There's going to be no such thing as a cheap mine any more... or is there?
The drive towards sustainability in mining is coming on top of the long-term upwards pressure on the two primary costs involved in mining – wages and energy – perhaps it’s time to acknowledge that, indeed, there can, or will be no such thing as, a ‘cheap’ mine in the future?
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During the discussion, and in reference to the incremental costs of making mining more sustainable, Dr Sarah Gordon – CEO and co-founder of Satarla – asserted that “you can’t build a cheap mine any more”. Expressing a similar view, Charlie Durant – Acting Head of CRU’s Sustainability Division – said that improving the sustainability of mining will be “very expensive,” resulting in something of a “green premium” to be paid by consumers.
When experts such as these predict significant growth of what is still currently an emerging cost, it’s probably time to take notice. Coming on top of the long-term upwards pressure on the two primary costs involved in mining – wages and energy – perhaps it’s time to acknowledge that, indeed, there can, or will be no such thing as, a ‘cheap’ mine in the future?
However, co-panellist Joe Carr – Innovation Director for Mining at Axora – predicts that something quite opposite might happen, and also thinks that low-cost operations can not only avoid conflicting with sustainability goals, but can actively contribute to them.
“I get what Sarah and Charlie said, and in the near-term they are right; there are going to be some significant costs involved in ESG and sustainability,” he says.
But what I think we’re going to see more of is a change in mindset about where and how we mine.
“But what I think we’re going to see more of is a change in mindset about where and how we mine. In terms of where we mine, I think we’re going to see miners prepared to invest in mining smaller deposits, perhaps in increasingly less hospitable places, and this change of mindset is going to be driven by new approaches in respect of how we’re able to mine. Miners will need fewer people on the ground and more robots and autonomous machinery, especially in the less-hospitable environments. And, making it even more cost-effective to mine these smaller deposits, perhaps with just a five-to-ten year lifespan rather than decades, miners will deploy modular, re-usable mining infrastructure, and cleaner sources of energy.
Miners will deploy modular, re-usable mining infrastructure, and cleaner sources of energy.
“The extraction of product from the ground notwithstanding, such changes will help miners leave a lighter environmental footprint, contributing to improved overall sustainability. We’re already witnessing the start of this new, technology-enabled era: some miners are using advanced new technology to reprocess existing tailings to extract more end-product, for example, and others are using smart technology that reduces diesel usage, which directly lowers emissions,” he added.
Joe also thinks that smaller, lower-cost operations might help mitigate a major risk in what is, for the time being at least, a somewhat volatile world. “Miners love to go big,” he says. “Given the choice of a few big mines or more but smaller mines, they will currently go big, every time. But this does nothing to mitigate what investors see as the biggest risk in the book, which is sovereign jurisdictional risk by the government of whatever country it is that a mine is operating in. And, if you have a smaller number of mega-mines, the impact on the business of ‘losing’ a mine this way is much higher. Losing a smaller mine to nationalisation may cause less damage.”
Joe also argues that the risk of nationalisation happening at all is arguably higher for larger mines. “Any mine nationalisation by any government is always going to be politically contentious but, the bigger the mine, the bigger the reward for taking that step. It’s possible that smaller mines will make it less politically attractive to nationalise.”
Will Joe’s predictions around modular mining and reusable mining infrastructure come true? Check back here in ten years, says Joe. “Although much of the technology already exists to enable the modular mining, reusable infrastructure and remote operation of mines, mining isn’t suddenly going to become a high-speed industry. But there will be a considerable competitive advantage for those miners who can harness technologies like this, even if it’s just to control their costs, so I’m pretty sure it will happen.”
To catch up on the full recording of the live Q&A: "What does sustainability in mining actually mean?", join the Axora Community “Metals & Mining” Group.
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