputs 850MW

The gigantic Three Gorges Dam hydro project in China outputs 18.2 GW

The new solar power stations being commissioned output 350MW

An offshore wind turbine on average outputs 3.6MW

So I year current demand for oil, could be replaced with:

191 coal fired power stations each year for 50 years

248 gas power stations each year for 50 years

354 industrial scale solar power stations each year for 50 years

146 nuclear power plants each year for 50 years

7 Three Gorges Dams projects each year for 50 years

34 400 off shore wind turbines each year for 50 years

Deep Water Horizon

But peak oil has no influence on mining and is not our problem

(right?)

Ore is shifted with diesel fuel (oil)

255 tonne load capacity 200kg (?) load capacity

1 truck = 3400 donkey loads

Bingham: Would we cart 5000tph of rock for

10tph of copper (0.2% grade) without oil? Or

run 66 000 donkey loads an hour..

Not without its logistical problems

There comes a point when something has to give.

Escondida: 1/3 of total energy consumed is in

haulage of ore from pit to plant

Cost of mining correlates with the price of oil

We are a petroleum based economy

at the industrialisation scale

Price of Potash

Price of Iron Ore

GFC

GFC

GFC

Case Study: Coal Seam Gas

How will government and corporate culture behave while managing a needed resource in an era of scarcity?

Coal Seam Gas CSG projects in Australia have been rushed through the

system and all of them were accepted

If due process was properly followed, then the majority of CSG projects would have been rejected

Private companies and government have colluded together at the expense of the people on the ground

Extensive legal and political resources have been applied to ensure the continued development of CSG

Concerns of the people on the ground are the loss of drinking water and environmental pollution in the region where they live and where they earn their livelihood

The charge is that the State Governments (desperate for revenue) have sold out the public in exchange for a mining royalties revenue stream

Peak GasYear 2018


CSG and shale gas has pushed this date back from approx. 2011

Supply and demand of Uranium

There is probably enough U for existing nuclear power stations

Future projection of Uranium production

2013

Nuclear power would have to increase 12-13 times capacity at peak

potential to make up for total energy supply to replace fossil fuels

Existing nuclear infrastructure needs replacing

Someone has to pay for these new reactor sites

Storage of spent fuel rods

Spent fuel rods are very radioactive and

generate a lot of heat

Need to be stored in cooled water for 10-20 years

before dry storage

This is the Achilles Heel of

nuclear technology as a solution

to our energy supply problem

Commercial spent nuclear fuel storage sites

When all energy has peaked and is declining, these sites will require

considerable power supply to prevent serious radiation pollution

Considerable power requirements are needed to

ensure safe storage 10-20

years after use

Nuclear plants in areas of seismic risk

Most industrial structures were authorised based on risk probability

matrices modelled on the previous 200 years

Nuclear plants in flood risk zones

11 nuclear plants on the banks of Mississippi and Missouri rivers

Cooling generators for operating reactors & spent fuel rods cant operate under water

2011

Fukushima Daiichi Nuclear Power Plant- case study

Japanese coast near Thoku hit by a 9.0 Magnitude underwater earthquake

The earthquake triggered powerful tsunami waves that reached heights of up

to 40.5 metres

Tsunami caused nuclear accidents, the Level 7 meltdowns at three reactors

This series of meltdowns happened due to a failure of coolant

systems. Diesel run generators destroyed by tsunami/earthquake

What was the official response to this accident?

A compelling case can be made that current human civilisation is not

mature enough to use nuclear technology

Hydrogen emission spectrum lines in the visible rangeTemperature ignition in air, is 500 C (773 K)

Colour spectrum of burning

plutonium

World supply of fossil fuels and uranium


Peak energy approx. 2017

What happens to democracy and due process when there is not

enough to resources to go around?

We Use a lot of Energy

The demand end of the equation needs surgery

Access to potable waterGlobal water use is

divided as follow:

70% Agriculture22% Industry8% Domestic

Global Potable Water Consumption Over Time

0

500

1000

1500

2000

2500

3000

3500

4000

4500

1930 1940 1950 1960 1970 1980 1990 1995 2000

Wat

er

dra

w (

km3/y

ear

)

World water use by economic sector (km3/year) (Shiklomanov 2000)

Agriculture use

Municipal use

Industrial use

Reservoirs

Total (rounded)

The amount of fresh water supply provided by the

hydrological cycle does not increase. Water everywhere on the planet is an integral part of the hydrologic cycle.

Many major rivers; Colorado, Ganges, Indus, Rio Grande and Yellow are so over-tapped that they

now run dry for part of the year.

Freshwater wetland has shrunk by about half worldwide.

Access to Potable Water

In the West, we take water for granted. Most people dont actually think about the supply of water. Water is easy to ignore provided you can still turn on a tap and water comes out!

We still have the same amount of water in our ecosystem but the supply of freshwater faces a three-pronged attack from population growth, climate change and industrialisation. As it currently stands, theres not enough water to go around.

Dynamic Interaction and Exacerbation

Power & water shortages

Decreasing grade requires more tonnes of rock extracted for the same resulting amount of target metal. More energy is needed (diesel and electrical power draw) per unit of

extracted metal

More potable water is needed per unit of extracted metal

Increasing ore hardness requires more power draw to crush and grind the ore

Dynamic Interaction and Exacerbation Decreasing grind size due to finer mineral grains requires more

power draw to crush and grind the ore More water is needed per unit of extracted metal

Water recycling is more difficult

More disseminated finer grained rocks are usually harder to crush and grind

To remain economically viable operation scale has to double/triple in size

Metal demand is growing fast

Once our civilization understands what is happening and why,

everything will need to be re-engineered.

Which will require vast amounts of metal! - QUICKLY

PR image of mining & sustainability Every year, 0.30.8% of global arable land (24 billion tons of fertile soil)

disappear/year and is rendered unsuitable for agricultural production

52% of the land used for agriculture is moderately or severely affected by soil degradation

Arable land loss estimated at 30 to 35 times the historical rate

Chemical fertilisers and herbicides are becoming less effective

Organic matter humus content has fallen from approx. 5% to less than 1%

Big Ag uses more than 3 times the volume of potable water than mining

Mining could be considered more sustainable than industrial

agriculture as there are more assets left that will last longer!!!

den Biggelaar, C., Lal R., Wiebe, K., Breneman V., Reich P., 2004b. The Global Impact of Soil Erosion on

Productivity II: Effects on Crop Yields and Production over Time. Adv. Agron 81, 4995

What we must choose to do to, if our industrial sector is to survive

Room to Manoeuvre

Mounting

StressDrift

Fundamental Reform

Early

Crisis

Existential

CrisisMounting

StressDrift Early

Crisis

Trapped Transition

Trapped Transition

Drift/

Decline

Write-off & Reset

Decay/Collapse

Existential

CrisisDrift/

Decline

Decay/

Collapse

Inelastic oil

supply 2005

Leadership & Vision

Understand

true implications

Peak Total Energy

2017

We

are

he

re

Time Frame to Implement

This pattern applies to all developing systems that require extensive infrastructure built Energy

Manufacturing capacity over and above standard demand

Large quantities of natural resources required

Approx 20 years

Determine best

replacement system

We are out of time. We should have seriously discussed what to do

in the mid 1980s and started applying the outcome in the late 1990s

Mining and heavy industry

When will this crash economically?

The party is over when demand for something vital outstrips supply

Some vital service ceases to function reliably or at all

The average people en-masse understands that the world they live in is no longer possible

And there is no easy solution at hand that allows their life to continue in the fashion they have become accustomed to

At which point, its on like Donkey Kong!!!

Must expand exponentially Cant expand

Deteriorating

Chris

Martenson

http://www.chrismartenson.com/crashcourse

The Pickle and the Rub

This is the only thing that can change

Decreasing

Grade

Sovereign Debt

Default

Decreasing

Grind size+Increasing

Depth+Peak Fossil

Fuel+

Peak

Mining

Credit

Freeze+ Structural

Inflation+

FIAT

Currency

Devaluation

+Peak

Finance

Peak

Manufacturing

Peak

Industrialisation

=

=

The End of Materialism

The End of the

Industrial Revolution

Expansion of production needed to stay viable

Expansion of money needed to service debt

The Industrial Big Picture

The writing on the wall Everything we need/want to operate is drawn from non-

renewable natural resources in a finite system

Most of those natural resources are depleting or will soon

Demand for everything we need/want is expanding fast

When these trends meet, there will come a point where how we do things will fundamentally change

None of these issues can be seen in isolation.

Real growth is dependant on energy and real resources

Price of oil to make oil exploration economic

Approx. - $USD 100/barrel

Price of oil above which economic growth is very difficult

Approx. - $USD 100/barrel

The End of Growth

(R. Heinberg 2012)

But corporate culture must grow to survive

Current business culture must expand and show a profit

If a business doesnt show a profit of 5-10%, financial investment is withdrawn and sent else where

Most businesses are not financially self sufficient and depend on investment to operate

The need for growth is a key KPI for survival

Most businesses are armpit deep in debt

Its getting increasingly difficult to grow without going further into debt

The fate of the current system of industrial management

This is not the end of industrialization but the end of the

current way of doing this.

A new system will be developed through necessity.

All of our current efforts are pushing in the wrong direction and are ultimately irrelevant!!!!

The push for growth on all fronts must come crashing to a stop in

a finite system eventually

The ethics of what gets used and for whom becomes relevant

Person A and Person B want the same pallet of aluminum ingots

Person A wants to build a roof over his swimming pool at his holiday home has lots of $$$

Person B wants to build a series of bore water pumps in a region with drinking water shortages represents a nation state government where resource is

situated

But money has become really unstable

The have-nots vastly outnumber the haves

grab your pitch forks and burning torches,

its time for a visit to the castle

Possible Solutions Fall into 3 Groups

Mine in a much more efficient manner

Invest more sophisticated methods of efficiency not merely mining

Change the business model behind mining

The conventional corporate model wont work in a contracting system

Mine our garbage tips and recycled rubbish as it comes in

Where did we put all the good stuff?

Over the last 150 years, we have dug up the highest grade deposits,

manufactured them into goods, and then put those goods into our

rubbish dumps


All the good stuff is still here, in concentrated piles, all around

our major cities


What is a typical grade of gold per tonne in a

modern mine site????

From 1000kg of Printed Circuit Boards

Typical Copper/Gold Deposit

Au ~ 1g per tonne of ore Cu ~ 10kg per tonne of ore 60% strip ratio

Saleable material recovered from 1000kgassorted E-waste (electrical, PC, TV, Mobile Phone, etc.)

23%

8%

27%

27%

3%

3%8%

1% Mild Steel

Stainless Steel

Glass

Plastics

Copper

Aluminium

Other materials

Hazardous Materials

Note: E-Waste also contains precious metals like

gold, silver, palladium, platinum, etc.

There is a strong precedent for this

Accepted off the shelf technology

Process Separation Methods

Magnetic Electrostatic Gravity

Shredding down 5mm F80 feed

(no grinding & its dry feed)

Sorting of the feed material is the key to success

Sorting technology is well established in industrial recycling

Pyrometallurgy is more complex

Smelting efficiently to feed characteristics

Separation of electroplated fragments

Alloys

Our Industrial Society is a Network System

Mining

(Raw materials)

Heavy Industry

(metal casting)

ManufactureDistribution

(JIT)

Retail

Energy

Finance

The same model

could be applied to

food, health, etc.

A small number of

companies

facilitate this

network

What Can Network Theory Teach Us

Connections are paths of communication of

some form

Nodes are where many paths connect

For example we all need petrol to function in the

modern world

If the network is damaged in macro structure terms, it shrinks in size but functions normally


If a node is knocked out, anything attached to that node unravels

If disruption of that node is long enough to prevent that vital part of the network to function

Then the whole network is put at risk

Example: Industrial Procurement Currency Trade Links

Disrupt USA & EU

as places to do

business with

Disrupt $USD as a

world reserve

currency


If the network serves a necessary purpose, a new network will manifest in place of the old network

The new network will operate to different control parameters

Necessity is the mother of invention

Energy is a controlling parameter

The complexity of a network is supported by and defined by the energy inputs that support it.

Our current complex system is supported by cheap abundant high density energy (oil)

1 cubic mile = 316.8 days with

world oil demand of

82.77 Mbbl/day


Complex system networks are not made insitu

They are grown over time from simple system networks

What Does All This Mean For The Energy Grid?

Peak oil means the node of petroleum energy supply is about to be disrupted

All links in the network system supported by petroleum will be logistically traumatized

As it stands, any replacement energy is less dense per unit volume and requires extensive infrastructure to be built

This means the replacement network system will need to be less complex than the current one, once fully operational

It will also take time for the network to reach full complexity

The same thing will happen in a few years for gas

and in 10 years time for coal

If cheap abundant energy is the engine, then mining is the

gearbox

What allows materialism to happen?

Social institutions and social contracts are developed

around what is possible

Environmental carrying capacity is the brakes

Environmental degradation and population overshootare the huge brick walls we are driving at really fast

Why was this allowed to happen?

Because they could

our current developed culture

And we never understood the true consequences

We were convinced it was OK

Expecting corporate culture to act for the greater good is inappropriate

If it incurs a profit loss

Or threatens their business model

Once survival becomes an issue

Systemic environmental

disruption

Natural raw materials

unavailable for

industrialisation

Energy supply

disrupted then

unavailable

Reset all FIAT currencies asset based Restructure all debt Need to grow into new system

Cannot sustain growth Cannot grow economy system Change to alternative energy system Rebuild all infrastructure to meet

requirements of new energy system

Cannot supply raw materials for construction or manufacture at needed

rate or volume, if at all

Need to reassess what is really needed Mine our rubbish dumps

Cannot run any existing system for very long

Resilience and redundancy required on all fronts

Practical carrying capacity vastly reduced

Financial

Systemic

Meltdown

Po

pu

lati

on

Ove

rsh

oo

t

Puts pressure on all other sectors except finance Most people of which have few relevant skills

outside existing paradigm

Wilful ignorance & aggressive apathy

Are these issues really

unknown to the senior

global decision makers?

What happens to due

process and democracy

when there is not enough

to support everyone?

Systemic environmental

disruption

Natural raw materials

unavailable for

industrialisation

Energy supply

disrupted then

unavailable

Financial

Systemic

Meltdown

Po

pu

lati

on

Ove

rsh

oo

t

Personal epiphany after a 15 year professional career

You can be at the right place at the right time,

when that system breaks

You cant make a system change that doesnt want to, that also regulates its own authority

and has its own political power source

Conventional thinking has no hope for the future.

Unconventional thinking and asymmetrical strategy

is the way forward

Timing is the key to everything

Paradigm changing information is right in front of us if we choose to see it

Everyone should try thinking for themselves at least once

Now would be a good time

Peak mining & implications for natural resource management -

Simon Michaux

Type in peak mining Simon Michaux

Developing a Sustainable Community - Simon Michaux

Type in Developing a Sustainable Community

These presentations are on YouTube

Questions???

My wife and I in 40 years time

(its up to you to keep up)

Peak Mining and the Implications for the Management of Natural Resources

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