Rio Tinto releases second quarter production results

Rio Tinto has seen production increases across the board, seeing a leap in all segments bar coking coal.

The miner recorded a 10 per cent increase in iron ore production for the first half of 2016 compared to last year, and an eight per cent increase for the second quarter compared to the previous corresponding period.

Importantly, iron ore shipments rose as well, with second quarter iron ore sales nearing a run-rate of 330 million tonnes per annum, and sales exceeding production, helping the miner to reduce its stockpiles built in the first quarter.

Pilbara operations produced 160.8 million tonnes in the first half of 2016, and recorded sales of 158.9 million tonnes, achieving an average pricing of US$48.4 per dry metric tonne.

The miner is continuing to focus on its Nammuldi Incremental tonnes project.

“The initial phase, with a five million tonne per annum capacity, commenced production in the fourth quarter of 2015 and the second phase, which will take annual mine capacity from five to ten million tonnes per annum, is due to come into production in the fourth quarter of 2016,” Rio Tinto said in an official statement.

It went on to say an investment decision for Silvergrass is slated for the second half of the year.

Iron ore guidance remains at the reforecast 330 million tonnes, due to the previously mentioned delays of the AutoHaul rail system, which is impacting productivity.

Bauxite and aluminium were major performers, with Rio Tinto recording 13 and 11 per cent increases in production compared to the same time last year.

This increase enabled a five per cent jump in third party sales compared to the first half of 2015.

Copper saw a massive jump, mainly due to Kennecott activities, with the miner seeing a 114 per cent increase in the second quarter production rate at the mine compared to the same time last year.

However, poor performance at Escondida due to lower grades saw a 23 per cent lower production rates.

Rio Tinto is also forecasting lower production rates at Oyu Tolgoi’s open cut operation.

In terms of diamonds, the Argyle mine continues to be a strong performer, recording a four per cent higher rate in the first half compared to 2015, following continued ramp up of underground operations leading to higher ore volumes, which was only partially offset by lower grades.

The miner recorded a negative result in terms of hard coking coal, down 14 per cent year on year for the quarter, and eight per cent for the half.

It put much of this production loss down to the timing of the longwall changeover at Kestrel.

Semi-soft coking call also saw a massive fall from its heights earlier this year, recording a 24 per cent drop quarter on quarter, although production levels were up for the half compared to the previous first half of the year.

Thermal coal production stayed broadly in line with existing rates, recording a two per cent fall half on half, but a six per cent increase compared to the previous corresponding quarter.

In line with BHP, Rio Tinto is also refocusing on exploration, recording expenditure of US$267 million for exploration activities in the first half of 2016 compared to US$243 million last year.

Of this, 38 per cent went to Energy & Minerals exploration; 28 per cent to central exploration; a quarter was from the Copper & Diamonds division, with the rest split between aluminium and iron ore.

BHP launch coal remote operations centre

BHP has launched an integrated remote operations centre (IROC) in Brisbane for its coal business.

The miner aims to replicate the success it had with its IROC in Perth, which controls operations right across the Pilbara, covering more than 1500 kilometres of rail, stockyards, and two separate port facilities.

Working with its joint venture partners Mitsubishi and Mitsui, the miner plans to provide real time coverage of its seven BMA mines in the Bowen Basin and the Hay Point Coal Terminal near Mackay, as well as its two BMC coal mines in the Bowen, and the Mt Arthur coal mine in the Hunter Valley.

According to BHP, the IROC will be a new, state-of-the-art facility located in Brisbane that will deliver an advanced control room which will operate continually, 24 hours a day, seven days a week.

“This is a very important step on our innovation and productivity journey across our coal assets and will mean we can more effectively replicate our best practices at each and every site,” BMA said in an official statement.

“The IROC will ensure we can optimise our production supply chain at every point in the cycle and deliver substantial, sustainable savings for our business, providing us with a significant competitive edge.”

When fully operational, the remote control operations centre will employ around 200 workers across a range of different roles, most of whom will be drawn directly from existing operations.

However the implementation of the new centre will affect workers on site, with BHP stating, “We understand that this type of innovative change to the way we operate can also bring uncertainty and displacement for some people, and we will be working closely with our employees to communicate regularly with them through this process.”

BHP has been contacted for further comment on how many jobs may be lost, and which roles will be most affected.

The miner has launched videos on Youtube to recruit controllers for the centre.

Sandvik divest mining materials handling division

Sandvik has announced it will divest its Mining Systems division to private equity firm CoBe Capital.

The group first announced its intention to divest the business late last year.

“Divesting the Mining Systems is an important step in consolidating Sandvik to its core operations, which for Sandvik Mining and Rock Technology is high technology mining equipment and aftermarket offerings,” Björn Rosengren, Sandvik’s CEO, said.

According to a Sandvik spokesperson the only Australian operations to be affected is the Bayswater facility, in Perth, which produces conveyor pulleys, rollers, and frames for mining.

The sale valuation has not been disclosed, however it is understood Sandvik will incur a capital loss of 800 million Krona ($123 million) in the third quarter of 2016.

This loss includes a negative cash flow position of 600 million Krona ($92.5 million) from the removal of the division.

The Mining Systems division designs, engineers, and supplies materials handling systems or the resources industry, and employed 1100 workers globally, and had sales of 5 billion Krona ($771 million), accounting for six per cent of Sandvik’s revenues.

Bids begin for Glencore coal rail assets

Initial bids for Glencore’s Hunter Valley rolling stock and haulage assets are rolling in.

Three major logistics companies – Aurizon, Pacific National, and Genesee Wyoming – are understood to have begun placing bids for the assets earlier this week, according to the AFR.

While a price is yet to be fixed for the sale, it is believed the assets – generated approximately $100 million EBITDA last year, and over the last few years has had revenues around $160 million annually – are valued in the one billion dollar range.

Glencore’s asset sale is part of the miner’s wider plan to pay down billions in debt.

According to the miner, the potential sale of the assets (GRail) “is in response to a strong global demand for high quality infrastructure assets and forms part of Glencore’s wider global debt reduction program”.

Glencore initially set up GRail in 2010 in response to what it believed were high levels of access and cost from existing coal haulage operators in the Hunter Valley.

Since that time it has reportedly grown to become the third largest coal haulage business in Australia, hauling around 51 million tonnes last year.

According to a source close to the matter, Glencore’s coal will likely be hauled by the new owner of the rail assets, although it is understood the details of the coal movement will be discussed in the new agreements.

While the locomotives, wagons, and support equipment are understood to be part of the potential deal, Glencore’s refuelling stations – located on its mines – will not be part of the sale.

China continues coal crackdown

China’s ongoing five year plan to cut coal and steel production and address pollution will see it punish regional governments for failing to close coal mines and steel mills.

Earlier this year China announced its intention to institute a reduction in thermal coal consumption within the next five years in order to cut pollution levels, with the National People’s Congress (NPC) outlining plans to reduce thermal coal consumption by 160 million tonne.

China’s ongoing pollution and smog issues were the main focus of the NPC, with Chinese president Xi Jinping stating that the government will be increasing focus on the nation’s environmental standards and regulations.

“We are going to punish, with an iron hand, any violators who destroy ecology or the environment,” Xi stated at the time.

As part of this plan the country also announced it would lay-off close to two million workers in its coal and steel industry to help cut market oversupply.

An official at China’s human resources and social security ministry said the nation’s industries expect to cut around 1.8 million workers as it seeks to reduce capacity, and address the growing stockpiles in the country.

Provincial governments have been ordered to set capacity reduction targets this week, and submit phase-out plans by the end of this month, chair of the National Development and Reform Commission Xu Shaoshi said, according to Bloomberg.

Those that miss their targets will be “seriously punished,” Xu said.

The country is also predicted to ban new coal fired power stations, according to the AFR.

In its upcoming 13^th Five Year Plan for the resources sector, China is forecast to ‘suspend’ construction of any new thermal coal power plants until 2018, after which the suspension will be reviewed, however it is unlikely to be lifted.

However the growing power demand is unlikely to be filled by renewable resources, with the Economic Information Daily stating there will a slowdown in wind and photovoltaic solar power support; instead the country will focus on hydropower and nuclear energy, stating their will be a moderate increase in the scale of operations.

Making mine mapping easier

As more mining become automated, surveyors are taking to the skies to make more out of machinery.

The rise of drone technology has seen miners, and surveyors in particular, utilise the technology to map out their mines in a faster, safer manner.

Both BHP and Rio Tinto have integrated drones on to their sites.

The Goonyella coal mine has used them for around a year to better understand their mine’s progress and monitor safety compliance.

In the past year Rio Tinto has planned and tested the use of drones for environmental and heritage surveys, inspections of equipment such as conveyors, pit wall inspections, gathering aerial imagery, thermal imaging, and geotechnical inspections.

Technology and Innovation Executive Greg Lilleyman said the company saw immense potential for drones to help extend the advantage Rio Tinto holds through the innovative use of technology, which can help to improve the safety and productivity of their operations.

An Australian partnership has been formed aimed at taking this mapping technology to the next level.

West Australian drone manufacturer ScientificAerospace has partnered with South Australian mapping company Dronemetrex to develop a new drone specially designed to aid surveyors.

Dubbed the TopoDrone-4Scight combines a number of technologies ScientificAerospace chairman Richard Pace said will make the drone a market leader for the survey industry.

The vertical take-off and landing drone uses ducted, which creates a more stable drone housed in 3D printed nylon that is safe to use around people because it has no exposed blades. It can also be used in spark free safety conscious applications, due to its non-conductive airframe and brushless motors.

It uses photogrammetric mapping technology developed by DroneMetrex, enabling accurate mapping without the need for a surveyor to establish data points.

The multi rotor accurate mapping drone is affordable and easy to use without complicated setup, and requires minimal training is easy to transport and can be used safely in urban areas.

Its on-board PPK Direct Georeferencing Solution software developed by Dronemetrex provides mapping with no ground control providing accurate mapping, reduced processing time and quality photogrammetric mapping, comparable to the best in the world.

“By combining our software and mapping expertise to Scientific Aerospace’s drone technology, we’ve created something that is unique, enabling accurate photogrammetric mapping to be far easier to access and far more affordable” Pace said.

A manufacturing plant is to be set up in Perth to supply the world with expected sales of $20 million in the first year.

Breaking down Big Data

July 11, 2016Features Cole Latimer

The premises, processes and personnel of Xstrata Copper's Mount Isa Mine, Western Queensland, Australia

Mining is an industry that runs the technological divide.

Whilst it is leading the way in terms of remote operations and automated systems that allow a miner to operate a mining truck from thousands of kilometres away, at the other end of the scale enormous processing and metallurgical operations are monitored, controlled, and planned using Excel sheets despite the fact that mountains of precise technical data is already being collected.

With the rise of Big Data, and the ability to monitor – often in real time – flow data from tanks and pipes, as well as metal and acid content, and compare it with historical data engineers are often overwhelmed with information.

Nearly every aspect of the mining industry, from minute processes through to massive haul truck payloads and warehousing and maintenance activities are now measured, tracked, and stored, and these machines and data sets can now compare and create a predictive picture for future production in a way the industry never could before.

“We see a significant number of mines that have data locked away in individual systems but now want to federate that data together, instigate new processes, involving their people in new ways to achieve better outcomes. Mining generates Big Data because the number of sensors are growing rapidly and systems involved are becoming more intelligent, so the challenge ahead is to federate that data,” Cisco Systems engineer Michael Boland said.

Rio Tinto has embraced this innovation path, and opened its ‘Big Data’, Analytics Excellence Centre early last year to help it deal with these reams of data from disparate sources.

Put simply, the humble –and easily amendable with no tracking oversight – Excel sheet will no longer cut it in the current environment.

This need for a greater data control, oversight, and comprehension is compounded by the recent changes to the ASX governance rules. Publically listed companies will now need to disclose their exposure to economic, environmental and social sustainability risks for the first time. This means miners need to present accurate, relevant corporate data, e.g. their operating data and compliance frameworks, to a level that was previously not required.

With this growing need to utilise the full capabilities of Big Data analytics to comply with ASX rules and lift efficiency, combined with clarity of data – as well as the capability for preventative maintenance – Metallurgical Systems has developed a program designed to tick these boxes, and which has already been roadtested at a number of copper and polymetallic operations globally.

The program, Metallurgical Intelligence, is a whole-of-plant management software that utilises thousands of data points to provide clean, accurate data, combined with automated intuitive reporting that integrates with existing systems, software, and processes, and can be tailored to individual sites.

Speaking to Metallurgical Systems managing director, John Vagenas, he explained the program was developed as there was a gap in the industry, and many mines were missing an opportunity to evolve their operations through the use of Big Data analytics.

The need for this system is being even more prevalent as the higher level engineers get closer to retirement age, and take not only their skills but also their knowledge of plant operations and what are often proprietary data systems with them, leaving a large knowledge gap.

Metallurgical Systems began life as an offshoot of Elemental Engineering, a process simulation and process development company focused on mineral and metallurgical processing. Elemental is already well known for its work on OZ Minerals’ hydromet demonstration processing plant.It parlayed this knowledge from Elemental to spin out the new company focused on its plant information system, Metallurgical Intelligence.

Using Tableau, Metallurgical Systems has allowed for data integration and drill down capabilities for engineers, operators, managers, and stakeholders in a user friendly environment, providing a total overview of every aspect of plant operations without the need for lengthy training programs or a background in IT.

amjuly16soft3 “Once the system has enough information gathered from all the monitoring devices throughout the process, it can run a dynamic simulation of the entire process system down to individual tank level, building it from each node – and keep in mind that a plant may have 2000 to 3000 nodes,” Vagenas told Australian Mining. “This is a system that can examine and monitor information minute by minute, and be used to conduct detailed investigations and resolve issues.”

The program can also combine this information with data gathered from historical sources and the lab to calculate plant chemistry and throughput, and combine this with data collected from the mining process, as well as power generation and distribution data, to give a never before seen level of interconnectedness and oversight over an operation.

“This program can query any places that data is being stored, gather it together, filter it for quality and then organise it in a common structure where you can use it effectively,” Vagenas said.

The ability to get right down to an almost ridiculously granular level makes the program a stand out.

“This program can break down how different parts of the plant are performing, across any given shift or across a period of time, and how inventory is changing through the site,” he said.

It also performs rapid calculations

“It validates what’s in the refinery at any given time, down to the equivalent item level, and what’s in each tank,” Vagenas said, “it helps you understand what’s in your plant, what’s changing, and how it is changing.”

“You can get the details on how much acid is being consumed by each element, and how much material is leaching is in each tank, and the tank profiles.”

With this understanding, greater efficiencies in ore blending, use of consumables, and power usage can be gained. This data can then easily be shared amongst the company.

Vagenas gave the example of how it can delineate information, using one client’s experience on how it collects and presents data in a meaningful and accessible way.

This major miner powered its plant using a number of different electricity suppliers; it used the program to figure out the percentage each supplier provided per hour, and the costs, and then used this information to renegotiate contracts.

The program also allows for operating prediction, as it can overlay information which can then be used to compare relationships between aspects such as throughput, plant chemistry, acid usage, and recovery over certain periods of time or different shifts, and the use that data to predict future performance.

It can also be used for maintenance purposes. As it allows for a drill down to individual instruments and sensors, the program can be used to see which sensors are gathering data and where they reside in the plant, and if not those individual nodes can be investigated to find out why.

This system is also explicitly transparent, Vagenas said, as it uses individual log-ins and tracking to show what changes were made, and who made them.

It brings companies up to par in terms of the new ASX changes by making them compliant with the new codes, and makes their data easily externally auditable, and allows the company full access to their own data to make better, more incisive business decision.

Vagenas demonstrated its ease of use, highlighting its simple drag and drop system, stating that by using the Tableau interface for reporting it makes the process a lot more intuitive, and helps cuts tasks that previously took hours down to minutes.

He added that Metallurgical Systems is also adding new user interfaces to the program in November, as “we think we can make this even better”.

“This program is breaking down Big Data, and letting engineers get back to their job of analysing information and actually running the plant.”

SA state budget released: major focus on resource sector

The South Australian Chamber of Mines and Energy (SACOME) has welcomed the South Australian state budget’s major priority on the resources sector.

Treasurer and mines minister Tom Koutsantonis reiterated the importance of the resources sector in SA as the 2014/15 figures showed the minerals and petroleum sector contributed $6.38 billion to the state.

SACOME chief executive Jason Kuchel said, “It is important to remember the value of our resources sector and what it does for not only our cities, but the regional hubs of our state. Regional towns near mining operations rely on those projects to stimulate life into their economies.”

SACOME welcomed the government’s decision to pay the co-produced levy on water to the state’s Arid Lands Board without seeking remuneration of the contribution from the resources sector.

“Our position is that this levy should be abolished all together, as it is water that would not ordinarily be used by other industries or private users, and no other jurisdiction globally charges for co-produced water,” Kuchel said.

Before the budget announcement, $50 million had also been promised to Whyalla Steelworks over two years for technologies or upgrades.

“These steps are critical for the regional economy and employment in the town. Thousands of people will, and already are, affected by this, so it is good to see the state government being proactive,” Kuchel added.

The budget allocated $3.6 million to collaborate with the community and develop an informed response to the Final Report of the Nuclear Fuel Cycle Royal Commission.

A further $500,000 was given for a detailed assessment of the increased electricity connections between South Australia and the National Electricity Market (NEM) which Kuchel said was “critical to ensuring security and reliability of supply to businesses in SA”.

SACOME was also provided $400,000 over two years for the employment of an industry connections manager – to enable a closer relationship between industry and service providers; sponsorship of the South Australian Mines Emergency Response Competition; a safety summit to be conducted in 2016/17; and for the ongoing creation of an annual innovation summit to take place on September 23, 2016.

Other initiatives provided by the state budget include extending the tax rebate on small business payroll for four more years; the implementation of a Magnetite Strategy which aims to identify initiatives to increase the economic benefits of SA’s magnetite deposits; and amendments to be considered for the Petroleum and Geothermal Energy Act.

In other states, the NSW budget saw a drop in coal royalties’ contribution, due to weak coal prices and slow growth in exports; this came after the QLD budget committed not to increase royalties yet neglected supporting initiatives for exploration.

澳洲政府预测铁矿石价格

Australian Government predicts lower iron ore prices

July 11, 2016News Cole Latimer

Latest News

The Australian Government has revised its initial 2016 budget forecasts for iron ore, dropping them by a fifth as market volatility continues.

Iron ore has seen a major rally over the last six months, rising from below US$40 per tonne to reach just over US$70 per tonne in April, before sinking to more stable levels of around US$55 per tonne.

In March, prior to the rallies, the Australian Government forecast iron ore prices of US$55 per tonne, a massive increase from its former US$39 per tonne price point.

However continued volatile prices, off the back of the Brexit concerns, have forced a reforecast.

Now the Federal Department of Industry, Innovation, and Science’s latest Resources & Energy Quarterlyreport has dramatically slashed the Treasury’s initial predictions.

It predicts a price point of US$44.80 per tonne, down nearly 20 per cent from earlier Treasury forecasts.

io prices The Department also predicted a similar price point for the rest of this year, at around US$44.20 per tonne, down from its earlier estimates of US$45.

“The revision is based on the assumption that loss-making operations may continue to produce for longer than previously expected,” the Department of Industry, Innovation and Science report said.

“It also factors in increased supply from India and additional cost savings reported by iron ore producers.

“Despite the large movements in prices, the market fundamentals are broadly unchanged — demand growth is slow and the market remains well-supplied.”

In terms of 2017 iron ore movements, the report stated “prices are expected to recover more slowly than previously forecast”.

Market analysts have also become more bearish on iron ore.

Analysts at Morgan Stanley believe a steep decline is still on the cards for the metal after releasing its latest forecasts, although it is still an increase from its original lower price point prediction.

According to Bloomberg, the group has lifted its 2016 forecast to US$46 per tonne, and its 2017 outlook to US$42 per tonne – an increase of 13 per cent from previous estimates – however it has forecast a price of US$35 per tonne for the last three months of the year, expecting additional tonnages coming online from Roy Hill and Vale to drive down value

Miners need to focus on balance sheets to survive, EY says

Mining companies need to focus on strengthening their balance sheets and generating cash if they are to survive current market instability, EY states in its latest report.

In its latest report, Navigating Volatility: Do you change your business or the way your business works, EY predicts the current period of market instability to remain for some time, stating “the longer-term economic outlook is volatile, leading to the possibility of substantial revisions to long-term metal price forecasts and making it hard for mining and metals companies to plan for the future”.

The study lists six key areas resources companies can focus upon to manage this current period of instability, mainly cost reduction; working capital; productivity; capital effectiveness; portfolio strategy; and financing.

Commenting on the report, EY Global Mining & Metals advisory leader Paul Mitchell stated, “Volatility will be a challenge for the mining and metals sector for the foreseeable future and BREXIT has brought additional uncertainty to this, with questions on how it may impact an already slow growth global economy. Locally, the Australian Federal election has potentially provided further uncertainty.”

“Our analysis is clear that mining companies need a different mindset in this environment if they want to maintain a strong balance sheet and develop plans for long-term profitability,” Mitchell said.

“Too many companies have viewed cost reduction measures and productivity initiatives as a once-off, when what they need to be doing is embedding continuous improvement in their DNA.”

He called on miners to reconfigure the way they approach their existing productivity, and turn to other industries to learn from their innovations.

This was echoed by Dassault Systemes Asia Pacific South region leader for Natural Resources business transformation, Adrian Hale.

“By looking to other industries, the mining industry can incorporate new applications into existing technology for improved productivity. More advanced simulation and 3D technology, as well as big data and the interoperability of systems, must be used at each stage of the mining cycle to improve productivity and output levels. Bold moves are needed to propel the industry forward,” he said.

“To understand where mining can look for innovation, it is useful to examine what has led to successful transformations in other industries; take, for example, Toyota – it became the world’s largest and most successful producer of automobiles by becoming an agile business – one that rapidly adjusts itself in light of changing demand and economic conditions.”

For a long time industry heads have said mining could learn more about productivity and efficiency by studying the manufacturing industry.

Unsurprisingly, BHP chairman Jac Nasser – a former president of automotive manufacturer Ford – advocates mining study the manufacturing industry for efficiency measures.

“Although there are as many differences between the automotive and mining sectors as there are similarities, forward thinking mining can likely make unanticipated productivity gains by taking lessons from this example – including reforming industrial relations, co-opting suppliers into the cost equation in an effort to extract efficiency, and shifting from traditional command-and-control hierarchies into a world of matrix or networked structures where human ingenuity is not overly hampered by rigid processes,” Deloitte said.

Even Rio Tinto’s former head of technology and innovation Greg Lilleyman said, “There may well be technologies from manufacturing, food processing, oil and gas or aerospace which are ripe for application [in the mining industry].”

Mitchell went on to say miners have remiss in not using these other industries as an example for improving their own productivity.

“Mining companies have generally been too slow to consider how they can apply best practice processes from other sectors. Consumer products companies have historically had lower margins so capital and cost efficiency has always been a focus – there are examples of some companies who have embedded process improvements that have enabled year-on-year savings of US$1.2b over the past three years,” he said.

“Miners can no longer rely on conventional wisdom and expertise from within the sector; they must cast the net wider and seek outsiders’ experience to get that next productivity and efficiency boost.”

The EY report also states the existing supply chain is ripe for innovation, and an area where both cost and productivity gains can be made.

The NIEIR’s executive director, Dr Peter Brain, has previously told Australian Mining of the importance of supply chain control, and the repositioning of this segment of the sector.

“What the leaders will do is invest heavily in new technology to integrate the front, middle and back office; much more remote control from remote operations, and looking across the entire supply chain, integrating not just simply pit-to-port, but pit-to-customer.”

Mitchell added that the current implementation of Big Data across the industry will also drive change.