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Minerals Engineering
journal homepage: www.elsevier.com/locate/mineng
University of British Columbia, Norman B. Keevil Institute of Mining Engineering, 6350 Stores Road, Vancouver, BC, Canada V6T 1Z4
University of British Columbia, Department of Earth and Ocean Science, 6339 Stores Road, Vancouver, BC, Canada V6T 1Z4
a r t i c l e
i n f o
Article history:
Received 31 March 2012
Accepted 9 July 2012
Available online 10 October 2012
Keywords:
CO2 sequestration
Mining
Mineral carbonation
Industrial carbon sequestration
a b s t r a c t
Proposed carbon reduction measuressuch as cap-and-tradeappear poised to have a signicant impact
on the nancial feasibility of mining operations as point-source emitters of carbon dioxide (CO2). It is
therefore necessary to proactively assess the ways in which these effects may be mitigated. Carbon
sequestration through mineral carbonation is well suited for integration into mining operations. Its ability to make use of waste rock to trap and store CO2, given suitable geological conditions, can help to signicantly reduce carbon emissions. This paper presents the rst attempt at conceptually integrating a
high temperature and pressure industrial mineral carbonation facility into a developing minesite. The
Turnagain nickel site, a low-grade, high-tonnage Ni-sulphide deposit, located in Northern BC, contains
an abundant amount of Mgsilicate minerals in its waste rock. These minerals have signicant potential
for use in mineral carbonation. In the presence of a mandatory cap-and-trade scheme in North America,
there is the potential to produce an additional revenue stream through the generation and sale of carbon
credits. Results of nancial modeling have yielded a net present value (NPV) at an 8% discount rate of
$131.5 million for the integration of mineral carbonation into proposed mining operations at Turnagain,
suggesting that the project may be viable from a nancial standpoint. Sensitivity analysis has also demonstrated that the parameter with the greatest inuence on project NPV is the CO2 avoidance ratio. This
ratio, which takes into consideration the amount of CO2 released in the mineral carbonation process to
determine the net amount of CO2 avoided, is critical to maximizing the amount of carbon credits available
for sale in a cap-and-trade environment.
2012 Elsevier Ltd. All rights reserved.
1. Introduction
Global climate change and the need for improved environmental accountability have recently jumped to the forefront of our
attention, both at home and around the world. As a result, government legislation appears inevitable in an attempt to help achieve
emissions targets and progress towards improved environmental
standards. Current plans suggest that market-based incentives
such as cap-and-tradeare the most effective way to adequately
reduce greenhouse gas (GHG) levels. Inevitably, these incentives
will require that regulation be put on the price of carbon dioxide
(CO2) (Government of Canada, 2009). Whatever forms these regulatory changes may take the consequences on the mining industry
may be signicant, given the environmental footprint commonly
attributed to mining operations (Norgate et al., 2007).
It is difcult to predict exactly how a carbon dioxide cap-andtrade program might develop. The European Unions Emissions
Trading Scheme (EU ETS) has set the stage for the development
Corresponding author. Tel.: +1 604 827 5089.
E-mail address: mhitch@mining.ubc.ca (M. Hitch).
0892-6875/$ - see front matter 2012 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.mineng.2012.07.007
269
It is important to note that the emissions produced, and consequently the CO2 avoidance ratio, will ultimately be dependent
upon the process conditions as well as the source of energy utilized
in the process. More generalized estimates by OConnor et al.
(2002) have suggested that an energy penalty of 11.5 kWh/t ore
processed is reasonable for the capture component of CCS. The extreme conditions required for efcient conversion adversely affects
the required amount of energy and the amount of CO2 released, as
well as the process operating costs. These effects indicate a number
of conicting priorities in the conduct of such research. While
some attempts have been made to maximize the efciency of reaction, other studies have sought to minimize costs or reduce process
emissions.
1.2. Integration into mining and mineral processing
The availability of Mg-rich minerals worldwide in mineable
deposits, combined with the high MgO content within Mgsilicate
mineralssuch as olivine and serpentinemake Mgsilicates
appropriate for use as feedstock material in mineral carbonation
(Lackner et al., 1995; Yegulalp et al., 2001; Barat et al., 2002;
Cipolli et al., 2004; Goff and Lackner, 1998). In addition, the common association of Mgsilicates with certain mineral deposit types
increases the feasibility of extraction, both of ore and of suitable
feedstock material for use in mineral carbonation. This benet is
primarily due to the ability to share the cost of extraction.
Kohlmann et al. (2002) and Gerdemann et al. (2004), have outlined
the importance of integrating the extraction of Mgsilicates for
mineral carbonation with pre-existing or planned mining activities
in order to reduce mining and transportation costs. This integration can result in more protable marginal projects and improved
overall project economics by lowering the mine cut-off grade and
bringing value to otherwise value-less waste rock (Hitch et al.,
2009; Zevenhoven et al., 2006).
270
(Ca,Mg)O
Mine
Mineral
Carbonation
Facility
CO2
(Ca,Mg)CO3
Aggregate
Storage
Disposal
Fig. 2. Conceptual lifecycle of mineral carbonation (modied after Huijgen et al.
(2007)).
The lifecycle of the mineral carbonation process is shown conceptually in Fig. 2. Beginning with the mine as a source of reactive
material, waste rock provides a steady source of feed for mineral
carbonation. A constant input of CO2 is required, derived either
from mine process emissions, outside sources via a pipeline, or a
combination of the two. Following reaction, the resulting benign
product is put to a number of uses, including aggregate or mine
backll to aid in construction or mine reclamation. Alternately,
the carbonate can be safely disposed, with little to no need for subsequent monitoring.
The mutual benets of integrating mining and mineral carbonation highlight the importance of integrating Mgsilicate extraction with mineral carbonation in order to enhance viability.
1.3. Importance to mining
Successful integration of CCS into the mining industry will require incentives to spur development and increase the likelihood
of widespread implementation across the industry. Incentive
structures to help curb CO2 emissions have already been implemented in Europe, through the development of the European Union Emissions Trading Scheme (EU ETS). A similar North
American initiative seems imminent (Western Climate Initiative,
2010; Government of Canada, 2009). These policy structures are
designed to cap the allowable amount of emissions from a point
source emitter of CO2. Given the contribution of the mining industry to total greenhouse gas emissions (Organisation for Economic
Co-Operation, 2004), it is anticipated that a cap on emissions will
create a notable impact on mining operations from both a nancial
and operational standpoint. The degree to which mining operations will be impacted is highly dependent on the imposed greenhouse gas reduction requirement, in addition to the incentives
provided through market mechanisms such as cap-and-trade.
The imposition of a limit on the total amount of CO2 permitted
for release by a single point source emitter will require emitters
either to change technologically to reduce emissions, or to capture
and store emissions that result from operations. Alternately, excess
emissions may be offset through the purchase of carbonoffset
credits. The operational and/or nancial impact of carbon reduction mechanisms, such as cap-and-trade, will require careful
assessment as environmental policy continues to develop.
1.4. Estimates of mineral carbonation costs
Previous cost estimates of implementing carbon sequestration
by way of mineral carbonation have yielded a wide variety of estimated values, illustrative of the high degree of uncertainty surrounding the valuation of mineral carbonation projects. A
summary of sample cost estimates is shown in Table 1. This uncertainty is magnied by the inconsistent use of feedstock material
and process parameters employed amongst these estimates. It is
also often unclear exactly which aspects of the lifecycle of mineral
carbonation, including all the components necessary to complete
the lifecycle, are included in these cost estimates. Herzog (2002)
indicated the need to add $50-$60/t CO2 for CO2 capture and
transport costs alone, attesting to the signicant impact that such
emissions could create in conducting an economic evaluation of
mineral carbonation. The additional need to incorporate other factors into the lifecycle of mineral carbonation, such as mining, processing and disposal, further delineates the need for improved
clarity in the estimation and presentation of mineral carbonation
costs.
Ballantyne and Hitch (2009) suggest in order for Canada to
achieve the published emissions reductions for 2020 (600 Mt
CO2e) and 2050 (1Bt CO2e) carbon offset prices will reach
CDN$200/t CO2e (Fig. 3).
Financial analysis was undertaken by the authors to determine
an estimate of the overall viability of integrating mineral carbonation into mining operations at Turnagain. Although project development is currently only at the conceptual design phase, it is still
important that the project economics be carefully considered, to
determine whether or not project development should continue.
A relatively high degree of uncertaintya common condition of
natural resource projectsis expected throughout development
(Park et al., 2001), and must be taken into consideration in the
analysis of the overall project economics. Further model renements will be necessary as more accurate project parameters become apparent.
The present nancial analysis makes use of a discounted cash
ow (DCF) approach for its ability to produce a relatively sound
understanding of the estimated project value, given the assumptions made in the base case scenario. While adequate as a preliminary analysis, it is important to bear in mind that in reality
any project will be much more uid, and project managers more
exible in terms of expanding, contracting, deferment, or abandonment of a project, as the conditions of operation become more precisely known. This exibility allows for added value in the ability to
mitigate losses while maximizing on upside potential (Schwartz
and Trigeorgis, 2004).
In order to quantify the uncertainty inherent in this project, as
well as in any deterministic modeling approach to project forecasting and evaluation, it was necessary to test the assumptions employed. Sensitivity analyses capture the inuence of the most
highly uncontrollable factors in project advancement and evaluate
how output uncertainty can be apportioned to the uncertainty of
the model inputs.
2. Methodology
2.1. Cost modeling
The tradeoff of cost versus efciency for the various mineral
carbonation technologies under investigation is an important
Table 1
Published cost estimates of mineral carbonation.
Cost
Reference
$70/t CO2
$50-$100/t CO2
$65/t CO2
$54/t CO2 sequestered $78/t CO2
avoided
$60-$100/t CO2
$69/t CO2
Lackner (2002)
IPCC (2005)
OConnor et al. (2005)
OConnor et al. (2004), Gerdemann et al.
(2007)
Newall et al. (2000)
Lyons et al. (2003), Penner et al. (2004)
271
factor when considering how best to proceed with project development. The benets of high sequestration efciency through the use
of high pressuretemperature mineral carbonation in an autoclave
are offset by the high costs needed for extensive processing and
elevated process conditions. Conversely, low efciencies of reaction associated with engineered heap leach piles or bio-inoculated
piles (Power et al., 2009) may be justied by minimal costs. This is
a critical aspect in the evaluation of mineral carbonation, as the
cost of the technology largely dictates its feasibility for implementation on an industrial scale. This tradeoff of cost versus efciency
(shown in Fig. 4) will be highly inuenced by the parameters set
forth by governmental regulations and/or the carbon management
scheme put into place, namely the cost of carbon and the cap on
emissions. It is anticipated that the trace of this relationship will
be a stepwise function, due to the signicant changeboth in
terms of cost and efciency of reactionthat will result from transitioning from more passive technologies, such as heap leaching, to
more active ones, such as agitated tank leaching (autoclave
reaction).
For detailed nancial modeling, an autoclave reaction was chosen for further consideration as the only method proven to store
$200
Corroborating datapoint:
(a)Natural attenuation (Wilson et al., 2006)
(b)Heap leaching (Stolaroff et al., 2005)
(c) Autoclave reaction (Lackner et al., 2008; this research)
$160
$120
(c)
$80
$40
(b)
$0
0%
(a)
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Efficiency of Reaction
Fig. 4. Conceptual tradeoff of cost versus efciency for various methods of mineral
carbonation. (See above-mentioned references for further information.)
272
Table 2
Cost model input parameters and base case scenario results.
Input parameters
Unit
Throughput
Strip ratio
Dunite in waste
wt.% MgO
Processing cost
Sequestration efciency
Sequestration operating cost
CO2 capture cost
CO2 transport distance
CO2 transport cost
tpd
%
wt.%
$/t feed
%
$/t CO2
$/t CO2
km
$/km
87,000
0.74
20
48.54
8.00
80
32.39
25.00
250
0.02
$/t CO2
82.51
$/t CO2
$/t CO2
27.98
237.91
Table 3
DCF model input parameters and base case scenario results.
Input parameters
Unit
Capital cost
Development phase duration
Mine life
Operating cost
Total sequestered CO2
CO2 avoidance ratio
Site CO2 emissions
Carbon credit pricea
CO2 reduction requirement
Decommissioning
Discount rate
Ination rate
$
yrs
yrs
$/t CO2
tpy
tpy
$/t CO2
%
$
%
%
139 million
2
24
82.51
2 million
0.77
1 million
200
20
20 million
8
2
$
%
yrs
yrs
131,449,380
25.1
3.72
4.77
Table 4
Overall sensitivity of cost model parameters.
Rank
Parameter
1
2
3
4
5
6
7
8
9
10
Sequestration efciency
Sequestration operating cost
CO2 capture cost
wt.% MgO
Processing cost
CO2 transport distance
CO2 transport cost
Mine throughput
Strip ratio
% Dunite in waste
273
$120
$110
$100
% dunite in waste
wt.% MgO
Sequestration efficiency
Processing cost
Sequestration operating cost
CO2 capture cost
CO2 transport distance
CO2 transport cost
Strip ratio
Mine throughput
$90
$80
$70
$60
$50
-100%
0%
100%
200%
300%
nancially, this scenario would generate an NPV8 of -$186.6 million. In this case, the base case NPV should no longer be evaluated
based on whether or not it is greater than zero, but whether or not
it is greater than the NPV of nancial compliance. This increases
the attractiveness mineral carbonation as a means to adapt to
incoming cap-and-trade mechanisms and the nancial consequences that may result.
As proposed cap-and-trade policy is developed and rened, further consideration must also be given to the penalties that would
be imposed in the case of non-compliance. Severe penalties for
those who fail to meet set emissions reduction requirements will
be a signicant deterrent for those who chose not to implement
adequate emissions reduction measures. The impact of these penalties will be an important factor to consider in the evaluation of
alternative scenarios in the context of overall project valuation.
3.3. DCF model sensitivity
Hand in hand with the signicant inuence of sequestration
efciency in cost modeling is the sensitivity attributed to the CO2
avoidance ratio in DCF modeling. This parameter is the most sensitive for a number of reasons already mentioned, namely that it is
imperative to maximize the efciency at which CO2 is sequestered,
given the required inputs both in terms of feed materials and costs.
The main difference is the need to balance the ultimate amount of
CO2 sequestered versus the amount of CO2 emitted through the
sequestration process itself. In this case, the CO2 avoidance ratio
is critical in order to maximize the amount of net CO2 sequestered
and available to sell as carbon credits. If, during the lifecycle of the
mineral carbonation process, there is an excessive amount of CO2
emitted, the efforts and costs put into the process are negated.
As such, ensuring that a minimal amount of CO2 is emitted during
the mineral carbonation lifecycle will mean that the maximum
number of carbon credits is available for sale. As a consequence,
the CO2 avoidance ratio is the most sensitive parameter in determining the NPV of mineral carbonation at Turnagain (Fig. 6).
Following the CO2 avoidance ratio, the price of carbon credits
has the second greatest inuence on the value of mineral carbonation. As the sole source of revenue in the mineral carbonation process, the price per tonne of CO2 available through the sale of carbon
credits has signicant ramications for overall project feasibility
by directly controlling the total available revenue. Without a signicant price on carbon, there will not be an adequate source of
revenue in order to offset the associated costs. This parameter is
also particularly important to consider since it is uncontrollable
from the perspective of research and development. The decisions
leading to the implementation of a broad-ranging cap-and-trade
program lie with government ofcials, and depend on their position on the environment. However, the highly sensitive and
$1,000
$500
Decommissioning
Capital cost
NPV
(Millions)
$0
Development phase
duration
Mine life
-$500
Operating cost
-$1,000
-$1,500
-$2,000
-100%
0%
100%
200%
300%
274
inuential nature of carbon price on the feasibility of implementing carbon reduction programs may provide signicant leverage
in order to lobby policymakers in support of research and development efforts. This point will become increasingly important as
more information comes to light regarding climate change and
the need for drastic carbon reduction measures.
There are a number of other parameters that have a noticeable
effect on the feasibility of mineral carbonation. Operating cost is a
signicant factor in determining the feasibility of mineral carbonation. Similar to carbon price in terms of importance, the operating
cost directly inuences the total available cash ow and consequently inuences NPV. Following in sensitivity, the total amount
of sequestered CO2 is inuential in being the denominator of all
unit costs; a larger amount of sequestered CO2 is able to more
widely distribute costs, therefore lowering costs on a per tonne basis. Site emissions will impact project feasibility in determining the
total amount of sequestered CO2 available to sell as carbon credits.
This follows the need to rst offset site emissions prior to claiming
sequestered CO2 as credits to sell in the market. The inuence of
the reduction requirement stems from the same principle of determining the amount of site emissions that are offset before carbon
credits can be claimed. By affecting the amount of carbon initially
required for offset prior to receiving carbon credits, both the site
emissions and the reduction requirement are directly determining
the total amount of CO2 available to be sold and consequently the
total revenue available.
Factors of less signicant inuence include the mine life, capital
cost, development phase duration and the cost of decommissioning. Mine life did not have a signicant impact on the feasibility
of mineral carbonation, due primarily to the impact of the time value of money. Although an extended mine life will impact cash
ow, when discounted back to the present time the effect of mine
life is minimal. Capital cost, while initially thought to have a greater inuence on project valuation, due to the front-loaded nature of
the cash ows, does not signicantly impact project valuation. The
capital cost required may have a more dramatic impact on the ability to secure project nancing, either through debt or equity. While
this does not necessarily impact project valuation, it may have an
impact on project feasibility in determining the ability to generate
funding for project construction. Similar to the impact of capital
cost, the development phase duration also does not have a significant inuence on NPV, primarily due to the subdued impact of
capital cost combined with the effect of the time value of money.
Finally, decommissioning costs had a relatively insignicant inuence because of the cash ow timing far in the future. Again, the
time value of money is extremely inuential in negating the effects
of this parameter. However, the required decommissioning of such
a project may have alternative effects in the need for signicant
environmental bonds to be held prior to project commencement.
The signicance and contribution of each of the individual
parameters investigated through this research cannot be ignored,
but their ranking in terms of sensitivity has provided a means by
which to prioritize further research and focus efforts on parameters that will results in the greatest inuence on project valuation.
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