Trends in MiningTrends in Mining

Lake Superior Lake Superior BinationalBinational ForumForum(Public Input Session, Hibbing (Public Input Session, Hibbing -- 2006)2006)

Mark SeversonMark Severson

What is driving change in the mining What is driving change in the mining industry?industry?Are there international factors that drive this Are there international factors that drive this change?change?What is changing in the mining industry?What is changing in the mining industry?What types of mining are in the region?What types of mining are in the region?Why are mines currently being explored in Why are mines currently being explored in this region?this region?What are the consequences or impacts of What are the consequences or impacts of these trends?these trends?

What is driving changes in the What is driving changes in the Mining Industry?Mining Industry?

Supply & Demand– This Dec ’05 article from the

Canadian Globe & Mail highlights the dwindling amount of copper being supplied to the global economy

– You’ve probably heard of “Peak Oil”, how about “Peak Copper”

What is driving changes in the What is driving changes in the Mining Industry?Mining Industry?

Increase in metal prices

What is driving changes in the What is driving changes in the Mining Industry?Mining Industry?

We are consumersWe are consumersUSA = only USA = only 5%5% of World of World Population but consume Population but consume 33%33%of worldof world’’s total raw materialss total raw materialsCompared to world average, Compared to world average, Americans consume:Americans consume:–– 7x plastic and petroleum 7x plastic and petroleum

productsproducts–– 6x aluminum6x aluminum–– 4x copper4x copper–– 3x iron and steel3x iron and steel–– 1.5x cement1.5x cement

What is driving changes in the What is driving changes in the Mining Industry?Mining Industry?

Demand

What is driving changes in the What is driving changes in the Mining Industry?Mining Industry?

Demand

American vehicle European vehicle

Demand

What is driving changes in theWhat is driving changes in theMining Industry?Mining Industry?

Guess which society demands more Earth’s resources ?

Uses of Palladium (Pd)Uses of Palladium (Pd) AutocatalystsDuctile and resistant to oxidation and high temperature

corrosion, palladium is useful in eliminating harmful emissions from gasoline engines - converts over 90% of hydrocarbons, carbon monoxide and NOx into carbon dioxide, nitrogen and

water vapor.

ElectronicsChemical stability and electrical conductivity make it an alternative to gold for plating in electronic components.

DentistryDental crowns and bridges. Used in a radioactive form for the

treatment of cancer.Jewelry

ChemicalRefining of nitric acid and uses in developing raw materials for

synthetic rubber and nylon.Fuel Cells

Coinage

Oil Refining

PolyesterCritical catalyst in the manufacture of polyester.

PhotographySuperior to conventional silver in tonal quality and archival

longevity.Water Treatment

Studied for use in removing a number of toxic and carcinogenic substances from groundwater.

Hydrogen PurificationEffective material to filter hydrogen from other gasses resulting

in an ultra pure hydrogen gas. Demand

Uses of Platinum (Pt)Uses of Platinum (Pt)

Researchers believe that scarce metals, such as platinum, risk depletion in this century because there is no suitable substitute for use in devices such as catalytic converters and hydrogen fuel cells

platinum and palladium, are increasingly bought by Chinese for consumption in jewelry. In 2004, Chinese jewelers purchased some 31 tons of platinum and 22 tons of palladium, representing almost 12% of world platinum group metal demand.

Demand

What about the rest of the World?What about the rest of the World?

A new "materials" centric world is unfolding for BILLIONS of people who desire a better lifestyle and are demanding improvements in technology, education, globalization, and communicationChina – strides to improve infrastructure– Transportation– Power stations and transmission lines– Telecommunications

Chinese and Asian Chinese and Asian demand for metalsdemand for metals

IndiaIndia’’s plan to rebuild their s plan to rebuild their InfrastructureInfrastructure

$2.24 billion to improve roads$2.24 billion to improve roads$4.95 billion in oil refining capacity$4.95 billion in oil refining capacity$4.2 billion for rural infrastructure$4.2 billion for rural infrastructure

In the implementation of these projects, In the implementation of these projects, India will have to India will have to consume huge quantities consume huge quantities of base metals and industrial metalsof base metals and industrial metalsincluding steel, copper, aluminum, and so including steel, copper, aluminum, and so on. on.

Does the world have enough metals to satisfy Does the world have enough metals to satisfy future consumer demands?future consumer demands?

Even the full extraction of metals from the EarthEven the full extraction of metals from the Earth’’s crust, s crust, and extensive recycling programs, may not meet future and extensive recycling programs, may not meet future demand if all nations begin to use the same services demand if all nations begin to use the same services enjoyed by developed nationsenjoyed by developed nationsAll of the known copper ore, plus all of the copper All of the known copper ore, plus all of the copper currently in use, would be required to bring the world to currently in use, would be required to bring the world to the level of developed nations for power transmission, the level of developed nations for power transmission, construction and other services and products that depend construction and other services and products that depend on copperon copperFor the entire globeFor the entire globe–– 26% of extractable Cu in Earth26% of extractable Cu in Earth’’s crust is now lost in nons crust is now lost in non--recycled recycled

wastewaste–– 19% 19% ““ ““ Zn Zn ““ ““ ““

“Metal Stocks and Sustainability”by

Robert Gordon and Thomas Graedel – Yale University

Marlen Bertram – Organization of European Aluminum Refiners

What is changing in the mining What is changing in the mining industry?industry?

Easy deposits have already been found Easy deposits have already been found ––only the hidden/hardonly the hidden/hard--toto--find ones are leftfind ones are leftHydrometallurgy vs PyrometallurgyHydrometallurgy vs PyrometallurgyThe loss of workers due to the Aids The loss of workers due to the Aids pandemic in Africapandemic in AfricaPolitical unrest is driving companies back to Political unrest is driving companies back to the western worldthe western worldNeed better tools to find ore deposits (3D Need better tools to find ore deposits (3D visualization)visualization)

3D Visualization3D Visualization

Dunka Road/NorthMet deposit

Babbitt/Mesaba deposit

3D rendering by Dean Peterson

Cu-Ni depositsdefined by

lots ofdrill holes

Grand Rapids

Babbitt

Nashwauk

Hibbing Eveleth

Virginia

Aurora

What types of mining are in the What types of mining are in the region? = Taconiteregion? = Taconite

Six Producing Mines:KeetacHibtac

MinntacUtac

ArcelorMittal SteelNorthshore

40 million tons/yr(75% of total US iron ore production)

Have to move 240 million tons of rock/yr

Northshore

ArcelorMittal Steel

UnitedTaconite

MinntacHibtac

KeewatinTaconite

MSI

Iron Nugget

What types of mining are in the What types of mining are in the region?region?

Sand and Gravel Other

Duluth

Rochester

Minneapolis

ST. PAUL

International Falls

Moorhead

OTHER MINE SITES AND IN MINNESOTA

Boundary Waters CanoeArea Wilderness

St. Cloud

DIMENSION STONECLAYSILICA SAND

10

3

Why are mines currently being explored in this region?

The rocks of northern The rocks of northern Minnesota form a portion Minnesota form a portion of the Canadian Shield, of the Canadian Shield, which are the old rocks which are the old rocks that form the core of the that form the core of the continent.continent.

Globally, such rocks host Globally, such rocks host a majority of the worlds a majority of the worlds mineral resourcesmineral resources

Why are mines currently being Why are mines currently being explored in this region?explored in this region?

The rocks are rightThe rocks are rightGood Geophysical Coverage

Why are mines currently being Why are mines currently being explored in this region?explored in this region?

Hydrometallurgical Hydrometallurgical advancesadvances

Smelters are no longer Smelters are no longer neededneeded

Why are mines currently being Why are mines currently being explored in this region?explored in this region?

Minnesota is a mining stateMinnesota is a mining stateThe state actively promotes Minnesota to The state actively promotes Minnesota to the minerals industrythe minerals industryExcellent mineral potentialExcellent mineral potentialExcellent transportation infrastructureExcellent transportation infrastructureHighly skilled workforceHighly skilled workforcePolitical stabilityPolitical stability

What are the consequences or What are the consequences or impacts of these trends?impacts of these trends?

New Mines may be opened (New Mines may be opened (Permitting Permitting ProcessProcess))Existing mines will be expanded (Existing mines will be expanded (Permitting Permitting ProcessProcess))Local towns and cities will need to expand Local towns and cities will need to expand

housing; health care; schools; recreational housing; health care; schools; recreational facilities; and all other servicesfacilities; and all other services

New Areas will be exploredNew Areas will be exploredCuCu--NiNi--PGE; CuPGE; Cu--PbPb--Zn; Ti; Diamonds; GoldZn; Ti; Diamonds; Gold

PermittingPermittingEnvironmental Assessment Worksheet (EAW)

Environmental Impact Statement (EIS)Permit to Mine - DNR

Water Appropriation Permit - DNRPublic Waters Work Permit - DNR

Dam Safety Permit - DNRPart 70 Permit (Air Emissions) - MPCA

NPDES/SDS Wastewater Permits - MPCASection 404 Permit - ACE

AD

EQU

AC

YScoping EAWDraft EIS Final EIS

Part 70 Permit (Title V/Total Facility Emissions)**

Air Emissions ModelingControl Technology Review (MACT/BACT)Impacts to Class I areas

NPDES/SDS Stormwater Permit for Construction Activity

NPDES Industrial Process Wastewater and Treatment Facilities

(large quantity) License

Section 404**

401 certification ??

Subm

it A

pplic

atio

n

Public Waters Work Permit**Dam Safety Permit**

Water Appropriation Permit**Time = usually within 30 days after data are complete

Permit to Mine**

** final decision dependant on adequacy of mandatory EAW / EIS

WCA - Wetland Replacement Plan / DNR (and COE, MPCA)

Waste Characterization Studies

Ground and Surface WaterMonitoring and site Characterization

(minimum 365 Days)

Air Quality Baseline Data Aquisition,Air Toxics Study

Plant, Wildlife, and Endangered-Threatened-Special Concerned Species

Data Gathering

Archeological and Historical Studies

Socio-Economic Studies

Mine Engineering Plans(Designs for Mine-Mill-Stockpiles-Tailings,Water Treatment Plan, Closure/PostclosurePlans, Air Quality/Dust Control Plans, Mining

Numerical Nutrient Budget Analysesof all affected waters

Human Health and Ecological Risk Assessment

DEC

ISIO

N

Environmental Review and Permitting Structure for Metallic, Non-Ferrous Mine in Minnesota

Include all relavent data in EIS processand Permit to Mine Application

One Month

One Year

A mandatory EIS is required for a metallic mine in Minnesota

The MDNR is the Responsible Government Unit (RGU) for the EAW/EIS Process

MPC

AC

OE

MD

NR

MPC

AM

DN

R

Federal EIS ?

Pre-

App

licat

ion

Con

fere

nces

Pilot Plant Data for New Technologies

Fugitives Control Plan

Water Balance Data

Incl

ude

ALL

rele

vant

dat

a in

the

EAW

/EIS

pro

cess

Wetland Replacement Plan

& Reclamation Plans, 1st year operating plan)

Water Treatment Plans

Data Acquisition Period

Hazardous Waste Generator

MD

NR

What are the consequences or What are the consequences or impacts of these trends?impacts of these trends?

New Mines may be opened (Permitting New Mines may be opened (Permitting Process)Process)Existing mines will be expanded (Permitting Existing mines will be expanded (Permitting Process)Process)Local towns and cities will need to expand Local towns and cities will need to expand

housing; health care; schools; recreational housing; health care; schools; recreational facilities; and all other servicesfacilities; and all other services

New Areas will be exploredNew Areas will be exploredCuCu--NiNi--PGE; CuPGE; Cu--PbPb--Zn; Ti; Diamonds; GoldZn; Ti; Diamonds; Gold

CuCu--NiNi--PGEPGE

St. L

ouis

Cou

nty

Lake

Cou

nty

T.59N.

T.60N.

T.61N.

T.62N.

R.12W. R.11W. R.10W.

N

VIRGIN

IA FO

RMATIO

NBIWABIK IRON FORMATION

Spruce Road

So. Filson Creek

Dunk

a Pit

Serpentine

Sec 17

Longear

LongnoseWyman Creek

Cu-Ni DEPOSIT

OXIDE-BEARING ULTRAMAFIC

Sec

SOUTH

KAW

ISHIW

I INTR

USION

PARTRIDGE RIV

ER INTRUSIO

N

Fault

INTRUSION (OUI)

T.58N.

22

Duluth ComplexMineral Resources

Grano

107 million metric tons0.69% Cu, 0.22% Ni(@ 0.5% Cu cutoff)

0.44 ppm Pd+Pt+Au0.76% Cu, 0.28% Ni

62 million metric tonsMaturi

(@ 0.7% Cu cutoff)

(@ $25.35 NSR cutoff)1.65 ppm Pd+Pt+Au0.67% Cu, 0.21% Ni

51 million metric tonsBirch Lake

Babbitt / Mesaba851 million tons

0.46% Cu, 0.12% Ni(@ 0.?% Cu cutoff)

NorthMet (1991)808 million metric tons0.43% Cu, 0.11% Ni0.61 ppm Pd+Pt+Au

(@ ?% cutoff)

Dunka Road /

R.14W.

Wetlegs36 million tons

0.57% Cu equiv.(@ 0.4 Cu equiv. cutoff)

(@ 0.2% Cu cutoff)0.41 ppm Pd+Pt+Au0.31% Cu, 0.09% Ni

215 million tonnesNorthMet (2005)Dunka Road /

Large but Low-grade Copper-Nickel-PGE deposits (Low sulfide)

Dunka Road/NorthMetPolyMet

PolyMetPolyMet’’s Plans Plan

One way of getting the Cu-Ni-Pt-Pd out

Instead of a Smelter!

Iron Ore Comparisons on Iron Ore Comparisons on WorldWorld--wide basiswide basis

(What is driving the current (What is driving the current trends?)trends?)

PARTIAL DATA of USGS “IRON ORE” WORLDWIDE OCCURRENCES -- No Shortage of Global Resource.

Brazil and Australia account for >67% of the world commerce in iron ore

World Steel Consumption World Steel Consumption Continues to GrowContinues to Grow

As the population increases and the developing As the population increases and the developing countries countries improve their economic situationsimprove their economic situations, steel , steel usage growsusage growsChinaChina and other Asian countries have been key and other Asian countries have been key factors in overall steel consumption factors in overall steel consumption –– efforts to efforts to improve their infrastructureimprove their infrastructureIndiaIndia is making strides to improve their is making strides to improve their infrastructureinfrastructureSteel usage is also increasing in the countries of Steel usage is also increasing in the countries of the the former Soviet Unionformer Soviet UnionIndonesia?Indonesia?

Chinese iron ore is in the interior and of poor Chinese iron ore is in the interior and of poor gradegradeChinese are partnering with ore suppliers (United Chinese are partnering with ore suppliers (United Taconite Taconite –– LaiwanLaiwan))Chinese have large infrastructure building needs Chinese have large infrastructure building needs –– Highway constructionHighway construction–– Airport constructionAirport construction–– Manufacturing plantsManufacturing plants–– City City moderizationmoderization –– especially in preparation for especially in preparation for

showcasing China for 2008 Olympicsshowcasing China for 2008 Olympics

China remains key driver in China remains key driver in iron tradeiron trade

Steel Production in Key Countries

0

50,000

100,000

150,000

200,000

250,000

300,000

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Year

1000

tonn

es

United States European Union JapanChina India South KoreaFormer Soviet Union

Source: IISI World Steel Statistics

Closer to Home Closer to Home --Aggregate DemandAggregate Demand

Future shortage could be key Future shortage could be key opportunityopportunity

Impeding shortage of aggregateImpeding shortage of aggregate–– Two Aggregate Resources Task Force (1998, Two Aggregate Resources Task Force (1998,

2000) reports forecast impending shortage of 2000) reports forecast impending shortage of aggregate in the 7 County Metro areaaggregate in the 7 County Metro area

DOT officials in DOT officials in neighboring states neighboring states already cite a shortagealready cite a shortage of high quality of high quality aggregateaggregate

Coarse Taconite Tailing = Coarse Taconite Tailing = Good Aggregate MaterialGood Aggregate MaterialMaterial is equivalent to fine aggregate (Material is equivalent to fine aggregate (--3/83/8””))Roughly 1 ton of material produced for Roughly 1 ton of material produced for every ton of finished product shippedevery ton of finished product shipped–– 2002 processing produced roughly 33 2002 processing produced roughly 33

million tons of this productmillion tons of this product

Local (Mn/DOT) UsageLocal (Mn/DOT) Usage20042004 > 1,500,000 tons Used> 1,500,000 tons Used for for

Highway 53/169 North road Highway 53/169 North road construction; primarily for granular construction; primarily for granular borrow and 15% of pavement mix.borrow and 15% of pavement mix.

ResultsResultsVery consistent productVery consistent productClean with engineered fines levelClean with engineered fines levelDurable Durable –– meets hardness specificationsmeets hardness specificationsVery low absorption (+/Very low absorption (+/--1%)1%)Equivalent of manufactured sand (100% Equivalent of manufactured sand (100% fractured faces)fractured faces)High friction factor High friction factor –– superior skid resistancesuperior skid resistance

Titanium potential Titanium potential -- MinnesotaMinnesota

What is Titanium used What is Titanium used for?for?

6 miles

St. L

ouis

Cou

nty

Lake

Cou

nty

T.59N.

T.60N.

T.61N.

T.62N.

R.14W.

R.12W. R.11W. R.10W.

N

0 50 KM

ELY

DULUTH

DULUTH COMPL

EX

LAKE SUPERIOR

CANADA

Mesabi Iron Range Sec 17LongearLongnose

Skibo

Water Hen

Edge of Duluth Complex

Cu-Ni DEPOSIT

Oxide-bearing Ultramafic

Sec 22

R.13W.

T.58N.

T.57N.

T.56N.

T.55N.

T.54N.

T.53N.

R 15W

Boulder Creek

Boulder Lake N.Boulder Lake S.

10 kilometers

Western Edge of theDuluth Complex

Intrusion (OUI)

Sec 34

NorthMet Cu-Ni DepositPolyMetProcessingFacilities

Proposed

NorthshoreTaconite

Mine

WymanCreek

TiOTiO22 Pigment UsesPigment Uses

Paper16%

Plastics27%

Other3%

Paints & coatings

54%

Other UsesOther Uses–– CeramicsCeramics–– Fabrics and Fabrics and

textilestextiles–– Floor coveringsFloor coverings–– Printing inkPrinting ink–– Roofing granulesRoofing granules–– RubberRubber–– Food additivesFood additives

Titanium MetalTitanium Metal——UsesUses

Other35%

Aerospace65%

Other

• Consumer Goods

(golf clubs, watches, jewelry)

• Chemical Process Industry

(pressure vessels, heat exchangers, pipe)

• Oil and Gas

(production risers)

• Medical

(hips, screws, plates, dental implants)

• Military

(M1A1, Bradley, M777) Aerospace

(blades, discs, skins, wheels, spacer rings, landing gear, rocket motor cases)

SummarySummary

Internal and international Internal and international demanddemand is the is the driving mechanism for expanding supply driving mechanism for expanding supply basebaseMinnesotaMinnesota’’s iron mining industry will s iron mining industry will continue (will supply aggregate?)continue (will supply aggregate?)Minnesota has the right rocks for other types Minnesota has the right rocks for other types of mining (Cu, Ni, PGE, Ti)of mining (Cu, Ni, PGE, Ti)The state actively promotes Minnesota to The state actively promotes Minnesota to the minerals industrythe minerals industry

Norilsk, Siberia, RussiaNorilsk, Siberia, Russia(the other way of getting the (the other way of getting the

CuCu--NiNi--PtPt--Pd out)Pd out)Largest producer of Pd in Largest producer of Pd in the world (the world (40%40% of of worldwide market = worldwide market = 2,500,000 oz Pd)2,500,000 oz Pd)

BUTBUTLargest polluter in the Largest polluter in the world (6X emissions from world (6X emissions from ENTIRE US nonferrous ENTIRE US nonferrous metal industry)metal industry)

2,800,000 ton/yr SO285,000,000 ton/yr waste water

Yellow snow from sulfur for30 miles around smelters

The Irony of it all!The Irony of it all!

Pyrometallurgy vs HydrometallurgyPyrometallurgy vs Hydrometallurgy(smelter vs contained system)(smelter vs contained system)

“Clean air in the urban centers of North America is exchanged for a poisoned Siberian landscape [and air]”

We have to think GLOBALLY!

Thank youThank you

Iron Ore Iron Ore ComparisonsComparisonsCompared to world players Compared to world players –– we we are smallare smallSome iron mines have similar Some iron mines have similar stripping ratios stripping ratios –– but Minnesota but Minnesota mines move more rockmines move more rockOur mill grades are generally Our mill grades are generally much lower than that of much lower than that of competitive mines on worldcompetitive mines on world--wide wide basisbasisThe The costcost to produce our to produce our products is products is highehigher than many r than many other areas due to ore grade and other areas due to ore grade and material movement requirementsmaterial movement requirements

PRODUCT % Fe VS ALL MATERIAL RATIO

50%

52%

54%

56%

58%

60%

62%

64%

66%

68%

70%

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

All Material Ratio (total tons moved / tons product) [higher numbers are worse]

Prod

uct F

e %

AustraliaBrazilCanadaChileIndiaSouth AfricaSwedenUSA

PRODUCT GRADE VS MILL GRADE (% Fe)

50%

52%

54%

56%

58%

60%

62%

64%

66%

68%

70%

0% 10% 20% 30% 40% 50% 60% 70%

Mill Grade % Fe

Prod

uct G

rade

% F

e AustraliaBrazilCanadaChileIndiaSouth AfricaSwedenUSA