A Mining and Exploration Industry Perspective on the Energy Transition
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The transition to renewable energy from fossil fuels will both fundamentally change the structure of minerals demand, and the process of mining. The mining and exploration sector in its current form may struggle to re-align mineral production to match these new demand patterns, whilst at the same time undergoing a significant shift in production technology. The ‘CET Scenarios’ Programme was established to investigate structural discontinuities, of this kind, in the future of mining. One discontinuity investigated was the energy transition. Two scenarios were developed: one involving a voluntary and complete energy transition driven by industrial innovation and framed by concerns over sustainable development (‘Wonderland’); and another with a forced and partial energy transition driven by government and framed by geopolitical (strategic) concerns over raw materials security (‘1984’). Following the development of the scenarios further research was conducted into the interaction of the mining and exploration sector with the energy transition, sustainable development and resource security, with the aim of better informing corporate strategy. The strategic recommendations to the mining and exploration sector for re-aligning with changing, but unknown minerals demand patterns, and exploration and production technologies, included techniques for monitoring ‘progress in transition’, ‘horizon scanning’, market analysis, capabilities analysis, and ensuring strategic coherence. An emphasis was placed on developing creative, social, adaptable and varied thinking skills amongst mining and exploration sector professionals and researchers. NOTE: This presentation was made in 2018 not 2011!!!
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A Mining and Exploration Industry Perspective on the Energy Transition
- 1. John Sykes1234, Allan Trench125, T. Campbell McCuaig16, and Mark Jessell1 1. Centre for Exploration Targeting, SES, UWA; 2. Business School, UWA; 3. MinEx Consulting, Australia; 4. Greenfields Research, UK; 5. CRU Group, UK; 6. Geoscience Centre for Excellence, BHP, WA. GSA Earth Sciences Student Symposium Perth, Australia: 29th November 2011 A MINING AND EXPLORATION INDUSTRY PERSPECTIVE ON THE ENERGY TRANSITION Image: Greenbushes Li-Ta-Sn mine, Western Australia; Source: Google Earth
- 2. GOOD PHD RESEARCH STARTS WITH THE PHILOSOPHY 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 2 of 35 Why am I here? And how did I get here? Image: Rodin’s ‘Thinker’; Source: Steven Fettig (Flickr)
- 3. MY PHD RESEARCH AIMED AT TWO QUESTIONS 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 3 of 35 What are the mines of the future? How do we find them? TOGETHER: What is the future of minerals exploration? Image: Xenophyophore on a cobalt-rich seamount; Source: World Ocean Review Image: Drone; Source: Shutterstock
- 4. COMPLEX QUESTIONS REQUIRING CREATIVE THINKING 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 4 of 35 Scenario, in film making, original idea for a film translated into a visually oriented text. The scenario plan gives the mood of each image and its relationship with the other shots in the sequence. The writer… sets up [the] shot according to… directions that are given in the scenario… the exact length of each shot, giving every word of dialogue, and describing all sound effects and the music to be used in each scene... A director may dispense with the scenario and direct the action according to his own concept of what best brings out the theme. Usually the director works with the scenario’s basic instructions and, as the filming progresses, adapts them to the evolving action. Source: Encyclopaedia Britannica
- 5. THE CET ‘FUTURE OF MINERALS EXPLORATION’ SCENARIOS 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 5 of 35 Background Research Test Scenarios Workshop 1 (Trial) Workshop 2 (Expert) Workshop 3 (Expert) Findings Today’s focus
- 6. DEVELOPING THE SCENARIOS WAS FUN… (SORT OF) 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 6 of 35 BUT THEY DID LEAD TO A SERIOUS POINT…
- 7. NAVIGATING THE ENERGY TRANSITION IS COMPLEX 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 7 of 35 Wonderland 1984 Left behind High tech Discworld NOW (An unknown number of economic cycles to come) Low tech (Beyond which is the unknown) ‘Economic paradigm’ ‘Sustainability paradigm’ ‘Strategic paradigm’ ‘Transition’ Images: Amazon
- 8. FIRST SURVIVE OUR ‘OLD WORLD’ OR ‘DISCWORLD’ 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 8 of 35 OLD ECONOMY STRATEGIC RESOURCES INEQUITY PROTECTIONI SM STRATEGIC RESOURCES ISIS BIG MINING ECONOMIC PARADIGM COAL POWER POLLUTION WASTE PETROL CARS …with an unknown number of economic cycles to come, so you have to be good at ‘business as usual’ BOOM & BUST BIG OIL
- 9. KNOW WHEN TO STEP THROUGH THE ‘TRANSITION’ 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 9 of 35 …but into which future? Image: Shutterstock
- 10. …ALL WE KNOW IS THAT IT CAN BE VOLUNTARY OR FORCED 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 10 of 35 WONDERLAND NINETEEN EIGHTY-FOUR (common in Eastern culture) (common in Western culture) Images: Maya Eilam
- 11. THEN THRIVE IN THE FUTURE: WONDERLAND? 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 11 of 35 GREEN ECONOMY STRATEGIC RESOURCES SILICON VALLEY PROTECTIONISM STRATEGIC RESOURCES ISIS DISRUPTION SUSTAINABILITY PARADIGM VOLATILITY CETA DEAL INNOVATION PARIS AGREEMENT Disruptive innovation within a global regulatory framework allows leads to voluntarily energy transition GLOBALISATION TESLA Images: Shutterstock
- 12. THEN THRIVE IN THE FUTURE: NINETEEN EIGHTY-FOUR? 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 12 of 35 NEW WORLD STRATEGIC RESOURCES BREXIT PROTECTIONISM STRATEGIC RESOURCES ISIS OLD WORLD MILITARY- INDUSTRIAL COMPLEX TRUMP STRATEGIC PARADIGM WAR PROTECTIONISM PUTIN ISIS Geopolitics and conflict forces a government-led energy transition in the fossil-fuel poor parts of the world Images: Shutterstock
- 13. GOOD PHD RESEARCH ALSO ENDS WITH THE PHILOSOPHY 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 13 of 35 BUT The scenarios are only the beginning of the ‘thinking’ not the end of it… so what have I been thinking about? Image: Rodin’s ‘Thinker’; Source: Steven Fettig (Flickr)
- 14. THE SCENARIOS REFLECT SUPPLY CONSTRAINTS 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 14 of 35 antimony, arsenic, barium, beryllium, bismuth, boron, cadmium, chromium, cobalt, gallium, germanium, graphite, indium, lithium, magnesium, manganese, mercury, molybdenum, niobium, PGMs, rare earths, rhenium, selenium, silicon, silver, strontium, tantalum, tellurium, thorium, tungsten, vanadium Components of ‘criticality’ ECONOMIC PARADIGM Important uses STRATEGIC PARADIGM Potentially geopolitically restricted production, e.g. USDOE critical metals reports SUSTAINABILITY PARADIGM Potentially environmentally / socially restricted production, e.g. EU critical metals reports ‘China produces 95% of the rare earth metals…’ “Dust emissions from the mining of… graphite had become a major issue, air pollution from dust had become… known as graphite rain.” - Olson, 2017 Sources: Sykes et al., 2016a,b
- 15. NEW TECHNOLOGIES REQUIRE NEW METALS 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 15 of 35 RENEWABLES METALS Uranium Rare earths (neodymium, praseodymium & dysprosium) – in the generator magnet Silicon & germanium; Gallium-arsenide; Copper-indium-gallium-selenide (CIGS); Cadmium-telluride Images: Shutterstock; Wikipedia;solarchoice Lead-acid Alkaline (zinc- manganese) Lithium-ion (graphite & cobalt) Nickel-cadmium / zinc Nickel metal (lanthanum- rare earth) hydride Vanadium redox BATTERY METALS
- 16. WE CANNOT ‘REDUCE, REUSE AND RECYCLE’ TO GROWTH 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 16 of 35 1 10 100 1000 10000 100000 100000010000000 1000000001E+09 Gallium Indium Lithium Cobalt Silicon Vanadium Nickel Rare Earths Germanium Copper Manganese Zinc Graphite Selenium Cadmium Lead Tellurium Arsenic Theoretical Total Available for Recycling (tonnes) 0 20 40 60 80 100 Gallium Indium Lithium Cobalt Silicon Vanadium Nickel Rare Earths Germanium Copper Manganese Zinc Graphite Selenium Cadmium Lead Tellurium Depletion Index for Material Available for Recycling (years) Data: USGS
- 17. WE CANNOT ‘REDUCE, REUSE AND RECYCLE’ TO GROWTH 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 17 of 35 We mine ‘commodities’ but recycle ‘products’ thus not all commodities are amenable to high levels of recycling 45% 55% Lead Production (2012) Primary Secondary Landfill ‘mining’ maybe as socially and environmentally problematic as conventional mining Image: Guardian (Javad Tizmaghz) Source: ILA 37% 33% 10% 5% 5% 1% 9% Lithium Consumption (2015) Batteries Ceramics & Glass Lubrication Purification Flux Aluminium Other (inc. pharma) Source: USGS
- 18. …AND THE MINING INDUSTRY IS STRUGGLING… 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 18 of 35 Molycorp files for bankruptcy as rare earth prices drop - Bloomberg, 25 June 2015 Graphite junior Triton Minerals in shock collapse - The Australian, 4 March 2016 Valence Industries enters voluntary administration - Australian Mining, 20 July 2016 Year-end turn in rare earth prices seen as Lynas losses near $1b - The Sydney Morning Herald, 10 March 2016 Integrated business still a Galaxy away - The Australian Mining Review, 27 March 2013 RB Energy shutters Quebec lithium mine as financing fails Financial Post, 8 Oct 2014 Great Western Minerals is Bankrupt - Newswire, 3 Dec 2015 * Galaxy Resources’ Mt Cattlin mine re-opened in 2017 (Source: ABC) * Triton Minerals re- listed later in 2016 (Source: Proactive Investors)
- 19. NONETHELESS SOME METALS HAVE POTENTIAL 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 19 of 35 Metals Constraints removed Graphite Discovery Sup. Use Copper Dis. Supply Use Germanium Dis. Sup. Use Indium Dis. Sup. Use Tellurium Dis. Sup. Use Arsenic Discovery S Use Gallium Dis. Sup. Use Selenium Dis. Sup. Use Silicon Dis. Sup. Use Cobalt Dis. S Use Lithium D Sup. Use Metals Constraints removed Nickel Dis. Sup. U Vanadium Dis. Sup. U Lanthanum D S Use Lead Discovery S Cadmium Dis. Sup. Manganese Dis. S U Zinc Dis. S U Neodymium D S Use Praseodymium D S Use Dysprosium D Use Uranium D S Fully unconstrained Fully unconstrained Most constrained Least constrained Source: Sykes et al., 2016a
- 20. BUT ENVIRONMENTAL & SOCIAL FACTORS ADD COMPLEXITY 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 20 of 35 Energy transition requires electric vehicles Increased mining of rare earths in China Questionable environmental and social impacts Switch back to ferric magnets required? Electric vehicles require better motor magnets Rare earth magnets are technically better Image: Reuters Based on: Widmer et al., 2015 Rare earth magnets case study
- 21. MINING IS IMPACTED BY THE ENERGY TRANSITION TOO 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 21 of 35 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Surface Mine UG Mine Mill Other Steel Equipment, Tyres & Parts Explosives & Reagents Fuel & Electricity Labour Data: CostMine, July 2016 Solar power at Sandfire Resources Degrussa mine, WA All electric underground mine planned by Goldcorp at Borden, Canada Wind power for copper mines in Chile owned by Barrick ‘Flexicycle’ using biodiesel power at Pueblo Viejo, Dominican Republic (Barrick)
- 22. …WITH MULTIPLE FACTORS CAUSING THE TRANSITION 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 22 of 35 Movement towards all electric underground mines Focus on greenhouse gas reduction Health concerns surrounding diesel emissions in confined spaces Improved battery technology Volkswagen NOX & SOX emission scandal Movement towards underground mines Focus on social & environmental footprint of surface mining Fewer surface mineral deposits awaiting discovery MOVEMENT TOWARDS ALL RENEWABLE ELECTRIC UNDERGROUND MINING? Improved automation and remote technology Safer underground mines
- 23. GOOD PHD RESEARCH ALSO ENDS WITH THE PHILOSOPHY 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 23 of 35 SO… What does all this mean? Image: Rodin’s ‘Thinker’; Source: Steven Fettig (Flickr)
- 24. THANK YOU 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 24 of 35 Contact details: • John Sykes: john.sykes@research.uwa.edu.au • Allan Trench: allan.trench@uwa.edu.au We’d like to acknowledge the efforts of the Centre for Exploration Targeting scenario planning team whose work contributed to this presentation: • John Sykes, Allan Trench, T. Campbell McCuaig, Jonathan Bell, Jeremie Giraud, Constanza Jara Barra, Ahmad Saleem, Dave Stevenson and Jan Tunjic. We’d also like to acknowledge the following collaborators for their contributions to this research: • Sam Davies, Aaron Dixon, Mark Jessell, Heta Lampinen, Cam McCuaig, Paul Miller, Nico Thebaud & Josh Wright. Image: Shutterstock
- 25. REFERENCES Conference abstract volume and… • Sykes, J.P. and Trench, A. (2016), MiningNews.net [online], 13 June. • Wright, J., Sykes, J.P. and Trench, A. (2016), Metal Pages China Metals Week Conference, Beijing, 6 September. • Sykes, J.P., Trench, A. and Wright, J. (2016), Mines and Money Conference, London, 29 November. • Sykes, J.P., Trench, A., Stevenson, D., Wright, J., Davies, R.S. and Dixon, A. (2017), Prospectors and Developers Association of Canada Conference, Toronto, 7 March. • Sykes, J.P., Trench, A., Wright, J., Davies, R.S. and Dixon, A. (2017), World Renewable Energy Congress, Perth, 6 February. • Sykes, J.P. (2017), Oxford Futures Forum, Oxford, 2 June. • Sykes, J.P. and Trench, A. (2017), AIG Battery and Strategic Metals Conference, Perth, 10 November. 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 25 of 35 Image: Shutterstock
- 26. APPENDICES The impact of the renewable energy transition on battery & strategic metal markets 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 26 of 35 Images: Shutterstock
- 27. ENERGY METALS MARKET GROWTH HAS BEEN VARIED 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 27 of 35 0 100 200 300 400 500 600 700 800 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Growth of metal market groups 2005-14 (US$ billions) Base Metals Precious Metals Minor Renewables Metals Minor Battery Metals Minor Critical Metals Battery Metal 2006-15 Price Change Rare earths 257% Lithium 155% Graphite 126% Manganese 51% Zinc 32% Lead 18% Cobalt -5% Nickel -51% Cadmium -51% Vanadium -47% Source: USGS (2015) For category definitions see appendices Renewables Metal 2005-14 Price Change Silicon 114% Arsenic 83% Germanium 32% Selenium -10% Tellurium -13% Copper -19% Uranium -23% Gallium -28% Indium -36%
- 28. CATEGORY DEFINITIONS FOR SLIDE 34 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 28 of 35 • Precious metals: gold, platinum groups metals & silver • Base metals: aluminium, copper, lead, nickel, tin & zinc • Renewables metals: arsenic, gallium, germanium, indium, rare earths, selenium, silicon, tellurium & uranium • Minor battery metals: cadmium, cobalt, lithium, manganese & vanadium • Other minor critical metals: antimony, barium, beryllium, bismuth, boron, chromium, magnesium, mercury, molybdenum, niobium, rhenium, strontium, tantalum, thorium, titanium & tungsten
- 29. THE MINING SECTOR AND INVESTORS HAVE PILED IN! 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 29 of 35 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Lithium Rare Earths Graphite Lithium (again) Talison Lithium to raise $194m in IPO Business News WA, 24 Nov 2009 RARE EARTHS BECOME HOT COMMODITIES – US IPO UP FIVEFOLD IN 10 MONTHS TheBull.com.au, 06 Jun 2011 Why these graphite miners have soared more than 87% The Motley Fool, 24 Jun 2014 Lithium-ion battery demand sends shares in miners soaring, but analysts predict bubble will burst ABC, 14 Jun 2016 They’ve got the power: Battery stocks charging up, analysts say The Sydney Morning Herald, 2 Jul 2014 Uranium Investors put stock in uranium ABC, 24 May 2006
- 30. EVIDENCE OF PAST TRANSFORMATIVE MARKET GROWTH 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 30 of 35 0 100 200 300 400 500 600 700 800 900 1900 1909 1918 1927 1936 1945 1954 1963 1972 1981 1990 1999 2008 Growth in market size indices of copper and aluminium 1900-2014 (1900 = 1) Cu Index Al Index 0 50 100 150 200 250 300 1900 1909 1918 1927 1936 1945 1954 1963 1972 1981 1990 1999 2008 Growth in market size indices of copper and nickel 1900-2013 (1900 = 1) Cu Index Ni Index 0 5 10 15 20 25 30 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 Growth in market size indices of copper and uranium 1950-2013 (1950 = 1) Cu Index U Index Data: USGS
- 31. INSTIGATED BY DISCOVERY, SUPPLY AND DEMAND 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 31 of 35 Nickel Discoveries in Sudbury & New Caledonia Bulk open pit mining Flotation & smelting advances Demand for armour Ability to handle radiation Uranium Demand for nuclear weapons Demand for nuclear power Bulk mining for very low grade radium Radium-uranium discoveries in the Congo Aluminium Bauxite discoveries in North America Bayer and Hall-Heroult processes Aviation demand Bulk open pit mining Source: Sykes et al., 2016b Images: Shutterstock
- 32. SOME ENERGY METALS MARKETS HAVE MORE POTENTIAL 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 32 of 35 Final market size potential Lack of discovery, supply & demand constraints on the market High potential and few constraints Low potential but few constraints High potential but many constraints Low potential and many constraints Nd Si Se As Te Cu Ga Ge In Pr Dy U Source: Sykes et al., 2016a Co Li La V Cd Mn Ni Zn Pb C
- 33. SOME ENERGY METALS ARE ENVIRO-SOCIALLY CONSTRAINED 29 Nov 2018 A Mining and Exploration Industry Perspective on the Energy Transition Slide 33 of 35 Ability to resolve constraint Type of market constraints Resolvable societal constraints e.g. conflict Unresolvable societal constraints e.g. toxicity Resolvable technical constraints e.g. processing challenges Unresolvable technical constraints e.g. geological scarcity Source: Sykes et al., 2016a Pr U Se Dy Ga Si Nd As Cu Te In Ge Co Li La V Cd Mn Ni Zn Pb C