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Opportunities for Innovation

John ThompsonCanada Mining Innovation Council

Outline

• Canada’s mining industry – contributions and challenges

• Solutions – the CMIC role• CMIC – progress, current approach and new ideas• Big challenges, opportunities, drivers and benefits

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Canada’s mining industry

Current status

•Globally significant producer• Aluminum, diamonds, nickel, potash, sulphur, titanium, uranium +

important coal, copper, gold, molybdenum, platinum, silver, zinc and specialty metals

•Over 320,000 well-paid jobs (wages 59% above average)

•Major employer: northern Canadians and Aboriginal people

•3,200 suppliers and contract companies•2011 contributions: $35.6B to GDP, > $9B to taxes and royalties, $102B in exports (>20% of total)

•Major face of Canada abroad: exploration,operations, financing

•Historical leader in mining-related education, research and technology development – key centres active across the country

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A recent report

Canadian Chamber of Commerce report 2012•Demonstrated leadership•Powers significant parts of the economyRecognized issues

– Skills crisis– Finance and taxation – staying

ahead of competition– Infrastructure – physical,

knowledge-based (geoscience) and policy

– Innovation and new technology– Social license and regulatory

environment

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Other comments

Deloitte “Top Ten” mining trends for 2013•Increasing costs•Lack of quality projects•Skills shortage•Improving the safety culture•Need for implementing new technology

Pierre Lassonde – “RoundUp Conference, 2013”•On quality: “…lowering cut-off grades to chase production…the next cut-off grade is called ‘dirt’…”

•On margins: “…capital and operating costs have just ballooned, and the margin and free cash flow have not increased with gold price…”

•On technology: “...Where are the new processing technologies? … Where are you guys? The companies are not spending enough money on research and development…”

•Comparisons to the oil industry – lamented the mining industry5

Competition

Global competition in the resource sector•Exploration expenditure – relates to probability of discovery•Cost effective operations – in the lower quartiles•Percentage of critical export markets•R&D – innovation: services, products and exports

Major competitors•Australia

− GA, CSIRO, CRCs …− BHPB, Rio Tinto

•EU – Finland, Sweden•Chile

6Source: OECD Statistics: Business Enterprise Expenditure by Industry

Mining and quarrying R&D expenditures

Canadian challenges

Resources and reserves – medium to long term•The Canadian industry needs new quality discoveries

•Exploration is becoming more challenging and more expensive – working in remote areas and at depth

Development – short to long term•Infrastructure challenges – access to the north

•Local challenges – far north, deep deposits

•Cost escalation, delays and competition

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Canadian challenges

Productivity – short to medium term•Canadian operations going deeper, moving more rock and handling more waste/tailings – for less product (lower grade)

Increased costs and cost per unit of production

•Global market with escalating costs (materials, labour, power)

•Operating excellence and best practices delivering continuous improvement – but not addressing underlying issues

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Canadian challenges

Energy, Environment and Safety – short to long term•Require the highest standards of safety and environmental performance – constant improvement

•The industry is energy and water intensive – focus on energy reduction, emission reduction, water management

•Closure and reclamation - sustainability

People – short to medium term•Shortage of critical personnel – exacerbated by retiring boomers•Maintain/increase educational capacity and training

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Innovation challenges

Barriers to innovation•Industry: capital intense, large scale/high volume and risk averse – limited focus on long term problems

•Mining diversity across Canada with dispersed supporting research organizations – natural variability inhibits innovation

•Engagement among industry, academia and government; with other technology sectors; with broader stakeholders

•Reduced cash flows may limit innovation and funding at the time when changes are most needed

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Solutions

CMIC – Pan-Canadian organization to:

•Engage industry to prioritize challenges

•Work with government to facilitate innovation and deliver results across Canada

•Reach out to researchers and SMEs – building from strength and enhancing commercialization

•Focus on developing programs based on solutions and new technologies – funded at an effective level

•Support increased capacity to develop people – HQP

•Communicate the Canadian innovation agenda nationally and internationally

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• Formed in 2007 – collaboration between industry, government and academia

• Endorsed by Energy & Mines Ministers Conference in 2008

• National partners: NRCan, CIM, MAC and PDAC

• 85 members, including most mining companies, most mining-related universities, the federal government, most provinces and one territory, consultants, and research labs

• Good progress in the development of strategic priorities

• First major project (in exploration) submitted for co-funding by industry and NSERC, $12M – to address declining reserves

• Other major proposals being prepared in mining, mineral processing, energy and environmental stewardship

Progress

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Entering the growth phase• Transition to the new Executive Director• Organization: governance, office, staffing

Developing programs• Organized by discipline and major issues• Exploration success – setting the bar

Working with partners – “Collaboration is the key”• Vital roles – experience, talent pools, educational capacity• Centres – varying business/discipline/regional focus • Individual researchers and technology companies (SMEs)• Latest partner: IMII – Saskatchewan: David Grier

CMIC – on track

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Current approach

• Six industry-led initiative committees• Success with Exploration – model for engagement and focus

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Exploration Mining Processing Tailings Reclamation

Energy Efficiency

Highly Qualified Personnel

Environmental Stewardship

Footprints Project•Discovery criteria•Discovery Technology•Data to knowledge

Prioritizing themes•Safety•Deep/northern mining•Fragmentation & comminution•Improved selectivity•Energy reduction; alternative fuels•Minimizing footprints

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Return on Investment

Successful programs – returns in $millions/operation– Contributions to new discoveries - $10s-100s– Improved mine design – reduced CAPEX (10%) - $100s– Increased performance (>5%) - $10s– Energy reduction (~25%) - $100s

Other benefits• Improved safety and reduced environmental impacts• Employment and a new pool of Canadian talent• Well funded R&D/education – universities and colleges• New technology sectors – enhanced reputation• Ongoing national prosperity

Successful model but taking too long• Exploration program: 2 years to develop – “fast”!

Discipline focus• Effective starting position• Potential for silos and overlap – may hinder innovation

Thematic focus• Energy – important but complex• HQP and Environmental stewardship – making progress

Alternatives• Program Directors• More efficient use of volunteers• New approaches

Funding• Reality check

CMIC – acceleration

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Business process

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Exploration

People – Power – Water (social license)

Discovery Evaluation

Inventory

Development

Extraction Processing

Bulk

Intermediate

“Pure”

WasteManagement

ClosureReclamation

DataKnowledgeTechnology

InnovationSpecific &Integrated Solutions

Market

?

Sm

eltin

g –

refin

ing

Focus on the challenges

Resource depletion• Accelerate discovery: target recognition/evaluation &

drilling

Designing and building cost effective operations• Planning for the future (10-50 years)• Capture “geomet” data for design – minimize footprint

Operating to increase productivity and decrease impact• Safety: deep underground and large open pit• Smart mining: selectivity, fragmentation & material

handling• Clean processing: selectivity, energy efficient

comminution, waste rejection, mine to product (value add), in situ mining

Enhancing environmental stewardship• Waste/tailings management• Reduced impacts: water, air, biodiversity, and people 18

HQ

P –

Skill

s –

Sust

aina

bilit

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Innovation drivers

BHAG – define the desired result• The ideal mining operations for 2035 and beyond• The changes in technology and human capital required to

meet these goals• The actions needed to produce these changes

− Engagement, consensus and prioritization− Program definition and funding models

Outcomes – for Canada and the Canadian industry• New high quality resources – long term sustainability• Leading mine designs with supportive communities• Productive operations in the lowest cost quartile – revenue• Global leadership in environmental stewardship• Contributions from multiple sectors, SMEs and innovators

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Opportunity for Canada

Global mining• Required to meet societal needs• Development/production issues will limit long term supply• Recognition of challenges – competitive search for solutions

Canadian mining industry• Major contributor to Canada• Doing OK – successful companies and institutions• Increasing challenges – the squeeze is coming

It takes time to• Change the mining industry• Create and fund new programs• Develop talent and new mining tech clusters and sectors

We need to start now!

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CMIC action items

• Welcome the new Executive Director – Carl Weatherell• Optimize the organization – program directors and

staff• Enhance program development• Focus on the big issues – drive multidisciplinary and

life cycle business approaches• Evaluate all funding models – sustainable business

model– Industry, governments and partners– Foundation and innovative funds– Program delivery methods

• Enhance the effectiveness of our volunteer pool• Tell the story – communication and branding

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CMIC Members in 20123MAbitibi GéophysiqueAdriana ResourcesAdvanced Applied Physics SolutionsAgnico-EagleAltiusAnglo-AmericanArcelor-MittalBarrick Gold CorporationBoart LongyearCambrian CollegeCamecoCanadian Association of Mining Equipment & Services for ExportCanadian Institute of Mining, Metallurgy & PetroleumCanadian Light SourceCanadian Mining Industry Research Organization Centre for Excellence in Mining Innovation

Cliffs Natural ResourcesConsortium de recherche en ressources minéralesDe Beers CanadaDenison Mines Corp.DGI Geoscience Inc.DIVEXÉcole PolytechniqueFranklin Geosciences Ltd.Fugro Airborne Surveys CorpGedexGolden Star ResourcesGolder AssociatesGold FieldsGoldcorpHatchHudBay Minerals Inc.IAMGold CorporationInmet MiningKingston Process MetallurgyKinross Gold CorporationLaboratoire international de géophysique minièreLaurentian UniversityLaval University

LookNorthMcGill UniversityMemorial University of NewfoundlandMining Association of CanadaMira Geoscience Ltd.MirarcoNational Research CouncilNatural Resources CanadaNew Millennium Capital Corp.Oil Sands Tailings ConsortiumOsisko Mining CorporationProspectors & Developers Association of CanadaQueen's University RD Corporation - NLSaskatchewan Research Council Shore GoldSNC-LavalinSRK Consulting (Canada)TeckUniversité du Québec à MontréalUniversité du Québec en Abitibi-TémiscamingueUniversity of AlbertaUniversity of British ColumbiaUniversity of ManitobaUniversity of New BrunswickUniversity of Saskatchewan University of TorontoUniversity of WaterlooUniversity of Western OntarioUniversity of WindsorUniversity of WinnipegUR EnergyValeWestern Potash Corp.Xstrata NickelYukon Cold Climate Innovation Centre

Members include all the provinces and territory shown in green

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