Research Priority Plan - MRIWA · Any opinion contained in this publication is unsolicited general information ... These challenges and opportunities are impacted by the fact that

Minerals Research Institute of Western Australia

mriwa

Research Priority Plan June 2013


mriwa

Minerals Research Institute

of Western Australia


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Disclaimer and Disclosure

This document has been prepared by Australian Venture Consultants Pty Ltd (ACN: 101 195 699) (‘AVC’). AVC was commissioned to prepare this publication by the Chamber of Minerals and Energy Western Australia (‘CMEWA’) and has received a fee from CMEWA for its preparation.

While the information contained in this publication has been prepared by AVC with all reasonable care from sources that AVC believes to be reliable, no responsibility or liability is accepted from AVC for any errors, omissions or misstatements however caused. Any opinions or recommendations reflect the judgment and assumptions of AVC as at the date of the document and may change without notice. AVC, its officers, agents and employees exclude all liability whatsoever, in negligence or otherwise, for any loss or damage relating to this document to the full extent permitted by law. Any opinion contained in this publication is unsolicited general information only. AVC is not aware that any recipient intends to rely on this document or of the manner in which a recipient intends to use it. In preparing this information it is not possible to take into consideration the information or opinion needs of any individual recipient. Recipients should conduct their own research into the issues discussed in this document before acting on any recommendation.

Editorial note 30 July 2014

The original version of this document referred to the Western Australian Minerals Research Institute (WAMRI), the name initially approved by the WA Cabinet. References to WAMRI have been change to the Minerals Research Institute of Western Australia (MRIWA) to accord with a subsequent decision of the WA Cabinet.

The title for the orginal version of this document was the “Research Priorities Plan”. This has been amended in this version to the Research Priority Plan, to be consistant with the reference in the Minerals Research Institute of Western Australia Act 2013.


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CONTENTS

The Minerals Research Institute of Western Australia........................................................................... 1

An Overview ........................................................................................................................................ 1

The Principal Objective of the Minerals Research Institute of Western Australia ............................... 1

About this Research Priority Plan ........................................................................................................... 4

Purpose of this Research Priority Plan ............................................................................................... 4

Process for Developing this Research Priority Plan ............................................................................ 4

Process for Review of the Research Priority Plan .............................................................................. 4

The Research Priorities of the Minerals Research Institute of Western Australia .............................. 7

Find More Resources .......................................................................................................................... 9

Expand the Mining Envelope ............................................................................................................ 16

Increase Recovered Value ................................................................................................................ 19

Improve Productivity .......................................................................................................................... 23

Develop New Products and Markets ................................................................................................. 25

Exhibit 1: Executive Summary of the 2010 Knowledge and Technology Needs Assessment ......... 26


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The Minerals Research Institute of Western AustraliaAn OverviewThe Minerals Research Institute of Western Australia (MRIWA) is focused on the research and development (R&D) needed by the Western Australian minerals industry to ensure it remains an engine of economic growth for Western Australia.

MRIWA, a Western Australian Government Statutory Authority, will invest Western Australian State Government funds in R&D projects that are designed to develop solutions for opportunities and challenges that face the State’s A$106 billion mineral resources industry.

MRIWA invests through competitive R&D grants made to R&D organisations within Australia and abroad that leverage multi-partner R&D funding from industry and/or other government sources of funding.

The intended outputs of funded projects must align with the objective of MRIWA (see next subsection) and the specific research priorities (see subsequent sections) outlined in this Research Priority Plan (RPP).

MRIWA also invests in developing engineers, geologists and other scientific professionals who are required for the future of the Western Australian mineral resources industry through a post-graduate scholarship program for higher-degree-by-research candidates. The primary focus of this program is PhD students, particularly those undertaking a project that is aligned with MRIWA’s priority research themes.

The Principal Objective of the Minerals Research Institute of Western AustraliaSuccess in the modern minerals industry requires the application of multi-disciplinary expertise to navigate the wide range of commercial, technical, social and environmental opportunities and challenges presented to exploration, mining, processing and marketing aspects of the business world-wide. Consequently, there are many fields of social, physical and biological scientific endeavour that can be pursued with the objective of maintaining and growing the Western Australian minerals industry.

However, MRIWA has limited resources. As such, its grants program must focus on areas that are most likely to deliver tangible benefits to the Western Australian minerals industry and the State, such that MRIWA is optimally positioned to contribute to economically meaningful outcomes. MRIWA has set a very clear overall objective that is designed to ensure this focus.

The Western Australian minerals industry provides the State with a wide range of significant socio-economic benefits. In its own right, it is a major employer of Western Australians, including Aboriginal Western Australians. Furthermore, with an estimated multiplier of 3.5 times, it is a major stimulant to industry and employment growth in other sectors of the metropolitan and regional economies of Western Australia. As a major investor in localised soft and hard community infrastructure, often in collaboration with the State Government, it is a major contributor to social well-being of Western Australians, particularly in regional Western Australia.

However, most importantly, taxes and primarily royalties paid to the State Government by the minerals industry are a major source of revenue for the State. Figure 1 below illustrates the trend in production royalties paid by various sectors of the State’s minerals industry to the State Government of Western Australia. In 2011-12, royalty payments to the State from the minerals industry totalled A$5.3 billion, representing 19.1 percent of total State Government revenues in that year.1

1Department of Treasury (2012), Budget: Economic and Fiscal Outlook, Budget Paper No.3, Government of Western Australia


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This significant financial contribution to the Western Australian Government Budget is critical for financing the high standard of health, education, law and order, transport, culture and the arts, recreational facilities and other civic amenities to which Western Australian citizens have become accustomed. The principal function of MRIWA is to support minerals R&D that is directed at optimising the ability of the industry to continue to provide the State this important income stream.

While Western Australia is fortunate to be endowed with enormous and diverse natural minerals resources, it faces the same dilemma as any minerals industry in that as its resources are progressively exploited, additional resources become increasingly more difficult to find, mine, process and sell. Furthermore, as new, particularly high-technology oriented industries emerge, global demand for either new mineral products, or mineral products for which demand has historically been negligible is increasing. Western Australia hosts known resources of many of these minerals and is prospective for many more. In many cases the economic development of these resources will require new technology that can produce mineral products that are tailored to a customer’s unique product specifications.

‘The long run availability of mineral commodities is a race between the cost increasing effects of depletion and the cost decreasing effects of new technology.’

John E. Tilton

University Professor Emeritus, Colorado School of Mines

Profesor de la Catedra de Economia de Minerales, School of Engineering, Catholic University of Chile

0

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Iron Ore

Gold

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Historical Western Australian MineralsRoyalty Receipts

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-92

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-94

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-96

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-98

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-02

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Figure 1 - Historical Western Australian minerals royalties receipts


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These challenges and opportunities are impacted by the fact that Western Australia faces increasing competition in both capital investment and mineral commodity markets from emerging, relatively unexplored minerals provinces that in many cases are characterised by lower cost structures and less stringent regulation. This is a paradigm that places the ability of the Western Australian minerals industry to continue to provide substantial revenues and other socio-economic benefits to the State into medium-to-long term at risk.

The Western Australian government has invested in MRIWA to undertake research that optimises the probability that the Western Australian minerals industry will continue to make this important financial and socio-economic contribution to the State well into the future, so that future generations of Western Australians will continue to benefit from its prosperity. This is best measured by the impact that research funded by MRIWA might have on maximising the quantum and duration of royalties paid to the State as a result of production from the Western Australian Minerals industry.

Obviously, a wide range of factors, many of which cannot be controlled, influence the quantum of royalty receipts from the minerals industry. These factors include fluctuations in commodity prices, commercial decisions around specific

projects and competition from other regions. However, in any given global economic environment, royalty receipts in Western Australia will be maximised by factors such as finding more resources, mining more ore, recovering more value from that ore, improving productivity of these operations and selling more minerals.

The Western Australian minerals industry does have some control over the direction of R&D that leads to new technologies and methods that facilitate these factors.

Principal Objective of the Minerals Research Institute of Western Australia

The Minerals Research Institute of Western Australia will stimulate minerals research that enables industry to continue to invest in and operate globally competitive minerals exploration, mining, processing and export enterprises in Western Australia, and in doing so, ensure that the State continues to receive the considerable social and economic benefits provided by this activity including the maximisation of quantum and duration of royalty payments.


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About this Research Priority PlanPurpose of this Research Priority PlanThis Research Priority Plan (RPP) is designed to articulate the research priorities for MRIWA. These priorities will direct the MRIWA Board’s decisions pertaining to R&D grant investments. The RPP identifies key challenges and opportunities in the Western Australian minerals industry where MRIWA will financially support R&D activity in collaboration with the Western Australian minerals industry and the local, national and global minerals research sector, to develop solutions for those challenges and opportunities so that MRIWA is optimally positioned to achieve its objective (see previous section).This RPP has two key purposes:

• MRIWA Board Decision MakingThe RPP is used by the Board of MRIWA as its principal tool for determining the minerals related R&D areas in which it will make grant investments. The RPP has been rigorously prepared through a highly consultative process (see subsequent section), to ensure that it provides a framework for directing MRIWA research grant investments at areas that will make an optimal contribution towards MRIWA achieving its objective (see previous section). The Board is obliged to ensure that the intended outcomes from R&D projects that it funds are aligned with the priorities in this RPP.

• MRIWA Communication The RPP approved by the MRIWA Board will be readily available in the public domain from the MRIWA website. As the principal source of information used by the Board to determine priorities for MRIWA R&D grant investments, it serves as a key communication tool to inform stakeholders on areas of minerals R&D that are of interest to MRIWA. As an extension of this function, it is also intended to be used by the research sector and industry to identify prospective R&D project proposals that align with MRIWA’s research priorities, and objective.

Process for Developing this Research Priority PlanThe commencement of the process for the development of this RPP dates back to late 2010, when the most recent endeavour to secure Western Australian Government support for MRIWA began. The information and knowledge on which the RPP has been developed has been established and refined as part of a process that commenced with making a case to the State for Government investment in minerals R&D and the subsequent planning process for the launch of MRIWA. The development of the RPP has taken place across three distinct phases:

• PHASE 1: Detailed Assessment of Future Knowledge and Technology Needs and Local Minerals R&D CapabilityA key component of the case made to the Western Australian Government for MRIWA was a detailed assessment of the general and sector-specific future knowledge and technology needs of the Western Australian minerals industry, as well as an assessment of the Australian minerals R&D sector and its capabilities. This exercise identified a total of 49 specific knowledge needs that were applicable to the wider minerals industry, as well as 30 that were applicable to specific sectors of the Western Australian minerals industry. This analysis is contained in a report that is publically available from the MRIWA and Chamber of Minerals and Energy Western Australia (CMEWA) websites.2 The Executive Summary of this report is contained in Exhibit 1.

2Australian Venture Consultants (2011), The Western Australian Minerals Industry: Future Knowledge and Technology Needs and Local Research Capability, Chamber of Minerals and Energy Western Australia


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• PHASE2:RefinementofMRIWAResearchFocusThe allocation of a total of A$11.5 million of State funds to MRIWA over three years resulted in a need to refine MRIWA’s R&D focus so that these funds could be optimally deployed to ensure that MRIWA achieves its objective (see previous section). This process involved wider consultation with companies operating minerals exploration, mining and processing projects in Western Australia to determine the priorities from the Phase I assessment, as well as a series of three scientific discipline workshops – exploration, mining and processing – where the results from that consultative process were presented to scientific experts in each of those disciplines, debated and refined.

• PHASE 3: Development and Finalisation of the Research Priority PlanThe results of the Phase 2 process were then synthesised into this consultation draft of the RPP that has been circulated widely to the Western Australian minerals industry and R&D sector for formal feedback and comment. This feedback and comment will be considered by the Board of MRIWA and integrated into a final RPP as deemed appropriate by the Board of MRIWA.

The process for the development of the RPP is illustrated in Figure 2 below.

Western Australian Minerals Industry:Future Knowledge and Technology

Needs Assessment– Literaturereviewandlimitedindustryandresearch

sectorconsultation– Identified79needsandmapsAustralianminerals

researchcapability

Wider Industry Consultation– 31interviewswithindustryexecutivestodetermineresearch

prioritieswithintheobjectivesoftheWesternAustralianMineralsResearchInstitute

Exploration DisciplineWorkshop

– Debateandrefinementonindustryexplorationrelatedpriorities

Mining DisciplineWorkshop

Consultation Draft of the Research Priorities Plan

Processing DisciplineWorkshop



– DraftResearchPrioritiesPlanforformalfeedbackfromindustrygovernmentandthemineralsresearchsector

Final Draft of the Research Priorities Plan– FinalResearchPrioritiesPlanadoptedbytheBoardofthe

WesternAustralianMineralsResearchInstitute

Phase1SteeringGroup

Phase2SteeringGroup

Phase3SteeringGroup(MRIWA)

Figure 2 - Research priority plan development process


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The research and analysis that has been undertaken across each of the phases of development of the RPP has been managed by the CMEWA, and undertaken independently by resources industry strategy group, Australian Venture Consultants (as the result of a competitive tender process). The first two phases of work were overseen by two separate steering groups, corresponding to the development of the MRIWA proposal for the State (Phase 1) and the operational planning process (Phase 2). The third phase was overseen by the inaugural board of MRIWA. The work-flow and governance arrangements for the development of the RPP are summarised in Figure 3 below.

MRIWA Development Phase

PhAsE 1 PhAsE 2 PhAsE 3

Research PrioritiesPlan Development

Activities

Detailedassessmentoffutureknowledgeandtechnologyneeds

AssessmentoflocalmineralsR&Dcapability

Phase1SteeringGroup

•NicoleRoocke,ChamberofMinerals&EnergyWesternAustralia(Chair)

•MarkWoffenden,CurtinUniversity

•SteveHarvey,CSIRO

•JimLimerick,UniversityofWesternAustralia

•PhilLimerick,UniversityofWesternAustralia

•PhilMurray,DepartmentofCommerce

•RichardBorozdin,DepartmentofMinesandPetroleum

•IanFletcher,BHPBilliton

Phase2SteeringGroup

•NicoleRoocke,ChamberofMinerals&EnergyWesternAustral-ia(Chair)

•SimonBennison,ChiefExecutiveOfficer,AssociationofMining&ExplorationCompanies

•MichelleAndrews,DepartmentofMinesandPetroleum

•PhilMurray,DepartmentofCommerce

•PeterLilly,BHPBilliton

•PhilLockyer,MRIWA

MRIWABoard

•PeterLilly(Chair)

•MarkWoffenden(CEO)

•AndrewShook,RioTinto

•PhilLockyer,Consultant

•JamesMcClements,ResourceCapitalFunds

•StedmanEllis,APPEA

RefinementofMRIWAResearchFocus

ConsultationDraftoftheResearchPrioritiesPlan

FinaldraftoftheResearchPrioritiesPlan

Governance

Principal Investigator AustralianVentureConsultants AustralianVentureConsultants AustralianVentureConsultants

Figure 3 - Governance mechanisms for the development of the research priority plan

Process for Review of the Research Priority PlanThe MRIWA Board (see Figure 3 above) is the custodian of the RPP and has an obligation to ensure that the RPP is current with respect to addressing priority issues for the Western Australian minerals industry. The MRIWA Board will ensure that the RPP is current by facilitating regular independent reviews that will involve a consultative process with industry, government and the R&D sector.


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The Research Priorities of the Minerals Research Institute of Western AustraliaThe MRIWA R&D priorities presented in this RPP are the result of a progressive refinement of the priority knowledge and technology needs identified by the consultative process discussed in a previous section and summarised in Figure 2 and Figure 3. The Board has further refined the R&D focus of MRIWA by establishing the criteria described on Figure 4 to guide selection of project proposals presented for considerations under the various themes and sub-themes.

These research priority selection criteria are summarised in Figure 4 below.

Criteriafor MRIWA

Research ThemePrioritisation

Probable direct and meaningful impact on

MRIWA’s objective

Areas where MRIWA can provide meaningful financial

investment

Positive outputs are likely to be adoptable

solutions for industry

Issues that industry, the research

sector and the MRIWA Board agree are real and significant

challenges and opportunities

Figure 4 - Criteria for mriwa research theme prioritisation

It should be noted that while many areas of mineral related R&D will align with these criteria, it is those areas that are most acutely aligned with these criteria that will be prioritised by MRIWA.

With respect to the criterion that requires MRIWA to provide meaningful financial investment to a R&D project, MRIWA is principally focused on funding two categories of projects:

• HighImpactProjectsthatRequireSignificantPublicSectorFundingThis is comprised of R&D projects that have the potential to have a significant impact on MRIWA achieving its objective and require a significant proportion of the cost to be met by a MRIWA grant investment in order to lower the hurdle rate (ie risk) for industry investment. It is expected that projects that fall into this category will be earlier stage applied R&D projects with a longer outcome horizon.

• High Impact Projects that Require Incremental Public Sector FundingThis is comprised of R&D projects that have the potential to have a significant impact on MRIWA achieving its objective, but require a lower proportion MRIWA grant investment in order to lower the hurdle rate for industry investment. It is expected that projects that fall into this category will be later stage applied R&D projects with a shorter outcome horizon.


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This is illustrated conceptually in Figure 5 below, where MRIWA’s focus is projects whose financial requirements and intended outcomes are aligned with either quadrant three or four.

1.HighContribution–LowImpact

2.LowContribution–LowImpact

3.HighContribution–HighImpact

4.LowContribution–HighImpact

High

High

Low

Low

PortionofProjectFunding

Provided

byMRIW

A

ProjectProbableImpactonMRIWAObjective

Optimisation of State Benefits including State

Revenues

Find More Resources

Expand the Mining Envelope

Increase Recoverable

Value

Improve Productivity

Develop New Products and

Markets

Figure 5 - MRIWA project leverage policy

Figure 6 - Core research themes of the Minerals Research Institute of Western Australia

Based on the consultative process and further refinement using the criteria summarised in Figure 4 opposite, the MRIWA Board will focus grant investments, and where appropriate, scholarship funding on the five themes summarised in Figure 6 below.

It is important to note that a project proposal does not have to fit exclusively into one or another of the themes: a single project may contribute to several themes or sub themes. In this way the project may contribute to multiple elements of the industry value chain.


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MRIWA recognises that exploration companies, mid-tier miners, multinational mining companies and companies operating in the mining services industry have different capacities to participate in R&D, but all can play a very important role in the development and delivery of minerals research projects targeting MRIWA’s research priorities.

The five priority research themes and research priorities within those themes are discussed in detail in the following subsections.

Find More ResourcesRationale for Theme PrioritisationExisting mineral resources in Western Australia are being exploited at a greater rate than which they are being replenished by new discoveries. Increasingly, exploration activity in Western Australia will need to venture into more challenging exploration environments for new world-class discoveries to be made. The fact that exploration is becoming increasingly technically challenging in Western Australia will motivate industry to invest in other, emerging minerals provinces where the exploration environment facilitates discoveries using conventional exploration methods and/or focus more resources on less risky brownfields exploration in Western Australia. There is evidence that this is already occurring.

For example:

• During the period 1996 to 2009, Australia’s share of global minerals exploration expenditure fell from 20 percent to 13 percent3;

• Greenfields exploration in Australia has been at best, stable over the past several years; and

• According to the Commonwealth Department of Foreign Affairs and Trade more than 230 Australian mining and energy companies have assets in Africa, accounting for 650 individual projects spread across 42 African nations and have invested approximately A$24 billion in these projects.4

This paradigm has the following two critical implications for Western Australia:

• Firstly, there will be a decline in the exploration industry in Western Australia which historically has been both a significant contributor to the State’s economy and the source of new discoveries that are often subsequently developed by the major resources companies; and

• Secondly, future growth in production and therefore royalties paid to the State will become increasingly dependent only on improvements in technology that facilitate extracting ore from more challenging geo-technical environments and recovering minerals from increasingly complex ores.

The solution to this predicament lies in modifying the risk-reward profile associated with investing in exploration programs that venture into more challenging exploration environments in Western Australia so that industry is adequately compensated to invest in greenfields exploration in these new exploration frontiers.

3CSIRO (2010), Minerals Down Under National Research Flagship: An Overview4Australian Government Department of Foreign Affairs and Trade Database (2011)


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Fundamentally, this involves undertaking research that generates new knowledge and technology that leads to the development of exploration methods and tools that reduce the likelihood of attaining false-positive results and which reduce the cost associated with undertaking exploration activities in challenging exploration environments in Western Australia.

Ultimately, minerals exploration programs applying these new methods and tools in new exploration frontiers would also benefit from the financial leverage provided by the State Government’s Exploration Incentives Scheme (EIS).

The prioritisation rationale for this priority theme is summarised in Figure 7 below.

Figure 7 - Basic rationale for state investment in finding more resources

Implication for IndustryExploration Investment Implication for the State

Currentresourcedepletionratesareoutstrippingresource

replenishmentrates

Increasinginvestmentinregionsthatpresentlesstechnicalexplorationrisk

Decliningexplorationsector

AlloftheeasytofindresourcesinWesternAustralia

havebeenfound

Decreaselikelihoodoffalsepositivesinchallengingexplorationfrontiers

Decreasecostofexplorationinchallengingexploration

frontiers

Increasingfocusonbrownfieldsexplorationtoincreaserents

fromdeployedcapital

Futureisunderpinnedonlybytheprospectofminingandprocessingincreasingly

marginaldeposits

Status of New Discoveryin Western Australia

Improve the Value Proposition for Industry Investment in Greenfields Exploration


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30

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01975

Moderate

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Exploration $

1980 1985 1990 1995 2000 2005 2010

Number of Discoveries

ExplorationExpenditures (2009 A$m)

Expenditures exclude exploration on Bulk Minerals

“Moderate” >100KozAu, >10Kt Ni, >100Kt Cu equiv, >5kt U3O8

“Major” >1mozAu, >100Kt Ni, >1mt Cu equiv, >25kt U3O8

“Giant” >6mozAu, >1mt Ni, >5mt Cu equiv, >125kt U3O8Sources: ABS and MinEx Consulting May 2010

Average cost for a Moderate discovery isUS$90m, versus $220m for a

Major Discovery and $800m for a Giant Discovery

Despite Australia’s share of global exploration expenditure having decreased, actual exploration expenditure in Australia rose dramatically over the past decade, driven by a combination of increased activity and higher exploration costs. However, unlike the peaks in exploration expenditure in the late 1980s and mid 1990s, the recent peak (2004-2007) resulted in a much smaller number of discoveries. This is illustrated in Figure 9 below6.

Theme ContextFigure 8 below5 demonstrates that the vast majority of known major Western Australian mineral deposits exist in areas characterised by outcrop or shallow basement.

Figure 9 - Australian exploration expenditure and minerals discoveries

5Schodde, R. (2010), Depth of Cover Charts for the ACS Think Tank Report, MinEx Consulting6Schodde, R. (2010), Discovery Costs for the ACS Think Tank Report, MinEx Consulting7McCuaig, T., Guj, P., Hronsky, J. and Schodde, R. (2009), Fennoscandian Exploration and Mining 2009: Exploration Targeting in a Business Context, Centre for Exploration Targeting

Figure 8 - Major mineral deposits and estimated depth of cover


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7McCuaig, T., Guj, P., Hronsky, J. and Schodde, R. (2009), Fennoscandian Exploration and Mining 2009: Exploration Targeting in a Business Context, Centre for Exploration Targeting 88Theo Murphy High Flyers Think Tank (2010). Searching the Deep Earth: The Future of Australian Resource Discovery and Utilisation, Australian Academy of Science9Schodde, R. (2010), Discovery Costs for the ACS Think Tank Report, MinEx Consulting

$2,000

$1,500

$1,000

$500

$01975

Giant

Major

Moderate

1980 1985 1990 1995 2000 2005 2010

Caution:Incompletedata

Cost per Discovery (2009 A$m)5 Year Rolling Average

Note: Analysis excludes Bulk Minerals (such as coal, iron ore and bauxite)

“Moderate” >100KozAu, >10Kt Ni, >100Kt Cu equiv, >5kt U3O8

“Major” >1mozAu, >100Kt Ni, >10mt Cu equiv, >25kt U3O8

“Giant” >6mozAu, >1mt Ni, >5mt Cu equiv, >125kt U3O8Sources: ABS and MinEx Consulting Aug 2010

The average cost for a moderate discovery has been US$90 million, US$220 million for a Major Discovery and US$800 million for a giant discovery. As a result of the limited discoveries associated with the most recent boom in Australian exploration expenditure, the cost of new discoveries in Australia has increased dramatically over the past decade. This is illustrated in Figure 10 below. What is particularly alarming with respect to this data is the dramatic decrease in the discovery of ‘giant’ (see definition in Figure 9 above) deposits over the past ten years, as historically most of the minerals industry’s wealth is generated by a small number of ‘giant ‘deposits7.

Following World War II, new geochemical and geophysical exploration tools were developed that facilitated limited discovery of mineral deposits under cover. The limitations of these tools is evidenced by the fact that despite their existence, 50 percent of all discoveries over a range of sizes made over the past 60 years were under less than 15 metres of cover and only 10 percent were under more than 200 metres of cover8. This is illustrated in Figure 11 below9.

Figure 10 - Australian mineral resource discovery costs

Figure 11 - Depth of Australian minerals discoveries (1850 to 2010)


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Furthermore, as illustrated in Figure 1210 below, most of the deep discoveries are clustered in areas where deposits are known from surface outcrops or historical production (‘brownfields’ exploration). Figure 12 also suggests that much of Western Australia is underexplored and therefore, the challenge for exploration science is to develop effective and economic tools for deep exploration in the ‘greenfield’ environment that is most of the Australian landscape.

Research projects that are supported by MRIWA under this priority theme will be developing new knowledge and technology that facilitates efficient exploration in areas of Western Australia that are characterised by transported or heavily weathered regolith. Such areas account for approximately one third of the surface area of the State.

Transported regolith is particularly problematic, as three to five meters of transported regolith is adequate to mask indicators of mineralisation beyond the sensitivities of existing surface detection technologies. Technologies with the ability to detect mineralisation under 5 to 300 metres of cover would create significant exploration opportunity.

Historically, exploration has been deposit focused. As exploration moves into deeper geology that is under in-situ or transported regolith the focus of exploration will need to move to the physical and chemical processes that lead to ore formation (mineralogy). Deeper deposits will need to be large and high-grade to be economic and only exploration based on technology that allows well-targeted drilling, is likely to facilitate the economic discovery of such deposits.

Figure 12 - Geographical location of Australian deep discoveries

10Schodde, R. (2010), Discovery Costs for the ACS Think Tank Report, MinEx Consulting


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PRIVATE sECTOR EXPLORTION INVEsTMENT IN NEW WEsTERN AUsTRALIAN PROVINCEs

GeoSurveyWesternAustralia

ModelsofSub-regolithWesternAustralianGeology

ExistingExplorationToolsandTechniques

NewExplorationToolsandTechniques

OreSystemsTheoryGeosciences

(geology,geochemistry,geophysicsetc)OtherDisciplines

(engineerig,remotesensingetc)

ExplorationIncentiveScheme

AccurateandCostEffectiveExplorationToolsforExploringSub-regolithGeology

Theme Research PrioritiesNew discoveries in more challenging Western Australian exploration environments will be underpinned by fundamental scientific knowledge in a range of areas including ore systems theory, core geosciences and other disciplines involved in the development of exploration tools such as engineering and remote sensing. The knowledge developed in these disciplines is then applied to the use of existing exploration tools and techniques as well as the development of new exploration tools and techniques that also build on knowledge generated from the use of existing tools and techniques. These tool and techniques will serve two purposes. Firstly, they will allow Geological Survey Western Australia (GSWA) and other organisations to generate pre-competitive maps and models of the sub-regolith geology in Western Australia. Secondly, they will provide industry with the tools to undertake cost effective exploration in sub-regolith environments based on metal anomalies identified by GSWA. The State Government’s Exploration Incentive Scheme (EIS) will further reduce the downside risk for companies using these tools in more challenging exploration environments in Western Australia.

Figure 13 below illustrates conceptually the minerals exploration research value chain as far as it pertains to Western Australia.

Figure 13 - Minerals exploration research value chain


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Table 1below summarises the key research priorities for MRIWA in the Finding More Deposits Priority Research Theme. Collectively, these research priorities are designed to systematically advance knowledge and capability toward a pre-competitive geological and geophysical knowledge base and exploration capability that facilitates private sector investment in exploration in newly identified Western Australian minerals provinces.

Research Priority Description Rationale

Mapping of the depth and character of cover progressing from shallow to deeper cover

Geological mapping of the nature and depth of the regolith in relatively shallow areas such as the cratonic margins and Eastern Goldfields to determine prospectivity. This should systematically progress to areas characterised by deeper regolith.

Areas in prospective regions that are characterised by relatively shallow depth of regolith are likely to be less expensive and challenging to explore using contemporary methods and are more likely to by economically exploitable using contemporary mining and processing methods.

Distal footprints research Study of the distal footprints of known ore deposits and the related larger minerals systems.

Mineral systems signatures that can be identified by distal footprints research will provide explorers with a greater ability to define anomalies and have confidence that those anomalies are positive indicators of mineralisation. This has application in sub-regolith exploration, as well as determining other areas that may be prospective for specific types of mineralisation.

Development and deployment of tools that provide improved understanding of the sub-regolith geology in Western Australia

Tools that establish the far-field signatures of identified mineralised systems including new petrophysical, geochemical and geological data collection techniques and campaigns.

New tools that facilitate competent collection and processing of data (including large volumes of data using facilities such as the Pawsey Centre) and ultimately more effective and efficient exploration programs in areas characterised by regolith.

Advanced analysis and correlation of existing geological and geophysical datasets

Application of new technology to the analysis of existing and new geological and geophysical data pertaining to Western Australia to identify metal anomalies that have not previously been analysed, better establish background signatures and to map basement mineralisation under the regolith.

New analysis of the significant amount of existing geological and geophysical data that resides with organisations such as GSWA for metal anomalies may inturn identify exploration targets in both outcrop and areas characterised by regolith of varying depth. It will also serve to validate targets identified by other research themes in this table.

Table 1 - Find More Resources Research Priorities


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Expand the Mining EnvelopeRationale for Theme PrioritisationA number of deep open cut and underground mining operations in Western Australia have known extensions of mineralisation at depth or are prospective at depth. Additionally, future new discoveries in Western Australia in existing prospective regions or in areas characterised by deep regolith are likely to be at depth. Deep underground extraction presents both generic challenges such as efficient ventilation, as well as some challenges that pertain specifically to the unique geotechnical conditions that occur in certain areas of Western Australia. Mining operations in Western Australia are also facing significant productivity challenges that are the result of their remote location and high inherent cost structures. Productivity issues are addressed in a subsequent priority theme.

If these challenges are not adequately addressed investment will increasingly shift to minerals regions where there are ore bodies that present less technical risk and have lower cost structures. The implications of this for the State are that existing projects will be mothballed or shut-down prematurely without the State having optimised its rents from those projects and similarly, new mineral resource discoveries that are hosted in deeper, more geotechically complex geologies will not be exploited by industry, resulting in lost economic opportunity for the State.

The solution to this challenge lies in the development of knowledge and technology that leads to demonstrated technical feasibility of mining deeper and more geotechnically challenging ore bodies in Western Australia, as well as decreasing the capital and operating costs associated with mining in such environments or increasing the productivity of inputs (see productivity priority theme).

The basic rationale for the State to invest in research specifically targeting solutions to mining challenges and opportunities in Western Australia is summarised in Figure 14 below.

Status of Ore Extractionin Western Australia

Implication for Industry Investment

Improve the Value Proposition for Industry Investment in Mining

Implication for the State

DepletionrateofWesternAustralianresourcesis

outstrippingthereplenishmentrate

ProductivityChallenges

Investmentwillincreasinglyshifttoregionswithoredepositsthatpresentless

technicalrisk

Projects‘prematurely’mothballed

Oreextractionwillincreasinglyoccurindeeper,moregeotechnicallycomplex

environments(greenfieldsandextensionsofexistingmines)

Demonstratedtechnicalfeasibilityofaccessingdeeper,moretechnicallychallenginggeotechnicalenvironments

Decreasecapitalandinputcostassociatedwithdeeper,

morecomplexminingactivities

Investmentswillincreasinglyshifttolowercostregions

Stateresourcesremain‘under-developed’

Figure 14 - Basic rationale for state investment in mining research


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Theme ContextThe vast majority of Western Australia’s current minerals production occurs from operations located in the Pilbara and Yilgarn Cratons. The location and settings of these key Western Australian geological features is illustrated in Figure 15 below.

Figure 15 - Western Australia, the Pilbara and Yilgarn CratonsSource: WA Department of Mines and Petroleum

While current production from both Cratons is multi-metallic, the vast majority of production in terms of volume and value from the Pilbara Craton is iron ore. Whereas the Yilgarn Craton accounts for the vast majority of Western Australia’s non-ferrous metalliferous mineral production. Indeed, operations in the Yilgarn Craton account for most of the State’s gold, nickel, base metals and alumina production, as well as resources associated with emerging sectors such as uranium, vanadium, lithium and to a lesser extent, rare earth elements

Much of the production activity in the Yilgarn Greenstones is from relatively mature underground or moderately deep open-cut operations, where there are known extensions of mineralisation at depth. This is particularly the case for many gold and nickel sulphide operations. As these operations progress into deeper geologies they face the following geotechnical challenges that are relatively unique to certain areas of the Yilgarn Craton:

• Virgin stresses are more deviatoric and increase more rapidly at depth than in other geological setting around the world. For example, in the Kalgoorlie-Kambalda region, horizontal geotechnical stresses at one kilometre of depth are approximately three times those under ‘hydrostatic conditions’

• The strength of Western Australia’s Archean Greenstones varies considerably across the Yilgarn Craton and as such, ground condition problems can be accentuated when weak and soft rock abut stronger and stiffer rocks

• The major principal stress which is often sub-horizontal, is oriented in the same general direction as the major geological structures.

500 km

MF01a 13/08/14

YILGARNCRATON

Perth

PILBARA CRATON

PHANEROZOIC

Granite

Granite

PROTEROZOIC

ARCHEAN

EARLY1 �00�� 500 Ma

MIDDLE1 000�1 �00 Ma

LATE540�1 000 Ma

LATE� 500�3 000 Ma

Sedimentary and volcanic

Sedimentary, minor volcanic


Metamorphic and intrusive

Metamorphic and intrusive

EARLY3 000�3 �00 Ma


LATE0�540 Ma


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Combined, these geotechnical challenges create a geomechanical environment conducive to rock-bursts, which present a significant OH&S and economic threat to deep underground operations.

Furthermore, as Western Australian underground mining operations progress into deeper geologies, ventilation will become increasingly problematic as the result of both subterranean heat and the need to move greater volumes of air more efficiently. Most of Western Australia’s underground mines are ventilated by series or parallel-series ventilation circuits. As mines become deeper and more extensive the risk of fire and progressive contamination of air in the underground system increases, resulting in higher than normal levels of pollutants that can include silica, asbestiform dust and diesel particulate matter. This represents both an economic and OH&S risk.

Theme Research PrioritiesNew and modified mining methods are underpinned by fundamental scientific knowledge in a diverse range of disciplines, including structural geology, civil, mechanical, materials and mining engineering and a wide range of disciplines that drive the development of automation equipment and systems. New mining methods and technologies that are developed as safe and economic solutions for challenging ore bodies then need to be adequately de-risked so that they are compelling to the key players in an adoption and investment decision, being mining companies, engineering firms, Engineering Procurement and Construction Management (EPCM) firms and project financiers and if new equipment is required, mining equipment OEMs.

Figure 16 below illustrates conceptually the mining research value chain as far as it pertains to Western Australia.

Figure 16 - Expand the mining envelope research value chain

MiningCompanies

EngineeringFirmsandEPCM

StructuralGeology

CivilEngineering

MechanicalEngineering

(Incl.MaterialsScience)

SuiteofDisciplinesRelevanttoAutomation

MiningEngineering

MiningEquipmentOEMS

SolutionsforChallengingDeposits

New/ModifiedMiningMethods

NewMiningEquipment

ProjectFinanciers


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Table 2 below summarises the key research priorities for MRIWA in the Expand the Mining Envelope Priority Research Theme. Collectively, these research priorities are designed to systematically advance knowledge and capability toward solutions for mining more ore from challenging deposits.

Research Priority Description Rationale

Deep extraction systems. Systems engineering approaches to the design of mining methods in deep and complex conditions.

The future of significant parts of the WA minerals sector that reside in deep and complex geotechnical environments.

Engineering in highly stressed and complex rock masses.

Some aspects of this include mine seismicity and rock-burst risk management, understanding the dynamic behaviour of ground support elements and systems, and the design of optimum ground support systems.


Productive and safe deep in-mine environments

Some aspects of this include the optimisation of ventilation for efficient removal of pollutants including silica, asbestiform dust and diesel particulate matter, temperature and airflow modelling for underground mine ventilation, and systems for real-time airflow measurement and gas/dust monitoring in hard-rock mines.


Table 2 - Expand the Mining Envelope Research Priorities

Increase Recovered ValueRationale for Theme PrioritisationAs higher grade ore that is characterised by simpler mineralogies are progressively exploited, maintaining economic recovery will become increasingly challenging for most sectors of the Western Australian minerals industry. There is also a number of existing and potential new sectors where Western Australia hosts significant in-situ resources that are easily mineable, but which present significant processing challenges. Finally, it is probable that as new discoveries are made in Western Australia, many of those resources will be hosted in mineralogies that present processing challenges.

If the technical challenges with respect to processing many Western Australian ores are not adequately addressed, project investment will increasingly shift to emerging minerals provinces that are characterised by a higher prevalence of simpler, higher grade ores. The implications of this for the State is that existing projects will be shut-down or mothballed prior to the full value of the resource having being recovered and new sectors that are potential contributors to the State’s royalties stream will not be developed.


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The solution to this challenge lies in the development of knowledge and technology that leads to demonstrated technical feasibility of modified or new processing circuits that can efficiently recover minerals from increasingly lower grade ores that are characterised by increasingly complex mineralisations.

The basic rationale for the State to invest in research specifically targeting solutions to processing challenges and opportunities in Western Australia is summarised in below with sector specific rationales listed in Figure 17 below.

Theme ContextHistorically, advances in minerals processing technology have facilitated both the longevity of relatively mature sectors, as well the establishment and growth of new sectors of the Western Australian minerals industry.

As mature sectors such as gold, nickel and base metals operations in particular progressively mine lower quality ores (in terms of both grade and mineralogy), the longevity of those sectors in Western Australia will be partly dependent on incremental improvements to existing processing circuits or the development and deployment of step change innovation in new processing circuits to economically recover minerals from increasingly mineralogically complex ores. An historical example of the importance of new processing technology to the longevity of mature sectors is the application of Carbon-in-Pulp processing in during the 1990s that facilitated recovery from low grade surface gold resources. While the medium term focus of this challenge is the gold, nickel and base metals sectors, in the longer term, iron ore and alumina sectors will face similar problems.

Status of Western AustraliaOre Bodies

Implication for Industry Investment

Improve the Value Proposition for Industry Investment in Complex Ore Bodies

Implication for the State

DepletionrateofWesternAustralianresourcesis

outstrippingthereplenishmentrateandnew‘simple’oresareincreasinglymoredifficulttofind

Investmentwillincreasinglyshifttoregionswithlesstechnicallycomplexores

Projects‘prematurely’mothballed

Recoveryfromcomplexoreswillbecomeincreasingly

challenging,expensiveandcapitalintensive

Demonstratedtechnicalfeasibilityofrecoveryfrom

complexorebodies

Decreasecapitalandinputcostassociatedwithrecoveryfromcomplexorebodies

Investmentwillincreasinglyshifttoregionswithlow

coststructures?

Stateresourcesremain‘under-developed’

Figure 17 - Basic rationale for state investment in increase recovered value


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There are also a number of potential and emerging sectors where Western Australia hosts significant known in-situ resources for which the development of capital and operating cost efficient processing circuits remains an obstacle to broad-scale development. This includes certain lateritic nickel, calcrete hosted uranium, heavy and light rare earth and lithium resources. These sectors present an opportunity to diversify the State’s minerals industry and to increase royalties and diversify the royalty stream.

Theme Research PrioritiesImprovements to existing hydrometallurgical and pyrometallurgical solutions, as well as the development of new solutions is underpinned by fundamental science in a range of areas including extractive metallurgy, geochemistry, ore body characterisation, process engineering, simulation and optimisation science and sensor and control technology development.

New and improved solutions for complex ores then need to be adequately de-risked so that they are compelling to the key players in an adoption and investment decision, being mining companies, engineering firms, EPCMs, processing equipment Original Equipment Manufacturers (OEMS) and project financiers. The protracted period of time required for the development, piloting, scale-up and other technical de-risking activities associated with both incremental improvements to existing processing circuits and step-change processing technology is one of, if not the main barriers to investment in projects that require the application of new processing technology.

Figure 18 below illustrates conceptually the minerals processing research value chain as far as it pertains to Western Australia.

MiningCompanies

EngineeringFirmsandEPCM

ExtractiveMetallurgy Geochemistry

OreBodyCharacterisation

Stimulationand

Optimisation

SensorandControl

Technologies

ProcessEngineering

ProcessingEquipmentOEMS

SolutionsforProblematicOres(Piloted)

ProvenHydroandPyroMetallurgicalProcesses

NewHydroandPyroMetallurgicalProcesses

ProjectFinanciers

Figure 18 - Research value chain for increase recovered value


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Determining specific priorities within the increase recovered value priority theme is challenging because of the R&D specificity is often peculiar to a particular ore body. Obviously, mineralogy and therefore processing requirements are very different between most sectors. However, even within sectors mineralogy and therefore processing R&D requirements can differ considerably between specific deposits within that sector.

Most certainly there are some limited areas that are applicable to most sectors, such as materials science that can improve the integrity of components of circuits operating in certain conditions, or even reduce the capital cost associated with circuits. An option for prioritisation also potentially resides in identifying sectors that are currently critically constrained by limitations to existing processing technology that have the greatest potential to impact on State royalties, and focus on R&D projects that are developing processing solutions for those sectors. However, it is difficult to determine which areas of technology or industry sectors should be prioritised, as many other factors affect the viability of individual sectors.

Consequently, MRIWA has determined that the most significant impact that it can have in the area of increase recovered value is to support R&D that is designed to accelerate the development, testing, piloting, scale-up and other technical de-risking activities associated with the development and deployment of new processing technologies in the Western Australian minerals industry.

Table 3 below, summarises some of the identified common opportunities and challenges.

Research Priority Description Sector Relevance

Modelling and simulation of processing circuits

The application of new technology and the development of new techniques that facilitate advanced modelling of processing circuits and lead to a reduced timeframe and cost of deployment of new processing technologies.

Longevity of established sectors that are approaching maturity or in decline as a result of decreasing ore quality, as well as potential new and emerging sectors that are constrained by current limitations to processing circuits.

Accelerated technology development frameworks

The development and testing of new processing systems development, scale-up and implementation risk management frameworks for minerals processing.

Longevity of established sectors that are approaching maturity or in decline as a result of decreasing ore quality, as well as potential new and emerging sectors that are constrained by current limitations to processing circuits.

Table 3 - Recovering More Minerals Research Priorities


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Improve ProductivityRationale for Theme PrioritisationThe MRIWA priority research themes of find more resources, expand the mining envelope and increase recoverable value are designed, within the context of Western Australia’s specific challenges, to address a fundamental challenge that is unique to multifactor productivity in the minerals industry generally.

In all primary industries natural resources are the primary inputs to the production process and as such, the productivity of these inputs is a determinant of multifactor productivity of all primary industries. However, in agriculture the natural resource inputs are renewable and their in-situ suitability and quality can be controlled, to a degree, through agricultural practices such as genetics (breeding or genetic modification), fertilizers, nutrition and husbandry regimes. The nature of in-situ mineral resources as the natural resource inputs to a minerals production operation is very different in that the natural resources are not renewable and opportunities for improving their suitability and quality in-situ are very limited.

Most minerals production operations mine and process higher quality ore (in terms of grade and simplicity of mineralisation) earlier in the mine’s life. This means that as a jurisdiction’s mineral resources are progressively exploited, the suitability and quality of the ore remaining in situ as an input to the production process decreases, a process that is accelerated when higher commodity prices motivate increased production. This results in naturally declining multifactor productivity.

Put simply, minerals become more difficult to find, mine and process. This fundamental determinant of productivity in the minerals industry is why three out of five of MRIWA’s research priorities are focused on these issues in the specific context of the Western Australian minerals industry’s challenges.

The improvement in multifactor productivity that resources companies must achieve in order to remain globally competitive has historically been relatively predictable at around 3 percent per annum, driven by a long term downward trend in the real price of most mineral commodities and incremental process improvement that results in the medium-to-long-term demise of inefficient companies.11

However, Western Australian minerals operations face a number of productivity challenges that are particular to Western Australia. These factors affect the economic viability of many projects as well as the competitiveness of Western Australian minerals projects in capital markets.

The very remote nature of current resources projects in Western Australia presents additional productivity challenges. If future discoveries are made and developed in areas of the State that is characterised by transported or heavily weathered cover, these challenges will be exacerbated by the extremely remote nature of those areas.

The ability of Western Australian minerals projects to compete in capital markets for investment will be contingent on those projects being able to present competitive net present values. This can be achieved by developing new knowledge and technology that reduces the operating and capital costs associated with those projects.

11Upstill, G. and Hall, P. (2006), ‘Innovation in the minerals industry: Australia in a global context’, Resources Policy, (31), 137-145


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Theme ContextCapital and operating costs associated with Western Australian minerals projects are high by international standards. Much of this additional cost is attributable to the remote nature of many projects. However, there a number of specific issues which exacerbate higher costs associated with remote project locations.

• High Labour CostsGenerally speaking, workers in the mining industry are more highly remunerated than workers in many other industries. The higher remuneration received across most job levels within the mining industry is a function of specialised skills and the hazards and hardships associated with the type of work, including a high instance of working for extended periods of time in remote and isolated locations. On-costs associated with a significant portion of the Western Australian minerals industry are also significantly higher than in many other industries as a result of capital and operation costs associated with a large Fly-in-Fly-out workforce.

Labour costs have most certainly been exceptionally high for the Western Australian minerals industry in recent times, with new projects and expansions increasing demand and driving higher wages. However, the mining industry remains a capital intensive industry.

• Other High Operating CostsHigh energy costs associated with limited infrastructure and a heavy reliance of liquid fuels for mining fleets and primary energy generation for many projects, together with the absence of a significant local chemicals industry exacerbates other operating costs associated with remote Western Australian mining operations.

• High Capital CostsCapital costs associated with establishing mining and processing operations in Western Australia are high. Protracted and complex approvals processes, high values of embedded labour in construction contracts and materials and in some cases, poor infrastructure and in some cases, significant international capital inputs exacerbate capital costs associated with remote minerals projects.

A major commercial R&D investment is currently underway in the bulk commodity industries that are seeking to develop and deploy automation throughout the value chain with the specific objective of improving the productivity of labour, other inputs and capital.

In light of the hundreds of millions of dollars that is being invested in mining operations automation by mining companies, manufacturers of mining equipment and systems integrators, it is highly unlikely that MRIWA would provide any meaningful leverage in this area of research. There are however, related issues that are peculiar to Western Australia, where MRIWA can play a role in funding research that provides the basis for improving productivity above and beyond finding more minerals, mining more ore and recovering more minerals.

Research PrioritiesMRIWA will consider projects that target solutions for step-change productivity optimisation, where these demonstrably align with MRIWA’s objective. Projects that address this theme may address productivity improvement at all stages of the minerals industry value chain. For example, potential projects could address step change productivity improvement in analysing existing exploration data, prosecuting approvals processes, supply chain infrastructure, haulage and export logistics, handling and re-use of water in mining and processing and so on.


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Develop New Products and MarketsRationale for Theme PrioritisationA number of factors are driving change in the global minerals demand profile. As developing nation economies grow they often develop new processes for manufacturing building materials and other key inputs to their economies that use mineral inputs that are of a different composition than has traditionally been the case.

As developing nations mature and the structure of their economic activity changes from being construction and basic manufacturing intensive to a greater focus on more advanced manufacturing, their minerals demand shifts from being primarily carbon steel based to a wider range of mineral inputs to support a broader base of economic activity.

In the developed world and part of the developing world, the continued development of new high-tech products and the scale-up of their manufacturing processes is driving growing demand for more exotic metals such as lithium, light and heavy rare earth elements and specialist alloying minerals such as vanadium.

This changing demand global demand profile presents several opportunities for Western Australia:

• Western Australia has significant un-developed in-situ resources of many minerals for which global demand is currently relatively low, but growing including ‘new’ minerals and lower grades of minerals that are already mined in Western Australia;

• In the case of some emerging minerals, there may be opportunity for progressive downstream activity to occur in Western Australia; and

• Many of these emerging mineral sectors provide an opportunity to market mineral outputs via long-term off-take agreements with a vertically integrated supply chain, potentially reducing the vulnerability of Western Australian royalty receipts to commodity market cycles.

Theme ContextThe production and marketing of ‘new’ minerals inherently involves a range of technical and market uncertainties that can detract from a decision to invest in the new sector. While identifying and managing market risk is a primary function of the private sector, some aspects of technical uncertainty may require new knowledge developed from R&D for which the hurdle rate for private sector investment is too high.

While exploration and mining processes are often generic, the recovery of new minerals from mineralogies that are unfamiliar to common minerals recovery processes means that new minerals processing circuits need to be developed, tested and deployed. These circuits may focus exclusively on the target ‘new’ mineral or may be attached to an existing circuit to produce the target ‘new’ mineral as a by-product.

Furthermore, understanding the technical aspects of product specifications of customers, and ‘reverse-engineering’ production processes that produce these specifications may require R&D for which the private sector hurdle rate is too high.

Research PrioritiesMRIWA will consider projects that are designed to assist in developing processes that lead to new mineral product exports from Western Australia, where these demonstrably align with MRIWA’s objective.


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Exhibit 1: Executive Summary of the 2010 Knowledge and Technology Needs AssessmentThis report discusses the observations and findings from an investigation into the future knowledge and technology needs of the Western Australian minerals industry (excluding petroleum and coal). The analysis contained in this report is the first stage of a process to develop a business case for a Western Australian Minerals Institute. The purpose of the proposed Western Australian Minerals Institute is to establish a vehicle whose primary purpose is to leverage, prioritise and coordinate State Government R&D investment targeted at meeting the future knowledge and technology needs of the Western Australian minerals industry and promote Western Australia’s expertise and success in minerals R&D.

The report focuses on the future knowledge and technology needs of the State’s key minerals sectors (as determined by contribution to Gross State Product) of iron ore, gold, nickel, bauxite-alumina, copper-lead-zinc, mineral sands and diamonds, as well as two emerging sectors, uranium and rare earths. Combined, these key sectors contributed approximately $50.0 billion to the $51.8 billion of non-petroleum minerals production in the State in 2009-10.

Tight margins, long-term capital investments and a continuous need to push down the cost curve to maintain international competitiveness have always ensured that innovation is important to the minerals industry. It is noteworthy that despite the minerals industry being perceived as ‘low-tech’, it has the highest levels of R&D embedded in its capital and intermediate goods relative to other industries. Furthermore, innovation is likely to become increasingly important to the Western Australian minerals industry as the industry cost curve steepens as the result of emerging scale operations in low cost jurisdictions, reduced trade barriers, the dominance of large multi-national mining companies with significant production and marketing economies of scale, and more challenging exploration and production environments.

This innovation is highly dependent upon a minerals industry research sector that is well resourced, coordinated and focused on developing the key short, medium and long-term knowledge and technology needs of the State’s minerals industry. Such a minerals industry research sector in Western Australia is unlikely to be maintained without an appropriate level of State Government intervention.

There are several key arguments for State Government intervention in Western Australian minerals industry research:

• As Western Australia becomes less prospective in the conventional exploration paradigm, mining companies, particularly multinational mining companies, are increasingly trading sovereign risk for technical risk by making exploration and production investments in relatively underexplored countries irrespective of the greater sovereign risk associated with those countries. The size of these relatively underexplored areas such as West Africa means the minerals industry has limited motivation to invest in knowledge and technology development that improves the prospectivity of Western Australia in the short-to-medium term.

• The diverse Western Australian minerals industry is reasonably dispersed throughout Western Australia. Many rural communities (including indigenous communities) are dependent on it for employment and infrastructure. The State has a role ensuring regional Western Australia receives maximum economic rents from the minerals industry through sustained profitable production.

• The minerals industry is in natural conflict with the Western Australian natural environment. The State Government has a role to ensure the natural environment is optimally protected and the minerals companies have access to the knowledge and tools to cost effectively meet environmental management requirements.


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• Minerals research in Western Australia has a global reputation, particularly in the areas of exploration and processing. Innovation in exploration is key to finding the next generation of world-class deposits in Western Australia, and innovation in processing is key to unlocking value that is contained in large low grade deposits of many minerals in Western Australia that are currently economically and technically infeasible. It is in the State’s interest to optimise the longevity of the Western Australian minerals industry by investing in the maintenance of this world-class research capability.

• The maintenance and development of a world-class innovation system will result in the development of technical capability that can be exported.

• Global mining companies are increasingly adopting open innovation strategies where most corporate R&D needs are outsourced. Western Australian research institutions will only attract industry open innovation investment for so long as they remain world-class.

This investigation into the Western Australian minerals industry’s future knowledge and technology needs has identified twelve broad areas of knowledge and technology needs that are relevant to most sectors of the industry. These are as follows:

• Finding New World-class Deposits in an Increasingly Challenging Exploration Environment – In-situ and transported cover map of Western Australia, deep crustal and upper mantle map of Western Australia, distal footprints map of Western Australia, aer/space-borne and other sensing tools that can see under cover to depth, imaging processing capability from disparate deep geology databases, interface sampling tools, more sensitive vegetation sampling tools, multilateral drilling technologies, more robust drill-bits and real-time down-hole sensing technologies.

• Water Issues – Understanding the effects of TDS on efficiency of hydrometallurgical processes, managing the corrosive effects of saline and hypersaline water on processing circuits and other equipment, water use minimisation, environmental impacts of water extraction and discharge and environmental impacts of water reuse.

• Automation and Process Control – surface mine automation, underground mine automation, process controls that optimise processing in real-time and processing automation (including reliable sensors and automated diagnostics).

• Reducing Energy Intensity – Blasting optimisation, improving crusher efficiency, improving milling efficiency, improvement in materials handling efficiency, improvement in ventilation efficiency, scoping study for the optimal application of current renewable energy technologies on Western Australian mine sites and an investigation into the potential deployment of geothermal power for mine site applications that require significant energy loads.

• Integration of Environmental Issues in Design and Engineering – ensuring that the whole of mine life (including post-closure) environmental impact is considered in operation design, development and operation such that the whole-of-life environmental impact of the operation is optimised.

• Mineralogy and Processing – techniques for chemical mapping of ore bodies during exploration and development data collection, chemical characterisation modelling and monitoring through processing circuits.

• Open Pit Slope Stability – automation for extraction from deep, steep pits, wall support technologies for steep deep pits and tools for monitoring pit wall integrity.


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• Underground Mine Stability – automation for underground extraction, support for high geomechanical stress underground operations and geomechanical stress monitoring technology.

• Low-capital-low-operating cost Leaching Solutions – heap leaching, bioleaching, in situ leaching, low temperature atmospheric leaching and improving existing leaching technologies.

• Tailings Management – tailings characterisation and chemical mapping and managing minor elements and recovery from tailings.

• Management and Leadership Issues – managing geographically dispersed teams, providing leadership to dispersed teams, effective leadership and motivation in a subcontractor workforce, managing collaborations across distance, managing collaborations across cultures and accelerated leadership development.

• Accelerated Technology Adoption – technology development and management systems that potentially accelerate adoption of new technologies by the minerals industry.

In addition to these wider industry knowledge and technology needs the investigation has also identified knowledge and technology needs that are specific to each key sector. These are as follows:

• Iron Ore Sector – large volume handling modelling and management systems, new methods for agglomerating ores, water usage in dust suppression, hydromodelling for dewatering optimisation, systems for upgrading high impurity ores and exploration techniques for new deposits.

• Gold Sector – improvements to the cyanide leaching process for complex ores and alternative leaching agents to cyanide.

• Bauxite –Alumina Sector – increased efficiency from the Bayer process, scoping study into the future application of renewable energy sources, improved processing of ore with high levels of organic impurities, improved efficiency of red mud as a carbon sink and reduction of red mud footprint, primarily through the development of products from red mud.

• Nickel Sector – reducing acid related costs and process inefficiencies in HPAL, materials science and HPAL systems integrity, standardisation of HPAL circuit design and alternatives to HPAL.

• Minerals Sands Sector – improving efficiency of synthetic rutile plants, improving synthetic rutile plant feedstock tolerance, economic recovery of other mineral credits from tailings and reducing tailings footprint.

• Uranium Sector – chemical mapping and modelling of radionuclides through the processing circuit for calcrete ores, reducing the negative impact that clay minerals have on recovery from calcrete ores, improved recovery from uranium leach solutions from calcrete ores, stability of radionuclides in calcrete tailings, improved yield and recovery rate and baseline understanding of radionuclide behaviour in the environment around surficial deposits

The paper discusses the knowledge and technology needs in detail and identifies research organisations with research programs and projects that address these issues.

The report also discusses the minerals research enabling capability of the John de Laeter Centre for Isotope Research, as well as the National agency responsible for the national geological survey, Geoscience Australia and the agency responsible for the State geological survey, Geological Survey of Western Australia.


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Finally, the paper discusses AMIRA International and Minerals and Energy Research Institute of Western Australia, which are organisations that have been responsible for funding many minerals research projects in Western Australia.

Based on our research, there appears to be some overlap of on research topics between the various research organisations. However, this observation needs to be treated with caution in some instances because of the collaboration that occurs between the CSIRO and other research organisations under the CRC program and other collaborative research institutes such as the Centre for Exploration Targeting and Australian Centre for Geomechanics.

Most of the key future knowledge and technology needs identified above are being addressed to varying degrees by the research organisations discussed in this report. It has not been possible within the scope of this investigation to examine the quantum of resource that these research organisations are targeting at the identified needs, the specific nature of individual research projects or where the work of these organisations sits relative to current-state-of-the-art within specific areas of research.

Areas of identified needs that do not seem to be addressed currently are:

• Process controls that optimise processing real time

• Improving ventilation efficiency

• Scoping study for optimal application of current renewable energy technologies at Western Australian mine sites

• Investigation into the potential to deploy geothermal power for significant energy applications on Western Australian mine sites

• Automation, specific to deep and steep open cut operations

• Wall support technologies for steep deep pits

• Automation for underground extraction

• Support systems for high geomechanical stress underground operations

• Tailings characterisation and chemical mapping

• Hydrometallurgy solutions for refractory gold ores

• Hydromodelling for dewatering optimisation in the iron ore sector

• Improving synthetic rutile plant feedstock tolerance

• Economic recovery of other minerals from minerals sands tailings

• Reducing minerals sands tailings footprint

• Understanding the stability of radionuclides in calcrete uranium tailings

• Understanding the natural migration of uranium and other radionuclides through air and water in the vicinity of surface and near surface uranium deposits


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Further work should be undertaken to understand the potential impact of solutions to these knowledge and technology needs that are not being met by current R&D. However, there are key areas where R&D is being undertaken that may currently be under-resourced, but which have the potential to have the greatest economic impact. These areas are as follows:

• Geoscience investigation and exploration technology development that leads to the discovery of new world-class deposits in Western Australia

• Research and technology development focused on automation solutions that improve labour productivity, given the biggest immediate challenge facing the Western Australian minerals industry is the shortage of skills and labour

• Metallurgical science and systems engineering that lead to more capital and cost effective methods of processing ores in Western Australia, particularly in relation to calcrete hosted uranium and lateritic nickel.

In a general sense, Western Australia has strong R&D expertise in exploration and processing, but currently lacks critical mass in addressing R&D requirements related to mining. Overall, there are a number of highly qualified private and public initiatives driving a broad array of relevant research. While there appear to be some gaps in addressing all the perceived future technology and knowledge required by industry, the greatest need may be in the ongoing identification, coordination and direction of WA specific R&D projects and initiatives.

Minerals Research Institute

of Western Australia


mriwaTelephone: +61 8 6180 4340

www.mriwa.wa.gov.au

Documents

Research Priority Plan - MRIWA · Any opinion contained in this publication is unsolicited general information ... These challenges and opportunities are impacted by the fact that