7
million is required to upgrade the tailings handling system
to PD pumping technology. Densifying the tailings will
have a positive effect on the spent on pumps but will require
a major investment in the existing thickeners. An estimated
total of $50 million is required for upgrading the system to
pump thickened tailings. For the purpose of this paper, no
further breakdown of the capital costs is provided.
Economic Evaluation
As demonstrated above, upgrading the tailings handling
system reduces operational costs. The capital costs required
for such an upgrade are significant. The viability of invest-
ing in retrofitting an operational pipeline depends on the
monetary return on investment (payback) as well as the
operational and competitive advantages of the upgrade.
The savviness to invest in upgrades that require more than
five years to break even is rare.
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
Cost variation
Power costs PD -1 PS -Cw 32%
Power costs PD -1 PS -Cw 65%
Water costs PD -1 PS -Cw 32%
Water costs PD -1 PS -Cw 65%
Carbon costs PD -1 PS -Cw 32%
Carbon costs PD -1 PS -Cw 65%
Figure 7. Sensitivity of payback period to variations in power, water and carbon tax costs
Figure 6. Operating costs. Costs represented as percentage
of current operating costs
The payback period for the two upgrade scenarios is cal-
culated assuming the required capital investment is repaid
by the difference in operational costs. In other words, the
savings in operational costs are considered fictive instal-
ments, offsetting the capital costs. Using this methodology,
the break-even period for the PD upgrade is nine years.
When the slurry is densified the payback period is reduced
to six years.
Sensitivity
The cost breakdown of the operational costs indicates the
two major drivers are power and water. Long term changes
in these costs affect the viability of the technology upgrade
significantly. Figure 7 presents the sensitivity of the pay-
back period as a result of a variation in costs of power,
water and carbon tax. As expected, variations in power
costs have a significant impact on the break-even period.
In the scenario where only the pumping technology has
been changed, power costs have the largest impact on the
break-even period. In the scenario where the tailings are
dewatered prior to pumping, the cost of water has the high-
est impact on the time required to break even. From these
calculations, it can be seen that in this case doubling actual
water costs reduces break-even by a third. In contrast with
common perception, the taxation of emissions has limited
effect on the feasibility of sustainable investments. The pos-
itive effect of improved water recovery for breaking even on
investment is amplified if water becomes more valuable in
the future. Increasing power costs have the second largest
Changei
pay-akperod
million is required to upgrade the tailings handling system
to PD pumping technology. Densifying the tailings will
have a positive effect on the spent on pumps but will require
a major investment in the existing thickeners. An estimated
total of $50 million is required for upgrading the system to
pump thickened tailings. For the purpose of this paper, no
further breakdown of the capital costs is provided.
Economic Evaluation
As demonstrated above, upgrading the tailings handling
system reduces operational costs. The capital costs required
for such an upgrade are significant. The viability of invest-
ing in retrofitting an operational pipeline depends on the
monetary return on investment (payback) as well as the
operational and competitive advantages of the upgrade.
The savviness to invest in upgrades that require more than
five years to break even is rare.
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
Cost variation
Power costs PD -1 PS -Cw 32%
Power costs PD -1 PS -Cw 65%
Water costs PD -1 PS -Cw 32%
Water costs PD -1 PS -Cw 65%
Carbon costs PD -1 PS -Cw 32%
Carbon costs PD -1 PS -Cw 65%
Figure 7. Sensitivity of payback period to variations in power, water and carbon tax costs
Figure 6. Operating costs. Costs represented as percentage
of current operating costs
The payback period for the two upgrade scenarios is cal-
culated assuming the required capital investment is repaid
by the difference in operational costs. In other words, the
savings in operational costs are considered fictive instal-
ments, offsetting the capital costs. Using this methodology,
the break-even period for the PD upgrade is nine years.
When the slurry is densified the payback period is reduced
to six years.
Sensitivity
The cost breakdown of the operational costs indicates the
two major drivers are power and water. Long term changes
in these costs affect the viability of the technology upgrade
significantly. Figure 7 presents the sensitivity of the pay-
back period as a result of a variation in costs of power,
water and carbon tax. As expected, variations in power
costs have a significant impact on the break-even period.
In the scenario where only the pumping technology has
been changed, power costs have the largest impact on the
break-even period. In the scenario where the tailings are
dewatered prior to pumping, the cost of water has the high-
est impact on the time required to break even. From these
calculations, it can be seen that in this case doubling actual
water costs reduces break-even by a third. In contrast with
common perception, the taxation of emissions has limited
effect on the feasibility of sustainable investments. The pos-
itive effect of improved water recovery for breaking even on
investment is amplified if water becomes more valuable in
the future. Increasing power costs have the second largest
Changei
pay-akperod