WHERE ARE THEY NOW?
Dr. Robert Morrison
Surviving the big resource cycle
This year, the world is witnessing the resurgence in base and precious metals prices. Nickel and gold are at or close to 10 or 15 year highs, while copper, lead and zinc are on a steady increase. Mining companies that were recently on the brink of bankruptcy, now have a second life. Small, aggressive exploration companies are being (re)floated in stock markets, and are receiving full financial backing not dreamed of a mere two years ago. What happened?
When I started my university career at Acadia in 1977, the world was in a similar resource boom. It was so exciting and financially attractive, many oil companies created their own mineral exploration divisions to ride the wave. As an undergraduate, it was easy to catch the enthusiasm and exploit the opportunities as a geologist-in-training, and be recruited as part of an army of exploration assistants to march through the boreal forests of northern Canada.
The exploration field season became the unofficial summer school for the earth sciences. As a result, I was most comfortable with geology as my major at Acadia, and realised many opportunities in pursuing earth sciences as a career. The Geology Department staff at Acadia were critically important, and incredibly patient and understanding, in bridling and directing this undergraduate exploration hyper-enthusiasm towards a rewarding university experience.
In 1981 I landed in Australia to pursue an Honours degree which was beyond my reach in the olde countrye due to challenged grades (but not necessarily in geology). The University of Adelaide's Honours year was almost devoid of students, as many of the third year's crop were enticed into job opportunities at the tail-end of Australia's resource boom.
But that was it. The show was over. Due in part to big new producing mines around the world, commodity prices were beginning to deflate. The exploration industry was cursed by its own success. Oil companies, not accustomed to long periods of reward-less expenditure, were pulling out of the mineral exploration game. Other mineral exploration and mining companies were consolidating their position and cutting costs. The job opportunities for graduates began to quickly evaporate, and universities suddenly had a back-log of "wannabe" geologists with few new opportunities to aspire to.
The following 20 years were close to catastrophic to the mineral and mining geological communities. Base and precious metal prices sunk to historic lows. Marginally profitable mines were closed. Exploration disappeared. New deposits were never developed. Geologists were laid off. Students fled the hard-rock geology schools, and entire university earth science departments were closed or severely curtailed.
A few hardy explorationists continued to operate out of the big mining houses, but the success rate was dismal. The few exploration successes, like Voisey's Bay massive nickel sulphide deposit, were freak occurrences with little to do with a rigorous application of the best scientific methods. Ongoing exploration failures took their toll on even the most optimistic of exploration and mining managers.
During this lengthy challenging period, I sought refuge first in a Ph.D. program at the University of Adelaide, and subsequently in Geological Surveys in Labrador and the Northern Territory. The pay was marginally above the poverty line and the office politics more accurately described as internecine warfare, but the opportunity to practice quality science was outstanding. Many of my former colleagues were not so lucky and jumped ship. For example, a popular urban myth is the number of former mine and exploration geologists who are taxi drivers in the Perth metropolitan area.
A mini-resource boom in 1994 provided an opportunity to join WMC in their nickel exploration program in Kambalda, Western Australia. However, that was short-lived. After a couple of years, WMC shut down its R&D programs at Kambalda, indicating that nickel was under the pump. R&D is an excellent barometer of the state of a health of the resource industry. WMC's St Ives Gold Mines offered me employment before nickel nose-dived and many more of my colleagues joined the taxi ranks. At the time it became very clear that exploration was an extremely risky career path. I moved sideways into resource modelling, grade estimation and near-mine ("extensional") exploration. Then it was gold's turn to face the music, and everyone at St Ives was suddenly fixated with the spot price of gold. It was only the Australian dollar's weak exchange rate which saved our jobs.
Fortunately, St Ives Gold was rescued by the big South African mining house, Gold Fields Ltd. The South Africans, anxious to expand their operations in the post-apartheid era, take a long-term view of their chosen commodity. They saw the enormous potential at St Ives through the eyes of all our geologists (it helps when the CEO for Gold Fields Ltd is a geologist by training). The outright purchase of St Ives in 2001 coincided with the gradual increase in the spot price for gold, and, at $35 million pa, Gold Fields Ltd commenced the largest exploration and resource development drilling campaign ever experienced in Australia. The exploration results have paid off and Gold Fields has recently committed $125 million to the construction of a new mill at St Ives.
The clock is now turned back to the resource industry economic climate of the late 1970's. Money is being pumped back into the exploration and mining industries. We have a second chance, and the pressure is on all geologists to deliver the goods. Can we perform? Can the universities re-tool to meet a reinvigorated mining and exploration market? There have been some hard lessons learned over the past 20 years which need to be addressed with urgency:
· Old exploration methods don't work anymore. We need to develop new methods and strategies to find ore deposits.
· R&D programs must be pragmatic and practical to survive and provide a valuable service to the industry. Exploration companies are not research institutions, and universities don't own drill rigs. However, they need to thoroughly integrate to improve the discovery rate.
· Exploration and resource industries must directly support R&D and foster university departments before they have atrophied to oblivion.
· Exploration and resource industries need to be more open in R&D. Sharing is good. Excessive confidentiality does not provide a "competitive advantage" anymore.
· Exploration and resource industries need to uplift their public profiles and actively promote their importance in the country, community and workforce.
The St Ives Gold Mining Company, Australia's second largest gold producer, is meeting these challenges by reinventing R&D. What used to be only an exercise in forensic geology (autopsies on former deposits), is now an integrated process involving universities and government research organisations. Along with Placer Dome Asia Pacific, we have initiated the "embedded researcher" concept to ensure seamless R&D interaction among the 40-50 exploration and mine geologists we have on site. The R&D project is not critical. What is fundamentally important is the communication between R&D and site personnel to stimulate and engage in innovative and creative thinking ways towards solving outstanding problems. We are looking at fluid flow, thermo-chemical gradients, fluid mixing, geochronology, palaeo-seismicity and aftershocks, and numerical modelling - just to name a few. Remote-controlled R&D is no longer acceptable, and we have flagged it as a vital issue to be addressed by the major providers of R&D in Australia.
This is the future in hard-core hard-rock geology. It's really exciting, and just sometimes, it feels as if it were 1977 all over again...