Australian Mining and the Environment — Issue #18
Examining the environmental impact of Australian mining and efforts by companies to mitigate negative consequences of mining operations.
Hello dear reader,
Today we’ll cover how bad Australia is at protecting the environment from adverse effects of mining.
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The background
When you think of Australia, what comes to mind? The Sydney Opera House, kangaroos, and the 38,168,614 deadly species scattered all over the country probably pop into your head.
But there’s probably one more thing.
Mining. Australia’s role in the global mining industry is paramount. Just like a basketball player can survive without knowing how to shoot, the world can survive without Australia’s mineral resources, but barely.
The country produces around a third of the world’s iron ore and a quarter of bauxites. It holds approximately 25% of the global zinc, nickel, and cobalt deposits.
Imagine a world where there are no Chinese ghost cities and where no one knows who Elon Musk is. Well, that’s what would happen without Australia’s iron ore or nickel.
But all joking aside, without Australia, commodity prices would skyrocket.
For Australia itself, these commodities largely drive the economy. According to the Minerals Council of Australia:
In 2021-22, Australia’s exports of minerals, metals, and energy commodities were worth $413 billion and accounted for 69% of total export revenue. Australian minerals have contributed 21% to Australia’s GDP growth in the last ten years and 32% ($41 billion) of all company tax paid in the nation in 2022.
Over the past ten years, capital expenditure in the mining sector has reached $168 billion. Each year, companies spend over $2 billion on minerals exploration alone. By 2040, it is projected that the mining industry will contribute over $170 billion to the country’s GDP and create over 330,000 jobs.
And Australia’s role in the upcoming ‘green’ revolution is going to be crucial. Estimates suggest that by 2030, Australia is poised to become the largest supplier of green commodities. Nickel, zinc, uranium, copper, cobalt are all used in some shape or form to produce ‘green’ products, whether it be batteries or nuclear energy. With nickel and cobalt’s demand potentially exploding by 19 and 21 times respectively by 2050, Australia's influence over the world economy may increase exponentially.
But therein lies the problem.
Yes, there are no emissions in electric cars and solar panels, but we all know that the materials used to produce both are not exactly green.
The problem
We can divide the problems stemming from the mining industry into two buckets: those related to climate and those that impact habitats.
Effect on climate
Australia is among the world’s leaders in per capita CO2 emissions, with only the Middle Eastern countries ahead. Aside from the US and Canada, no other developed country comes even close to Australia.
Of course, someone has to do it. Someone has to produce iron ore so we can build bridges, bauxite so we can produce planes, and nickel so we can manufacture batteries. But that also doesn’t mean that there are no consequences.
I’m no climate expert, and climate change is a complex issue. But Australia experienced a period of 38 consecutive months of above-average temperatures. The 2019-2020 bushfires were absolutely devastating for the natural habitat. I doubt that increased coal mining helped with that.
Effect on habitat
In Western Australia alone, 44.2 million hectares of land are used for mining purposes. That’s 17% of the state’s land. This activity has well-understood consequences:
At regional to landscape scales, direct impacts are associated with waste discharge and pollution (including dust and aerosols), chemical emissions and acids, and sediment transport.
Animals, vegetation, and indigenous people — all lose their habitat:
11 of the 27 major vegetation groups have lost at least 20% of their original extent. Although not the entire loss was brought about by the mining industry, when 17% of the land is used for mining, it's hard to argue it doesn’t have any impact.
Threatened terrestrial species have lost 7.7 million hectares of potential habitat, including for migration purposes.
More than 60% of the country’s mining activity is located near Indigenous communities. In the Northern Territory, that figure is at 80%.
For better or for worse, mining activity is dispersed throughout the country with the exception of central Australia, where there’s basically a whole lot of nothing.
Site rehabilitation exacerbates the habitat issue. Mining sites are not meant to be exploited forever. Some run out of the extracted mineral, while others become unprofitable. If that happens, the company may leave the site, or sometimes go bust.
Site rehabilitation exacerbates the habitat issue. Mining sites are not meant to be exploited forever. Some run out of interest in the mineral, while others become unprofitable. If that happens, the company may leave the site, or sometimes go bust.
In Queensland, one of the world’s leading coal mining sites, companies that go into liquidation leave behind less than 10% of the budget that’s needed for site rehabilitation. At best, this means that the government has to raise money from taxes to pay for said rehabilitation.
According to different sources, there are 50,000 to 80,000 abandoned mines in the country. Regardless, they are only in the process of being mapped, so this number might still rise.
And from what I gather, there’s no national program or legislation to deal with the problem. In the US, for example, since the 1970s there has been a requirement for mine operators to fill them in the event of closure. These voids can disrupt natural habitats and potentially lead to increased pollution during floods.
The reasons
The Australian government has been criticized a lot for its lacklustre measures tackling the climate issue. In 2022, the government introduced breakthrough legislation that should change that. Before, however, the country only claimed its ambitions to reach net-zero by 2050, but with this new set of laws, those ambitions have been shaped into law. Before the legislation, the government planned to reduce emissions by 26-28% by 2030 from 2005 levels, lagging behind other developed countries where this target is twice as high. Now, it aims at a 43% reduction.
Just to illustrate how bad the governance issue was, Australia was last among 61 countries in climate policy rankings, behind Russia, Ukraine, Belarus, and Saudi Arabia. Like, how is that even possible?
There are three reasons why the government has been so inept in doing anything to combat the issue.
1. Personal gain. Let’s start with the most basic one: mining companies donate to political parties. In 2020 alone, fossil fuel companies donated $57 million to the country’s political parties. It's unlikely they did that craving for additional regulations.
2. Economic dependence. As I’ve mentioned at the beginning, commodity exports have a major impact on Australia’s economy. Tax revenue, jobs, investments — all of that is driven by the world’s lust for coal, zinc, and cobalt. We also can’t ignore the indirect impact that the mining industry has on the economy. The mining industry employs 286,000 people but supports 1.1 million jobs. And though we can quibble with the numbers, some indirect impact is apparent.
3. Geopolitical tensions. Many transition issues and Australia’s part in it stem from China’s role in nickel and cobalt processing, among others. With the West (the US) wanting to avoid losing the ‘green’ battle to China, they need Australia to step up. That, by the way, is not that rosy of a scenario for the Australian economy. If the country plays the role intended for it, its dependency on commodity exports would only increase. And this is a low-value-add, prone-to-price-volatility industry.
A comical, albeit sad example of how the government looked after the environment can be found in a report by the Minerals Council of Australia. In the report, it’s proudly stated that in the Upper Hunter Valley, 36% of the disturbed land is under rehabilitation. I might be wrong, but doesn’t that mean that 64% is not under rehabilitation? Not great.
The new government appears to be taking the issue seriously, although some questions still remain. We’ll see what happens. Until then, a lot of onus is placed upon the private sector.
Speaking of which.
The solutions
In the old mining game, companies go about it in a pretty straightforward way. They start by drilling exploratory holes, scooping up buckets of rocks, and then running a bunch of tests to figure out what the ore body looks like. If it looks promising, they raise money, bring in the heavy equipment, and kickstart the mining operation.
But here's the catch: all those decisions about where to drill and how much ore can be extracted are based on analyzing a tiny 0.05% sample of rock. That leads to some serious inefficiencies. For one, a ton of waste material ends up going through the mill, which means less of the good stuff extracted per unit of time, translating to more energy, time, and money down the drain. Then there's the hassle of hauling samples to the lab for testing, eating up precious time. Plus, many mining operations rely heavily on manual labor, driving up costs and energy consumption even further.
What Plotlogic does is, before the mining process even begins, the company scans all the rocks and provides information on those rocks: how to treat them and whether they contain ore. It accomplishes this by sampling 26-27% of the rocks, which is over 500 times more than in traditional operations.
The company utilizes a myriad of smart technologies, such as hyperspectral sensors, LiDARs, and AI, to scan the pits, improve the digging process, and characterize material running through the conveyor.
So how specifically does it help with all the harmful effects of the mining industry? There are a couple of ways:
When rocks are extracted and placed in different piles, there's less need for re-handling. That means trucks, diggers, and other equipment are used less, leading to fuel savings.
The mine is operated in the right sequence, selectively, which again helps to save fuel and use less equipment in general.
Mines can be operated for longer since the feed grade is improved. This may result in fewer mines being abandoned in the future.
Next is Element Zero, which touts a compelling vision on its website:
Element Zero has developed a novel approach to cost-effectively and efficiently convert metal ores such as iron ore, nickel ore, and other future-facing metals to pure metal form with zero carbon emissions.
How is it able to do that? The company has a patented technique known as "electro-reduction," which employs an alkaline solution and electric current to extract pure iron from iron ore waste components such as silica, alumina, and oxygen. Presently, iron ore of lower grades poses challenges for processing using low-carbon energy sources due to its demanding temperature requirements.
Element Zero's electrochemical approach, employing an alkaline solution and electric current, enables processing at lower temperatures. This allows the company to use renewables to extract ore and also consume 30-40% less energy.
Importantly, Element Zero is located in Western Australia, responsible for 55% of the global seaborne iron ore supply. The company has plans to produce 2.7 million tonnes of high-purity iron from 5 million tonnes of iron ore feed.
The last company worth mentioning is Global Road Technology (GRT).
Mines churn out literal tons of dust through blasting, excavating, transporting, and stockpiling processes. And dust isn’t exactly our friend. Firstly, mine dust contains heavy metals. When inhaled, it leads to severe health consequences. Secondly, some dust particles are tiny enough to be carried away by wind, contaminating water bodies and threatening flora and fauna. Thirdly, to tackle what are known as dust events, it would take 20 Olympic-sized swimming pools worth of water within a 2-3 minute span to combat these occurrences.
Just to give you an idea of the water consumption by mines, in 2005, a Rio Tinto mine consumed 3,500 megaliters of water. And a megaliter equals 1,000,000 liters.
Furthermore, water itself isn't a perfect remedy for dust suppression. Coal, silica, and mineral dust are naturally hydrophobic, and spraying them with water can be counterproductive.
This brings us back to GRT. The company’s solutions, like GRT Haul-Loc or GRT:12X, are added to water to enhance its dust suppression capabilities. These solutions are up to 12 times more effective at capturing particles than water alone. They also help reduce water usage for dust suppression by 65% and extend the suppressing effects by 4-5 times longer.
A lot of intricate chemistry goes into developing these agents, so instead of delving into the details, let’s watch a 40-second video to see how they work.
The takeaway
Two completely unrelated takeaways.
Firstly, it's surprising how sluggish and inactive the Australian government is in addressing mining-related environmental issues. Regardless of a country's development or its rule-based appearance, incentives override everything. As the legendary Charlie Munger said, "Show me the incentive and I’ll show you the outcome."
Secondly, amidst all the hype surrounding AI and its role in aiding developers to create yet another app for sales managers to track their leads, there's Plotlogic. By harnessing AI, Plotlogic helps mining companies conduct sampling tests in 2-3 minutes instead of 6 weeks. When compared, it seems like the efforts of the sales app developers are somewhat trivial.