Airships for the Mining Industry
Over the past two decades, global known reserves of minerals have diminished while exploration activities have declined. The world is not running out of metals, but most of the easily accessible ore deposits are depleting. Mining companies are being forced to dig deeper, or develop new ore bodies in untouched frontier areas with limited access. This article examines the use of cargo airships in place of building gravel roads to provide cost-effective, sustainable transport. Airships could expand the possibility of mining operations and economic development in inaccessible areas, like much of northern Canada.
Approximately 70 percent of Canada’s landmass has neither railway or road access. Decades of prospecting and exploration drilling have already identified many locations with suitable levels of mineralization in this 7 million square kilometer area. These ore bodies would already be developed if access were available, but lack of infrastructure holds back the economic development. The problem is the immense expense of road construction in the North. The average cost of building a single lane gravel road in the Canadian Shield and Arctic is about C$3 million per kilometer.
The costs of building roads to bring in workers, equipment and fuel to the site and to bring out mineral concentrates can make extraction uneconomic. Roadless mining has only been possible with diamonds and gold. Such mines can bring in supplies over a seasonal ice road, and carry out the mine’s weekly production in a small airplane. The advent of cargo airships could eliminate the need for ice roads and expand the range of mineral deposits that can be profitably developed.
Whether it is better to use cargo airships, or to build a gravel access road depends on the location, the volume of traffic and the expected life-time of the mine. Figure 1 presents a conceptual model of the economic trade-off of using cargo airships versus building a gravel road and using trucks. For any given length of road, the initial construction can be treated as a fixed cost. Trucking costs can be treated as a function of the volume handled. The fixed cost of road construction and the variable costs of the trucks can be summed up to provide the total transportation cost for any volume of output over a set distance.
Cargo airships require minimal infrastructure. Their costs can be treated as totally variable, depending only on the volume carried. If the output exceeds the capacity of a single airship, another identical airship is added. As illustrated in Figure 1, the choice between the cargo airship and the road is determined at point X, where the total costs are equal. If the tonne-kilometers of mineral output are less than X, the mine developer is better off to use the cargo airship. If the production of the mine exceeds X, then the mine should build a road.
Figure 1 Conceptual Model of Cost Trade-off of Cargo Airships versus Roads
The trade-off point between roads and cargo airships will be adjusted by three important considerations: the geography, the type of minerals and the expected life of the mine.
An empirical model would be adjusted for the conditions of any specific mining location. The obstacles of muskeg, swamps, rock outcrops, water crossings and permafrost soils, as well as environmental, are impediments that will cause cost increases. In addition, the longer the road, the more the road construction costs move up, and the trade-off point shifts to the right.
Road building also includes a number of non-material expenses. Obtaining regulatory approvals, environmental mitigation and consultation with indigenous groups increased construction costs. In addition, the time and resources required to perform environmental assessments and conduct meetings can add significant opportunity costs to the project. Many locations in the North have no gravel deposits, which means added costs to truck road-building materials. Construction and its associated costs are only incurred once, but on-going maintenance, snow clearing and end-of-life closure can also be included.
The type of mineral deposit is important because the mine output (concentrate) determines the number of loads to be carried. Trucks are relatively inexpensive compared to airships. As the volume of material to be moved increases, the costs of the airship would increase much faster than the trucking costs. Consequently, the airship could compete with trucks for rare earth concentrates, a lithium and some base metals, but not iron ore, because its value-to-weight ratio is too low.
The third economic dimension to be considered is the length of time that the mine can be expected to operate. Most roads can last over 40 years, providing there has been some rehabilitation around the 25-year mark. But if the mine only lasts, say 15 years, a perfectly good road becomes a stranded asset. Worse still, the mining road may need to be decommissioned and the area restored. The shorter the economic life of the mine, the more airship transport is favoured.
The ability of companies to capitalize on the tremendous mineral potential in Northern Canada, is shockingly poor. Throughout all of the North West Territories (NWT) and Nunavut, only seven major mines are active at the present time. Nunavut has three gold mines and one iron ore mine, while in the NWT three diamond mines remain open (two are in serious financial difficulty). More mining occurs in the Canadian Shield regions of the Canadian provinces, but again only in locations that are relatively close to existing land infrastructure. Cost controls are vital to success of mine operations, and the current high costs for transportation and logistics scuttle many new mines before they start.
Sustainability issues have been at the forefront of mining discussions for many decades. The industry is under substantial pressure to reduce emissions and lessen environmental impacts. Under the new Impact Assessment Act (2020) mines have to include plans to hit “net zero” emissions by 2050 if they have any hope for approval. Significant reductions in carbon emissions could be made by using hydrogen fuel cell powered cargo airships that would make it easier to hit these new requirements. The Canadian Institute of Mining, Metallurgy and Petroleum (CIM) is already reporting increased use of hydrogen, and expects mines to use more in the future.1
Mining companies are a natural partner for the airship industry, but so far institutional barriers have discouraged their involvement. When asked whether or not his company would invest in an airship development, one mining executive responded, “We dig rocks out of the ground, and know nothing about flying things through the air.” Even though effective logistics and operational cost containment are vital, the mining industry has never made any investment in the development of an airship-based solution for the transportation of mineral concentrates.
Second, many mining developments consider road development to be a government obligation. For example, the owners of the “Ring of Fire” chromite deposit in Northern Ontario have been in a 15-year impasse with governments, over who should build the road.
The third problem is the manner in which mining companies raise money. In Canada a significant tax break to investors is offered for “flow-through shares”. However, this money is restricted to exploration, and cannot be used to build roads or invest in airships.
In the future, metal producers may be required to include the “carbon footprint” as a distinct component of the global market price. Mines that are able to reduce this footprint using sustainable, regularly-scheduled cargo airship services, will be better positioned to compete financially, and to operate in a more sustainable manner, aligning to ESG (environmental-social-governance) metrics.
The use of cargo airships in mining is not simply a binary choice. Even if the mineral deposit has the size, ore content and location to justify a road, the cargo airship could still be useful in its development. The mine could begin operations on a start-up scale using cargo airships, while the road obtains regulatory and environmental approval. Subsequently, the airship could speed up the construction of the road by locating materials and equipment along the right-of-way. Once the road finally opens, the airships could be reassigned to other mining developments.
Costs are not the only advantage of cargo airships. Local indigenous groups may only receive ephemeral benefits for their communities, if the mining road goes straight to the mineral deposit. One of the issues slowing down the “Ring of Fire” development is the reasonable ‘shared benefit’ expectation of the indigenous peoples. They would like the mine development to connect their remote communities to the provincial road network. The use of a cargo airship can accommodate both parties. The outbound loads of mineral concentrates from a mine are much larger than the inbound loads of supplies. Therefore, it should be quite manageable for scheduled airships to include regular detours on inbound trips to neighbouring towns for their supplies, too.
Land rights and work permit negotiations often hinge on providing employment and training opportunities for indigenous community members. A local airship facility would require trained pilots, mechanics, forklift drivers for loading/unloading of cargo, as well as various support functions in an emerging and innovative field. Airship mining could provide valuable career related training opportunities for Indigenous youth to work at well-paying jobs within their own communities, while preserving their traditional way of life.
In summary, the economic development of Canada’s mineral-rich northern regions would greatly benefit from regularly scheduled airship services. Mines are currently being challenged as never before to demonstrate their ability to operate with much more accountability and environmentally sound practices. Using airships to transport supplies and processed materials would provide many benefits. As ESG criteria continue to be incorporated into business practices, executives from both the mining and airship industries need to work together to develop an innovative airship solution for mining operations.