grades are often touted as the factors that decide whether a
new mining project will make it into development.
according to Andy Miller, analyst for IM Datas
service, deposit location and associated logisticscosts are also
key determinants of a mineral projects viability.
|New mine to market routes for industrial
minerals will alter trade patterns
and reshape markets (source: Energizer
natural properties of a project define the markets it can
serve, and prices often signify conditions within these
markets, it is costs that dictate whether it is actually
feasible to supply these minerals to the market, Miller
He notes that a
gradual shift in primary export locations towards developing
economies, and the emergence of new graphite and fluorspar
projects in countries with relatively immature infrastructure,
has meant that logistical arrangements have come to feature
more prominently in capex and opex estimates.
considerations, particularly in less developed regions such as
parts of Africa and Asia, can form a large proportion of a
projects total cost and are therefore fundamental in
identifying the potential returns on a project, Miller
Miller says that
while logistical options are considered from the outset of a
project, they continue to be evaluated throughout the
development of a deposit.
There is no
point spending money on even preliminary studies if the costs
involved in transporting the material will be too high,
the finer details will only be refined as the nature of the
property is explored. Once companies have a solid idea of the
type of material and quantities they will be dealing with then
logistical plans can truly be cemented, he
margins on industrial minerals are usually much tighter than in
other raw material markets, logistics can contribute
significantly to the final price paid by buyers.
outlines, the exact proportion depends on factors including the
mode of transport, volume, distance to market and the region of
the world, but for graphite and fluorspar, this share is much
less than some other minerals such as frac sand, where
logistics account for around 70% of the delivered
logistics can account for between 20-30% of the delivered cost
of a mined product, but market-specific supply chain factors
will impact this, he says.
graphite and fluorspar
outlines, natural graphite is generally transported by
freight. Over 70% of global production comes from China,
more than half of which is exported to Europe, the US and other
areas of Asia. From port, it is generally then distributed by
generally moved as concentrate in 25kg sacks or bags, so closed
transportation vehicles are necessary.
slightly more diverse, Miller explains. Mexicos Mexichem
is the largest sole producer and supplies its neighbour, the
US, by rail and road, as well as other parts of the world by
sea freight. In Asia, Mongolia supplies into both Russia and
China via the trans-mongolian rail network, while China again
supplies much of the rest of the world by sea
fluorspar (acidspar) can be moved either as dry or wet
filtercake which means there are slightly different
transportation requirements, depending on the way the material
has been processed.
metallurgical-grade fluorspar (metspar) can be moved as rock,
which has its own transportation issues, but generally some
sort of processing takes place on site.
China is the
leading producer of both graphite and fluorspar. The government
has pushed to consolidate some of the countrys graphite
market in recent years, which has led to the emergence of
larger, more powerful companies that have established more
efficient logistical infrastructure.
fluorspar production is more spread out, however, with many
smaller producers meaning that the quality of transport links
is more varied.
minerals, the rest of global production takes place among a
few, long established mining operations, meaning logistical
infrastructure is relatively advanced.
investment at new projects
locations of many new projects often posethe challenge of
rudimentary transport links, Miller says that
growing investment in both minerals and other commodities in
these regions means that infrastructure is growing
for instance has had a wave of investment from the LNG sector
which is reducing the costs for companies trying to develop
mines in the area, he says.
take big extractive projects like oil and gas, coal and iron
ore to open the door for more niche mineral
there are areas which will be subject to greater logistical
challenges but few of these are particularly unique, he
players in the graphite and fluorspar markets over the coming
decade are likely to be projects in areas such as Vietnam,
Mongolia and Mozambique, where accessibility may be an
some new projects are located in more economically advanced
regions which eases logistical difficulties, such as in Canada,
or the new projects which are coming on stream in the UK and
Germany. Canada-based projects certainly use this as a selling
As new projects
and export hubs for graphite, fluorspar and other industrial
minerals begin to mature, Miller believes that markets will
start so see new patterns of trade materialise.
were entering a new generation of trade routes for a
number of mineral markets. China, which dominates supply of
many minerals, is developing its downstream markets and looking
to export less, he explains.
The slump in
global markets for raw materials has allowed China to divert
investment into downstream industries, enhancing the
countrys potential as a manufacturing centre and
simultaneously increasing domestic consumption.
steps back from its place as the worlds top raw material
supplier, there will be a gap in the market for new low cost
supply. Which countries step into this void will define new
trade routes, Miller says.
Andy Miller will
be discussing this article in more detail in a presentation at
Moving Minerals 2013 on 3 December in Amsterdam. Contact firstname.lastname@example.org
for more information or visit www.indmin.com/MM2013
to download the programme and register.