The Economics of Mineral Benefication

Prabhash Gokarn

Head Projects

Opening Presentation

Workshop on Mineral Beneficiation,

Sukinda 31-Mar-2014

Prabhash Gokarn, Head Projects, FAM

Presentation Flow 1. Preamble 3

2. Introduction 4

3. How Markets Value Minerals 5

4. Beneficiation - a game changer ?

a. Chrome – a UG2 Concentrate Story 6

b. Manganese – desperate need for technology 7

c. Iron Ore 8

d. Coal 9

5. Conclusions 10 2


Preamble A famous bet :

Julian L. Simon, the economist, and Paul Ehrlich, the environmentalist entered in a widely followed scientific wager in 1980, betting on a mutually agreed-upon measure of resource scarcity over the decade leading up to 1990.

Simon and Ehrlich chose five commodity metals. Copper, chromium, nickel, tin, & tungsten were chosen and Simon bet that their prices would decrease, while Ehrlich bet they would increase.

Between 1980 and 1990, the world's population grew by more than 800 million, the largest increase in one decade in all of history.

Ehrlich lost the bet, as all five commodities that were bet on declined in price from 1980 through 1990, the wager period.

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Simon Ehrilch


Introduction

Between 1980 & 1990 the price of three of the five metals went down

in nominal terms and all five of the metals fell in price in inflation-

adjusted terms.

Main reasons -

a) better methods of beneficiation & extraction increased the

resource base.

b) more effective usage

Case in point – Copper :

Better hydrometallurgical concentration, solvent extraction

techniques – threshold limit reduces to 0.6%

Electronic components use less copper than electrical equivalents.

Improvement in Mineral Beneficiation has widespread impact

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How Markets Value Minerals Demand & Supply should determine the price of minerals,

however, other factors seem more important :

Monopoly/Oligopoly :

○ Historic examples : Tin (Malaysia and Thailand), Copper(Chile), Silver(Argentina)

○ In the cases stated above, no new major ore deposits discovered, however, due to improvement in beneficiation and extraction technologies, lower grade mineral deposits have become economically viable.

Rare Earths & China, today…. Challenge to us mineral engineers to make low grade RE deposits in India viable?

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Better Concentration Techniques Changes the Value

Markets gives to Minerals, removes Oligopolies


Beneficiation – a game changer ? Chrome Ore :

UG2 – by-product of processing UG2 seam ores to

extract platinum with very low Cr:Fe ratio of 1.3:1

Not used by anyone except China, which has developed

processes to make Chrome Alloys from UG2

Concentrate.

Result :

China has become the leading producer (& consumer) of

ferrochrome in the world drop in Cr prices that is here

to stay.

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Beneficiation has changed the game in Chrome Alloys


Manganese Ore - desperate need for technology

India has large reserves of Manganese minerals:

○ Low grade : Mn content < 20% ~600-700 mn MT

○ High & Med grade : ~350-430 mn MT

but most are of low grade

Additionally, ores in Orissa region, including in Tata Steel’s

Joda Mn Mines, being ferruginous, have low Mn/Fe ratio

Many beneficiation processes have been discussed or

tested, challenge to us Mineral engineers is to urgently :

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Beneficiation – a game changer ?

Commercially develop Beneficiation Processes

for low grade and low Mn/Fe Manganese Ores


Iron Ore

All steel makers the world over, Tata Steel included,

have concentrated on developing beneficiation

technologies for :

Beneficiating low grade Fe ores – ores upto 40% Fe

being used in China compared to +63% a few years

ago

Reduction of alumina content of iron ore and use of

slimes


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As a result of success of beneficiation, iron ore fines are

now valued higher than lumps – a game changer


Coal

Coal beneficiation by washing almost universally adopted

for upgrading high ash coals

Improved beneficiation techniques coupled with advances

in coke making and increasing use of non coking coals

and alternate reducants has helped the world feed its

insatiable demand for reductants.


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Success of coal beneficiation has helped mitigate the

shortage of good quality coal - a game changer


Conclusions Rising population and aspirations have led to increased

demand for ores from a limited mineral/coal base.

Successful beneficiation techniques have been game

changers across geographies and minerals.

As a result, despite limited resources, by and large,

production has kept pace with human aspirations.

We are but half way – limitless aspirations and limited

resources provide continuing challenges to us mineral

engineers in the field of beneficiation……

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Prabhash Gokarn, Head Projects, FAM Prabhash Gokarn, Head Projects, FAM

looking forward to you all to….

…throw more light on the subject

Thank You

[email protected] ?

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Back Up

Some Details


Back Up – some details…

1. More about the Simon – Ehrlich Bet 14

2. Chrome – a UG2 Concentrate Story 15

3. Manganese – desperate need for technology 22

4. Iron Ore & Coal 26

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Between 1980 and 1990, the world's population grew by more than 800 million, the largest increase in one decade in all of history.

But by September 1990, the price of each of Ehrlich's selected metals had fallen.

Chromium, which had sold for $3.90 a pound in 1980, was down to $3.70 in 1990. Tin, which was $8.72 a pound in 1980, was down to $3.88 a decade later.

Julian Simon won because the price of three of the five metals went down in nominal terms and all five of the metals fell in price in inflation-adjusted terms, with both tin and tungsten falling by more than half.

Ehrlich insisted that commodities would become more expensive: they were running out in the face of the population explosion.

More about the Simon – Ehrlich Bet

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Simon asserted : more people meant more brains meant better methods of extraction and lower usage per unit of production. Thus prices should fall. Sure, there are periods where the alarmists would win, but the general move over time favours the cornucopians.

Simon said : technology would advance and new stocks of materials would be exploitable. This would happen faster than demand would leading to falls in prices.

In Copper, SX-EW (solvent extraction & electro-winning) opened up the entire planet to another wave of copper exploration. Before 1980, we made copper from copper sulfides. If we found a mountain of copper oxide then that’s what it stayed at, copper oxide. Copper oxide wasn’t copper ore, it was simply dirt, for we didn’t know how to extract the copper from it.


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SX-EW changed that: it’s a process to extract copper from copper oxide. Thus all those mountains of copper oxide out there (and there are many, quite literally, mountains of copper oxide) became copper ore instead of dirt. Thus the price declined.

We do discover new mineral resources, we do develop new beneficiation & extraction technologies, which make larger amounts of mineral resources available to us.

There are other events that happen, certainly, which push prices up for periods of time.

But the long term trend for metals at least is downwards.


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Counter argument of the Simon Ehrlich Bet

Prices of all five metals (chromium, copper, nickel, tin, and tungsten) had gone up between 1950 and 1975.

But the prices of three of the five went down in the 1980s, in part because a recession in the first half of that decade slowed the growth of demand for industrial metals worldwide.

Ironically, a prominent reason for the slower industrial growth was the doubling of world oil prices in 1979.

Indeed, the price of oil probably was a factor in the prices of metals in both years, being unprecedentedly high in 1980 and unprecedentedly low in 1990

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Chrome – a UG2 Concentrate Story

UG2 is attractive to Chinese processors as its can only be

used in small open furnaces (furnaces in SA & Khaz are

closed furnaces).

Also, due to higher dust generation on using fine UG2,

producers find it difficult to comply with pollution norms

using UG2 – not a problem for Chinese manufacturers (for

obvious reasons).

This has caused a dramatic shift in ferrochrome production

moving away from South Africa to China.

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UG-2 Chromite Production Trends

Steep increase in UG2 production in recent years has

already made it the largest source of Chrome.

Source : ICDA Statistical Report : Chromium in 2013, Jan 2014

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….allowing China to become the top

ferrochrome producer….

China’s increasing Cr Ore & reducing FeCr

imports. Source ICDA, Oman Dec 2013

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… and the top chrome ore importer….

Source ICDA, Oman Dec 2013 23


Causing a Decline in Ferrochrome Prices adjusted for inflation..

Source Cramer, Basson, Nelson, Impact of Pt production from UG2 ore on chrome,

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Manganese Ore Beneficiation -

Technologies considered, inconclusively Beneficiation of Low Grade Mn Ores :

RADOS – Radiometric Mn Ore Sorting

Magnetic Separation of ore & gangue

Wet gravity beneficiation

Improving the Mn/Fe ratio

Magnetic Separation of Fe post reduction roasting

Through Blast Furnace reduction : MnO slag

Sponge Iron route - partial reduction of Fe followed by

Magnetic Separation

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Engineering

The Economics of Mineral Benefication