Category: Mines and Quarry

South32 has released its Quarterly Report for September, showing a significant reduction in financial leases as the Australian dollar has depreciated against the US dollar.

After falling to 10.3 per cent on the ASX in June earlier this year, South32 has managed to reduce its net debt from US$206 million to US$196 million during the September 2015 quarter.

Capital expenditure rates for South32 are also expected to decline further than the previously forecast nine per cent drop, reflecting the weaknesses of the average exchange rates.

According to South32 CEO Graham Kerr, “Our high quality and low-cost assets, motivated workforce and strong balance sheet remain a key point of differentiation.”

Production has increased overall within the alumina sectors, leading South32 to predict a saleable production increase of 3 per cent to 3.95 million tonnes

Manganese ore production also saw an increase during the quarter, maintaining competitiveness and sustainability throughout the cycle.

Declines of three to four per cent were witnessed in both coal sections as coal production in the 2016 financial year is forecast to decline by per seven cent to 31.95 million tonnes.

By reducing costs and de-capitalising the business, South32’s production increases may provide a temporary relief amidst the volatile exchange rate and the declining profitability in mining operations.

With all of the publicity about research breakthroughs, it is easy to forget that private companies rather than publicly funded research institutions are the centre of the innovation systems.

Innovation happens in businesses, and most new businesses come from existing ones. If the system is not working at this level, the returns on investment in research are likely to be low.

Pushing more government funding into research in our present innovation system is not the way ahead. Treasury and the Productivity Commission may see this as theoretically sound, but like the mantra of strengthening research-industry links, the limited outcomes point to the need for new more experimental and pragmatic approaches.

The growth of entrepreneurship in Australia and deepening entrepreneurial ecosystems are good news. But how many of those start-ups are based on the commercialisation of public sector research? To my knowledge, only a few. Most respond to commercial opportunity and draw knowledge from wherever they can get it.

Australia is a very small but very capable player in the global research system and that is a great asset, but we have not worked out how to best govern and leverage those strengths. What is missing is a mechanism to stimulate and support innovative demand and to capture this drive in order to develop new products, services and firms.

Demanding innovation

The best recent example of harnessing the demand-side of innovation is – perhaps suprisingly – mining. Over the past 20 years, a dynamic and innovation-based mining equipment, technology and services (METS) sector has evolved in Australia.

By 2013, there were more than 1,000 METS firms with an aggregate turnover in the A$70-90 billion range, employing more than 300,000 people, with exports over A$20 billion and rapid offshore expansion.

In FY2012 the “sector” invested at least A$1.5 billion in R&D, which is more than information, media and telecommunications. Here we see demand from the user sector driving innovation in what are often, but not always, high tech suppliers, in this case often involving new applications of information technology.

It is often the quality of demand, which is related to the competency of the users, that enables innovation. In 2011-12 the mining sector invested almost as much in R&D as did the manufacturing sector. It is now very much a knowledge-intensive industry and a demanding user.

The current downturn in mining sector investment is hitting the METS sector hard. But firms are focusing on innovation and finding markets in other sectors and offshore.

For example, the 2015 survey by the METS industry association, Austmine, found that 44% of survey respondents were moving into other industries and a third had sought new export markets. One in three had also launched a new product or service. National METS Survey 2015 Results

This encouraging story of entrepreneurship and innovation has had little to do with public sector research, venture capital or innovation or entrepreneurship policy.

Despite the strengths of the CSIRO and some universities in these areas, and their important contribution to knowledge and innovation, neither this research nor public policy have been major drivers of the remarkable growth of Australian METS firms over the past 20 years.

Two reforms

Opportunities for demand-led innovation exist throughout the economy. They are likely to be greatest where there is strong market growth, sustained investment and new challenges.

Consider the cities of Australia, which can (and in some cases need to) be transformed through new communication, environmental and transport infrastructure and technologies.

But to do this we need to reform our institutions to develop new forms of system-level governance and policy frameworks that influence both the challenges and solutions. This type of innovation is often harder than technological innovation but is often the most critical for enabling other forms of innovation.

To achieve this, we need two essential changes within government.

First is to strengthen the policy advice available within government. The mainstream economic paradigms that inform Treasury and the Productivity Commission have at best a weak purchase on innovation.

Recent developments in the Department of Industry and Science, with the formation of the office of the Chief Economist and the more systematic work on innovation analysis may be the beginnings of a capable alternative source of advice able to contest the views of Treasury. But much more strengthening is required.

Second is to acknowledge that the Australian Research Council is not fit for this purpose. It is, after all, a research funding organisation run by researchers.

What is needed is a different type of innovation-oriented organisation. It would identify new challenges and help build the capabilities in industry and the research sector to respond innovatively.

But, importantly, it does not allow research organisations to monopolise public research funding, pursue their own interests and so create a commercialisation bottleneck.

An exemplar for this type of organisation is TEKES in Finland. It uses foresight and roadmapping to identify opportunities, and it proactively develops coalitions and collaborations to apply the needed competencies.

Among the critical forms of institutional innovation we need are what Dan Breznitz, in his book Innovation and the State, terms “Schumpeterian Development Agencies” which have wide degrees of freedom to undertake continuous experiment with a wide scope to act, engage, change and redefine.

Analysts predict further slumps for iron ore in 2016, as new projects such as Roy Hill come online and swing into full production.

Weak demand growth in China and a stronger US dollar will ensure iron ore prices stay down, according to BMI Research.

A report from BMI stated that investors expect the commodity to trade between $US50-60 per tonne for the rest of 2015, dropping again to the $US45-55 range in 2016.

Market shares held by BHP, Rio Tinto and Brazilian major Vale have increased low-cost ore supplies, however China’s steel consumption will contract by 1.3 per cent each year up to 2019, BMI said.

“Global iron ore majors will continue to ramp up production to squeeze out higher-cost competitors,” BMI said.

“BHP Billiton, Rio Tinto and Vale all reported record output in 2014 and will increase output further in the quarters ahead.”

New shipments from Hancock Prospecting’s Roy Hill Project were also flagged to contribute to an increasingly apparent glut of the steel-making commodity, with productivity to increase over the next year to full capacity.

Fortescue Metals Group has also pledged to maintain their shipping levels despite weak prices, and recently gained 5.3 per cent on the ASX to a high of $2.30 on Monday, which has dropped to $2.23 and is continuing on a steady rise.

Mitchell Services has begun work under a two year contract for work at Evolution Mining’s operations.

The contract, valued at $27 million, includes both underground and surface drilling services at the Pajingo and Cracow gold mines.

It will use drill rigs acquired from Nitro Drilling (which is currently in liquidation) will be used for the surface operations, whilst underground work will use newly sourced underground drill rigs.

Mitchell Services executive chairman Nathan Mitchell welcomed the win and the start of new work.

“The award of this work is encouraging as it further strengthens an ever increasing Tier 1 client base whilst providing diversification in revenue streams through significant underground drilling programs,” Mitchell said.

Chinese miner CITIC recently disclosed a massive injection of capital into the embattled Sino Iron project, made on April 1.

Costs in the project have surpassed $US12billion, as reported by the AFR, although $US2.5 billion has already been written off the value of the project in March due to economic considerations such as the plunge in the price of iron ore.

Still involved in a protracted and very public legal dispute over royalties with Clive Palmer-owned mine developer Mineralogy, CITIC Pacific are also ebroiled in a dispute with their lead contractor China Metallurgical Group Corporation (MCC).

The original plan offered by Mineralogy was for a $US2.9 billion turnkey construction contract, however CITIC commissioned MCC under the apprehension the company could further save on costs.

However, a fixed $US3.4 billion contract with MCC resulted in cost overruns of $US858 million, with delays blamed on adverse weather and “typhoon”, and problems with electric motors purchased by CITIC.

Fortunately the mine has been exporting magnetite since January 2014, capitalising on project costs, however only two of the six planned production lines are operational.

The AFR said the income from export sales are not being booked as income or in operating cash flow, but rather directly against the capital expenditure for construction.

With the remaining four production lines to reach operational ability by the end of 2016, it has been anticipated that CITIC will not reveal the full extent of their operating losses until 2018 when full-year reports for 2017 are released.

An Australian success story of design innovation, engineering expertise and product excellence, Striker is a reputed heavy equipment manufacturing company that has made its presence felt in the global market with a complete range of fixed, portable, mobile and track plants.

Striker’s modest beginnings in Perth, Western Australia in 1998 saw the company design and manufacture fixed plant for the Australian mining industry. Capitalising on the growing demand for mobile equipment in Australia’s resources sector, Striker leveraged its expertise in design and manufacturing to introduce a new range of track mounted and mobile crushing, screening and processing equipment. Today, the Australian-owned heavy duty equipment manufacturer addresses the fixed and mobile machinery needs of diverse industries from mining, recycling and quarrying to civil contracting, earthmoving and materials handling throughout Australia, the Asia-Pacific and the rest of the world.

Built to a high standard, and built to last, Striker’s machinery range from tracked crushing and screening equipment to fixed plant for quarrying and mining as well as its latest recycling line has been put to the test in some of the harshest environments around the world. From the challenging conditions of Australian mines to the coldest regions of remote Mongolia, Striker’s heavy equipment range is a proven top performer ready to meet every design and application challenge.

The 5-year structural warranty offered on all Striker-designed and manufactured plants, underlines the company’s confidence in the reliability of its equipment range.

Striker is also a well-known equipment rental company, maintaining one of the largest rental fleets of mobile crushing and screening machinery throughout the Southern Hemisphere. Striker’s rental equipment is available for both short and long term periods to clients across Australia.

Striker’s machinery range

Striker offers a comprehensive solutions portfolio spanning fixed plant and MAX plant installations, conveyors, heap leach systems, tracked crushers, Etrac crushers, recycling systems, and bare crushers and screens among many more.

Fixed plant installations are part of Striker’s bespoke solutions designed to meet specific client requirements and application challenges. Striker’s MAX Plant concept is based on a design philosophy that combines creative thinking and innovative solutions to provide the client with a versatile plant that can be simply, flexibly and easily reconfigured to any process requirement.

Engineering services: Design, construction and fabrication

Striker offers turnkey design and construction services to build mineral processing facilities for complete greenfield or brownfield projects encompassing plant modifications, upgrades and expansions; plant evaluation and condition reports; plant operations and maintenance support and optimisation; plant relocation, refurbishment and recommissioning; and consulting.

Striker’s experienced fabrication team, supported by their fabrication facilities in Malaysia and Thailand, delivers superior fabrication services to a wide variety of industries, meeting project objectives and challenging deadlines cost-effectively.

Service, repair, refurbishment and parts

Striker’s 24-hour, 7-day a week support team, operating from the four main service centres in Perth, Brisbane, Malaysia and China, ensures all plant and equipment are supported round-the-clock. Repair services are provided for both Striker machines as well as other brands of equipment. A specialised refurbishment service is also offered for all Striker equipment in need of a complete overhaul after many years of service.

Striker carries a wide range of spares for all equipment including track machines, mobile machines, fixed plant, conveyors and hydraulic systems in addition to wear parts for all crusher products. Specialised packages for operator training, service and repairs training, and electrical and hydraulic training are available for all Striker customers.

With offices located across Australia, Malaysia, USA, the Middle East and China, Striker’s worldwide presence ensures customers have access to a broad range of heavy equipment solutions, services and support from a single source.

Know more about Striker’s crushing and screening plants and turnkey engineering design services.

Trelleborg’s engineered products operation has supplied “a lower cost, long lasting rubber lifter bar solution” to Australia’s largest open pit gold mine for one of their ball mills. A valuable alternative to traditionally used composite steel, they offer a number of significant benefits such as a longer life and reduced downtime. Trelleborg has provided rubber lifter bars in special grade compound – 1605AM to replace the existing composite steel solution which lines the mine’s grinding mills. These special grade rubber lifter bars have achieved the same life expectancy as composite steel, and also provide reduced power draw, noise pollution and weight, which decreases the impact on rotating components and makes the bars easier to handle.

Downtime is a significant issue faced by the mining industry, and the mining and material processing industry is always looking for ways to enhance availability of the mills that grind and blend materials. Trelleborg’s rubber lifter bars “offer increased operational efficiencies, significantly reduced downtime, simple wear monitoring and life predictability. In addition, when compared with steel, a rubber solution also provides superior resistance to the severe impact, high temperature and abrasion caused by the comminution of the ore within the mine’s grinding mill, lengthening its life.” Composite steel is currently the traditional material of choice for primary and some secondary milling applications and until now has provided a whole-life performance that alternatives could not. However, the development of Trelleborg’s special grade rubber compound and various face angles to suit any application, offer greater value and performance versus composite steel lifter bars.

Trelleborg’s expertise in the use of polymers and polymer composites means that it is at the forefront of efficient and effective mill lining solutions. By optimizing design and specialized rubber compound selection for all milling wear protection applications, including lifter bars, Trelleborg can provide longer lasting, higher performance solutions. Trelleborg offers a wide range of rubber lifter bars and plates for ball mills, rod mills and drum scrubbers. The standard rubber lifter sizes range from 50 mm-250 mm wide and 50 mm-300 mm in height, and come complete with aluminium and steel tracks, with different face angles to suit the milling or scrubbing application. Trelleborg also provides a wide range of shell plates, grate plates, head plates and filling segments, including the backing rubber to protect the mother plate of the mill.

Sandvik has announced its intention to divest its Mining Systems division.

This product area, which sits within Sandvik Mining, covers the supply, design, and engineering of materials handling systems for the resources industry.

“Divestment of Mining Systems will make Sandvik Mining more focused on its core operations, mining equipment and aftermarket offerings for both underground and surface mines, which Sandvik will continue to develop to ensure long term value creation,” Mats Backman, CFO and acting President and CEO for Sandvik, said.

The division employs around 1300 people, and had annual sales of $1.12 billion, accounting for 7 per cent of Sandvik’s invoicing.

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

From the third quarter of this year the Mining Systems group will be reported as ‘discontinued operations’.

It is understood a buyer is yet to be found.

As base metals prices stagnate, many miners are looking to innovative methods to increase production.

One area that many operators are looking to for cost savings and efficiency increases is that of minerals processing.

OZ Minerals began trials to slash costs and boost productivity by implementing more efficient minerals processing at its Carrapatenna operation.

The miner developed a hydromet demonstration processing plant to verify scalability for its site late last year, and has now seen positive results from the trials.

“The first trial results from the hydromet demonstration plant indicate that the process is scalable and is already returning copper-in-concentrate levels of more than 55 per cent,” OZ Minerals stated.

“This compares favourably to globally produced concentrates with copper-in-concentrate grades that typically average less than 30 per cent,” OZ Minerals said.

It added that impurity elements were below penalisable levels.

“This is a great set of first results for OZ Minerals and the copper industry in South Australia,” OZ managing director Andrew Cole said.

He went on to state that “the successful completion of this demonstration trial will allow up sot produce some of the best and cleanest copper concentrate in the world, with virtually no impurities”.

The new pilot plant builds upon laboratory scale test work, where a final product exceeding 55 per cent copper-in-concentrate from a starting concentrate grade of 30 to 35 per cent.

According to OZ Minerals, the system involves processing copper concentrate containing chalcopyrite and bornite. It then converts these two minerals into chalcocite by leaching out the iron and other impurities.

“On the back of these promising results,” Cole said, ”we will continue to feed samples of concentrate through the plant over the next few months to build on our technical understanding and confidence in the process.”The trials come as South Australia throws its support behind the copper industry in the state, launching a new strategy to ramp up production.

Speaking before members of the South Australian Chamber of Mines and Energy (SACOME), state treasurer and resources minister Tom Koutsantonis announced the next phase of consultation was underway.

“There is widespread agreement that South Australia’s geology and geography does put us in the box seat to supply copper to the world’s fast growing economies,” Koutsantonis said.

“The Directions Paper on the Copper Strategy seeks the views of industry, regional and Aboriginal communities, and other stakeholders on how we tackle some of the issues that could prevent South Australia from reaching its full potential as a copper producer.

“In the weeks ahead, we will be looking to the community, landowners, producers, explorers, researchers, innovators and suppliers to provide their guidance on the final design of this long-term strategy.”

As part of the strategy the South Australian Government has pledged $10 million to found a joint study of the hydromet process between OZ Minerals and Orway Mineral Consultants, with work carried out by Adelaide University.

OZ Minerals will contribute $8 million to the research.

Speaking on the this plan and the trial results, Cole added that “this is crucial research that could help maximise the value of South Australia’s copper resources for generations to come”.

“When considered in the context of the South Australian Copper Strategy, it is a very exciting time for the industry.”

With current cooper production around 300,000 tonnes per annum, the SA government wants to triple production by 2030 to become a major contributor to Australia positioning itself as the third largest copper producer in the world.

At present South Australia has three active copper mines; Olympic Dam (BHP), Prominent Hill (OZ Minerals) and Kanmantoo (Hillgrove Resources).