For nearly three decades, resource-rich Australia has profited from China's insatiable appetite for raw materials that have fuelled the Asian powerhouse's spectacular double-digit economic growth.
Now, with the authorities in Beijing intent on promoting domestic consumption as opposed to investment and imports, a perfect storm is gathering Down Under as mining operators contend with unstable commodity prices, high labour costs, competition from US coal exporters, the advent of carbon and mining taxes and an investor community that is increasingly averse to risk. For beleaguered Australian mining operators, the elation that characterised the booming early noughties has turned to angst as the pressure mounts to cut costs and improve operating margins.
As Peter Kanck, project integrator at the Adelaide-based Deep Exploration Technologies Cooperative Research Centre (DET CRC) explains, the onus is now on the industry to innovate its way out of this ever-widening hole by developing more cost-effective methods of minerals exploration.
"Current exploration techniques have a very poor success or hit rate," he explains. "The challenge is to develop a better value proposition. More information, the ability to make decisions quickly, minimising the time and cost of drilling holes that have no value - all of these things will help the industry to discover and define resources much faster. The long lead times and delays associated with bringing a resource to realisation result in significant cost for investors. A realistic expectation is to shorten this lead time from months or years to days."
Joint enterprise: DET CRC and the drilling technology roadmap
Mineral resources constitute approximately 50% of Australia's exports; however, 80% of the nation's mineral production is from mines that were discovered more than 30 years ago, the vast majority of them located where the basement - the geological term given to the metamorphic or igneous rocks that underlie a sedimentary platform - is outcropping or shallow. More successful, cheaper and safer technologies that enable exploration at greater depths in vast prospective areas of deep, barren cover rock are therefore at a premium.
One of approximately 40 cooperative research centres (CRCs) dotted across Australia, DET CRC was established in 2010 under the auspices of AMIRA International's drilling technology roadmap, a collaborative project involving 59 representatives from mining and drilling companies.
Focusing on research into the drilling, logging and targeting of exploration holes, DET CRC will manage an eight-year programme funded by $28m in cash from the Commonwealth Government, $27m cash (and $15m in-kind) from industry participants and $50m in-kind from research providers.
"The DET CRC is an industry-initiated and industry-driven response to the key long-term challenge facing the minerals industry, that being the need to replace, through exploration, the ever-more rapidly depleting existing stock of mineral resources," commented Joe Cucuzza, director of project delivery for AMIRA International.
Deep impact: the coiled tubing drill rig explained
The investment has paid dividends in the shape of a prototype of the world's first coiled tubing drill rig (CT rig) for mineral exploration, a technology that could lead to a surge in exploration activity.
"Coiled tubing drills have been used in the oil and gas industry for years, primarily for 'work over drilling', where existing holes, lines or wells are re-drilled or cleaned out to improve productivity and delivery of oil or gas," explains Kanck. "These holes can be thousands of metres deep; however, the coil tube operates inside existing casing or pipes, not unlike a drain cleaner. The typical application in mineral exploration is in host material known as 'soft rock'."
Unlike traditional rigs, which employ drill rods, the CT rig uses a continuous reel of tubing that enhances safety and maximises the length of time the drill bit is able to operate at the bottom of the hole. The CT rig is also much smaller and lighter than conventional drill rigs and uses a motor at the base of the shaft rather than at the surface, thus reducing fuel costs and environmental impact.
"The challenges faced by hard rock explorers include developing economic methods that can drill hard rock of 150-200MPa with a single pass, and at a high speed and penetration rate," Kanck continues. "The CT rig technology the DET CRC is developing aims to work within this challenging space, using a cost model that is a fraction of existing hard rock exploration, and a very small fraction of oils and gas budgets.
"To achieve these outcomes, a holistic approach to the drilling process is required. Coil tubing needs to become a long-life composite and new drilling tools that are significantly more efficient and effective must be developed. Cutting materials and hardware that are purpose designed and developed for the new operating parameters, plus control systems and downhole and surface tools that provide cost-effective, decision ready data are also needed.
"A very small footprint will provide obvious environmental and cost savings in mobilisation, reduced energy use and a real-time, decision-making environment," he adds.
Innovation is key: horizontal drilling and the future of mining in Australia
Based on current reserves, resources and rates of exploitation, half of Australia's existing major non-bulk commodity mines could close down within seven to 18 years. Against this gloomy backdrop, do technologies such as the CT rig and horizontal drilling genuinely have the potential to revitalise the industry in Australia and worldwide?
"There is a lot of discussion about horizontal drilling, but that is not the space that DET CRC is operating in," says Kanck. "This style of drilling is usually for gas or oil drainage or perhaps used for ore body delineation in brown-field mining operations. The DET CRC hard rock CT drill will be able to find and define mineralisation 'halos', fast-tracking the prospecting process and significantly improving the successful strike rate of exploration."
Such technologies cannot arrive soon enough for the Australian mining industry as it looks to address the significant reduction in the nation's mineral resources inventory brought on by high production rates and low mineral exploration success.
"Most of the outcropping deposits in Australia have been found - and industry is having to progressively go under deeper cover," Richard Schodde, managing director of Minex Consulting and a keynote speaker at the DET CRC Annual Conference, said recently. "This means industry has to use indirect methods to discover the deposit and this is more expensive to do and riskier."
"In combination with real-time sensors, the coiled tubing drill rig would radically speed up the rate of target testing. The ability to learn as you go by getting instant feedback on the ore grade and mineral potential of the local area will help quickly guide the company to zero-in on the deposit.
"This is contrast to the current stop-start approach to exploration which requires several campaigns of work over several years to delineate the deposit. Company management know that 'time equals money'."