As the 2024 Prospectors & Developers Association of Canada (PDAC) convention ends in Toronto, Canada, Garry Warren, Ausenco’s President of Minerals and Metals North America, shares five priorities that should be top of the agenda for North American mining leaders this year.
1. Getting investors to notice - and what to do in the meantime
While many of the economic signs suggest we’ve passed the bottom of the mining cycle, the markets certainly aren’t acting that way. Traditional mining investors are still holding back their dry powder. Tourist investors – those looking to pop and drop a stock – have shifted to other sectors like crypto and GenAI. Even gold assets – where prices have hovered at around $2,000 USD per ounce for more than a year – have received an ambivalent reception from investors recently.
In this environment, my experience suggests there are two strategies mine owners and CEOs should be considering. The first is to take a more sequential approach to developing your asset. Rather than waiting until you have enough financing to exploit the entire resource, consider whether you could start in a smaller or more targeted way. That would allow you to not only raise less in the markets, but also start generating revenues sooner (something investors would very much appreciate).
If that’s not possible (though I have a group of engineers and designers who would be interested in challenging that view), the strategy should be to make sure dust doesn’t settle on your designs and plans. The idea is to keep it all current so that, when investors do return to the market, you are ready to jump back in.
2. Understanding government incentives
The race for resource security is changing the dynamics of metals markets. Many governments are now offering significant incentives to help attract investors and developers. In the US, the critical minerals list includes more than 50 minerals that could receive funding under the Inflation Reduction Act (IRA). In Canada, the federal government has released its Critical Minerals Strategy to encourage development through a multipronged approach encompassing innovation, workforce development and stakeholder engagement.
Over the past two years, we have been hearing from many mine executives and owners interested in seeing how they might structure their strategies to maximize the value of these government incentives. In part, this requires mine owners to have (or hire) people with a very clear understanding of how these incentives work and how they can be accessed. It also takes smart designers and engineers to create a strategy that meets incentive requirements.
My view is that the best way for governments to increase investment in mining isn’t just through incentives but also through reducing permitting time. Less time stuck in permitting doesn’t just mean that projects move forward faster, it also makes them more viable and, therefore, more attractive to investors. Incentives come and go. Improvements in the permitting process are much more durable.
3. Building stakeholder relationships
If you don’t have the support of your local communities and stakeholders, you don’t have a project. In part, this is about engagement and communication. Ensuring local communities not only have a voice, but an active role in development and operation, is key to success. So, too, is ensuring the environmental impact of your project has been mitigated and that your long-term footprint is minimized.
I am a big proponent of derisking projects early in the process. I believe that many of the delays that mine owners face during development could be reduced or eliminated if only the planners and engineers had considered these issues right from the start. That not only reduces delays, it also reduces costs – making changes at the design stage is much, much cheaper than making changes during development.
Having the right engineering partner is critical. At Ausenco, we leverage our multidisciplinary capabilities to help our clients identify and address potential environmental and social concerns long before they impact their projects. Our engineers bring in our environmental colleagues right from the start, allowing us to identify potential environmental risks and reduce permitting delays early in the process.
4. Driving performance with technology
New mining technologies and approaches are rapidly changing mine performance and efficiency. Technologies allow operators to quickly separate low-grade waste from high-grade ores before it goes into the processing cycle. Bulk sorting removes low-grade material from the primary crusher discharge. Coarse Particle Floatation (CPF) means less crushing in the mill. Dry stack tailings reduce water usage.
Used in the right situations, these new technologies and approaches can help influence the development and operational costs of an asset. They can also go a long way towards reducing the environmental footprint and improving the safety of an operation. Some tick multiple boxes – CPF, for example, reduces energy use in the mill and leaves behind a coarser material that better lends itself to dry stack tailings (also reducing water use and improving safety).
Today’s mining investors are looking for projects with high efficiency, low environmental impact and great safety. And there are a range of new technologies that can help them achieve that. Don’t be surprised to see the adoption curve for new technologies ramp up rapidly over the next few years.
5. Partnering for success
In an uncertain market, what mine owners really need is partners they can trust. They want engineering firms who aren’t just technically capable, but also aligned to their objectives and values. They need advisors who see the full picture and bring a multi-disciplinary view to their projects. They want partners who are just as committed to the success of the project as they are.
I firmly believe that one of the biggest reasons that we are winning in our markets is because our clients recognize we are committed to their projects and aligned to their objectives. In part, that’s because we make great effort to mitigate risks and maximize viability very early on in the project, using our deep experience and capabilities to look at projects from all sides. And our focus on finding better ways means we are always looking for opportunities to deliver better outcomes for our clients.
My conversations with mining leaders suggest the desire for alignment is rapidly becoming a key criterion when selecting an engineering, procurement and construction company. And I suspect this trend will have a long-term impact on the engineering services sector more generally.