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Posts Tagged ‘environment’

India and Australia strengthen environmental protection

August 31, 2011 Comments off

India Court Extends Karnataka Iron-Ore Mining Ban

“India’s Supreme Court has extended a ban on iron ore mining in two new districts in the southern state of Karnataka, a lawyer involved in the matter said Friday.

Panindra Rao, a lawyer representing the mining industry, told Dow Jones Newswires that a court-appointed body found prima facie evidence of environmental degradation in the districts of Tumkur and Chitradurg. ‘[The court] has stopped mining and transportation operations in Chitradurg and Tumkur districts,’ he said, adding that a panel has been asked to make a detailed environment impact study of these two districts.

The extension of the mining ban to two more Karnataka districts on lines of another imposed on July 29 in the key iron ore hub of Bellary is expected to hurt not only supplies to domestic mills, but also exports by the world’s third-largest iron ore supplier.”

Source: Wall Street Journal, August 31 2011

Australia’s West Kimberley Becomes Heritage Site

“Australia plans to protect its spectacular West Kimberley region from environmental degradation caused by mining and development. An area of wilderness bigger than England will be classified as a National Heritage site to help guard its rare attractions including 130 million-year-old dinosaur footprints.

Nicole Roocke, director of the Chamber of Minerals and Energy of Western Australia, said the ‘broad-brush approach’ would mean an additional bureaucratic burden for potential mining projects in the area. ‘It will impact negatively on all economic development in the Kimberley. It will compromise economic growth in communities in the Kimberley,’ Ms. Roocke said.”

Source: Wall Street Journal, August 26 2011

Observations:

  • The Indian district of Karnataka is responsible for approximately a quarter of India’s iron ore exports and a fulfills a significant part of domestic demand. Environmental degradation in the area is mainly caused by illegal and/or poorly controlled mining.
  • The key fight between industry groups and environmental lobbyists in Australia is about the development of a gas terminal for Woodside in the West Kimberley region. Industry groups are not happy because they will have to introduce tighter controls (although the developing partners do not see the introduction of the site as a stumbling block), while environmentalists see the introduction of a heritage site as useless if the development of the complex goes on.

Implications:

  • The current boom of the mining industry has encouraged governments around the world to put stricter environmental regulations in place, knowing that companies are willing to go a long way to be able to continue with their projects. While the main government interventions in India are around increase of government control and institutionalization of the industry, interventions in Australia, the US, and other OECD countries mainly focus on preserving specific areas or species.
  • The actions of the Australian government should partly be seen as a political move, countering the critics that the government has been too mining-friendly by watering down the super profits tax.

©2011 | Wilfred Visser | thebusinessofmining.com

Peru cancels Southern Copper’s Tia Maria Project

April 15, 2011 1 comment

“Peru has canceled the controversial Tia Maria project owned by Southern Copper Corp., a mining ministry spokeswoman said Friday. The spokeswoman said the project was ruled “unacceptable” by the ministry, which is in charge of giving approvals for mining projects.

The cancellation was announced at a brief televised press conference of regional and national government representatives following the deaths this week of three anti-Tia Maria protesters. ‘We want to return to normal,’ said Peruvian Minister for Energy and Mining Pedro Sanchez, who refused to answer further questions. A spokesman for Southern Copper Peru said the company had no immediate comment.

The Tia Maria mine project, which was seen producing 120,000 tons of copper a year, had been dogged by a series of protests from residents fearing it would damage their water and environment.”

Source: Wall Street Journal, April 8 2011

Observations:

  • Southern Copper, part of Grupo Mexico, is one of the world’s largest copper miners, but is largely unknown by many people in the industry. The company has operations in Mexico and Peru and exploration projects in Chile.
  • The 120 thousand ton/year Tia Maria project should have increased expected 630 thousand ton production in 2011 to 700 thousand ton/year in 2012. Approx. 3/4 of the company revenue comes from copper.

Implications:

  • Southern Copper will need to submit a new environmental study to prove the mine will not contaminate groundwater. Public opinion in Southern Peru has turned against the company and led to large protests.
  • The intervention by Peru’s government might have impact on other development projects in the country. Furthermore, a potential increase of mining taxes is one of the key debates in the presidential election. Miners in Peru will have to be more aware of the social and political operating environment in the coming years.

©2011 | Wilfred Visser | thebusinessofmining.com

Doubts on Coal India’s coal reserves

September 13, 2010 Comments off

“Coal India is set to begin a roadshow to promote what is expected to be India’s biggest stock listing, even as tightened environmental regulations and a Maoist insurgency threaten to render much of the state-owned miner’s reserves inaccessible. …

Coal India hopes to raise up to Rs150bn ($3.2bn) from the sale of a 10 per cent stake. That would make its initial public offering bigger than India’s largest completed listing, the $3bn offering of domestic electricity producer Reliance Power in early 2008. Coal India claims to be the world’s largest coal producer and accounts for 85 per cent of production in India, which has the fourth-largest reserves on the globe. But it recently revised down its annual production target from 520m tonnes to 486m tonnes, citing delays in environmental clearance for mine expansion. Meanwhile, Indian coal imports are surging, with KPMG estimating a domestic shortfall of 189m tonnes a year by 2015.”

Source: Financial Times, September 13, 2010

Observations:

  • The capital aimed to raise with the proposed IPO is $0.4bln higher than initially targeted. However, the uncertainty caused by changes in legislation have delayed the process by months since the rumours in June.
  • Coal India has 471 mines (March 2010) of which 273 are underground, 163 opencast and 35 mixed mines. CIL further operates 18 coal washeries, (12 coking coal and 6 non-coking coal). The many small operations are organized into 8 core geographical business units.

Implications:

  • A recent ruling on mining in areas populated by tribal people affected the plans of Vedanta to develop an iron ore mine in the state of Orissa. The Indian government is stepping up its efforts to protect the environment and human rights, changing the way many local mining companies have to operate. The amount of capital Coal India will be able to raise depends on the availability of its reserves in areas protected by these rulings.
  • Once a larger part of Coal India is made available to the public, large corporates in the Indian power industry and heavy industry (especially steel: ArcelorMittal, Reliance and Tata) are likely to acquire strategic stakes in the company to secure supplies.

©2010 | Wilfred Visser | thebusinessofmining.com

The BP Oil Spill: Could this happen in mining?

June 7, 2010 1 comment

The blowout on deepwater horizon was caused by a series of errors, classified as questionable decisions [D], mistakes [M] and violations [V]. In the report of events below the bad decisions, mistakes and violations have been identified.


“Internal BP documents show that BP engineers had concerns as early as 2009 that the metal casing BP wanted to use might collapse under high pressure. In March, 2010, the rig was experiencing problems that included drilling mud falling into the undersea oil formation, sudden gas releases, a pipe falling into the well, and at least three occasions of the blowout preventer leaking fluid. According to a report by 60 Minutes, the blowout preventer was damaged in a previously unreported accident in late March, and BP overruled the drilling operator on key operations [V]. BP declined to comment on the report. The American Bureau of Shipping last inspected the rig’s failed blowout preventer in 2005.

On March 10, 2010, a BP executive e-mailed the Minerals Management Service that there was a stuck pipe and “well control situation” at the drilling site, and that BP would have to “plugback the well.” A draft of a BP memo in April warned that the cementing of the casing was unlikely to be successful. Halliburton, a week after the explosion, said that it had finished cementing 20 hours before the fire, and that it cemented the Macondo well but had not set the final cement plug to cap the bore as “operations had not reached a stage where a final plug was needed” [D]. A special nitrogen-foamed cement was used which is more difficult to handle than standard cement.

In late April, 2010, Adrian Rose, a vice president of Trans-ocean, Ltd., said that workers had been performing their standard routines and had no indication of any problems prior to the explosion. However, preliminary findings from BP’s internal investigation released by the House Committee on Energy and Commerce on May 25 indicated several serious warning signs in the hours just prior to the explosion. Equipment readings indicated gas bubbling into the well, which could signal an impending blowout [V].

The fire aboard the Deepwater Horizon reportedly started at 9:45 p.m. CDT on April 20, 2010. According to Transocean executive Adrian Rose, abnormal pressure accumulated inside the marine riser and as it came up it “expanded rapidly and ignited”. According to interviews with platform workers conducted during BP’s internal investigation, a bubble of methane gas escaped from the well and shot up the drill column, expanding quickly as it burst through several seals and barriers before exploding. Rose said the event was basically a blowout. Survivors described the incident as a sudden explosion which gave them less than five minutes to escape as the alarm went off.

At an April 30 press conference, BP said that it did not know the cause of the explosion. Transocean chief executive Steven Newman described the cause as “a sudden, catastrophic failure of the cement, the casing or both.” The heavy drilling mud in the pipes initially held down the gas of the leaking well. When managers believed they were almost done with the well, they decided to displace the mud with seawater [M]; the gas was then able to overcome the weight of the fluid column and rose to the top.“

Source: Wikipedia report on BP Oil Spill, June 4 2010

Firstly, could the same decision making situation develop in mining as well? Yes, it could. Just as in the cases of Chernobyl and the Challenger, psychological effects have played an important role in the framing of the organizational behaviour which allowed the accident to happen. The most important effects James Reason mentions in his report “the Chernobyl errors” are:

  • Forgetting the power of the beast. Operators get so used to working with large and potentially dangerous objects that they forget the potential impact of a mistake.
  • Rationalizing away. What are the odds that something will go wrong? It won’t happen to us!
  • Trusting the others will know/act. Especially in interaction between groups uncertainty is not shown. In the Deepwater case the interaction between Trans-ocean, BP and contractors will have contributed to this situation of groupthink.

Secondly, are there situations in mining that could have an impact comparable to the oil leak in the Gulf of Mexico? The fact that it takes some time to think about examples shows just how much we are used not to think about potential consequences of our actions. Both the health/safety and the environmental impact of the blow out can certainly be matched in mining. The numerous mine explosions in coal mining, slides in open pit mines and caving above underground mines are just examples. “The big one” could happen anytime and anywhere. Similarly, breaking tailings dams, uncontrolled leaching operations and many other process related accidents could destroy the flora and fauna in a large area, especially when the poison is spread by a river.

Finally, mining shares the schizophrenic safety culture with the petroleum industry. Most companies are very strict about personal safety, but relentlessly driven by production targets in operations at the same time. This culture results in a frequent disregard of potential hazards or even violation of “redundant rules” in making operational decisions that do not directly appear to be related with personal safety. In the BP case this was the cementing of the casing, in the mining case this could be the spacing of boreholes or the dewatering of a dump. As long as miners don’t learn to think about the power of the beast, an “oil spill” could certainly happen in mining.

©2010 – thebusinessofmining.com