Metal Ore Mining
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Industry Overview
The US metal ore mining industry includes about 250 companies with combined annual revenue of over $7 billion. Major companies include Freeport McMoRan Copper & Gold and Newmont Mining. Metal ore mining is highly concentrated: the largest 10 gold companies account for 80 percent of revenue, and the largest 10 copper and nickel companies account for 95 percent of revenue.
Competitive Landscape
Demand is driven by industrial demand and economic growth, both domestic and foreign. Individual company profitability depends on volume and operating efficiency. Large companies can afford to discover and develop new deposits and increase reserves. Small companies typically own just one mine, limit exploration to that one property, and operate it as efficiently as possible. Metal ore mining is capital-intensive: annual revenue per employee is about $300,000.
The industry includes companies that mine and process gold, silver, copper, nickel, lead, zinc, iron ore, and other metals.
Products, Operations & Technology
Major products include gold bullion (35 percent of revenue); iron ore (25 percent); and metal concentrates (20 percent). Iron ore is used to make steel for many industries. Precious metals such as gold and silver are used in jewelry and electronics; copper is commonly used in construction.
Almost all US metal ore mining companies use open-pit mines, where the surface is removed to reach ore deposits. Benches are cut into the mine walls to provide access to progressively deeper ore. The ore is extracted by drilling holes in the rock for explosives. After blasting, the ore is removed using huge earthmoving equipment such as power shovels and draglines. This equipment is bought from major mining and drilling equipment manufacturers. Once the metal is exposed, smaller shovels are used to load it into trucks, rail cars, and conveyors for transport to a mill for processing. Mines are large, typically hundreds of acres, and produce up to half a million tons of ore.
Some companies have their own processing facilities and others sell the unrefined ore to third-party processors. Most gold and copper are processed by the mining company. Processing is called beneficiation and involves removing unwanted parts to improve the quality and purity of the metal. Steps include crushing, washing, filtering, sorting, sizing, separating, and acid leaching.
Processing depends upon the grade of ore. Higher grade oxide ores are processed in mills by grinding the ore into a fine powder and mixing it with water before passing it through a leaching circuit. Lower grade oxide ores are processed using heap leaching, which consists of stacking crushed ore on pads and using a weak leaching solution to dissolve the metal. Chemicals used in the leaching process differ by the metal mined, primarily cyanide solutions for gold and sulphuric acid for copper.
Waste material, created by mining and processing, can be up to 99 percent of the rock volume in the case of precious metals, such as gold and silver. Mine tailings contain impurities and chemical residues that were used in beneficiation. Acid drainage into groundwater, caused by leakage or seepage during leaching, can be an environmental problem.
Mining exploration focuses on finding large-scale deposits of metals and costs about 5 percent of company revenue. About a third of exploration is at existing mines. For new exploration, a feasibility study is completed and exploration conducted using airborne geophysical data, satellite and location devices, field-portable systems, and onsite geological prospecting. Companies often joint venture on exploration projects and then pay royalties to each other for mineral rights. Mining companies either own the property outright or pay royalties or lease payments to the owners for mining rights. Mining is sometimes allowed on government land after rights are secured and royalties paid.
Ore reserves are estimated quantities of proven, probable, or possible material that may be economically mined in the future. Estimates of reserves are based on engineering evaluations and data derived from drilling holes. Mining companies must continually replace areas depleted by production, which makes reserves a major financial asset.
Technology investments focus on production improvements and exploration efficiency. Technologies providing constant improvement of existing processes are the norm, rather than breakthroughs. Reducing the temperature of high pressure leaching, which reduces the amount of water and acid needed in beneficiation, is an example of a recent process improvement.
