INNOVATIONS IN METALLURGY
WITH A CASE STUDY OF Pb SMELTING IN PERU
Phillip J. Mackey
PERUMIN - 31st Mining Convention
Arequipa, September 16th to 20th, 2013
“Peru is a Mining Country”
We must not forget that metallurgy is as much a part of mining as
digging ore out of the ground. As you will see in the logos here
developed by our predecessors, smelting is part of the mining cycle.
Peru must be a mining country in the true sense of the word. This
presentation will talk about developing a Pb smelting industry in Peru
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Some World Trends
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Population growth, with water and food crisis looming
Electric cars gaining further attention
New African opportunities
Waning of the climate debate, emergence of sensible climate science
Slow recovery in the U.S. but an overall decline of U.S. world influence
Surge in the economies of China and India
Growing importance of South America
Political conflict and unrest
All these trends mean change…..
So change is very much part of life, and there is also change
in the mining/smelting industry ……. as will be discussed....
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What are the ten top issues that mining
companies worldwide will face during
the next 50 years?
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Some Immediate Issues
Affecting Mining Companies
1. Loss of market capitalization, lower share prices (market does not buy
the industry’s “long term growth strategy”)
2. Importance of emerging markets (China, India, etc)
3. One critical key to the future will be the ability of a company to bring on
new metal supply through the right projects ( capital discipline)
4. Relentless demand will be there – the % increases in growth may not be
as high as before
5. Balancing productivity and profitability:
Position on cost curve a primary focus (= cost reduction)
Role of technology – technology & innovation can lower
costs (also requires detailed understanding of data and processes)
In part taken from.“ Review of Global Trends in the Mining Induistry-2013, Price Waterhouse, www.pwc.com
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…..and a prediction……….
1. At present, world mining companies send huge amounts of non-ferrous
metal concentrates to China for smelting…..copper, zinc, lead……….
2. This large scale “mining-custom smelting model” is likely not sustainable
due to issues including….higher labour costs in China, energy costs,
environmental controls, possible difficulties/concerns on shipping some
materials (like Zn, Pb, etc), other environmental aspects....
3. It is considered that over say about the next decade, concentrates will
more and more be treated at the country of origin or another convenient
country (but still, China will remain a key player in the industry)
Peru needs to plan now for future changes. This situation
will be discussed later in this presentation regarding
developing a modern Pb smelting industry in Peru
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Latin America Overview
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Outline of Presentation
• Part I - Innovations in metallurgy
 Important for keeping low on the cost curve
 Types of innovation – examples
 Discussion
• Part II – Case Study of new Pb smelting industry in
Peru
 Considerations involved, requires some innovative thinking
 Plan of action
• Part III- Conclusions
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World Growth in Metals
1800 to 2010
Up until about 1900,
Pb was the most
important non-ferrous
metal
Growth of all metals
will continue
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The white curve plots the trend of Cu concentrate
to custom smelters, 1970 to 2010
The box (yellow curve) shows this trend
from 1700 to beyond 2000
This reveals the trend is cyclical. The same type of trend would also apply to Pb concentrates
CUSTOM SUPPLY, %
100
80
60
40
20
0
1970
1980
Source: P.J. Mackey
1990
YEAR
2000
2010
Change……
(e.g., establish a modern Pb smelting industry in Peru)
• Different results require different actions
• Different actions require different thinking
• Different thinking requires generous listening
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Paul Hersey’s quote*
 To look is one thing
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To see is another
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To understand what we see is still another
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But to ACT on what we understand is really what it’s all
about, isn’t it?
* Paul Hersey (1931-2012) – A leading US authority on training and development in leadership
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What has innovation done for us
All major technical developments in mining and metallurgy
have occurred as a result of successful innovative
developments
This has been carried out by operating companies,
equipment suppliers, research institutes of various types
and universities
There need not be “one best place” to carry out
development….it depends on the strategy and approach of
people involved
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What innovation has done for the energy
requirement to produce copper (by smelting)
Decreasing trend of energy consumption in Cu Smelting over the last
four centuries (as MJ/t Cu - feed to metal)
Since 1900, energy consumption
has dropped by a factor of about
30 times. (flotation, use of large
reverbs, later use of O2)
Energy at present time ~ 12,000
MJ/t Cu, 70-80% is electricity, as
compared to mostly fossil fuel in
the past
Source: Coursol et al. Energy in copper smelting, CIM, 2011
Two Broad Types of Innovation
1. Creative-”Flash of Insight”
 Examples
 Noranda Process – 1963 (copper smelting),
 Top Smelting Lance - (1971) - ISASMELTTM, Ausmelt
 Gravity separator (in mineral processing)
2. Innovative Adaptation (also called “incremental innovation”)
 Examples
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Outokumpu flash smelting -1947 (Cu, Pb and Ni)
SAG milling
Use of oxygen for smelting
Establish a modern Pb smelting industry in Peru
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A Flash of Insight - The Noranda Process
(N.Themelis and P. Spira - 1963)
1. In the 1960s, the mainstay of smelting was the large reverberatory
furnace, with converter slag returned to the furnace for slag
cleaning
2. The soon-to-be-inventors did ground-breaking tests that showed
returned converter slag had an extremely short residence time in
the furnace, yet slag was still effectively cleaned of copper
3. The inventors deducted that since the slag residence time was low
yet effective, why not combine smelting and converting in the same
vessel and still keep the same short residence time for slag
cleaning
4. Thus was born the Noranda Process, the world’s first commercial
plant for continuous smelting and converting
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Innovative Adaptation-Outokumpu
Flash Smelting (Bryk et al. - 1947)
1. The idea “flash smelting” of fine concentrate
in a gas stream had been known and used
since the 1930s
2. Outokumpu in the 1940s, wishing to utilize
the chemical heat of smelting (instead of
using scarce electric power as used pre-war),
chose to adapt the 1930s flash smelting ideas
to their own requirements.
St Jacques furnace, 1930s
3. Thus was born the Outokumpu Flash Smelting Process, the world’s
first commercial plant for smelting to a medium grade of matte and
utilizing the heat for smelting
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The Path to Progress
(e.g., establish a modern Pb smelting industry in Peru)
“ The reasonable person adapts himself to the world.
The unreasonable person tries to adapt himself to the
world.
All progress comes from the unreasonable man.”
George Bernard Shaw
British Writer (1903)
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Global Pb Production
Note: Mine production
represents about 44%
of output, bal. is recycled Pb
Peru provides about
5 % of world mined Pb
but no Pb metal*
Source: Hassall et al, Pb-Zn 2010, CIM/TMS
With Cerro re-starting,
this is a simplification
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Ranking of Pb mine output
by country
Source: USGS, Washington, USA, 2012
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Metal price trends
Highly volatile since 2005
Lead
Metal price trends - highly volatile
since 2005,will likely remain so
Long Term Pb price ~US$2,100/mt
Source: ILZSG, 2012
Pb mine output in China increasing
Source: ILZSG, 2012
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Falling Pb and Zn Ore Grades
Source: ILZSG, 2012
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All lead metal used in Peru is imported metal*
Chances are that 1 car in 20 in Peru has lead in the battery originally
mined in Peru, the concentrate was shipped elsewhere for smelting
and then the metal was re-imported in the battery. A case could be
made for some Pb smelting in a modern plant to be done in Peru.
Such a plant could also treat secondary Pb (batteries)
* With Cerro re-starting, this is a simplification
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The typical Peruvian Pb miner receives
much less than 100% of conc. value
It requires some 50 Litres of fuel oil to
ship 1 tonne of Pb concentrate to China
thereby adding unnecessarily to greenhouse
gas emissions
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Considerations Regarding a
Modern Peruvian Pb Smelting Industry
Economics of any new plant to be in the first quartile of the cost curve
This requires world-class technology for a new plant, start small
Benefits include:
Security of processing (refer to news report last month that Yunnan will
halt Pb smelting – next slide)
Labour costs are on the rise in China, Smelting Charges will likely
increase in future. Storage of concentrates at the ports can be problematic
Shorter payment period
Saves on freight costs (which will likely increase in future), shipping will
increasingly require stringent environmental safeguards seriously affecting
the present “mining-custom smelting model”
Reduces industry greenhouse gases - it requires ~50 Litres fuel oil to ship
1 tonne of Pb concentrate from Peru to China
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China’s Yunnan Tin Will Halt Lead Smelting
After Price Declines
(Bloomberg News - Aug 23, 2013 )
Chinas Yunnan Tin Co said it would idle its lead smelter because lower
prices for the metal have made it unprofitable.
The plant, with 100,000 metric tons of annual capacity, will stop operating
this month, according to a statement from the company, which is based in
Kunming, Yunnan province. Output this year from the smelter will drop to
about 60,000 tons from a previous estimate of 90,000 tons, Board Secretary
Pan Wenhao said today by phone.
Possible steps Peru can take to
establish a world class Pb smelting industry
Create an industry - Government “Pb Task Force”
Essential to have industry support, market driven
Group to carry out benchmarking surveyIndustry trends
Role of China (growth, but… trend of increasing costs, etc,
concerns over shipping Pb, storage at ports, etc)
Technology Review (Top Lance, SKS, other….)
Economics, financial and country issues, possibility of a
Japanese style JV plant in Peru, etc
Consideration given to also processing secondary Pb (batteries)
Consider Peru setting up a Canadian “CANMET-like Government
metallurgical laboratories (to retain Government expertise)
Prepare recommendations
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Leadership and Expertise
Applies to a company as well as a country
“ Obviously, our leadership does not and should
not necessarily have the technical expertise
needed to make some of the decisions we need
to make.
However, we have people who do have the
expertise and top management needs to ask the
right questions of these people to understand
the technical implications of our decisions.”
Roger Ackerman, Corning Chairman and CEO, 1998
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Critical Thinking Components
(in looking at a new “mining-smelting” model)
Generous listening
Comfort with uncertainty
Prioritization
Turning complexity into simpler parts and most
importantly……….
Capacity to enlist others into action
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Modern Pb smelting Technologies
(all these technologies are environmentally clean)
Top Smelting Lance (Australia)
ISASMELTTM
Ausmelt/Outotec
Flash Smelting (Finland)
SKS/Bottom Oxygen Blowing (China)
Kivcet (Russia)
QSL (USA)
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ISASMELTTM Pb Smelting
Source: Xstrata Technology brochure, 2012
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SKS/Bottom Blowing under consideration
at Port Pirie, Australia
Source: Port Pirie web site
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Schematic flow diagram
Pb Smelting
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Some new/re-opened Pb smelters
Source: ILZSG, 2012
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Conclusions
1. Since successful introduction of “innovation” requires
an “atmosphere of change”, openness to new approaches
is essential ( for setting up a modern Pb smelting industry)
2. There is potential for an innovative approach to Pb
smelting in Peru. Issues and considerations as regarding
achieving this were outlined in the presentation
3. A number of modern Pb smelting technologies are now
available for clean, environmentally safe operations
4. A tentative “Plan of action” was developed for discussion
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One last thought
Strategies and technologies only deliver promises.
People and processes deliver results.
Deloitte & Touche Advertising
“Peru is a Mining Country”
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Acknowledgements
I wish to acknowledge the support of Bertrand
De Windt, ICM-Peru Chair and also Perumin in
helping to make this presentation possible
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MUCHAS GRACIAS
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