The resource sector is one of the linchpins of the material world. Without mining, the comforts we as a society have come to depend on would cease to exist. From the cars we drive to the computers we type on, in some way, shape or form, the materials needed to function in today’s society are fundamentally tied to the mining industry. Unfortunately, mining is considered one of the dirtiest and environmentally unfriendly practices currently in existence. And in a society that is becoming increasingly environmentally conscious, the mining industry is under some pressure to clean up its methods.
A recent report by Kachan & Co. takes a look at the ways in which the resource sector can “clean up” its act using breakthrough innovations. To help us get a better understanding of these technologies, Dallas Kachan, managing partner at Kachan & Co., took some time to speak with Resource Investing News (RIN) about the report.
RIN: Thank you for joining us Dallas. To start off, can you help our readers understand how can mining technologies be green or clean?
Dallas Kachan: If you look at manufacturing, transportation and a lot of the traditional heavy industries of the world, they’re all over clean and green technology. Mining is one of the last holdouts. Mining can in fact be more efficient and more cost effective through new science, new breakthrough innovations.
In our report, we look at areas of innovation including power reduction, water reduction, new processes and reducing toxicity. For instance, you may be aware that gold and other minerals today are separated using, among other things, cyanide and other toxins. There are new processes that don’t use toxins, for instance bioleaching, which in many cases use a very benign sort of biological materials. They don’t necessarily do it as fast, but they haven’t seen widespread adoption yet.
That’s why we wrote this report — we want more people, particularly clean tech investors and large corporations, to know about the important new innovations going on in mining.
RIN: What does the report look at when you deal with clean technologies for mining? Is it the process or is it the equipment?
DK: In terms of power reduction, some of the ways companies are trying to come up with new innovations include the comminution process of crushing a rock. Today’s state of the art SAG mills are very inefficient, and there are companies trying to figure out ways to crush rock in more energy-efficient ways.
Low-power separation approaches are another area of focus. Separation today of minerals and slag is a very costly process. If you’re heating these materials, you’re paying an awful lot in natural gas. Some companies are working on low-power separation, and in some cases magnetic separation or other methods that don’t require any power at all. And if those can be made to scale and are adopted in a wide sense, then that can dramatically reduce the amount of power needed.
We also look at so-called hydrometallurgical processes that use biology and not heat to separate minerals from ore. In terms of fuel and maintenance reduction, I was surprised at the number of companies that are offering software to help companies optimize the routing of their trucks, thereby saving fuel. Even simulators–there are a handful of companies out there that are doing great, really immersive simulations with mining equipment, helping operators learn this expensive gear without actually being behind the wheel and burning valuable diesel. A simulator can also teach an operator how to use their brakes most effectively to reduce wear and tear, which translates to reduced maintenance costs, and of course how to drive or operate the vehicle in the most fuel-efficient way which also reduces fuel costs and maintenance costs as well.
RIN: It is interesting to see that there are a lot of innovations like computer-aided simulations making things more efficient for companies.
DK: And then rethinking some of the assumptions of how mines are run today really struck us as a surprise. Particle management, dust management, and ventilation are huge energy costs because you’ve got in some cases thousands of kilometers (or miles) of tunnels that all need to be ventilated because you’re taking diesel equipment down there. Well what if you were using primarily electric equipment and diesel emissions weren’t nearly as much of a factor? Your ventilation costs could conceivably drop if you transition over to electric hauling and trucking systems.
There are a handful of companies that are pursuing the conversion of existing mine equipment to all-electric or battery hybrid electric. In some cases they’re offering brand new ways of moving ore through a mine that are essentially electric trains hauling are to the surface and tailings back into the mine. These suppliers are among those identified in our report.
RIN: Can you share with us what some of the most exciting clean tech innovations are?
DK: Aside from the ones I’ve mentioned, let me highlight a couple more. Non-cyanide separation is really interesting to me. If you’re eliminating the need for cyanide and other toxins, that’s a really good thing. There are companies in our report working on new ways to do that.
I’d be remiss if I didn’t touch on biologics, the bioleaching of tailings. BioteQ (TSX:BQE), in Vancouver, is at the forefront of cleaning up existing tailings, or even tailings from 100 years ago, using biological processes, in some cases reclaiming some of the trace minerals and metals that are left in the tailings.
We also look at BacTech Environmental (CNSX:BAC) as a company that is looking at new ways of cleaning up current mine sites and mine sites of the past.
RIN: How difficult is it for companies to get started with greener methods? (Is it capital intensive?)
DK: We’ve found that while adopting new technologies like these leads to higher capital expenses (capex) upfront, adopting these new technologies could lead to lower operating costs and lower permitting costs. So companies are most interested in these innovations because they can often speed up the permitting process. If you have to budget three years and $20 million to receive a permit for a mine, and you can accelerate that to one year and $5 million dollars by adopting another $10 million dollars worth of new green technologies, you’re ahead of the game. The time to money is faster, and you’re still paying less out of pocket than you would at today’s prices.
There’s also an argument to be made for reduced operating costs in terms of power requirements; these new technologies can reduce a mine’s need for electricity and natural gas. Closure costs, remediation costs all could be mitigated through these new technologies as well. So the economic case for these new investments is hard to ignore.
RIN: One thing I have heard a lot of when it comes to green solutions in mining is that the technology is usually proprietary. Have there been improvements in the availability of these technologies?
DK: Green mining technology is still a niche category. There may come a day where companies like BioteQ, BacTech and Railavator and the 45 other companies we profile in our report have their phones ringing off the hook. But at this point, these small companies have to call mining companies and make a case for why they should look at their technology. Green mining tech has yet to cross the chasm, so to speak, to mainstream adoption in classic technology marketing parlance.
I think we’re at a rare point in history where mining companies, policy makers and elected officials are somewhat in sync now. The average voter wants to see clean water and green trees, and your average mining company wants to be as efficient and economical as it can be, and that in many cases involves adopting cleaner green technologies. I think it’s an interesting time in which policy makers and mining companies have more in common than they think they might.
RIN: Yes, and you say in your press release that the government should support the green mining innovation without using funds from taxpayers. How would that be done?
DK: Coming from the world of clean tech, like I do, we see governments like China and the US, Germany, Sweden, and South Korea all putting aside large percentages of their GDP to underwrite clean and green technologies.
Many of them have given away a large amount of taxpayer dollars, billions and billions, to companies they have handpicked and selected as being very important to their countries. In some cases, China has bolstered its solar and wind tech manufacturers, and in some cases the US did the same through loan guarantees and other grants through the Department of Energy over the last six or eight years.
But these approaches have proven to be flawed given that a lot of the individual companies that these governments have funded have failed for various reasons. So the governments of the world have been trying to pick winners, but their decisions aren’t necessarily the best ones. We’ve found in our analysis of the green tech industry worldwide that governments are more successful when they start setting mandates and standards and passing laws along the lines of “X percentage of our power needs to come from renewable sources by this date” and then standing back to let the private sector figure it out.
Let companies like the utilities, for instance, be the ones to make decisions about which technologies are optimal and why and how. Similarly, we think these lessons translate to the world of mining. If governments believe that mining is strategic to their economies, and it is, then they should consider passing new mandates and standards that require companies to do certain things by certain dates. Let the companies themselves figure it out — which technologies would be right for them and in the geographies that are important to them.
RIN: Your report looks at the ways to manage risk and profit from new mining technologies. What strikes me from just the title of this report is the word profit. How can companies profit from implementing greener technologies or processes?
DK: I was surprised when I was reading the early drafts of our report to learn that mining has become less efficient over time. In our report, we note how “a study by the mining advisory firm Erin Gold verifies that the U.S. permitting process has jumped from an average of five to seven to ten years”, and at the same time “during the last 50 years the global mining industry lost 30% of its productivity, requiring greater efforts to produce each unit of output, which I found astonishing.
So if you can boost the efficiency of mining through new technology, if you can boost the productivity of individual workers through technology, then that puts us back on that path to profitability. If you’ve got a marginal mine that sits on the edge of being cost-effective and you can, through technologies, reduce the need for power through a low power separation process you may obviate the need for large amounts of natural gas. If you can, through water recycling for instance, manage to put only benign tailings back in the ground and thereby reduce your closure and year-round remediation costs, just because you invested an extra $5 million dollars in a water purification system, then that, too, can dramatically change the profitability of a borderline mine. So it’s interesting to see how the economics can significantly change with new technology.
RIN: How about from the investment side? Recently RIN looked at corporate social responsibility (CSR) practices and how companies involved in CSR tend to have higher returns for investors. Do you think the same can be said for companies practicing greener mining methods?
DK: Investment in cleaner mining technology is really the most fundamental CSR initiative a company could take. CSR, in mining, has generally meant building roads and schools and addressing the needs of indigenous populations as best as possible after the fact. What if the mine wasn’t polluting the water to begin with, if the mine wasn’t subjecting workers to massive amounts of diesel pollution to begin with? Investment in new technology, to do things right with as little impact as possible, is arguably the most meaningful CSR initiative a company can take on.
RIN: Are there any companies that you can name that have been successful in making the shift from common mining practices to green tech?
DK: A lot of companies are still experimenting with selective pieces of the puzzle. We’ve got four or five little case studies in our report that I can reference for you right now. For instance, Barrick Gold (TSX:ABX,NYSE:ABX) is implementing some energy efficiency projects, especially at a mine in Argentina, and is looking at adopting some water recycling zero discharge through technologies there as well.
Rio Tinto (ASX:RIO) has got the first pilot mine in New South Wales in Australia that is testing the capture of fugitive methane, accidental methane released from the mine process. It’s also experimenting with CO2 storage in Victoria, Australia, sequestering carbon dioxide.
Interesting too is VALE’s $140-million initiative underway with ABB Group, a multinational, to convert the largest iron ore mine in Brazil to be automated and truckless. They believe that by eliminating 100 trucks, they will reduce diesel consumption by as much as 77 percent.
RIN: Thank you very much for speaking with me. I’m excited to read more about responsible mining practices.
DK: Well, it’s important to note that mining’s not going anywhere; it’s an important piece of how we do what we do on this planet. The only way we’re going to be able to scale the number of people on this planet is to do things better than we’ve done in the future — the good news is that there are a lot of companies now looking to do just that in mining.
Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned.
Editorial Disclaimer: Interviews conducted by the Investing News Network are edited for clarity. The Investing News Network does not guarantee the accuracy or thoroughness of the information reported. The opinions expressed in these interviews do not reflect the opinions of INN and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
Kachan & Co’s Emerging Green Mining Innovation: Managing risk and profiting from new mining technology breakthroughs report is available for purchase on the company’s website.