Engineering & Consultancies
From conception to closure: Solutions for the full mining lifecycle
Chile’s evolving regulatory framework and increasingly stringent environmental regulations mean that the engineering firms and consultancies active in the mining space have their hands full. The question of whether new legislation will stunt project development remains to be seen, but with no radical overhaul expected, the outlook in this segment of the industry looks robust for the years ahead.
One of the themes that have been gaining traction in recent years is mine closure; a perpetual challenge for mining companies for centuries, but one that is subject to ever-more scrutiny. Although the issue of mine closure is not new, the industry has traditionally struggled with it due to changing legislative scenarios, commercial pressures, ESG-related challenges and poorly planned costs.
“Regulations require you have a closure plan before you even move the first stone,” observed Esteban Hormazabal, managing director of SRK Consulting Chile, who referenced international standards from ICMM, APEC, ECLAC and the World Bank as guidelines for good practice.
“Mine closure is a matter that must be approached from a multidisciplinary and integrated perspective; from the design, construction and operation of a mining project to its implementation,” he said, explaining that integrated engineering is required because both physical and chemical stability must be reviewed, including concepts of geotechnics, hydrogeology and geochemistry.
“The industry has struggled with the issue of mine closure for a variety of reasons – changing legislative scenarios, commercial pressures of increased or poorly planned costs, and the clear environmental and community pressures. The necessity to rehabilitate properly is not only a statutory duty but impacts on the future of the business – the social license to operate.”
Mark Wainwright, Managing Director – Mining, Turner & Townsend
“Regulation must be done during prefeasibility studies. From there you should already have at least a draft of a closure plan,” added Hormazabal, citing SRK’s work at Gold Fields’ Salares Norte project in Chile as an example of the company’s work in this field from the prefeasibility stage to the detailed engineering.
In 2020, Turner & Townsend collaborated on the ‘Planning for successful rehabilitation’ report, underscoring the case for early planning for closures and financing such closures. “It also highlighted some of the challenges in closure and confirmed the need to find alternative options for a rehabilitated mine,” revealed Mark Wainwright, Turner & Townsend’s managing director – mining, giving the examples of site greening, renewable power sources and job creation schemes related to eco-tourism as options.
“We think the study helped deepen industry awareness of the environmental impact and socio-economic benefits of sound mine closures. With the growing calls for a decarbonized mining industry, this is one of the levers that can be used to enhance the reputation of the sector,” reflected Wainwright, adding that the necessity to rehabilitate properly is not only a statutory duty but impacts on the future of the business – ‘the social license to operate’ – as a part of corporate ESG responsibilities which shareholders are watching carefully.
One of the trends in mining engineering in recent years has been the preference of clients to work with fewer contractors, as the industry leans towards a model whereby one company, such as an EPCM, manages various responsibilities.
Global mining engineering firm Ausenco has worked on many of the emblematic development projects in Chile in recent years, including BHP's Spence Growth Option (SGO), Teck’s QB2 and Antofagasta’s INCO project. Claudio Lesch, Ausenco’s president for South America, highlighted the lumpsum, turnkey EPC contract that Ausenco was awarded for the Mantoverde project as a particular example of the type of contract model companies are now seeking. “This project is not just a milestone for us, but also for the industry, as it is a different type of contract modality in Chile,” he commented, adding that approximately 90% of the engineering is completed (as of May 2022), all the equipment and construction contracts have been secured, and construction is progressing.
“The main benefit of a multidisciplinary engineering approach is that a holistic view and clear project management comes from being involved in the design stages with the client, where both parties have a vested interest because they will be involved throughout the life of the project.”
Dominique Viera, Vice President of Operations, Metaproject
Iván Rayo, general manager of Chilean engineering firm JRI, also spoke of the benefits of being involved in mining projects throughout their lifecycle, and on that note, was pleased to report that in 2021, unlike the previous year, there was more value engineering work in Chile such as conceptual studies, optimization projects and concentrate process debottlenecks. “A large part of these value engineering projects are transformed into long-term investment projects,” explained Rayo, suggesting that better metals prices are stimulating this demand.
JRI celebrates its 40th anniversary in 2022, and has been involved in one of the most emblematic long-term projects in Chilean mining – Codelco’s Rajo Inca development, which will extend mine life at the State-run company’s Salvador division until 2065. JRI has developed all of the engineering studies for the Rajo Inca project since 2016, starting with the value engineering and conceptual studies with an integrated scope (mine, plants, tailing dumps and infrastructure), then the feasibility study, and currently the detailed engineering. “We support the contracts of the operational teams and, as the only engineering company that has interacted with Codelco in this project, our participation is fundamental,” stated Rayo, noting that JRI has developed the project with modern work methodologies such as Lean Full Design, BIM 4D and Advance Work Package (AWP).
Another Chilean engineering firm to celebrate a landmark anniversary is Metaproject, which turns 30 in 2022, and also works with Codelco – taking charge of the tender and asset contract management of all the company’s divisions. Dominique Viera, Metaproject’s vice president of operations, discussed some of the common mistakes made during the lifecycle of a project from an engineering standpoint: “Nowadays projects get delayed because there is a siloed chain from the engineering conception to the different stages throughout a project,” she said, explaining that there can be discrepancies because these stages are often tendered between more than one engineering company, and an excessive part of the budget is given to the construction companies in very early stages, resulting in the following tenders being given to the cheapest bidder. “However, if you buy cheap, you often end up paying twice. In the end, the client has to do contractual modifications resulting in a more expensive and longer project.”
Viera went on to elaborate on the main benefit of the multidisciplinary engineering approach that Metaproject adopts: “A holistic view and clear project management comes from being involved in the design stages with the client, where both parties have a vested interest because they will be involved throughout the life of the project.”
Image courtesy of Siemens