INNOVATIONS IN METALLURGY

Transcription

1 INNOVATIONS IN METALLURGY WITH A CASE STUDY OF Pb SMELTING IN PERU Phillip J. Mackey PERUMIN - 31 st Mining Convention Arequipa, September 16 th to 20 th, 2013

2 Peru is a Mining Country We must not forget that metallurgy is as much a part of mining as digging ore out of the ground. As you will see in the logos here developed by our predecessors, smelting is part of the mining cycle. Peru must be a mining country in the true sense of the word. This presentation will talk about developing a Pb smelting industry in Peru 2

3 Some World Trends Population growth, with water and food crisis looming Electric cars gaining further attention New African opportunities Waning of the climate debate, emergence of sensible climate science Slow recovery in the U.S. but an overall decline of U.S. world influence Surge in the economies of China and India Growing importance of South America Political conflict and unrest All these trends mean change.. So change is very much part of life, and there is also change in the mining/smelting industry. as will be discussed... 3

4 What are the ten top issues that mining companies worldwide will face during the next 50 years? 4

5 Some Immediate Issues Affecting Mining Companies 1. Loss of market capitalization, lower share prices (market does not buy the industry s long term growth strategy ) 2. Importance of emerging markets (China, India, etc) 3. One critical key to the future will be the ability of a company to bring on new metal supply through the right projects ( capital discipline) 4. Relentless demand will be there the % increases in growth may not be as high as before 5. Balancing productivity and profitability: Position on cost curve a primary focus (= cost reduction) Role of technology technology & innovation can lower costs (also requires detailed understanding of data and processes) In part taken from. Review of Global Trends in the Mining Induistry-2013, Price Waterhouse, 5

6 ..and a prediction. 1. At present, world mining companies send huge amounts of non-ferrous metal concentrates to China for smelting..copper, zinc, lead. 2. This large scale mining-custom smelting model is likely not sustainable due to issues including.higher labour costs in China, energy costs, environmental controls, possible difficulties/concerns on shipping some materials (like Zn, Pb, etc), other environmental aspects It is considered that over say about the next decade, concentrates will more and more be treated at the country of origin or another convenient country (but still, China will remain a key player in the industry) Peru needs to plan now for future changes. This situation will be discussed later in this presentation regarding developing a modern Pb smelting industry in Peru 6

7 Latin America Overview 7

8 Outline of Presentation Part I - Innovations in metallurgy Important for keeping low on the cost curve Types of innovation examples Discussion Part II Case Study of new Pb smelting industry in Peru Considerations involved, requires some innovative thinking Plan of action Part III- Conclusions 8

9 World Growth in Metals 1800 to 2010 Up until about 1900, Pb was the most important non-ferrous metal Growth of all metals will continue 9

10 CUSTOM SUPPLY, % The white curve plots the trend of Cu concentrate to custom smelters, 1970 to 2010 The box (yellow curve) shows this trend from 1700 to beyond 2000 This reveals the trend is cyclical. The same type of trend would also apply to Pb concentrates Source: P.J. Mackey YEAR

11 Change (e.g., establish a modern Pb smelting industry in Peru) Different results require different actions Different actions require different thinking Different thinking requires generous listening 11

12 Paul Hersey s quote* To look is one thing To see is another To understand what we see is still another But to ACT on what we understand is really what it s all about, isn t it? * Paul Hersey ( ) A leading US authority on training and development in leadership 12

13 What has innovation done for us All major technical developments in mining and metallurgy have occurred as a result of successful innovative developments This has been carried out by operating companies, equipment suppliers, research institutes of various types and universities There need not be one best place to carry out development.it depends on the strategy and approach of people involved 13

14 What innovation has done for the energy requirement to produce copper (by smelting) Decreasing trend of energy consumption in Cu Smelting over the last four centuries (as MJ/t Cu - feed to metal) Since 1900, energy consumption has dropped by a factor of about 30 times. (flotation, use of large reverbs, later use of O 2 ) Energy at present time ~ 12,000 MJ/t Cu, 70-80% is electricity, as compared to mostly fossil fuel in the past Source: Coursol et al. Energy in copper smelting, CIM, 2011

15 Two Broad Types of Innovation 1. Creative- Flash of Insight Examples Noranda Process 1963 (copper smelting), Top Smelting Lance - (1971) - ISASMELT TM, Ausmelt Gravity separator (in mineral processing) 2. Innovative Adaptation (also called incremental innovation ) Examples Outokumpu flash smelting (Cu, Pb and Ni) SAG milling Use of oxygen for smelting Establish a modern Pb smelting industry in Peru 15

16 A Flash of Insight - The Noranda Process (N.Themelis and P. Spira ) 1. In the 1960s, the mainstay of smelting was the large reverberatory furnace, with converter slag returned to the furnace for slag cleaning 2. The soon-to-be-inventors did ground-breaking tests that showed returned converter slag had an extremely short residence time in the furnace, yet slag was still effectively cleaned of copper 3. The inventors deducted that since the slag residence time was low yet effective, why not combine smelting and converting in the same vessel and still keep the same short residence time for slag cleaning 4. Thus was born the Noranda Process, the world s first commercial plant for continuous smelting and converting 16

17 Innovative Adaptation-Outokumpu Flash Smelting (Bryk et al ) 1. The idea flash smelting of fine concentrate in a gas stream had been known and used since the 1930s 2. Outokumpu in the 1940s, wishing to utilize the chemical heat of smelting (instead of using scarce electric power as used pre-war), chose to adapt the 1930s flash smelting ideas to their own requirements. St Jacques furnace, 1930s 3. Thus was born the Outokumpu Flash Smelting Process, the world s first commercial plant for smelting to a medium grade of matte and utilizing the heat for smelting 17

18 The Path to Progress (e.g., establish a modern Pb smelting industry in Peru) The reasonable person adapts himself to the world. The unreasonable person tries to adapt himself to the world. All progress comes from the unreasonable man. George Bernard Shaw British Writer (1903) 18

19 Global Pb Production Note: Mine production represents about 44% of output, bal. is recycled Pb Peru provides about 5 % of world mined Pb but no Pb metal* Source: Hassall et al, Pb-Zn 2010, CIM/TMS With Cerro re-starting, this is a simplification 19

20 Ranking of Pb mine output by country Source: USGS, Washington, USA,

21 Metal price trends Highly volatile since 2005 Lead Metal price trends - highly volatile since 2005,will likely remain so Long Term Pb price ~US$2,100/mt Source: ILZSG, 2012

22 Pb mine output in China increasing Source: ILZSG,

23 Falling Pb and Zn Ore Grades Source: ILZSG,

24 24

25 All lead metal used in Peru is imported metal* Chances are that 1 car in 20 in Peru has lead in the battery originally mined in Peru, the concentrate was shipped elsewhere for smelting and then the metal was re-imported in the battery. A case could be made for some Pb smelting in a modern plant to be done in Peru. Such a plant could also treat secondary Pb (batteries) * With Cerro re-starting, this is a simplification 25

26 The typical Peruvian Pb miner receives much less than 100% of conc. value It requires some 50 Litres of fuel oil to ship 1 tonne of Pb concentrate to China thereby adding unnecessarily to greenhouse gas emissions 26

27 Considerations Regarding a Modern Peruvian Pb Smelting Industry Economics of any new plant to be in the first quartile of the cost curve This requires world-class technology for a new plant, start small Benefits include: Security of processing (refer to news report last month that Yunnan will halt Pb smelting next slide) Labour costs are on the rise in China, Smelting Charges will likely increase in future. Storage of concentrates at the ports can be problematic Shorter payment period Saves on freight costs (which will likely increase in future), shipping will increasingly require stringent environmental safeguards seriously affecting the present mining-custom smelting model Reduces industry greenhouse gases - it requires ~50 Litres fuel oil to ship 1 tonne of Pb concentrate from Peru to China 27

28 China s Yunnan Tin Will Halt Lead Smelting After Price Declines (Bloomberg News - Aug 23, 2013 ) Chinas Yunnan Tin Co said it would idle its lead smelter because lower prices for the metal have made it unprofitable. The plant, with 100,000 metric tons of annual capacity, will stop operating this month, according to a statement from the company, which is based in Kunming, Yunnan province. Output this year from the smelter will drop to about 60,000 tons from a previous estimate of 90,000 tons, Board Secretary Pan Wenhao said today by phone.

29 Possible steps Peru can take to establish a world class Pb smelting industry Create an industry - Government Pb Task Force Essential to have industry support, market driven Group to carry out benchmarking survey- Industry trends Role of China (growth, but trend of increasing costs, etc, concerns over shipping Pb, storage at ports, etc) Technology Review (Top Lance, SKS, other.) Economics, financial and country issues, possibility of a Japanese style JV plant in Peru, etc Consideration given to also processing secondary Pb (batteries) Consider Peru setting up a Canadian CANMET-like Government metallurgical laboratories (to retain Government expertise) Prepare recommendations 29

30 Leadership and Expertise Applies to a company as well as a country Obviously, our leadership does not and should not necessarily have the technical expertise needed to make some of the decisions we need to make. However, we have people who do have the expertise and top management needs to ask the right questions of these people to understand the technical implications of our decisions. Roger Ackerman, Corning Chairman and CEO,

31 Critical Thinking Components (in looking at a new mining-smelting model) Generous listening Comfort with uncertainty Prioritization Turning complexity into simpler parts and most importantly. Capacity to enlist others into action 31

32 Modern Pb smelting Technologies (all these technologies are environmentally clean) Top Smelting Lance (Australia) ISASMELT TM Ausmelt/Outotec Flash Smelting (Finland) SKS/Bottom Oxygen Blowing (China) Kivcet (Russia) QSL (USA) 32

33 ISASMELT TM Pb Smelting Source: Xstrata Technology brochure,

34 SKS/Bottom Blowing under consideration at Port Pirie, Australia Source: Port Pirie web site 34

35 Schematic flow diagram Pb Smelting 35

36 Some new/re-opened Pb smelters Source: ILZSG,

37 Conclusions 1. Since successful introduction of innovation requires an atmosphere of change, openness to new approaches is essential ( for setting up a modern Pb smelting industry) 2. There is potential for an innovative approach to Pb smelting in Peru. Issues and considerations as regarding achieving this were outlined in the presentation 3. A number of modern Pb smelting technologies are now available for clean, environmentally safe operations 4. A tentative Plan of action was developed for discussion 37

38 One last thought Strategies and technologies only deliver promises. People and processes deliver results. Deloitte & Touche Advertising Peru is a Mining Country 38

39 Acknowledgements I wish to acknowledge the support of Bertrand De Windt, ICM-Peru Chair and also Perumin in helping to make this presentation possible 39

40 MUCHAS GRACIAS 40