Minerals, Wealth and Progress - Mining and the Environment: From Ore to Metal - page 27

chance with silver than with gold. Mining history is replete with examples where a viable
ore-grade was encountered in as many as 20 adjacent holes on a grid pattern, only to find
that there were no values or only low-grade values between. On the other hand, barren
drill holes may have missed a major ore body by a matter of a few metres. Murphy's Law
applies - 'If anything can go wrong, it will.'

Operational and Metallurgical Risks

A wide variety of factors and incidents can disrupt operations or make them less economic. In
the construction period, delays may follow, for example, from unexpected geological instabil-
ity, as in the collapse of the Ok Tedi tailings dam, or late arrival of critical production equip-
ment, with consequent cost overruns. In the operational period, poor performance can result
from inappropriate metallurgy or technology, equipment failure, unforeseen circumstances,
as well as human errors and factors such as lack of skilled labour and/or subcontractors, poor
maintenance, labour unrest, failure to identify or obtain the most appropriate equipment, and
delays in completing critical infrastructure such as access roads or water supply.
Metallurgical risks can originate from a limited understanding of the ore body (Lay
2006). Mineral deposits are not uniform in the nature of the ore and gangue minerals (i.e.
intergrowths, variations in composition, intensity of oxidation and/or alteration processes
acting on the ore minerals which influence their metallurgical behaviour). Preliminary
understanding of crushing and grinding characteristics, liberation size, and metallurgical
recovery, as well as variability of grade of mineralization may be inaccurate. Some portions
of the mineralized body may contain deleterious elements (such as arsenic or mercury) that
make them unacceptable to smelters, or they may contain unstable pyrite/marcasite that
ignites spontaneously within mine workings or during concentrate shipment.
Ground instability, specifically rock falls or rock bursts in underground mines and slope
failures (land slips) in open Pit mines, are among the most common causes of disruption
to mining operations. Again, these risks relate to the difficulties involved in adequately
exploring geotechnical conditions in a highly variable, complex subsurface rock mass.

Mineral deposits are not uniform
in the nature of the ore and
gangue minerals.

Economic/Market Risks

Mine output may not yield a sufficient return to meet the company's fiscal expectations or
obligations either because of a decline in commodity prices, increased cost of fuel or other
consumables or because insufficient quantities of output are sold. Mining cash flows are
heavily influenced by commodity prices and currency fluctuations, as seen in the closure of
many mines during the late 1990s when commodity prices were low. Unlike most other com-
mercial products, prices of metals are generally set internationally. Low-grade products must
compete for markets with higher-grade products. Discovery and development of large and/
or high-grade deposits may depress the market prices. Substitution of alternate material that
will perform the function of a particular metal cheaper or better will diminish the market.

Country Risks

Sometimes referred to as political risk, country risk consists of all factors within a host
jurisdiction's economic, political, legal, and social systems that can delay or block the
reasonable or scheduled implementation of a mining project ( Table 1.4 ). Country risks