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Energy Efficiency Opportunities
KML Expansion Project
August 2013
Table of Contents
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About Karara
Iron Ore Basics
Base Plant – Mine and Concentrator
KML’s Magnetite Process
Requirements for a Viable Project
Operating Cost
The Approach
The Process and Outcomes
Overall Outcome
In Closing
About Karara
• Located in the Mid-West Region of Western Australia, 215 km eastsoutheast of Geraldton and 320km north-northeast of Perth
• Australia’s second magnetite project
• World class project with ~2.5bt resource and 30+ year mine life
• A Joint Venture and Partnership between Gindalbie and Ansteel
Iron Ore Basics
• Not all iron ore projects are the same
– Hematite
– Magnetite
• Hematite
– Reddish – black mineral
– Chemical formula
• Fe2O3
– Key property is that the mineral is Non
Magnetic
– Found in large high grade deposits
• 55-62% Fe
• Low impurities – but these vary depending on the ore body
– No two ore bodies are the same
– Often referred to as DSO – Direct Shipping Ore
• Mining, crushing and screening required to produce lump and
fines products
Iron Ore Basics
• Magnetite
– Black grey mineral
– Chemical Formula
• Fe3O4
– Occurs with other minerals, predominantly
silica bearing minerals
• Ore grades vary 10-30% Fe
• KML ore averages 36.5% Fe
• Not commercially saleable in the raw
state
– Key physical property is that the mineral is Magnetic
– Intensive processing is required to produce a commercially saleable
product
• Liberation size 25-35 microns
• High energy input required to grind the ore
– Magnetite concentrates typically
• >64% Fe
• KML’s magnetite premium products
– 68% Fe, 4.75% SiO2 with low other impurities
Base Plant - Mine and Concentrator
– Mining at a rate of 30mtpa, one of WA’s single biggest mining
operations
– Commissioning completed and ramp-up well advanced
– Ability to produce 8mtpa premium magnetite concentrate
Base Plant - Mine and Concentrator
– Flythrough
The Magnetite Process
• High energy intensive process
• KML’s magnetite process involves the following unit processes:
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Primary crushing
Secondary crushing and screening
High Pressure Grinding (HPGR) and screening
Rougher Magnetic separation
Primary Grinding
Intermediate Magnetic separation
Fine Grinding
Reverse flotation, regrind
Concentrate thickening and filtration
Tails thickening, filtration and stacking
Requirements for a Viable Magnetite
Project
• Ore body
– Large ore body - long life of mine to support the capital expenditure
– High magnetite grade with low impurities
• 36% Fe
• SiO2, AlO3
– High metallurgical recovery
• Capable of generating a product that is commercially saleable
– 68% Fe, 4.75% SiO2 and low impurities
– Quality will dictate if the business is a price maker or taker
• Access to infrastructure
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Power
Water
Rail
Port
Requirements for a Viable Magnetite
Project
• Financial
– Operating Cost < Product Revenue
• Payback capital (including interest) in an acceptable time
• Return value to shareholders
• Price volatility
The Approach
• KML’s Approach
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Establish the overall expansion strategy for the company
Develop a design concept
Develop a design approach
Establish the Owner’s team
• Expansion Strategy
– Board mandate was to expand magnetite production to >30Mtpa by
approximately 2020
• Design Concept
– Design a plant that is readily expandable in modules whilst causing
minimal interruption to the operating plant during construction,
commissioning and operation
The Approach
• Design Approach
– Build on the “groups” collective design, construction and
commissioning experience
– Learn from past mistakes
– Undertake all activities during the Feasibility Study to ensure a
seamless transition into FEED and detailed engineering design (DED)
• No shortcuts, dot the “i”’s and cross the “t” approach
– Leverage of the current engineering design as far as practical
• Specifications, detailed drawings, 3D model, calculations
– Consider constructability during design
• Be able to construct without impacting on the operating plant
– Consider value engineering opportunities to reduce capital cost,
improve operability and reduce unit operating cost.
The Approach
The Approach
• KML’s Owners Team
– Establish a core multidiscipline engineering team to manage the
execution of the works
– Headed by the Project Director, the core team positions are
• Legal and Commercial
• Project Director
• Approvals Document control
• Project Manager
• Scheduling
• Principal Process Engineer
• Cost Control
• Principal Mechanical Engineer
• Manager Optimisation
• Principal Civil / Structural Engineer
– The competency of the Owner’s team is key to delivering the project
on-budget, on-schedule and to the required quality. As a project moves
from the study phase into execution, the Owner’s team expands
accordingly to deliver the project.
The Process
• Staged program centered around the evaluation of the Base Plant
and equipment in order to identify value adding opportunities to
reduce capital and operating costs
• Program of work
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Base Plant expandability review
Concentrator process design review
Mining – In pit crushing and conveying study
Port and Rail capacity modeling
Metallurgical testwork and simulations
Value Engineering
Definitive Feasibility Study
The Process
• Base Plant Expandability Review
– High level expandability review of the Base Plant to ascertain if the
plant can be upgraded or expanded to achieve the overall expansion
strategy
– Outcomes
• A tightly constrained plant layout. Expansion of the mine
concentrator is physically constrained by;
– Run of Mine pad to the East
– Rail to the West
– Tailings disposal to the South
– Incoming High Voltage power to the North
The Process
Incoming Power Line
LOCATION
Rail Loop
ROM Pad
Tails Stacking
Back
The Process
– Outcomes
• Bottlenecks identified in the process flowsheet. Bottlenecks are
typically major capital equipment that cannot be easily upgraded,
replaced by larger equipment, or additional equipment installed
such as;
– High pressure grinding rolls
– Ball mills
– Concentrate and tailings thickening
The Process
• Concentrator Process Design Review
– Detailed review of the Basis of Design to verify and establish a suitable
BOD for the expansion
– The review involved a review of available data and additional
metallurgical testwork
– Outcome(s)
• Modified process Basis of Design
• Simplified process flowsheet
The Process
• In Pit Crushing and Conveying (IPCC)
– External consultant engaged to assess IPCC compared to
conventional Haul To Surface (HTS) operation
• Previous study completed by Coffey Mining in 2008 reported a significant
operatig cost saving for IPCC compared to HTS
• Cost savings increase with both rate of production and also in the event
that fuel, tyres and labour costs increase at a rate in excess of other
operational costs
– IPCC options considered
– Start 2016 stage 2 Expansion
– Start 2018 stage 3 Expansion
The Process
• Port and Rail Capacity Modeling
– External consultancy engaged to model the rail and port system to
estimate the true capacity at the port
• 16Mtpa capacity based on 60kt shipments at 100hrs average
vessel TAT.
– KML’s modeling shows 18-20 Mtpa using combination of larger vessels
- Panamax/Kamsarmax.
The Process
• Value Engineering
– External engineering consultant engaged to:
• Rationalise a plant layout that is expandable with minimal
interruption to the operating plant
• Identify, assess and rationalise equipment selection by considering
upsize opportunities that were not available during the original
design
• Reduce capital cost
• Reduce operating cost
• Improve performance and operability
The Process
– Outcomes
• Improved concentrator layout
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Modular and expandable design to meet expansion schedule
Engineering easily duplicated at minimal cost
Improved maintainability
Within existing KML tenements
Fully incorporated magnetite and hematite stockpile, reclaim and train
load out facility
• Process flowsheet retained with equipment alternatives and upsize opportunities considered
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Reduced flowsheet complexity
Improved operability and maintainability
Lower operating cost
Lower capital cost
The Process
• HPGR’s confirmed as the lowest power consumer compared to
other commercially available equipment such as;
– SAG Mills
– AG mills
• Increasing the Ball Mill transfer size from the original design value
of 55 µm to 120 µm and allowing for additional power in the Tower
Mills reduces the overall installed power requirement by
approximately 8.6 MW
The Process
• Definitive Feasibility Study (DFS)
– External engineering consultant engaged to undertake the DFS
– Outcomes
• Robust modular design to meet the overall expansion methodology
• Capital and Operating cost estimate to 15± accuracy
• Approx 20% lower operating cost compared to the Base Plant due to
improved design
– Economies of scale due to better use of existing infrastructure and
contacts
– Improved utilisation and distribution of high power consuming
equipment in the process plant
Overall Outcome
Viable plant design that meets the project objectices
In Closing
• Mining projects are margin driven business
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The cost of production must be significantly lower than product
revenue
• Efficiency (energy, process) is a key driver in the design phase of
every project
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Lowest cost of production targeted at all times
Highest operating cost area are the focus
• Improvement in efficiency for existing mining operations is difficult
due to;
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High sunk capital cost
Efficiency typically comes from economies of scale
Bigger equipment
Requires capital expenditure that needs to meet investment hurdles