Economic Decision Making For Frontier Technology

Major scientific discoveries cannot be programmed. New or frontier technology, however, can and should be planned. It is the vital force underlying the business strategy of a vigorous and profitable mining and metals company. Generally, a radical departure from existing technology is required to 1) Enhance the competitive value of ore reserves, i.e., to turn low grade or marginal reserves into competitive reserves. 2) To increase yield and decrease costs. 3) To decrease investment. 4) To increase mine life. 5) To improve product quality to meet market demands. The very definition of frontier technology implies that it is so different that the old plant, if already in use, will not be directly suitable to use the new technology. Therefore, a priori, we know that the commercialization of frontier technology would very likely involve new investment. The recommended technique of economic and technical analyses, I propose to call "Success Analysis.'' Simply stated, it forces us, by step- by-step procedure, to ask "what is needed to succeed in this particular project." Therefore, the first step is to identify what is meant by "success." The definition of "success" requires an agreement with top management or sponsors of the project as to what constitutes "success" in their minds as contrast to the technical people perception of "success." In general, top management would define success as meeting: 1) The technical objectives, i.e., technology being developed would produce the desired product at the acceptable quality. 2) Financial objectives, i.e., when commercialized, the project's capital cost, operating costs and return on investment are better than the projects they would normally fund. The return has to be better because new technology is inherently riskier. 3) Marketing objectives in that the project will produce product of acceptable quality in timely manner, i.e., scale-up to commercial plant would not cause undue delays in start-up and that large fix-up expenditure would not be required to protect the projected return on the investment. Many projects are started in the laboratory to develop "Frontier Technology" in mineral processing. Most of these efforts are never commercialized. There are many causes of these failures. The major causes are listed below: 1) Inadequate communication with the sponsors of the project so that project objectives are defined and agreed to by all. 2) Ill-defined technical problems. 3) Incomplete development of technology. This has two major components: a. Incorrect scale-up and engineering. b. Inadequate start-up and maintenance planning. 4) Incomplete and over-optimistic process economics. 5) Lack of understanding of the future behavior of the marketplace. 6) Failure to complete R&D effort by the time it is needed. 7) Incorrect projections of human resources required; that is, technical, managerial and operating. 8) Lack of realistic forecast of the expenditures required for commercialization of the R&D effort. These pitfalls can be avoided by comprehensive planning and the use of success analysis technique. The major elements in "Success Analysis" are: 1) Identification of the "need" for new technology. 2) Unbiased and complete scale-up engineering. 3) Acceptable economic feasibility with enough margin of error in the sale prices and operating costs to justify the inherent risks in frontier technology. 4) Timing for availability of investment capital and markets. Many failures in the development of frontier technology are preordained because the initial selection of the research project has been without adequate attention to the needs of the industry. Many very innovative hydrometallurgical processes for recovery of copper from concentrates were developed in the past twenty years. They have not adapted except to a very minor extent because they did not satisfy the success analysis criteria. The copper industry in North America needed a process to compete against high grade ores and to avoid