downstream opportunities and challenges! · annual report . mintek operates in the latter stages of...
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NSTF Science Councils Symposium:
Beneficiation of SA’s Natural Resources
Mineral Beneficiation … Downstream Opportunities and Challenges!
Peter Craven General Manager, Business Development
17 September 2014
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Mintek – The home of minerals beneficiation!
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• is one of the largest and oldest mineral and metal
technology institutes in the world (80 years old in 2014)
• is a state-owned Science Council, governed by an Act of
Parliament, with a board appointed by the Minister of
Mineral Resources
• focuses on all aspects of minerals processing and
beneficiation, with the exception of iron- and steel making
and coal processing
• has a permanent staff of about 750, including 250
engineers and scientists
• undertakes R&D and furnishes commercial testwork and
consultancy services to clients worldwide
• Has an annual budget of about €50 million:
– 50% funding from state sources, focused on research
– 50% commercial income, derived from various services
to industry (About 800 commercial projects last year)
Mintek ……
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Mintek in numbers
250 scientists and
engineers
R200m R&D
budget
R300m technology
sales
44 published
papers
71 conference
publications
3 patent family
filings
680 media
references
65,000 chemical
analyses
588 technical
reports
60 direct new
SMME jobs
100 SMME
trainees
80 part-time
bursars
47
full-time bursars
720 commercial
projects
81 interns
Source: Mintek 2013
Annual Report
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Mintek operates in the latter stages of the Mining Value Chain
Exploration Mining Concentration Refining Value
Addition
Pyrometallurgy
Hydrometallurgy
& Biotechnology
MINTEK
Council for
Geo-Sciences
(CGS) Council for Scientific and Industrial Research (CSIR)
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Mintek’s extensive R&D underpins its commercial services
• Mintek spends R250m annually on applied R&D (~50% of its budget)
• These R&D outputs are transferred to industry either in the form of
commercial service work or, on occasion, technology licences
• Mintek undertakes ~ 800 commercial projects annually, evidence of the
high regard industry has for our technology
Mintek sells innovation !
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Mintek’s R&D strategy is aligned to the NDP
Points specifically identified in NDP:
• Improved extraction efficiency to extend ore resources
• Improved energy and water efficiency
• Beneficiation to downstream, value-added products
Mintek’s R&D strategy includes these NDP points,
and additionally includes:
• Mining, industrial and consumer waste treatment
• Small-scale and artisanal mining
• Improved extraction technologies for precious, base,
ferrous and energy minerals
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Mintek’s management of innovation
• Combination “market pull” and “technology push” approach
• Industry need ascertained from:
– Commercial testwork activity
– Industry-specific workshops
– Participation in networks like SAMMRI
• Technology opportunities identified from:
– Mintek internal early-stage research
– Close relationship with technology vendors
– Extensive international network
• Strategy articulated in medium- to long term strategy (Mintek 2020)
• Highly structured research management process:
– 8 “platforms”, based on government priorities, strategic drivers, industry needs
– Allocation of funding (~R250m) between these platforms
– “Top Down” calls for internal proposals in these areas
– Selection of projects from “Bottom Up” proposals
– Cluster project management
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Mintek test facilities are often operated at industrial scale
Tapping of Mintek’s test DC furnace
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Site work is often conducted in very difficult conditions!
Copper heap bioleach test facility in Iran
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Mintek sometimes supplies technology on a turnkey basis
Turnkey gold refinery using
Mintek Minotaur® technology
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Project example - Cliff Resources Chromite
• 18 month Canadian ferrochrome project for Cliff Natural Resources
– to Bankable Feasibility Study level
• Started with laboratory scale testing
• Concluded with large pilot smelting campaign
• Included mineral processing and pyrometallurgy
• Over 500t of ore tested
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• A 2-year high-temperature heap bioleaching project for one of the largest copper
projects in Chile
• Highly successful technically in demonstrating that copper extraction could be
controlled within the desired range
Project example - Chilean copper heap leach project
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• Encompasses many different dimensions
• DMR definition in the Beneficiation Strategy:
“…beneficiation, or value-added processing, involves the
transformation of a primary material (produced by mining
and extraction processes) to a more finished product, which
has a higher sales value”
• To a metallurgist – any act of processing the mined ore
• To an investor – anything that adds value to a project
“Mineral Beneficiation” - different meaning to different people
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Benefit to the national economy is beyond question
• Creation of “decent jobs”
• Foreign direct investment, fiscus contribution and forex
earnings
• Diversification of industry
• Reduced dependence on depleting resources
• Transition from resource economy to high-tech economy
• Skills development
• Improved livelihoods in proximate communities
But There are a number of hurdles that also
need to be recognised and overcome
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Critical determinants for project investment …
• Financing - proximity to financial markets & shareholders
• Availability of creative assets (entrepreneurial capabilities)
• Favourable business environment
• Access to feedstock and other inputs at competitive pricing
• Access to technology
• Skilled operational staff
• Access to markets – relationships and proximity
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Massive difference between ….
Increasing the sales price of a product
As measured by R/unit of product, R/unit of metal contained in product, higher sales revenue, etc
and
Increasing value to the project investor
As measured by ROI, shareholder value, etc
Source: Deloitte report – Positioning
for mineral beneficiation, 2011
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• Internal railage often more expensive than sea-freight
• Often lack all “ingredients” (coke, sweeteners, bulk chemicals, etc)
• WTO limits protective tariffs
• Close interaction with proximate market often more valuable
• Proximity to shareholders is advantageous (They prefer investing in their
backyard, where they understand the risks)
Proximity to ore resource - often not an economic advantage
Any successful business needs a clear,
material, sustainable competitive advantage!
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Minerals industry is particularly “global”
• Dominated by multinationals
• Even juniors are increasingly globally disseminated
• Production landscape has changed considerably over the past 50
years. Mining-minerals processing-smelting-manufacturing chain
seldom confined within one country’s borders
• Bauxite–alumina–aluminium is a good example
• Strong competition from other resource-rich countries and
developed economies to retain downstream industry – won’t willingly
give up market share (EU example)
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Mining company thoughts on downstream diversification (or
vertical integration)
For • Better appreciation of “value in use”
• Move from resource to intellectual assets
• Price setting – control of downstream activities
Against • Less value in intermediate stages
• Competing against clients
• Moving away from expertise base
• Shareholder expectations
• Company structures and culture
• Doesn’t diversify portfolio - still exposed to same cyclicity
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International investor perception of SA as an “innovation
economy” is relatively poor ….
Source: INSEAD Global Innovation Index 2014
South Africa rates 53rd out of 143 countries
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Also a negative perception of SA as a “competitive economy”
Source: World Economic Forum, Global
Competitiveness Report, 2014
South Africa rates 53rd out of 148 countries
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SA is second only to Russia in terms of energy usage to
generate unit of GDP
• SA has a large, energy-intensive mining and resource extraction component
• SA’s historical low energy cost has attracted energy-intensive industries (eg aluminium
refineries)
• Need to recognise energy-intensive mineral beneficiation activities, to decide whether these will
be of most overall benefit to the economy
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SA is increasingly short of technical skills
• Global issue, in both developing and developed world, but worst in Australia and Africa
• Exacerbated by recent retrenchments of senior, experienced staff in industry
Students graduating 2010 Graduates entering industry
Source: Cilliers et al, Mineral Industry, Education and Training 2012
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Thank You www.mintek.co.za