Minerals Engineering 39 (2012) 268275

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Minerals Engineering
journal homepage: www.elsevier.com/locate/mineng

Economic feasibility and sensitivity analysis of integrating industrial-scale

mineral carbonation into mining operations
Michael Hitch a,, G.M. Dipple b
a
b

University of British Columbia, Norman B. Keevil Institute of Mining Engineering, 6350 Stores Road, Vancouver, BC, Canada V6T 1Z4
University of British Columbia, Department of Earth and Ocean Science, 6339 Stores Road, Vancouver, BC, Canada V6T 1Z4

a r t i c l e

i n f o

Article history:
Received 31 March 2012
Accepted 9 July 2012
Available online 10 October 2012
Keywords:
CO2 sequestration
Mining
Mineral carbonation
Industrial carbon sequestration

a b s t r a c t
Proposed carbon reduction measuressuch as cap-and-tradeappear poised to have a signicant impact
on the nancial feasibility of mining operations as point-source emitters of carbon dioxide (CO2). It is
therefore necessary to proactively assess the ways in which these effects may be mitigated. Carbon
sequestration through mineral carbonation is well suited for integration into mining operations. Its ability to make use of waste rock to trap and store CO2, given suitable geological conditions, can help to signicantly reduce carbon emissions. This paper presents the rst attempt at conceptually integrating a
high temperature and pressure industrial mineral carbonation facility into a developing minesite. The
Turnagain nickel site, a low-grade, high-tonnage Ni-sulphide deposit, located in Northern BC, contains
an abundant amount of Mgsilicate minerals in its waste rock. These minerals have signicant potential
for use in mineral carbonation. In the presence of a mandatory cap-and-trade scheme in North America,
there is the potential to produce an additional revenue stream through the generation and sale of carbon
credits. Results of nancial modeling have yielded a net present value (NPV) at an 8% discount rate of
$131.5 million for the integration of mineral carbonation into proposed mining operations at Turnagain,
suggesting that the project may be viable from a nancial standpoint. Sensitivity analysis has also demonstrated that the parameter with the greatest inuence on project NPV is the CO2 avoidance ratio. This
ratio, which takes into consideration the amount of CO2 released in the mineral carbonation process to
determine the net amount of CO2 avoided, is critical to maximizing the amount of carbon credits available
for sale in a cap-and-trade environment.
2012 Elsevier Ltd. All rights reserved.

1. Introduction
Global climate change and the need for improved environmental accountability have recently jumped to the forefront of our
attention, both at home and around the world. As a result, government legislation appears inevitable in an attempt to help achieve
emissions targets and progress towards improved environmental
standards. Current plans suggest that market-based incentives
such as cap-and-tradeare the most effective way to adequately
reduce greenhouse gas (GHG) levels. Inevitably, these incentives
will require that regulation be put on the price of carbon dioxide
(CO2) (Government of Canada, 2009). Whatever forms these regulatory changes may take the consequences on the mining industry
may be signicant, given the environmental footprint commonly
attributed to mining operations (Norgate et al., 2007).
It is difcult to predict exactly how a carbon dioxide cap-andtrade program might develop. The European Unions Emissions
Trading Scheme (EU ETS) has set the stage for the development
Corresponding author. Tel.: +1 604 827 5089.
E-mail address: mhitch@mining.ubc.ca (M. Hitch).
0892-6875/$ - see front matter 2012 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.mineng.2012.07.007

and implementation of a similar system in North America

(Skjrseth and Wettestad, 2008; Karling, 2007; Victor and House,
2004). Should a cap-and-trade program similar to the EU ETS come
into effect in North America in the near future, it would undeniably
have signicant nancial ramications for large point-source emitters of CO2 such as mine sites. In addition to the environmental impacts that carbon capture and storage (CCS) may be able to achieve,
the economic sustainability of its implementation must be demonstrated (Huijgen and Comans, 2005; OConnor et al., 2004;
Zevenhoven et al., 2006). While business decisions based solely
on environmental considerations would be laudable, shareholder
accountability and the nancial well being of a company are always a primary concern (Lasher, 2008). This suggests that weighing the costs of environmental stewardship against the potential
consequences of the alternative is necessary. Environmental actions must be economically and nancially viable before they
may be widely and effectively employed.
The appeal of a CCS project at the Turnagain nickel site lies in its
potential for simultaneous contribution to environmental and
economic sustainability. Carbon credit trading can result in a
reduction of compliance costs and/or the realization of additional

M. Hitch, G.M. Dipple / Minerals Engineering 39 (2012) 268275

revenue streams. This paper aims to evaluate the degree to which

the integration of a mineral carbonation project would impact the
mine economics of the Turnagain nickel site in the presence of a
cap-and-trade system. Through an analysis of cost efciency for
various mineral carbonation options and their subsequent development within a comprehensive cost model and discounted cash
ow (DCF) model, the long-term feasibility of integrating such a
project was evaluated.
The Turnagain nickel project is located approximately 70 km
east of the community of Dease Lake in Northern British Columbia,
Canada (Fig. 1). By denition, it is a high tonnage, low-grade, Nisulphide deposit. Waste rock at the project contains abundant
Mg-rick olivine, making it an attractive site for implementation
of industrial-scale mineral carbonation facilities.
1.1. Mineral carbonation background
Mineral carbonation is quickly gaining recognition as one of the
most effective ways of removing excess CO2 from the atmosphere
(Rock, 2007; Voormeij and Simandl, 2004; Lackner et al., 1995).
First proposed by Seifritz (1990), mineral carbonation takes advantage of the natural weathering process of silicate minerals, whereby the alkalinis extracted from silicate minerals through
weathering and waterrock interactions react with ambient atmospheric CO2 to produce newly formed carbonate minerals (Huijgen
and Comans, 2005; Lackner, 2002). Specically, the weathering of
abundant calcium (Ca) and magnesium (Mg)-rich silicate minerals
to form Ca- and Mg-carbonates, in the presence of CO2, forms the
basic concept behind mineral carbonation technology. The goal of
mineral carbonation on an industrial scale is to accelerate this natural process, to allow for greater quantities of CO2 to be captured
and stored in a shorter period of time.
The efciency of mineral carbonation is directly attributable to
the amount of CO2 emitted by the process itself. Estimates by
OConnor et al. (2004) suggest that only 77% of sequestered CO2
can be claimed as CO2 avoided, resulting in a CO2 avoidance ratio
of 0.77, as calculated using Eqs. (6 and 7).

269

CO2 avoided CO2 sequestered  CO2 emitted

CO2 avoidance ratio CO2 avoided : CO2 sequestered

It is important to note that the emissions produced, and consequently the CO2 avoidance ratio, will ultimately be dependent
upon the process conditions as well as the source of energy utilized
in the process. More generalized estimates by OConnor et al.
(2002) have suggested that an energy penalty of 11.5 kWh/t ore
processed is reasonable for the capture component of CCS. The extreme conditions required for efcient conversion adversely affects
the required amount of energy and the amount of CO2 released, as
well as the process operating costs. These effects indicate a number
of conicting priorities in the conduct of such research. While
some attempts have been made to maximize the efciency of reaction, other studies have sought to minimize costs or reduce process
emissions.
1.2. Integration into mining and mineral processing
The availability of Mg-rich minerals worldwide in mineable
deposits, combined with the high MgO content within Mgsilicate
mineralssuch as olivine and serpentinemake Mgsilicates
appropriate for use as feedstock material in mineral carbonation
(Lackner et al., 1995; Yegulalp et al., 2001; Barat et al., 2002;
Cipolli et al., 2004; Goff and Lackner, 1998). In addition, the common association of Mgsilicates with certain mineral deposit types
increases the feasibility of extraction, both of ore and of suitable
feedstock material for use in mineral carbonation. This benet is
primarily due to the ability to share the cost of extraction.
Kohlmann et al. (2002) and Gerdemann et al. (2004), have outlined
the importance of integrating the extraction of Mgsilicates for
mineral carbonation with pre-existing or planned mining activities
in order to reduce mining and transportation costs. This integration can result in more protable marginal projects and improved
overall project economics by lowering the mine cut-off grade and
bringing value to otherwise value-less waste rock (Hitch et al.,
2009; Zevenhoven et al., 2006).

Fig. 1. Location of the Turnagain nickel project.

270

M. Hitch, G.M. Dipple / Minerals Engineering 39 (2012) 268275

(Ca,Mg)O

Mine

Mineral
Carbonation
Facility

CO2

(Ca,Mg)CO3

Aggregate

Storage

Disposal
Fig. 2. Conceptual lifecycle of mineral carbonation (modied after Huijgen et al.
(2007)).

The lifecycle of the mineral carbonation process is shown conceptually in Fig. 2. Beginning with the mine as a source of reactive
material, waste rock provides a steady source of feed for mineral
carbonation. A constant input of CO2 is required, derived either
from mine process emissions, outside sources via a pipeline, or a
combination of the two. Following reaction, the resulting benign
product is put to a number of uses, including aggregate or mine
backll to aid in construction or mine reclamation. Alternately,
the carbonate can be safely disposed, with little to no need for subsequent monitoring.
The mutual benets of integrating mining and mineral carbonation highlight the importance of integrating Mgsilicate extraction with mineral carbonation in order to enhance viability.
1.3. Importance to mining
Successful integration of CCS into the mining industry will require incentives to spur development and increase the likelihood
of widespread implementation across the industry. Incentive
structures to help curb CO2 emissions have already been implemented in Europe, through the development of the European Union Emissions Trading Scheme (EU ETS). A similar North
American initiative seems imminent (Western Climate Initiative,
2010; Government of Canada, 2009). These policy structures are
designed to cap the allowable amount of emissions from a point
source emitter of CO2. Given the contribution of the mining industry to total greenhouse gas emissions (Organisation for Economic
Co-Operation, 2004), it is anticipated that a cap on emissions will
create a notable impact on mining operations from both a nancial
and operational standpoint. The degree to which mining operations will be impacted is highly dependent on the imposed greenhouse gas reduction requirement, in addition to the incentives
provided through market mechanisms such as cap-and-trade.
The imposition of a limit on the total amount of CO2 permitted
for release by a single point source emitter will require emitters
either to change technologically to reduce emissions, or to capture
and store emissions that result from operations. Alternately, excess
emissions may be offset through the purchase of carbonoffset
credits. The operational and/or nancial impact of carbon reduction mechanisms, such as cap-and-trade, will require careful
assessment as environmental policy continues to develop.
1.4. Estimates of mineral carbonation costs
Previous cost estimates of implementing carbon sequestration
by way of mineral carbonation have yielded a wide variety of estimated values, illustrative of the high degree of uncertainty surrounding the valuation of mineral carbonation projects. A

summary of sample cost estimates is shown in Table 1. This uncertainty is magnied by the inconsistent use of feedstock material
and process parameters employed amongst these estimates. It is
also often unclear exactly which aspects of the lifecycle of mineral
carbonation, including all the components necessary to complete
the lifecycle, are included in these cost estimates. Herzog (2002)
indicated the need to add $50-$60/t CO2 for CO2 capture and
transport costs alone, attesting to the signicant impact that such
emissions could create in conducting an economic evaluation of
mineral carbonation. The additional need to incorporate other factors into the lifecycle of mineral carbonation, such as mining, processing and disposal, further delineates the need for improved
clarity in the estimation and presentation of mineral carbonation
costs.
Ballantyne and Hitch (2009) suggest in order for Canada to
achieve the published emissions reductions for 2020 (600 Mt
CO2e) and 2050 (1Bt CO2e) carbon offset prices will reach
CDN$200/t CO2e (Fig. 3).
Financial analysis was undertaken by the authors to determine
an estimate of the overall viability of integrating mineral carbonation into mining operations at Turnagain. Although project development is currently only at the conceptual design phase, it is still
important that the project economics be carefully considered, to
determine whether or not project development should continue.
A relatively high degree of uncertaintya common condition of
natural resource projectsis expected throughout development
(Park et al., 2001), and must be taken into consideration in the
analysis of the overall project economics. Further model renements will be necessary as more accurate project parameters become apparent.
The present nancial analysis makes use of a discounted cash
ow (DCF) approach for its ability to produce a relatively sound
understanding of the estimated project value, given the assumptions made in the base case scenario. While adequate as a preliminary analysis, it is important to bear in mind that in reality
any project will be much more uid, and project managers more
exible in terms of expanding, contracting, deferment, or abandonment of a project, as the conditions of operation become more precisely known. This exibility allows for added value in the ability to
mitigate losses while maximizing on upside potential (Schwartz
and Trigeorgis, 2004).
In order to quantify the uncertainty inherent in this project, as
well as in any deterministic modeling approach to project forecasting and evaluation, it was necessary to test the assumptions employed. Sensitivity analyses capture the inuence of the most
highly uncontrollable factors in project advancement and evaluate
how output uncertainty can be apportioned to the uncertainty of
the model inputs.
2. Methodology
2.1. Cost modeling
The tradeoff of cost versus efciency for the various mineral
carbonation technologies under investigation is an important
Table 1
Published cost estimates of mineral carbonation.
Cost

Reference

$70/t CO2
$50-$100/t CO2
$65/t CO2
$54/t CO2 sequestered $78/t CO2
avoided
$60-$100/t CO2
$69/t CO2

Lackner (2002)
IPCC (2005)
OConnor et al. (2005)
OConnor et al. (2004), Gerdemann et al.
(2007)
Newall et al. (2000)
Lyons et al. (2003), Penner et al. (2004)

M. Hitch, G.M. Dipple / Minerals Engineering 39 (2012) 268275

271

Fig. 3. Carbon offset pricing forecast (Ballantyne and Hitch, 2009).

factor when considering how best to proceed with project development. The benets of high sequestration efciency through the use
of high pressuretemperature mineral carbonation in an autoclave
are offset by the high costs needed for extensive processing and
elevated process conditions. Conversely, low efciencies of reaction associated with engineered heap leach piles or bio-inoculated
piles (Power et al., 2009) may be justied by minimal costs. This is
a critical aspect in the evaluation of mineral carbonation, as the
cost of the technology largely dictates its feasibility for implementation on an industrial scale. This tradeoff of cost versus efciency
(shown in Fig. 4) will be highly inuenced by the parameters set
forth by governmental regulations and/or the carbon management
scheme put into place, namely the cost of carbon and the cap on
emissions. It is anticipated that the trace of this relationship will
be a stepwise function, due to the signicant changeboth in
terms of cost and efciency of reactionthat will result from transitioning from more passive technologies, such as heap leaching, to
more active ones, such as agitated tank leaching (autoclave
reaction).
For detailed nancial modeling, an autoclave reaction was chosen for further consideration as the only method proven to store

Conceptual Model of Mineral Carbonation Costs

Sequestration Cost ($/t CO2)

$200
Corroborating datapoint:
(a)Natural attenuation (Wilson et al., 2006)
(b)Heap leaching (Stolaroff et al., 2005)
(c) Autoclave reaction (Lackner et al., 2008; this research)

$160

$120
(c)

$80

$40
(b)

$0
0%

(a)

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Efficiency of Reaction
Fig. 4. Conceptual tradeoff of cost versus efciency for various methods of mineral
carbonation. (See above-mentioned references for further information.)

adequate amounts of CO2, a conclusion supported by considerable

research to bring it past the proof-of-concept stage. While the option to implement mineral carbonation through engineered heap
leach piles is not entirely unreasonable in the future, adequate research in this area has not been undertaken to be able to provide
reasonable parameters and warrant further analysis.
2.2. DCF analysis
Discounted cash ow analysis was able to produce an estimate
of project value to aid in the decision making process. While up
front it is relatively simple to evaluate a project in terms of revenue
versus cost, it is important to consider the time value of money and
the impact that signicant up-front capital costs may have. Financial analysis through DCF modeling is the most commonly used
methodology in evaluating potential investments for its ability to
quantify the added value to shareholders (Lasher, 2008; Park
et al., 2001; Campbell and Brown, 2003). Mining operation input
parameters are based on the Companys 2010 feasibility study
while those parameter values for sequestration and CO2 transport
are based on the work of Campbell and Brown, 2003. Input parameters used in this study are located in Tables 2 and 3.
2.2.1. Assumptions
A wide variety of options exist that allow proposed mining
operations at Turnagain to integrate with carbon management programs in British Columbia and elsewhere. These options primarily
relate to location and transportation issues, namely a site for mineral carbonation and a source of sufcient CO2. While many large
sources of CO2 exist in heavily populated areas, the primary
sources of mineable feedstock material tend to be located in remote locations, such as that found at Turnagain. Emissions from
the mine and the processing plant will undoubtedly be signicant,
given operations such as the Mt. Keith Nickel Mine (BHP Billiton,
2004). However, it is likely that mineral carbonation at Turnagain
will require an external supply of CO2 in order to take advantage
of the signicant amount of available feedstock. The development
of a mine may draw point-source CO2 emitters towards the area,
and consequently improve CO2 transport logistics. As such, it is
necessary to locate and source potential alternatives in order to
supply sufcient quantities of CO2 to maximize sequestration via
mineral carbonation and justify project implementation.

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M. Hitch, G.M. Dipple / Minerals Engineering 39 (2012) 268275

Table 2
Cost model input parameters and base case scenario results.

3. Base case results

Input parameters

Unit

Base case value

Throughput
Strip ratio
Dunite in waste
wt.% MgO
Processing cost
Sequestration efciency
Sequestration operating cost
CO2 capture cost
CO2 transport distance
CO2 transport cost

tpd

%
wt.%
$/t feed
%
$/t CO2
$/t CO2
km
$/km

87,000
0.74
20
48.54
8.00
80
32.39
25.00
250
0.02

Base case result

Total operating cost

$/t CO2

82.51

Best case scenario

Worst case scenario

$/t CO2
$/t CO2

27.98
237.91

Table 3
DCF model input parameters and base case scenario results.

Input parameters

Unit

Base case value

Capital cost
Development phase duration
Mine life
Operating cost
Total sequestered CO2
CO2 avoidance ratio
Site CO2 emissions
Carbon credit pricea
CO2 reduction requirement
Decommissioning
Discount rate
Ination rate

$
yrs
yrs
$/t CO2
tpy

tpy
$/t CO2
%
$
%
%

139 million
2
24
82.51
2 million
0.77
1 million
200
20
20 million
8
2

Base case result

NPV8
IRR
Simple payback
Discounted payback

$
%
yrs
yrs

131,449,380
25.1
3.72
4.77

Ballantyne and Hitch (2009).

While it is important to accurately estimate the operating

parameters of a mineral carbonation scheme at Turnagain, revisions to these values will invariably be made as further research
and development of mineral carbonation and mining operations
at Turnagain are outlined. For this reason, sensitivity analysis became essential in the overall valuation determined through this research. It is only through assessing the range and magnitude for
the various inputs can a more complete understanding of the project economics and viability be achieved.
2.3. Sensitivity analysis
Sensitivity analysis was rst performed on the cost model inputs, allowing each input to be delineated in terms of its dependent factors. This enabled an analysis of the deviations from the
base case to assess the impact of various factors. The sensitivity
of each of these inputs allowed for a more accurate estimate of
the sensitivity of project value, as determined through DCF modeling and its respective sensitivity analysis (Saltelli et al., 2004).
2.4. Effect of correlation
Correlations are particularly important in this study, given the
strong relationship between the price of carbon and the CO2 reduction requirement. Despite the perpetual uncertainties of market
mechanisms, the principles of supply and demand suggest a strong
positive relationship between these two key parameters.

3.1. Cost sensitivity

The most sensitive parameter outlined through sensitivity analysis of the cost model was the sequestration efciency of reaction.
Unit changes in this parameter are the most inuential on the cost
of sequestration, primarily due to the requirements and associated
costs that go into preparing feedstock for sequestration. Maximizing the amount of CO2 sequestered from the input feedstock enables costs to be minimized per unit sequestered. Given the
substantial requirements in bringing input feedstock and CO2 to
a suitable state at the site of reaction, the amount of CO2 sequestered per unit of input is important in determining the unit sequestration cost in the lifecycle of mineral carbonation. As the
determinant of the total amount of CO2 sequestered, sequestration
efciency also directly affects other cost inputs by inuencing the
size of the denominator for the calculation of unit cost per tonne of
CO2 sequestered. It is therefore important that this parameter is
maximized in order to minimize the overall unit cost of sequestration. Table 4. Illustrates the overall sensitivity ranking of the cost
model input parameters.
The spider plot below (Fig. 5) presents a relative representation
of the sensitivity of the cost model elements. Those input parameters with the steepest slope represent the inputs with the greatest
inuence per unit of change, as represented by the X axis around
the base case value of 0.
Sequestration operating cost was the most second most sensitive parameter determined through sensitivity analysis. As the
most signicant contributor to total cost in determining unit cost
per tonne CO2, operating cost for the autoclave was found to be
sensitive, resulting from the signicant pressuretemperature conditions required and the associated cost of power. Reducing the
dependency on extreme conditions will help reduce unit costs,
keeping in mind that the sequestration efciency has a greater
overall impact and must remain the priority for further research.
Sequestration costs are essentially the cost of operating the mineral carbonation facility. Raw material supply is accounted for under the mine operation costs. CO2 capture costs are also sensitive,
as a result of the signicant power and energy requirements for
removing CO2 from ue gas.
The wt.% of MgO in the waste rock was found to be the fourth
most sensitive parameter in cost modeling, as it directly impacts
the amount of MgO available for reaction with CO2. Initially, it
was thought that this parameter would have a greater effect on
the total unit cost of sequestration, as it directly impacts the
amount CO2 sequestered, but this was not the case. Similar to
the reasons supporting the sensitivity of the sequestration efciency, a decrease in the amount of MgO in the waste rock results
in less MgO available for reaction with CO2. This causes a reduction
in the amount of CO2 sequestered and therefore decreases the

Table 4
Overall sensitivity of cost model parameters.
Rank

Parameter

1
2
3
4
5
6
7
8
9
10

Sequestration efciency
Sequestration operating cost
CO2 capture cost
wt.% MgO
Processing cost
CO2 transport distance
CO2 transport cost
Mine throughput
Strip ratio
% Dunite in waste

273

$120
$110
$100
% dunite in waste
wt.% MgO
Sequestration efficiency
Processing cost
Sequestration operating cost
CO2 capture cost
CO2 transport distance
CO2 transport cost
Strip ratio
Mine throughput

$90
$80
$70
$60
$50
-100%

0%

100%

200%

300%

Per Cent Change From Base Case

Fig. 5. Spider diagram showing sensitivity of cost model input parameters.

denominator in calculating unit sequestration cost per tonne of

CO2. The opposite effect will occur if the wt.% of MgO in the waste
rock increased.
Following in sensitivity of the cost model was the processing
cost, and consequently the grind size required in the reaction process. This has cost implications arising from the power requirements necessary to obtain ner grind sizes. Carbon dioxide
transport distance and cost are also important to consider in terms
of their inuence on the total unit cost of sequestration, but less so
than the preceding factors. The majority of the cost in bringing a
signicant source of CO2 to the site of reaction is the separation
and capture of CO2. However, one major item to consider is the
availability of pipeline infrastructure. Without an available pipeline network in which to transport signicant amounts of CO2, a
mineral carbonation project will have to rely on the separation
and capture of CO2 from ue gases on site, and these will not likely
provide an adequate supply.
Finally, the least sensitive parameters investigated were the
throughput, strip ratio and percentage of dunite in the waste rock.
All three of these parameters were inuential in determining the
amount of sequestered CO2, impacting the denominator used for
calculating the total unit cost of the process. These factors, however, had only a very minimal impact in terms of sensitivity. Their
primary importance was in terms of determining the scale of a
mineral carbonation facility, which will be dictated by the on-site
emissions that need to be offset, plus the availability of waste rock
and CO2 supply. These considerations are heavily dependent on the
conditions and economic circumstances of mining operations at
Turnagain.
3.2. Net present value
Results of the base case scenarios generated a cost estimate of
$82.51/t CO2 and an NPV8 of $131.51 million with an IRR of 25.1%
for the cost model and the DCF model, respectfully. The positive
NPV of the base case suggests that mineral carbonation at Turnagain
may be a viable development path from the perspective of project
economics. It is important, however, to remain mindful of the conceptual nature of this investigation and the inherent uncertainty,
surrounding model input parameters. As such, sensitivity analysis
allowed for a more thorough investigation into the impacts of this
uncertainty on overall project valuation. The results of sensitivity
analysis are discussed below.
In addition to the valuation produced through nancial modeling of the base case scenario, consideration must also be given to
the nancial consequences of the alternative. Should a cap-andtrade mechanism develop whereby emitted CO2 must be offset
1
The projected carbon price of $200/tonne (2027) is based on Ballantyne and Hitch
(2009) projection of pricing relative to Canadas published emissions reduction target.

nancially, this scenario would generate an NPV8 of -$186.6 million. In this case, the base case NPV should no longer be evaluated
based on whether or not it is greater than zero, but whether or not
it is greater than the NPV of nancial compliance. This increases
the attractiveness mineral carbonation as a means to adapt to
incoming cap-and-trade mechanisms and the nancial consequences that may result.
As proposed cap-and-trade policy is developed and rened, further consideration must also be given to the penalties that would
be imposed in the case of non-compliance. Severe penalties for
those who fail to meet set emissions reduction requirements will
be a signicant deterrent for those who chose not to implement
adequate emissions reduction measures. The impact of these penalties will be an important factor to consider in the evaluation of
alternative scenarios in the context of overall project valuation.
3.3. DCF model sensitivity
Hand in hand with the signicant inuence of sequestration
efciency in cost modeling is the sensitivity attributed to the CO2
avoidance ratio in DCF modeling. This parameter is the most sensitive for a number of reasons already mentioned, namely that it is
imperative to maximize the efciency at which CO2 is sequestered,
given the required inputs both in terms of feed materials and costs.
The main difference is the need to balance the ultimate amount of
CO2 sequestered versus the amount of CO2 emitted through the
sequestration process itself. In this case, the CO2 avoidance ratio
is critical in order to maximize the amount of net CO2 sequestered
and available to sell as carbon credits. If, during the lifecycle of the
mineral carbonation process, there is an excessive amount of CO2
emitted, the efforts and costs put into the process are negated.
As such, ensuring that a minimal amount of CO2 is emitted during
the mineral carbonation lifecycle will mean that the maximum
number of carbon credits is available for sale. As a consequence,
the CO2 avoidance ratio is the most sensitive parameter in determining the NPV of mineral carbonation at Turnagain (Fig. 6).
Following the CO2 avoidance ratio, the price of carbon credits
has the second greatest inuence on the value of mineral carbonation. As the sole source of revenue in the mineral carbonation process, the price per tonne of CO2 available through the sale of carbon
credits has signicant ramications for overall project feasibility
by directly controlling the total available revenue. Without a signicant price on carbon, there will not be an adequate source of
revenue in order to offset the associated costs. This parameter is
also particularly important to consider since it is uncontrollable
from the perspective of research and development. The decisions
leading to the implementation of a broad-ranging cap-and-trade
program lie with government ofcials, and depend on their position on the environment. However, the highly sensitive and

$1,000
$500

Decommissioning
Capital cost

NPV
(Millions)

Sequestration Cost ($/t CO2)

M. Hitch, G.M. Dipple / Minerals Engineering 39 (2012) 268275

$0

Development phase
duration
Mine life

-$500

Operating cost

-$1,000

Total sequestered CO2

Avoidance rate

-$1,500

Carbon credit price

-$2,000
-100%

0%

100%

200%

300%

Per Cent Change From Base Case

Fig. 6. Spider plot showing sensitivity of DCF model input parameters and their
proportional contribution to the NPV of mineral carbonation.

274

M. Hitch, G.M. Dipple / Minerals Engineering 39 (2012) 268275

inuential nature of carbon price on the feasibility of implementing carbon reduction programs may provide signicant leverage
in order to lobby policymakers in support of research and development efforts. This point will become increasingly important as
more information comes to light regarding climate change and
the need for drastic carbon reduction measures.
There are a number of other parameters that have a noticeable
effect on the feasibility of mineral carbonation. Operating cost is a
signicant factor in determining the feasibility of mineral carbonation. Similar to carbon price in terms of importance, the operating
cost directly inuences the total available cash ow and consequently inuences NPV. Following in sensitivity, the total amount
of sequestered CO2 is inuential in being the denominator of all
unit costs; a larger amount of sequestered CO2 is able to more
widely distribute costs, therefore lowering costs on a per tonne basis. Site emissions will impact project feasibility in determining the
total amount of sequestered CO2 available to sell as carbon credits.
This follows the need to rst offset site emissions prior to claiming
sequestered CO2 as credits to sell in the market. The inuence of
the reduction requirement stems from the same principle of determining the amount of site emissions that are offset before carbon
credits can be claimed. By affecting the amount of carbon initially
required for offset prior to receiving carbon credits, both the site
emissions and the reduction requirement are directly determining
the total amount of CO2 available to be sold and consequently the
total revenue available.
Factors of less signicant inuence include the mine life, capital
cost, development phase duration and the cost of decommissioning. Mine life did not have a signicant impact on the feasibility
of mineral carbonation, due primarily to the impact of the time value of money. Although an extended mine life will impact cash
ow, when discounted back to the present time the effect of mine
life is minimal. Capital cost, while initially thought to have a greater inuence on project valuation, due to the front-loaded nature of
the cash ows, does not signicantly impact project valuation. The
capital cost required may have a more dramatic impact on the ability to secure project nancing, either through debt or equity. While
this does not necessarily impact project valuation, it may have an
impact on project feasibility in determining the ability to generate
funding for project construction. Similar to the impact of capital
cost, the development phase duration also does not have a significant inuence on NPV, primarily due to the subdued impact of
capital cost combined with the effect of the time value of money.
Finally, decommissioning costs had a relatively insignicant inuence because of the cash ow timing far in the future. Again, the
time value of money is extremely inuential in negating the effects
of this parameter. However, the required decommissioning of such
a project may have alternative effects in the need for signicant
environmental bonds to be held prior to project commencement.
The signicance and contribution of each of the individual
parameters investigated through this research cannot be ignored,
but their ranking in terms of sensitivity has provided a means by
which to prioritize further research and focus efforts on parameters that will results in the greatest inuence on project valuation.

4. Summary and conclusion

It is becoming increasingly evident that governmental bodies
around the world are searching for meaningful ways in which to
help mitigate and reduce atmospheric levels of CO2. It is likely that
this will come in the form of a cap-and-trade mechanism, given its
ability to provide adequate incentives to spur innovation and effect
change. As such it is imperative that point source emitters of CO2
prepare for the potential adverse effects that may result from putting a price on carbon. This is particularly important in the mining

industry, where mine economics may be signicantly impacted by

the nancial implications of cap-and-trade. Carbon sequestration
through mineral carbonation may be a viable option in order to offset mine emissions and potentially generate an additional revenue
stream through the sale of excess carbon credits. The implementation of mineral carbonation, as opposed to many of the other suggested forms of carbon sequestration, has the advantage of
producing a stable by-product with a reduced risk of CO2 leakage,
as well as the potential for a more accurate verication process
quantifying the amount of CO2 sequestered.
This research has produced a preliminary analysis of the nancial feasibility of integrating mineral carbonation into proposed
mining operations at the Turnagain nickel site in Northern BC.
Through the initial development of a conceptual cost model for
the lifecycle of mineral carbonation, an operating cost of $82.51/t
CO2 was determined. This was necessarily due to the wide array
of cost estimates in the literature, and the inconsistent inclusion
of all the necessary steps in the lifecycle of mineral carbonation.
This research has therefore attempted to generate a more comprehensive and all-encompassing estimate of the cost of mineral carbonation, in order to more accurately approximate input costs for
further nancial modeling. A preliminary nancial model using a
discounted cash ow approach was then developed, generating a
base case NPV8 of $131.5 million and an IRR of 25.1% in the presence of a cap-and-trade program (N.B. based on a projected 2027
Carbon price of $200/tonne). This suggests that project implementation may be viable from a nancial perspective. However, consideration for the conceptual nature of these analyses required a
comprehensive sensitivity analysis. From the cost model, the most
inuential parameter was found to be the sequestration efciency
of reaction, whereas the most inuential parameter in DCF modeling was found to be the CO2 avoidance ratio of reaction. The importance of these two parameters reinforces the need for a balance
between maximizing sequestration efciency and minimizing
CO2 emitted during the mineral carbonation process.
These results have a direct impact on continued research efforts
in the eld of mineral carbonation. In the future, the development
of mineral carbonation technologies and methodologies will need
to take the net amount of sequestered CO2 into primary consideration in order to maximize efforts towards the development of a
feasible process. Previous efforts have been aimed towards the
maximum sequestration efciency of reaction, but this research
has demonstrated that this is not the best course of action when
considering the overall feasibility of mineral carbonation. Focusing
on the CO2 avoidance ratio and net sequestration effect will not
only be benecial from an environmental standpoint, it will also
result in a process that has the greatest value for investors. By maximizing the value of the process, the likelihood of implementing a
mineral carbonation scheme on an industrial scale is greatly increased. It is this aspect of mineral carbonation that should therefore be the focus of further research and development.

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