Canada Mining Innovation Council Business Case Executive Summary: Towards Zero Waste Mining. August, 2015

Transcription

1 Canada Mining Innovation Counci Business Case Executive Summary: Towards Zero Waste Mining August, 2015

2 The Canadian mining industry is at risk and needs to adapt to a new reaity of increasing compexity Decining Productivity Structured abour market forces, decining resource quaity, and a egacy of inefficient capita aocation have ed to decining productivity (i.e., decining abour productivity, increasing capita intensity, and decreasing mining intensity) Increasing Costs High energy consumption, eevated input costs (e.g., energy, infrastructure, abour, royaties, permitting fees, and compiance), and critica shortages in energy and water have resuted in increasing energy intensity, decreasing margins and diminishing economic feasibiity of new mine deveopments Increasingy Compex License to Operate Concerns from mutipe stakehoders incuding conservation and the potentia environmenta impacts of minera deveopment and mine cosure have resuted in increasing government reguation and demand for heightened corporate socia responsibiity and stakehoder engagement Operating With Uncertainty Voatie commodity prices have resuted in unpredictabe margins, forcing companies to pan for the unforeseeabe, and decreasing financing capita avaiabiity 2

3 In order to remain sustainabe and profitabe, the industry must innovate and coectivey chaenge existing ways of thinking The sustainabiity of the Canadian mining economy is at risk if current trends continue Mining business chaenges wi continue to grow, resuting in decreased productivity, increased costs, difficuty maintaining a icense to operate, and continued short term decision making at the expense of ong-term vaue creation As each of the main business chaenges utimatey impact mining operation profitabiity, mining companies wi find it increasingy difficut to remain profitabe and continue operations in Canada If no action is taken there wi be a significant negative impact to the Canadian economy with the resuting factors a decining in the short term Contribution to GDP Fisca Contribution Project Investment in Next 10 Years Minera Production Number of Canadians Empoyed Additiona Empoyees Required over the Next 10 Years Therefore, the industry requires a coective approach to innnovation In order to make a significant shift in improvement to address the greatest mining chaenges and maintain the immense contribution that mining provides to the Canadian economy, the industry must act as a business ecosystem and coectivey chaenge existing ways of thinking, by revisiting ong-standing practices and processes 3

4 The Canada Mining Innovation Counci provides a forum for change to enhance Canada s position as a goba mining eader Nationa non-profit organization comprised of over 75 members that incudes minera exporation companies, mining companies, service providers (mining and other), academia, research abs, and provincia and federa government Why CMIC Was Created? Formed at the request of the industry and government to provide innovation eadership to the Canadian mining industry What CMIC Does? CMIC faciitates an industry-driven innovation ecosystem connected through parae and sequentia inkages towards addressing Canadian Zero Waste mining chaenges CMIC s Mission & Goas To enhance the competitiveness and sustainabiity of the Canadian mining industry by coordinating exceence in research, innovation, and commerciaization towards maintaining Canada s goba eadership in mining Stage 3 CMIC s Approach The staged and phased approach of the technoogy roadmaps ensures gradua progression (Phase 1 3) and adoption of innovative technoogies (Stages 1 3) which promote, more efficient and sustainabe operations and increase sharehoder vaue A new: Net Zero Waste Definition of Towards Zero Waste Mining Stimuate technoogy innovation in Canada to achieve zero waste in mining and minera processing within years, with a focus on the environment, energy, and productivity Sources of Inspiration for the CMIC Mode 1 Created to deveop, faciitate, and manage coaborative research projects for interested parties Stage 2 Stage 1 Optimized and advanced: Industry cost-drivers Safe and reiabe: Environmenta impact reduction Focused on acceerating the pace of improvement in environmenta sustainabiity in Canada s oi sands through coaborative action and innovation Phase 1 (Years 0-3) Phase 2 (Years 3-5) Phase 3 (Years 5-10) Designed as a coaborative, industry ed innovation network to sove key industry issues by heping members combine resources to sove common probems and decrease costs Source: (1) Detais sourced from the websites of COSIA, Ecipse, and AMIRA 4

5 CMIC s Towards Zero Waste Mining strategy addresses the pressing issues that are keeping executives up at night Abiity to reach ore bodies that are further away faster and in a safe manner Environmenta footprint reduction and more effective operations Making continuous mining more economica and efficient Comminution energy reduction Water usage, avaiabiity, and efficiency is a chaenge Energy management and efficiency Improvements in safety to benefit empoyees Access to rea time data strong drive to improve the abiity to make decisions and monitor operations from arge data sets in rea time Mine panning and better understanding of ore bodies to aow for efficient mining 5

6 by addressing the five most pertinent Towards Zero Waste Mining issues through impementabe portfoio roadmaps From Zero Waste mining issues Exporation to actionabe Portfoio Roadmaps Exporation Priority Projects Acceerated targeting undercover Near-time data retrieva, anaysis, and modeing $18.0 Tota Required Investment* $10.0 Government $1.0 $5.0 Cash In-Kind $2.0 Partners Continuous Underground Mining Underground Mining Rea-time continuous underground mining $31.1 Tota $17.6 Government $2.2 $11.3 Cash In-Kind $0.0 Partners Processing (Comminution Efficiency) Energy Efficiency Energy / Processing Energy efficient comminution through new technoogy demonstration and waste energy recovery Tota $10.8 Government $1.5 Cash $7.2 In-Kind $2.3 Partners Environmenta Management Environmenta Stewardship Cosure criteria Taiings management Mining industry knowedge hub & sensors Data management 6 $16.5 $9.6 Government * The spit between government and industry investment across portfoios is based on anticipated investment eve by industry, given their stated priorities Tota $1.1 $3.3 Cash In-Kind $2.5 Partners

7 CMICs Portfoio Impementation Approach CMIC incorporates mutipe, agie project deivery modes that everage knowedge, faciities and investments 1. CMIC managed research consortia: Our current exporation project is the argest geoscience consortia in North America, addressing expicit research needs for the industry. 2. Project integration/coordination: This custers existing new mining projects, adds potentia new project eements and accounts for muti-miion investments being made by companies. This wi be one component of our underground mining program. 3. Technoogy Demonstration: This accounts for new technoogy that is not deveoped far enough and is typicay too costy for a singe company to test. In the case of energy efficient processing we are examining 3-5 new technoogies in this genre. Exporation Underground Mining 4. CMIC Directed, Partner Deivered: These projects typicay occur on the initia stages of arger, consortia-based project to prove an idea or provide a baseine of data, information and modes on which we need to proceed. 5. CMIC Instigated with Ecosystem Participation: These are either very difficut technica chaenges that have broad appicabiity and interest or where there are significant groups working on eements yet need to be stimuated to move in the right direction. environmenta monitoring technoogies. Low grade waste energy recovery is one exampe. 6. Mini-Consortia: Evove around needs of a seect group of companies and incude two nascent projects in genomic based sensors for environmenta monitoring and hybrid air vehices for aternative transportation. Processing Environmenta Stewardship 7

8 In order to impement these roadmaps, government and industry investment is required In order to faciitate the coaborative innovation agenda within the mining industry, CMIC and its industry members have identified a tota of $89.6M in funding requirements over the first 5 years. CMIC, together with industry participants, wi then prioritize projects based on actua funds received. Further funding detais and breakdowns are provided in the foowing sides Funding Breakdown $89.6 (56%) $50.0 Tota Funding Government Cash Funding Required $CAD M $5.8 (6%) $26.7 (30%) In-Kind Partner $7.1 (8%) Tota Government Cash In- Kind Partner* *In addition to industry and government funding contributions, CMIC is everaging cash and in-kind funding input from other groups (approximatey 15-20, incuding pubic sector organizations, private industry, and service providers). It is expected that additiona funding from these groups wi be identified when projects are further defined 8

9 The possibe savings from investment in the portfoios can be quantified based on industry expenditures CMIC evauated the 2014 financia statements of 13 mining companies and appied the expected outcomes to the reevant expenditure items to cacuate the possibe 10-year ong-term ROI figures Portfoio Exporation Short-term Average exporation vaue per doar spent increased by 10-15% Outcomes Long-term Average exporation vaue per doar spent increased by 25-30% Annua Exporation Expenditure Range Possibe Savings* Annua Short-term Savings Annua Long-term Savings Low spenders: $3-8M $0.5 1M $1-2M Medium spenders: $41-80M $6-12M $12-24M High spenders: $ M $37-59M $74-118M Underground Mining 20% unit cost reduction through a 200% increase in abour productivity and 20% increase in mining intensity 33% unit cost reduction through further increases in mining intensity Underground Mining Unit Costs Range Short-term Mining Unit Cost Savings Long-term Mining Unit Cost Savings Base metas: $55-89 / t $11-18 / t $18 30 / t God: $800 1,000 / oz $ / oz $ / oz Uranium: $28 / b $6 / b $9 / b Energy / Processing 20% energy reduction in comminution 45% energy reduction in comminution Daiy Mine Energy Use Daiy Short-term Reduction in Energy Use Daiy Long-term Reduction in Energy Use Sma Mi Capacity: 11 MWh 2 MWh 5 MWh Medium Mi Capacity: 93 MWh 19 MWh 42 MWh High Mi Capacity: 2,300 MWh 460 MWh 1,035 MWh 20% cost reduction in cost and iabiities for environmenta management and reguatory compiance Annua Environmenta Cost Range Annua Long-term Savings Environmenta Stewardship Remediation: $5-20M Rehabiitation: $50-80M Recamation: $30-200M $1-4M $10-16M $6-40M *Assumptions and quaifications for the possibe savings targets have been identified in the detaied Business Case document 9

10 Project governance and management by internationay recognized subject matter experts Project Governance Project Directorate Nominated by project investors Project Management Office Project eaders and support staff Manage and report on project execution Project Test Site Leaders Technica Expert Groups Provide industry and nonindustry subject matter experts Inteectua Property Framework Non-negotiabe common IP Poicy Project Inteectua Property Agreement Background Inteectua Property Owned by a Project Sponsor who has deveoped or icensed it CMIC Project Sponsors (who provide financia or In-Kind support) get excusive access to generated IP for 12 months, after which it is circuated to the rest of CMIC s members Project Inteectua Property Created by a project participant(s) as a direct resut of a Project and remains owned by creator(s) uness otherwise transferred. 10

11 Creating ong term vaue through coaboration on common issues Investment Options Advantages Disadvantages Invest in Property, Pant, and Equipment (PPE) Addresses current chaenges in PPE designed to target specific issues (e.g., poor productivity) Generates additiona revenue or increased margins (i.e., mining intensity through continuous extraction) Ony addresses specific issues which have aready been soved by PPE suppiers, or other sectors Addresses the decrease in margins for the shortterm, but ignores ong-term systematic chaenges Investment depreciates Independenty Invest in Innovation Research and Deveopment Addresses industry chaenges, through interna (e.g., existing staff) or externa (e.g., research faciities, product / service providers, and speciaty mining consutants) resources with a focus on ong-term vaue Provides soe access to any IP / patents deveoped, providing a possibe competitive advantage Requires substantia financia investment with no sharing of costs with other mining firms Requires extensive resource and time commitment, taking away from mining production activities Provides access to imited taent poo (i.e., interna or hired experts) Imposes significant risk for the time and money invested Address Operationa Expenditure Pressure Points Improves iquidity and cash fow in the shortterm, heps fund other priority investments, and provides additiona security in case of a drop in commodity price Reduces debt and / or meets key financia ratios Addresses short-term chaenges at the expense of business growth and ong-term vaue creation Does not provide direct return on investment 11

12 Government can prioritize mining investment through CMIC Government investment wi address common mining chaenges, increase technoogy deveopment and adoption, address cimate change and environmenta impacts Direct Impact Indirect Impact Increased Confidence in the Mining Industry More Investment by Firms Effects on Industry, the Economy, and Job Creation License to operate Perception that government sees the vaue of investing in the Canadian mining sector Industry investment wi have greater investment incentive if not matched by governments Soved mining chaenges resut in positive impact to the economy and enabe further growth of tech and cean tech economy Addressed environmenta and community concerns wi enabe further growth of the resource economy Prompt action is required by government representatives to aocate funding for the 2016 budget Budgetary Submission (By Q1 2016): Submit budget request for the Towards Zero Waste strategy to Pariament Approva of Funds (By Q1 2016): Approva of funds by Treasury for 2016 expenditure Transfer of Funds (By Q2 2016): Transfer of funds from Treasury to CMIC for investment in the Towards Zero Waste strategy 12

13 Workfow for the CMIC Towards Zero Waste Mining strategy impementation Industry Next Steps Today 1 Commit to 5 year Investment (Q1 2016): Review detaied business case, aign with CMIC s Towards Zero Waste strategy, confirm five year funding commitment 2 Aot Funding (Q3 2016): Aign with one or more Portfoios and aot yeary budgets across Portfoio projects 3 Estabish Individua Project Consortia: Technica Working Groups determine Project Test Sites, and eadership and subject matter expert roes by consortium members 4 Commit to In-Kind Investment (Prior to Project Start): Technica Working Groups to determine what in kind resources required from consortium members and pursue individua commitments Execute Projects in Accordance with CMIC Roadmap and Project Governance Structure and any partnership agreements Canada as a Goba Mining Leader CMIC Next Steps 2 Obtain Funding (Before Q1 2016): Finaize investment aocations with industry participants and other stakehoders 4 Budget Approva (by Q1 2016): Finaize government budgeting process and keep both industry and government informed regarding project executions 1 3 Present Business Case (Q3 2015): Finaize Roadmaps (Before Q2/Q3 2016): Share the Business Case with Obtain outstanding funding and resources required in industry and government order to finaize technica working group project pans stakehoders to soicit buy-in and investment commitment 5 6 Commence Next Panning Cyce: Compie industry insights from current projects and begin pans for second generation programs Execute Projects: Initiate projects in accordance with Business Case roadmaps and signed IP poicies 13