UBC Theses and Dissertations

UBC Theses Logo

UBC Theses and Dissertations

Feasibility and sensitivity analysis of integrating mining and mineral carbonation : a case study of.. Hindle, Sarah Robin 2011

You don't seem to have a PDF reader installed, try download the pdf

Item Metadata

Download

Media
ubc_2011_fall_hindle_sarah.pdf [ 841.28kB ]
Metadata
JSON: 1.0053475.json
JSON-LD: 1.0053475+ld.json
RDF/XML (Pretty): 1.0053475.xml
RDF/JSON: 1.0053475+rdf.json
Turtle: 1.0053475+rdf-turtle.txt
N-Triples: 1.0053475+rdf-ntriples.txt
Original Record: 1.0053475 +original-record.json
Full Text
1.0053475.txt
Citation
1.0053475.ris

Full Text

FEASIBILITY AND SENSITIVITY ANALYSIS OF INTEGRATING MINING AND MINERAL CARBONATION: A CASE STUDY OF THE TURNAGAIN NICKEL PROJECT  by  Sarah Robin Hindle B.Sc., St. Francis Xavier University, 2008  A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF APPLIED SCIENCE in The Faculty of Graduate Studies (Mining Engineering)  THE UNIVERSITY OF BRITISH COLUMBIA (Vancouver) September 2011 © Sarah Robin Hindle, 2011  ABSTRACT Proposed carbon reduction measures such as cap-and-trade appear poised to have a significant impact on the financial 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 of suitable geology for its ability to make use of waste rock to trap and store CO2 and offset carbon emissions. The Turnagain Nickel site, a low-grade high-tonnage Ni-sulphide deposit located in Northern BC, contains an abundance of Mg-silicate minerals in its waste rock that have significant potential for use in mineral carbonation. This has the potential to produce an additional revenue stream through the generation and sale of carbon credits in the presence of a mandatory cap-and-trade scheme in North America. Results of financial 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 financial standpoint. Sensitivity analysis has also demonstrated that the parameter with the greatest influence 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 in order to maximize the amount of carbon credits available for sale in a cap-and-trade environment.  ii  TABLE OF CONTENTS ABSTRACT ........................................................................................................................ ii  TABLE OF CONTENTS ................................................................................................... iii  LIST OF TABLES .............................................................................................................. v  LIST OF FIGURES ........................................................................................................... vi  LIST OF ACRONYMS ................................................................................................... viii  ACKNOWLEDGEMENT ................................................................................................. ix  1  INTRODUCTION ...................................................................................................... 1  1.1  Project Overview ................................................................................................ 1  1.2  The Turnagain Nickel Site .................................................................................. 2  1.3  Purpose & Objective ........................................................................................... 5  2  MINING & CO2: A LITERATURE REVIEW .......................................................... 9  2.1  Mineral Carbonation ......................................................................................... 10  2.1.1  State of the Science ....................................................................................... 12  2.1.2  Integration into Mining and Mineral Processing .......................................... 14  2.2  Relation & Importance to Mining ..................................................................... 17  2.2.1  Carbon Policy & Incentive Structures .......................................................... 18  2.3  Feasibility.......................................................................................................... 21  2.3.1  Previous Cost Estimates ................................................................................ 23  3  ANALYTICAL METHODS .................................................................................... 25  3.1  Conceptual Framework ..................................................................................... 27  3.2  Financial Modeling ........................................................................................... 30  3.2.1  Cost Modeling ............................................................................................... 32  3.2.2  DCF Analysis ................................................................................................ 32  3.2.3  Assumptions.................................................................................................. 33  3.3  Sensitivity Analysis .......................................................................................... 34  3.3.1  Effect of Correlation ..................................................................................... 35  4  RESULTS ................................................................................................................. 38  4.1  Base Case Scenario ........................................................................................... 38  4.1.1  Cost Modeling ............................................................................................... 38  4.1.2  DCF Analysis ................................................................................................ 42  4.2  Sensitivity ......................................................................................................... 50  4.2.1  Cost Model Sensitivity.................................................................................. 50  4.2.2  DCF Model Sensitivity ................................................................................. 56  4.3  Correlation ........................................................................................................ 61  5  DISCUSSION ........................................................................................................... 68  5.1  Base Case Scenario Results .............................................................................. 68  5.2  Sensitivity Rankings ......................................................................................... 69  5.2.1  Cost Model Sensitivity.................................................................................. 69  5.2.2  DCF Model Sensitivity ................................................................................. 72  5.3  Correlation ........................................................................................................ 75  5.4  Research Significance and Contributions ......................................................... 76  5.5  Next Steps ......................................................................................................... 77  5.5.1  Options Pricing ............................................................................................. 77   iii  5.5.2  Qualitative Benefits ...................................................................................... 78  5.5.3  Effects of Time ............................................................................................. 81  6  CONCLUSION ......................................................................................................... 82  REFERENCES ................................................................................................................. 85  APPENDIX A – Cost Model ............................................................................................ 96  APPENDIX B – DCF Model ............................................................................................ 99   iv  LIST OF TABLES Table 2.1. Previous cost estimates of mineral carbonation. .............................................. 24  Table 4.1. Cost model input parameters and base case scenario results. .......................... 39  Table 4.2. DCF model input parameters and base case scenario results. ......................... 43  Table 4.3 Cost model input parameters, including upper and lower bounds, used in sensitivity analysis. ................................................................................................... 52  Table 4.4 Overall sensitivity ranking of cost model input parameters. ........................... 55  Table 4.5 DCF model input parameters, including upper and lower bounds, used in sensitivity analysis. ................................................................................................... 58  Table 4.6 Overall sensitivity ranking of DCF model input parameters. .......................... 61  Table 4.7 Correlation scenario results. ............................................................................ 62   v  LIST OF FIGURES Figure 1.1 Location of the Turnagain Nickel site, situated in North-Central British Columbia (modified after Hard Creek Nickel Corp., 2011). ...................................... 4  Figure 1.2 Flowchart outlining the holistic approach to evaluating the feasibility of integrating mineral carbonation into proposed mining operations at Turnagain. ....... 8  Figure 2.1 Conceptual life cycle of mineral carbonation (modified after Huijgens et al., 2004). ........................................................................................................................ 16  Figure 3.1 Conceptual tradeoff of cost versus efficiency for various methods of mineral carbonation. ............................................................................................................... 29  Figure 3.2. Estimated relationship between the CO2 reduction requirement and carbon credit price. ............................................................................................................... 37  Figure 4.1 Breakdown of major cost factors of mineral carbonation at Turnagain. ......... 41  Figure 4.2 Base case discrete cash flow of CO2 sequestration via mineral carbonation at Turnagain. ................................................................................................................. 45  Figure 4.3 Base case net cash flow of CO2 sequestration via mineral carbonation at Turnagain. ................................................................................................................. 46  Figure 4.4 Base case discounted net cash flow of CO2 sequestration via mineral carbonation at Turnagain. ......................................................................................... 47  Figure 4.5 Base Case cumulative cash flow of CO2 sequestration via mineral carbonation at Turnagain. ............................................................................................................. 48  Figure 4.6 Base case cumulative discounted cash flow of CO2 sequestration via mineral carbonation at Turnagain. ......................................................................................... 49  Figure 4.7 Spider plot outlining sensitivity of cost model input parameters and their proportional contribution to the unit cost of sequestration. ...................................... 53  Figure 4.8 Tornado diagram showing sensitivity of cost model input parameters in terms of their range of influence on the unit cost of sequestration. .................................... 54  Figure 4.9 Spider plot showing sensitivity of DCF model input parameters and their proportional contribution to the NPV of mineral carbonation at Turnagain. ........... 59  Figure 4.10 Tornado diagram showing sensitivity of DCF model input parameters in terms of their range of influence on the NPV of mineral carbonation at Turnagain. 60  Figure 4.11 Discrete cash flow of CO2 sequestration via mineral carbonation at Turnagain including the effects of correlation between carbon credit price and CO2 reduction requirement. .............................................................................................. 63  Figure 4.12 Net cash flow of CO2 sequestration via mineral carbonation at Turnagain including the effects of correlation between carbon credit price and CO2 reduction requirement. .............................................................................................................. 64  Figure 4.13 Discounted net cash flow of CO2 sequestration via mineral carbonation at Turnagain including the effects of correlation between carbon credit price and CO2 reduction requirement. .............................................................................................. 65  Figure 4.14 Cumulative cash flow of CO2 sequestration via mineral carbonation at Turnagain including the effects of correlation between carbon credit price and CO2 reduction requirement. .............................................................................................. 66   vi  Figure 4.15 Cumulative discounted cash flow of CO2 sequestration via mineral carbonation at Turnagain including the effects of correlation between carbon credit price and CO2 reduction requirement. ...................................................................... 67   vii  LIST OF ACRONYMS CCS CCX CO2 CSR DCF ERA EU ETS GHG HNC IRR NPV TSX WCI  Carbon capture and storage Chicago Climate Exchange Carbon dioxide Corporate social responsibility Discounted cash flow Environmental risk assessment European Union Emissions Trading Scheme Greenhouse gas Hard Creek Nickel Corporation Internal rate of return Net present value Toronto Stock Exchange Western Climate Initiative  viii  ACKNOWLEDGEMENT  This research could not have happened without the generous support of Hard Creek Nickel Corp. Their enthusiasm for this project has been tremendous, and I wish to extend many thanks to all the wonderful individuals at Hard Creek who made this work possible. I would also like to convey my heartfelt gratitude to Dr. Michael Hitch for his continued support and encouragement throughout my time at UBC and his valuable assistance in bringing this research together. You constantly challenged me to be my best, and I thank you for being my guide. I wish to also express my sincere thanks to Dr. Scott Dunbar for his continued assistance and inspiration, and to the rest of my committee, Dr. Malcolm Scoble and Dr. Greg Dipple. Finally, thank you to the entire Department for shaping who I am today.  ix  To my family, thank you for always believing in me. And to Aaron, thank you for keeping me sane through it all. I couldn’t have done it without you.  x  1 INTRODUCTION  1.1 Project Overview 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-trade, are the most effective way in which to adequately reduce greenhouse gas (GHG) levels; this will ultimately require a price to be put on carbon dioxide (CO2) (Government of Canada, 2009). Whatever form these regulatory changes may take, the consequences of such legislation on the mining industry may be significant given the environmental footprint commonly attributable to mining operations (Norgate et al., 2007). The implications on mine economics may be immense, and as such it is important that we begin to understand how they may affect project feasibility and the ways in which we might offset these impacts. Ultimately, restrictions or limitations on carbon emissions may become a deciding factor when considering and evaluating the overall feasibility of developing a deposit. In response, it is necessary that corporations anticipate and prepare for such a scenario, and have a plan in place outlining the necessary steps required to operate under a proposed cap-and-trade regulatory environment. Being proactive in planning for these effects will help ensure and protect the viability of current and future mining projects.  1  1.2 The Turnagain Nickel Site The focus of this research is on the Turnagain nickel deposit (Turnagain) in Northern British Columbia, 100% owned by Hard Creek Nickel Corp. (TSX-V: HNC) (Hard Creek). The Turnagain deposit was chosen as the focus of this case study due to its geologic propensity as an attractive site for the sequestration and storage of carbon. This is primarily due to its ultramafic mineralogy, with abundant quantities of magnesium-rich olivine found within the waste rock of the deposit. The ultramafic material found at Turnagain has significant potential to trap and store CO2 through a process known as mineral carbonation. A more detailed discussion of mineral carbonation is found in Chapter 2. Turnagain is a prime example of a deposit amenable to the integration of mineral carbonation directly into the mine plan, thus enabling the corporation to take advantage of a regulatory environment of governmental carbon management and capand-trade as it sequesters CO2. The Turnagain nickel deposit is located in north-central British Columbia, approximately 70 km east of the nearest town of Dease Lake, BC, as shown in Figure 1.1. The deposit is hosted within the Turnagain ultramafic complex, an Early Jurassic Alaskan-type mafic-ultramafic intrusive pluton with a total area of ~24 km2 (~8x3 km) (Scheel, 2007). This complex is found within greenschist facies metasedimentary and metavolcanic rocks of ancestral North America, and is fault bounded on all sides (Scheel, 2007; Gabrielse, 1998; Clark, 1980). The Turnagain complex is dominated by ultramafic lithology, primarily characterized by a well-exposed dunite core, surrounded by an outer zone of poorly exposed wehrlite, olivine clinopyroxenite, pyroxenite and minor hornblendite. There is  2  weak to intense serpentine alteration throughout the complex, with a characteristically black colour. This is attributed to magnetite formation during serpentinization (Clark, 1980; Nixon, 1998; Scheel, 2007).  The presence of abundant olivine found in the  dominant rock-types at Turnagain makes this site well suited for applications to carbon sequestration via mineral carbonation due to the availability of rich sources of MgO. The Turnagain ultramafic complex is also a host to disseminated and semi-massive pyrrhotite (FeS) and pentlandite ((Fe,Ni)9S8) mineralization, as well as more minor latestage hydrothermal Pt-Pd-Cu deposits (Scheel, 2007; Nixon, 1998). This mineralization is the focus of exploratory drilling, resource characterization and economic assessment currently being done by Hard Creek.  3  Figure 1.1 Location of the Turnagain Nickel site, situated in North-Central British Columbia (modified after Hard Creek Nickel Corp., 2011).  4  1.3 Purpose & Objective Carbon sequestration has the potential to be highly influential in reducing overall atmospheric carbon dioxide levels, particularly when considering the widespread applicability of this process to sites around the world (Oelkers et al., 2008; Huijgen and Comans, 2003; Zevenhoven and Kohlmann, 2001). At issue with this are the high costs associated with mineral carbonation technology (Lackner et al., 1995; IPCC, 2005; Gerdemann et al., 2007; Huijgen et al., 2007; Huijgen and Comans, 2005; Chen et al., 2006). It is therefore necessary that the cost of mineral carbonation be evaluated in relation to the environmental and financial benefits that may be available in order to determine its propensity as a promising project for future development. It is difficult to predict exactly how a future carbon dioxide cap-and-trade program may develop (if at all), however the relative success of the European Union’s Emissions Trading Scheme (EU ETS) has set the stage for the development and implementation of a similar system in North America (Skærseth 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 significant financial ramifications for large point-source emitters of CO2 such as mine sites. It is crucial that operations in a position to be affected by such policy changes be thoroughly prepared to handle the consequences that result from climate change legislation. This may include consideration of the ways in which mines can help make meaningful emissions reductions, as well as managing the financial considerations of reducing compliance costs in order to protect and maximize their return on investment.  5  In addition to the environmental impacts that carbon capture and storage (CCS) may be able to achieve, it is also essential that that the economics of it are properly demonstrated (Huijgen and Comans, 2005; O’Connor et al., 2004; Zevenhoven et al., 2006). While business decisions made purely based on environmental impacts would be laudable, this is not always realistic when shareholder accountability and the need to ultimately uphold the financial well-being of a company are paramount (Lasher, 2008). This suggests that weighing the costs of environmental stewardship against the potential consequences of the alternative is necessary.  Although unfortunate, environmental  actions must be economically and financially viable before they have a chance to become widely employed and ultimately make meaningful a change. The appeal of bringing about a viable CCS project at the Turnagain Nickel site is the potential to make meaningful environmental contributions while simultaneously improving business interests. This may occur either by reducing compliance costs and/or the possible realization of additional revenue streams through carbon credit trading. This research 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 versus efficiency for various mineral carbonation options and the subsequent development of a comprehensive cost model and discounted cash flow (DCF) model, the long-term feasibility of such a project was evaluated. The purpose of this research is the development of a preliminary analysis investigating how the introduction of cap-and-trade may affect mine economics and the ways in which operators can help mitigate these effects. It is undeniable that putting a  6  price on carbon emissions will have detrimental effects on the viability of mining operations, however it is likely that the introduction of carbon sequestration technology such as mineral carbonation may be able to counteract these effects in suitable locations. In fact, the production of carbon credits via mineral carbonation, and the revenue generated through the sale of excess credits, may be able to contribute to improved project economics.  In particular, the Turnagain Nickel deposit in Northern BC is  amenable to implementing mineral carbonation technology alongside mining operations, and will likely be a viable method by which to generate additional cash flow and improve overall project valuation in a cap-and-trade environment. A holistic approach to this research allowed for the integration of considerations stemming from a wide variety of fields, including mining, geology, environment, policy and finance. Through an inter-disciplinary approach, visually represented in Figure 1.2, a more comprehensive analysis was developed in order to consider the many factors that feed into project valuation, the relationships that exist between them, and how each may influence project feasibility.  7  Mining  Geology  Policy  Project Feasibility  Finance  Environment  Figure 1.2 Flowchart outlining the holistic approach to evaluating the feasibility of integrating mineral carbonation into proposed mining operations at Turnagain.  8  2 MINING & CO2: A LITERATURE REVIEW  Carbon sequestration, otherwise known as carbon capture and storage (CCS), is the mechanism by which carbon dioxide (CO2) is captured and stored in order to reduce overall atmospheric levels of CO2 and help mitigate global climate change (Gibbins and Chalmers, 2008). Although environmental options such as fuel switching, increased efficiency and policy changes are currently being implemented, these solutions are only capable of reducing the amount of new emissions released into the atmosphere. The enhanced use of CCS technologies are the only options capable of significantly reducing overall atmospheric CO2 levels to help us meet government-set emissions reduction targets (Jaccard and Rivers, 2007; Stephens and Keith, 2008). As such, it is important that research efforts are focused on bringing CCS technologies towards reality on an industrial scale. Carbon sequestration encompasses a wide variety of carbon capture and storage options, including oceanic storage, geologic storage, biomass storage and mineral storage (Voormeij and Simandl, 2004; Stephens and Keith, 2008). While these are all viable options that are currently under intense investigation by the research community, mineral storage (better known as mineral carbonation) has a number of unique benefits that make it a promising long-term CO2 storage solution. These benefits, including a more detailed description of mineral carbonation, are presented in the following section.  9  2.1 Mineral Carbonation Mineral carbonation is quickly gaining recognition as one of the most effective ways of removing excess CO2 from the atmosphere (Khoo and Tan, 2006; Rock, 2007; Voormeij and Simandl, 2004; Lackner et al., 1995). First proposed by Seifritz in 1990, mineral carbonation takes advantage of the natural weathering process of silicate minerals, whereby the alkalinity 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). Specifically, the weathering of abundant calcium (Ca) and magnesium (Mg) rich silicate minerals to form Ca- and Mgcarbonates in the presence of CO2 forms the basic concept behind mineral carbonation technology. The acceleration of this natural process to allow for greater quantities of CO2 to be captured and stored in a much shorter period of time represents the goal of initiating mineral carbonation on an industrial scale. The silicate minerals most aptly suited for mineral sequestration are those containing the greatest molar ratios of CaO (calcium oxide) and MgO (magnesium oxide) (O’Connor et al., 2000; Lackner et al., 1995; Huijgen and Comans, 2003). By increasing the molar ratio of Ca- and Mg-oxides, more reactant oxide is available to react with CO2 in accordance with the simplified exothermic reactions seen in Equations 1 (Lackner et al., 1995, Huijgen and Comans, 2003).  CaO + CO2 → CaCO3 (ΔHr = -179 kJ/mol)  [1]  MgO + CO2 → MgCO3 (ΔHr = -118 kJ/mol)  [2]  10  The reactions contained in Equations 1 and 2 derive from the general equation for the reaction of Ca- and Mg- silicates with CO2 to produce carbonates as seen Equation 3 (Goldberg et al., 2001), whereby Mg-Ca-silicates react with CO2 to produce Mg-Cacarbonates, silica and water respectively.  (Mg,Ca)xSiyOx+2y+zH2z (s) + xCO2 (g) → x(Mg,Ca)CO3 (s) + ySiO2 + zH2O (l/g)  [3]  It is both calcium and magnesium that are best suited for use in mineral carbonation, however research thus far has predominantly focused on Mg-rich silicate minerals such as olivine and serpentine that contain a high wt% of MgO. These minerals are preferred due to their widespread abundance in ultramafic rocks such as peridotites and serpentinites.  The forsterite end-member of olivine (Mg2SiO4) and serpentine  (Mg3Si2O5(OH)4) typically contain the highest molar ratios of MgO and are composed of approximately 45-50 wt% MgO for forsterite and 38-45% wt% MgO for serpentine (Chizmeshya et al., 2008). By comparison, Ca-silicates contain only 12-15 wt% CaO and are therefore much less reactive as less contained oxides are available to react with CO2. They are therefore less effective in trapping and storing large amounts of CO2 through mineral carbonation (Lackner, 2002; Lackner et al., 1997; Yegulalp et al., 2001). Magnesium silicate minerals react with gaseous CO2 to produce magnesite (MgCO3) and quartz (SiO2), as well as water in the case of a serpentine reactant. The reactions of forsteritic (Mg-end member) olivine and serpentine are exhibited in Equations 4 and 5 respectively (Chizmeshya et al., 2008; Goldberg et al., 2001; Huijgen and Comans, 2003; Kojima et al., 1997; Yegulalp et al., 2001).  11  Mg2SiO4 (s) + 2CO2 (g) → 2MgCO3 (s) + SiO2 (s) (ΔHr = -90 kJ/mol)  [4]  Mg3Si2O5(OH)4 (s) + 3CO2 (g) → 3MgCO3 (s) + 2SiO2 (s) + 2H2O (l) (ΔHr = -64kJ/mol)  [5]  The production of various hydrated forms of magnesite are also common depending on the pressure-temperature (P-T) conditions of formation (Chizmeshya et al., 2008; Wilson et al., 2006). Mineral carbonation is a viable long-term CO2 storage solution due to its long-term stability and the benign nature of its products (Huijgen and Comans, 2003; Maroto-Valer et al., 2005; Fauth et al., 2000; Zevenhoven et al., 2006). Carbonate is the most thermodynamically stable form that carbon can take, exhibited in the exothermic reactions of Equations 1-5 and by their respective negative enthalpies of reaction (ΔHr) (Lackner, 2002).  The stability of carbonates on a geologic time scale make them  extremely useful for carbon sequestration applications due to their benign nature and the associated reduction (or possible elimination) of leakage risks (Yegulalp et al., 2001; Lackner et al., 1998; Cipolli et al., 2004; Guthrie et al, 2001). The reduction in long-term liability and the reduced need for prolonged monitoring efforts makes mineral carbonation an extremely effective method of carbon sequestration.  2.1.1  State of the Science  While these reactions proceed slowly at ambient P-T conditions, elevated P-T levels have produced greatly accelerates rates of reaction and conversion efficiencies (Chen et al., 2006; Gerdemann et al., 2003; Oelkers et al., 2008; Huijgen and Comans, 2003;  12  O’Connor et al., 2000; IPCC, 2005). Previous studies at the Albany Research Centre were able to attain 90% conversion within 24 hours at T=185ºC, PCO2= 115 atm and particle size of -37 μm (O’Connor et al., 2000) in an autoclave, attesting to the relatively high P-T conditions and grinding requirements needed for effective mineral carbonation. Subsequent work has focused on the impact of passive layer formation, and its significant role in limiting the extent of mineral carbonation. McKelvey et al. (2006) and Béarat et al. (2006) outlined the need for continuous particle abrasion and exfoliation in order to reveal fresh surfaces for reaction, suggesting that grind size and slurry flow are critical factors to consider in enhancing rates of reaction. Maroto-Valer at al. (2001) outlined the need to achieve faster reaction routes under milder process conditions in a continuous feed loop in order for mineral carbonation to become a cost-effective technology (Penner et al., 2004). The need for continuous flow loop reaction in mineral carbonation is of particular importance when considering its implementation on an industrial scale, where capacity will have to be sufficient to process large quantities of material and maximize the sequestration of CO2 in the minimum amount of time. Consideration must also be given to the amount of CO2 emissions directly attributable to the process of mineral carbonation itself. Estimates by O’Connor 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 from the relationships seen in Equations 6 and 7.  CO2 avoided = CO2 sequestered - CO2 emitted  [6]  CO2 avoidance ratio = CO2 avoided : CO2 sequestered  [7]  13  It is important to note that the emissions produced, and consequently the CO2 avoidance ratio, will ultimately be dependent on the process conditions of reaction as well as the source of energy utilized in the process. More generalized estimates by O’Connor et al. (2002) have suggested that an energy penalty of 11.5 kWh/t ore processed is reasonable. The extreme conditions required for efficient conversion adversely affects not only the amount of energy required and the amount of CO2 released, but also the process operating costs. In consideration, there appears to be a number of conflicting priorities in the research. Although some attempt to maximize the efficiency of reaction, others look to minimize costs or reduce process emissions. This research focuses on the impact and sensitivity of each of these contributing factors on the overall financial feasibility of mineral carbonation, therefore allowing research priorities to be set. These concepts are further explored in Section 4 and discussed in Section 5.  2.1.2 Integration into Mining and Mineral Processing  The availability of Mg-rich minerals worldwide in mineable deposits, combined with the high MgO content within Mg-silicate minerals such as olivine and serpentine, make Mgsilicates aptly suited for use as feedstock material in mineral carbonation (Lackner et al., 1995; Yegulalp et al., 2001; Béarat et al., 2002; Cipolli et al., 2004; Goff and Lackner, 1998). In addition, the common association of Mg-silicates with certain mineral deposit types increases the feasibility of extraction, both of ore and of suitable feedstock material for use in mineral carbonation. This occurs primarily due to the ability to share the cost of extraction.  Kohlmann et al. (2002) and Gerdemann et al., (2004) outlined the  14  importance of integrating the extraction of Mg-silicates for mineral carbonation with preexisting or planned mining activities in order to reduce mining and transportation costs. More specifically, mineral carbonation is well suited for integration into mining operations in deposit areas dominated by mafic and ultramafic mineralogy that host associated economic mineral deposits such as nickel, chromite, PGE and diamond deposits (Robb, 2005). This has the ability to make marginal projects more profitable and improve overall project economics by lowering the mine cut-off grade and bringing value to otherwise value-less waste rock (Hitch et al., 2010; Zevenhoven et al., 2006). On a geologic timescale, mineral carbonation proceeds spontaneously and naturally (Goldberg et al., 2001) and is observed in locations around the world. This includes observances at the Atlin and Cassiar chrysotile deposits in British Columbia, and at Clinton Creek in the Yukon (Wilson et al., 2009b; Wilson et al., 2006; Power et al., 2009). These studies demonstrated that carbon is trapped and stored in Mg-carbonate minerals such as magnesite (MgCO3), as well as more dominant hydrated forms of Mgcarbonate such as hydromagnesite (Mg5(CO4)(OH)2●4H2O, nesquehonite (MgCO3●3H2O) and dypingite (Mg5(CO4)(OH)2●5H2O). Similar observances have also been found at the Mount Keith Nickel mine in Western Australia, where hydromagnesite has been found to precipitate within the mine tailings, simultaneously sequestering approximately 58,000 tCO2/yr (Wilson et al., 2009a). Work by Rollo and Jamieson (2006) and Lee (2005) has also investigated the ability of kimberlite rock at diamond mines in the Northwest Territories to sequester CO2, with additional work done by Wilson et al. (2009c). This demonstrates that the potential to integrate mineral carbonation into various mining operations around the world may be possible.  15  The life cycle of the mineral carbonation process is shown conceptually in Figure 2.1. Beginning with the mine as a source of reactive material, the waste rock of mining operations provides a steady source of feed for mineral carbonation. A constant input of CO2 is also required, derived either from mine process emissions, outside sources via a pipeline, or a combination of the two. Following reaction, the resulting benign product may follow a number of paths, including use as aggregate or mine backfill to aid in construction or mine reclamation. Alternately, the carbonate could be safely disposed of with little to no need for prolonged monitoring efforts.  (Ca,Mg)O  Mine  Mineral Carbonation Facility  CO2  (Ca,Mg)CO3  Aggregate  Storage  Disposal Figure 2.1 Conceptual life cycle of mineral carbonation (modified after Huijgens et al., 2004).  The mutual benefits made possible through the integration of mining and mineral carbonation highlight the importance of integrating Mg-silicate extraction with mineral carbonation in order to enhance viability.  16  2.2 Relation & Importance to Mining Successfully integrating carbon capture and storage into the mining industry will require incentives to spur development and increase the likelihood of widespread implementation across the industry. These incentives will be required in order to offset the significant costs associated with CCS projects (Newell et al., 2006). 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), and a similar North American pursuit appears 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 (OECD, 2004), it is anticipated that a cap on emissions will create a notable impact on mining operations from both a financial 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 mechanism 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 need to be addressed by emitters either through technological change to reduce emissions, or through the capture and storage of emission that do result from operations. Alternately, excess emissions may also be offset through financial means through the purchase of carbon offset credits in the market. The operational and/or financial impacts of carbon reduction mechanisms, such as cap-and-trade, are something that must be carefully considered by corporations as environmental policy measures continue to develop.  17  2.2.1  Carbon Policy & Incentive Structures  In order to meet the Government of Canada emissions reduction targets of 20% below 2006 levels by 2020 and 65% by 2050, it is imperative that a price be put on carbon through the use of market-based policy mechanisms (Government of Canada, 2009). Market-based environmental control is useful in its ability to stimulate adaptation as each source sees best fit, allowing for effective innovation through the most economical means for each individual entity (Dales, 1968; Crocker, 1966; Montgomery, 1972; Tietenberg, 1985; Freeman and Kolstad, 2007). Forecasts have estimated that in order to achieve such deep emissions reductions, carbon prices will have to rise to approximately $200/t CO2 (Government of Canada, 2009; Jaccard et al., 2008).  It is undeniable that a  significant financial incentive will be necessary in order to achieve the deep emissions reductions set forth by the Government of Canada. Point-source emitters of CO2 who are quickly able to adapt to low-emissions technology or offset emissions via other means such as CCS will have a significant advantage over their competitors, becoming more and more important as carbon prices increase to meet set reduction targets. As point-source emitters of CO2 (i.e. BHP Billiton, 2004; OECD, 2004), mining operations must be aware of the implications that an impending price on carbon may pose. The financial impacts may even have the potential to significantly affect the operational viability of mining activities (Ho et al., 2008). Traditional command-and-control regulatory mechanisms focus on environmental reform through the delineation of specific management practices required for compliance (Kolstad, 1986). In contrast, the trend towards market-based incentives such as cap-andtrade has become increasingly prominent in the implementation of environmental policy  18  (Hahn and Hester, 1989; Jaccard and Rivers, 2007). It has been suggested that marketbased incentives are more efficient, offering the freedom and flexibility to stimulate research and development in new areas of emissions reduction/mitigation in order to meet emissions limits as each source sees fit. This also allows point sources to exercise their least-cost option to meet set targets, providing valuable flexibility for each unique source (Dales, 1968; Crocker, 1966; Montgomery, 1972; Tietenberg, 1985; Freeman and Kolstad, 2007). While much discussion has revolved around the most appropriate and effective mechanisms of environmental protection, the development of the European Union Emissions Trading Scheme (EU ETS) as well as the voluntary Chicago Climate Exchange (CCX) has set the stage for the future development of a North American emissions trading platform with general consensus converging on the merits of a marketbased approach (Hanjürgens, 2005; Jones and Levy, 2007). Supported by the experience of other greenhouse gas trading systems for SO2 and NOx (Aulisi et al., 2005; Ellerman et al., 2000; Tietenberg, 2006), it appears only inevitable that comprehensive emissions trading will become a prominent tool in environmental management going forward. Initiatives at the regional level are taking charge to implement emissions regulations on point-source emitters of CO2.  For example, a regional cap-and-trade mechanism is  currently under development by the Western Climate Initiative (WCI) through the collaboration of independent jurisdictions from Canada and the United States (Western Climate Initiative, 2010). A cap-and-trade scheme functions through setting a limit or cap on allowable emissions. Tradeable permits are then allotted, giving permission for an entity to emit a specified amount of CO2. If the amount of actual emissions exceeds their allocation of  19  permits, emitters must trade or pay for additional permits. On the other hand, an emitter may end up with excess permits if emissions are below the set cap, allowing them to sell their permits to other emitters who have exceeded the cap (Labatt and White, 2007). It has become increasingly apparent that opportunities may exist in an emissions trading environment, contrary to what many may predict as a negative political force on corporate affairs. Outlined by Boyd et al. (1995), the net benefits that are likely to arise through the implementation of carbon reduction measures promotes their steadfast development.  The increasing concern about climate change and the need for  environmental action appears to have revealed the numerous risks associated with inaction and the need for a proactive approach to impending policy. It also seems apparent that there is tremendous value to be had in the financial markets for those companies ready to embrace climate change (Jones and Levy, 2007; Labatt and White, 2007). Explored by Cogan (2006), firms may no longer be looking at GHG reduction as a burden, but rather as an opportunity to capitalize on business opportunities presented in new and emerging markets surrounding climate change. Through the development of a well-functioning carbon market such as a cap-and-trade program, those corporations able to adequately reduce their emissions will be rewarded, further encouraging other firms to follow suit. Ultimately, this has the possibility to lessen CO2 emissions and help achieve the deep GHG reduction targets outlined by the government.  20  2.3 Feasibility Significant opportunities exist with regards to CCS projects, however feasibility must first be established in order to determine a viable path going forward to bring these projects to reality. Cogan (2006) outlined the profit potential of the carbon market for those companies ready to embrace the innovative technologies related GHG reductions, however it is first necessary to consider the associated costs (Alberta Carbon Capture and Storage Development Council, 2009). Feasibility studies are commonly employed in order to determine whether or not a project should be undertaken and/or to select between multiple projects when funds are limited (Mishan and Quah, 2007). This is done to ensure an efficient and effective allocation of resources and to maximize shareholder value in the case of public companies (Lasher, 2008). This is commonly done in financial analysis by reducing costs and benefits to a unique value known as the net present value (NPV), which takes into account the time value of money by bringing all associated cash flows back to time zero for proper comparison of their present value (Park, 2001; Campbell and Brown, 2003). Cash flows are discounted by the required rate of return for the investment ‘r’, typically defined as the cost of capital, adjusted for project risk.  Project NPV is  represented by Equation 8 (Lasher, 2008; Clayment et al., 2008), where where CFi represents the cash flow at time ‘i’ and and CF0 represents the initial cash outlay at t0.  NPV = CF0 + CF1/(1+r)1 + CF2/(1+r)2 + … + CFn/(1+r)n , or  [8]  NPV = ∑ CFi/(1+r)i  21  A positive NPV value indicates that undertaking the project at hand will add value to the firm, such that any project for which NPV greater than 0 should be accepted for its ability to increase shareholder wealth. Conversely, any project where NPV less than 0 should be rejected. Under circumstances in which funds are limited and only one project may be selected, the project with the greatest NPV is preferred (Pearce et al., 2006; Vance, 2003). This is the typical selection criteria employed in the capital budgeting process, however exceptions to the rule exist where it may be advantageous to consider a project with a negative NPV. Benefits may exist where investment in negative NPV projects will aid a firm in accessing an emerging market where future benefits are expected, treating the initial investment as an intermediary step (Bhimani, 2006; Moyer et al., 2009). Selection criteria should also be modified to reflect the instance where investment in a negative NPV project is required in order to avoid the more significant losses expected from the alternative.  This may exist where new policy or governmental  regulations require firm action of some form. In this case, it is necessary to revisit the standard investment criteria to select the project with the greatest NPV, regardless of whether or not it is positive or negative. This suggests that in certain circumstances, where project investment is required in order to comply with new regulations or standards, investment in negative NPV projects may be necessary in order to reduce the cost of compliance and limit shareholder loss.  22  2.3.1  Previous Cost Estimates  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 are shown in Table 2.1 with associated references therein. The uncertainty among previous cost estimates is magnified 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 outlined in Figure 2.1, 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 significant impact that such omissions could create in conducting an economic evaluation of mineral carbonation. The additional need to incorporate other significant 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. Research presented in Section 4 attempts to addresses this need.  23  Table 2.1. Previous cost estimates of mineral carbonation. Cost  Reference  $70 /t CO2  Lackner, 2002  $50-$100 /t CO2  IPCC, 2005  $65 /t CO2  O’Connor et al., 2005  $54 /t CO2 sequestered O’Connor et al., 2004; Gerdemann et al. 2007 $78 /t CO2 avoided $60-$100 /t CO2  Newall et al., 2000  $69 /t CO2  Lyons et al., 2003; Penner et al. 2004  24  3 ANALYTICAL METHODS Financial analysis was done in order to determine an estimate of the overall viability of integrating mineral carbonation into proposed mining operations at Turnagain. Although project development is currently only at the conceptual design phase, it is still important that the project economics are carefully considered in order to determine whether or not to further proceed with project development. As is inherent in most natural resource project, a relatively high degree of uncertainty will undoubtedly be present throughout (Park et al., 2001), and must be taken into careful consideration upon analysis of the overall project economics.  Further model refinements will be necessary as project  parameters become more accurately known. In this financial analysis, a discounted cash flow (DCF) approach has been utilized for its simplicity in gaining a relatively sound general understanding and perspective on estimated project value given the assumptions made in the base case scenario. While adequate as a preliminary analysis, it is important to further consider the value inherent in real options and the flexibility held by management to expand, contract, defer or abandon a project, as the conditions of operation become more precisely known. This allows for added value in the ability to mitigate losses while maximizing on upside potential (Schwartz and Trigeorgis, 2004). Further analysis of the added value of building real options into project development and decision-making are briefly considered and discussed in Section 5. In order to quantify uncertainty inherent in this project, as well as in any determininstic modeling approach to project forecasting and evaluation, it was necessary  25  to test the numerous assumptions employed. Sensitivity analyses were performed in order to capture the influence of the most highly uncontrollable factors in project advancement and to evaluate how output uncertainty can be apportioned to the uncertainty of the model inputs (Saltelli et al., 2004). By no means is this a method of eliminating risk, but merely a means to more accurately understand risks and uncertainty that may significantly impact project economics (Pergler and Freeman, 2008). This enabled a greater awareness of the uncertainties in project development to be assessed, providing a gauge by which to measure the overall impact of such uncertainty. Modeling has come under scrutinty for the false sense of security it may provide, particularly owing to the principle of ‘garbage in, garbage out’, however it can still be a useful tool in the strategic decision making process insofar as the users understand the limitations of the model and the meaning of the results produced (Bowman and Moskowitz, 2001; Pergler and Freeman, 2008). This methodology was chosen to enable the quantification of the potential value in a proposed mineral carbonation process, taking into consideration the time value of money. This is a common analysis tool used in the securities industry as well as throughout the mining industry for the evaluation of potential projects.  In comparison to more  qualitative approaches to project valuation, financial modeling and sensitivity analysis allows for a more robust and quantifiable measure of the potential value inherent in a project. Within the realm of financial modeling, both discrete and continuous modeling options exist. Both approaches to financial modeling carry distinct advantages, however the most commonly employed method of financial modeling is discrete in nature. This  26  does not preclude the use of continuous modeling, for it is the dynamic nature of continuous modeling that can allow for more complex sensitivities to be investigated. This is of particular importance when considering the effects of time on cash flows, both in terms of cash flow timing and duration. However, given the relative infancy of the present investigation, the developed models were created using discrete modeling techniques.  This was primarily done to facilitate the presentation of a simple and  straightforward financial model for presentation to the corporate mining community to which it would ultimately impact.  3.1 Conceptual Framework The tradeoff of cost versus efficiency for the various mineral carbonation technologies under investigation is an important factor when considering how best to proceed with project development. The obvious benefits of high sequestration efficiency through the use of high P-T mineral carbonation in an autoclave are offset by the high costs needed for extensive processing and elevated process conditions. Conversely, low efficiencies of reaction associated with engineered heap leach piles or bio-inoculated piles (Power et al., 2009) may be justified by the minimal cost requirements. This is a critical aspect in the evaluation of mineral carbonation, as it is the cost of the technology, and what you get for that cost, that will ultimately dictate its feasibility of implementation on an industrial scale. It is this tradeoff of cost versus efficiency shown in Figure 3.1 that may also be highly influenced 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  27  due to the significant jump, both in terms of cost and efficiency of reaction, which would result when transitioning from more passive to more active mineral carbonation technologies. These presently include active mineral carbonation technologies such as agitated tank leaching (autoclave reaction), and more passive technologies such as heap leaching. Figure 3.1 represents the conceptual cost vs. efficiency curve developed for mineral carbonation, with corroborating data points gathered from: a) Wilson et al. (2006) for natural attenuation in abandoned mine tailings at Clinton Creek, YT, and Cassiar, BC; b) Stolaroff et al. (2005) in conjunction with heap leach sequestration in industrial residue piles, and c) derived through cost modeling in this study and further supported by Lackner et al. (2008) for agitated tank leaching. The step-wise form of this relationship demonstrates the significant cost differences that are expected between active and passive sequestration technologies.  However, within each general sequestration  method, this figure suggests that relatively minimal increases in cost should have an incrementally larger impact on efficiency as the technology is refined through further research and development until a more active form of sequestration becomes necessary. Thus far, sequestration efficiency appears to be capped at around 90%, represented graphically in the near vertical regression line shown on the right hand side of the figure. For detailed financial modeling, autoclave reaction was chosen for further consideration as it is the only method thus far proven to store adequate amounts of CO2 and that was supported by detailed 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 done  28  to date to be able to provide reasonable parameters and warrant further analysis. This may, however, change in the future should more research be focused in this area.  Conceptual Model of Mineral Carbonation Costs $200 Corroborating data point: (a) Natural attenuation (Wilson et al., 2006) (b) Heap leaching (Stolaroff et al., 2005) (c) Autoclave reaction (Lackner et al., 2008; this research)  Sequestration Cost ($/t CO2)  $160  $120  (c) $80  $40 (b) $0 0%  (a)  10%  20%  30%  40%  50%  60%  70%  80%  90%  100%  Efficiency of Reaction  Figure 3.1 Conceptual tradeoff of cost versus efficiency for various methods of mineral carbonation.  Figure 3.1 presents the critical tradeoff of cost versus efficiency in the mineral sequestration of CO2, however is important to note that the addition of time may be integral in further developing this graph. The inclusion of this third dimension would likely impact decisions regarding mineral carbonation technology, as the low cost-low efficiency reactions would also likely correlate with a high time-frame to achieve the resulting extent of reaction. Conversely, it is anticipated that high cost-high efficiency reactions would be able to proceed in a much shorter amount of time. More detailed  29  analysis and further study is required to quantify the effects of time and the impact that this additional dimension might have on the economics of implementing mineral carbonation on an industrial scale, and whether it would preclude the use of low efficiency-low cost technologies as a result of the slow reaction rates and long timelines for reaction. This concept is briefly considered in Section 5.  3.2 Financial Modeling Preliminary analysis was done through the use of financial modeling in order to gain a more complete understanding of mineral carbonation costs and valuation at the Turnagain Nickel site. A detailed spreadsheet of the financial models developed, including both the cost model and the DCF model, are found in Appendix A and B respectively, with a summary of inputs found in Tables 4.1 and 4.2. Once cost estimates were determined, project cash flow was forecasted taking into consideration capital costs, variable operating costs as well as revenue potential available from a carbon incentive scheme. Preliminary financial analysis was performed through the use of pro forma financial modeling in Excel in order to determine an estimate of project valuation. By combining the required costs necessary in supporting such a project, as well as the potential revenue and/or cost reductions created (Sawyer, 2009; Park et al., 2001), cash flows both in an out of the project were determined and a comprehensive discounted cash flow (DCF) model was developed.  Financial analysis utilizing a discounted cash flow approach is  commonly used in the mining industry to assess the net present value of a proposed project and to aid in the making of investment decisions, both from a company and  30  investor perspective. There are numerous advantages to financial analysis through cash flow modeling, which has resulted in its widespread use in project valuation. Discounted cash flow models can be developed to be as simple or as complicated as needed or possible, thus allowing even the most primitive of projects to be quantified and evaluated. Financial models do, however, have distinct limitations in their ability to account for the qualitative aspects of a particular project, whether positive or negative. This is especially prudent in the case of environmental projects, which may have the ability to impact perceptions and garner goodwill for the company in addition to the intrinsic environmental benefits. These qualitative aspects of a project can be extremely important to consider, and may have the ability to sway an investment decision even if the project valuation is marginal.  Ultimately, investment decisions come down to project  economics, however the intrinsic value inherent in environmental endeavours must still be kept in mind. In addition, models are relatively limited in their ability to value options. For example, a project with built-in flexibility to alter their schedule to take advantage of market fluctuations holds more value than a project following a strict schedule. Options even extend to the ability to delay or abandon a project to minimize loss should tough situations arise. In these cases, however, it remains difficult to quantify the value that these options bring. Most commonly, DCF modeling results in the undervaluation of a project that has built-in real options (Trigeorgis, 1993; Kulatilaka and Marcus, 1992). It is therefore extremely important that these additional value-add parameters are considered in conjunction with the results of financial models.  It is only through  31  combining the information available from these multiple sources that the most thorough evaluation of a project can be made.  3.2.1  Cost Modeling  The cost model formulated though this research was developed such that it would allow for a series of user inputs that could be adjusted based on various factors such as the proposed technology, feedstock assay values, distance between facilities and production capacity to generate a discrete estimate of the total unit cost of sequestration in terms of $/t CO2. The cost model was developed based on the methodology of Lackner et al. (2008) for cost estimation of integrating steel production with mineral carbon sequestration and appropriately adapted as necessary for integration into nickel mining operations.  3.2.2 DCF Analysis  Discounted cash flow analysis was performed in order to garner 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 costs, it is important to consider the time value of money and the impact that significant 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, 2001; Campbell and Brown, 2003).  32  3.2.3  Assumptions  A wide variety of options exist that will allow proposed mining operations at Turnagain to become integrated with carbon management programs in British Columbia and elsewhere. These options exist mainly in relation to location and transportation issues, namely the site of mineral carbonation and the source of sufficient quantities of CO2. While many large sources of CO2 exist in heavily populated areas, the primary sources of mineable feedstock material tend to be located in more remote locations, such as that found at Turnagain. Emissions from the mine and the processing plant will undoubtedly be significant given precedent 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 significant amount of available feedstock. The development of a mine may draw point-source CO2 emitters towards the area and consequently improve CO2 transport logistics, however it is impossible to predicted or rely on this fact at the moment. As such, it is necessary to locate and source potential alternatives in order to supply sufficient quantities of CO2 to maximize sequestration via mineral carbonation and justify project implementation. Turnagain may benefit from its relative proximity to the Fort Nelson area of North-Eastern British Columbia, where abundant oil and gas exploration and development is resulting in large quantities of CO2 being emitted from the area (Voormeij, 2004). Matching these major sources of CO2 with the available sinks is a key factor in ultimately determining the viability of carbon sequestration schemes. Due to the high costs of transporting large quantities of waste rock for use as mineral carbonation feedstock, it will be necessary to locate a mineral carbonation  33  facility proximal to the mine site (Kohlmann et al., 2002; Gerdemann et al., 2004). Ultimately, the required supply of CO2 to the site will be dependent on the CO2 emission at the mine and in the surrounding vicinity, which will need to be determined as mining parameters and infrastructure are more definitively outlined. For the purposes of this study, a CO2 transport distance of 250km was used as an approximation. Given the preliminary nature of this investigation, a number of additional estimates were used to develop a base case scenario for mineral carbonation at Turnagain. Estimates and references for both the cost model and DCF model are found in Tables 4.3 and 4.5 respectively. It is important to accurately estimate the operating parameters of a mineral carbonation scheme at Turnagain, however revisions to these values are unavoidable 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 of the impact for the various inputs can we begin to get a more complete understanding of the project economics and viability.  3.3 Sensitivity Analysis Sensitivity analysis was essential in order to obtain a more complete and thorough understanding of the input factors and how the uncertainty surrounding each one would impact model outputs. Consequently, sensitivity analysis was first performed on the cost model inputs, allowing each input to be delineated in terms of its dependent factors respectively. 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  34  accurate estimate of the sensitivity of project value, as determined through DCF modeling and its respective sensitivity analysis (Saltelli et al., 2004). Spider plots of each variable assessed in the sensitivity analysis allowed for simplified visual comparison of the importance of each factor (Perry and Hayes, 1985; Perry, 1986). Those factors with the greatest slope (whether positive or negative) have the greatest sensitivity per unit of movement away from the base value, as measured by Δx/x. In contrast, tornado plots were formulated to graphically show the impact of the sensitivity of each parameter as an absolute change from the base value. This method of presentation is more heavily reliant upon the degree of uncertainty in estimation as dictated by the range of values possible for a given factor (Eschenbach, 2006). While tornado plots are a valuable tool in visualizing the potential impact of various input factors overall and the need for further estimate refinement, the sensitivity of factors is primarily distinguished based on the absolute value of the slope of each parameter as determined from the spider plots (Flanagan and Norman, 1993).  3.3.1 Effect of Correlation  Following sensitivity analysis, it was necessary to consider the effects of correlation. This was particularly important given the strong relationship between the price of carbon and the CO2 reduction requirement. Although the nature of this relationship is unknown, and will never likely be accurately known given the uncertainties of market mechanisms, the principles of supply and demand suggest a strong positive relationship will exist between these two key parameters.  35  Integrating the nature and strength of relationships between interdependent variables in financial modeling will be an important step in further developing these models and in future research. This research has served to evaluate the importance and sensitivity of various input parameters in the development of a mineral carbonation scheme at Turnagain, however further analysis will require a more detailed investigation into the specific relationships that may exist between parameters and how this will ultimately affect project value. One of the most notable relationships in the financial modeling of a mineral carbonation scheme is the relationship between carbon credit price and the CO2 reduction requirement. Following the principles of supply and demand (Baumol and Blinder, 2009), the relationship between these two parameters will undoubtedly demonstrate positive correlation; as the CO2 reduction requirement rises, the price of carbon credits will increase as well.  This idea is demonstrated in Figure 3.2, showing the estimated  relationship between the CO2 reduction requirement and the price of carbon credits. This relationship is based on the Government of Canada (2009) CO2 reduction targets, which aims to achieve a 20% reduction in CO2 emissions below 2006 levels by the year 2020, ramping up to a 65% reduction by 2050. Corresponding carbon credit prices were estimated based on a straight-line price increase to $300/t CO2 according to carbon credit price forecasts provided by the Government of Canada (2009).  36  0%  $350  10%  $300  20%  $250  30% $200 40% $150 50% $100  60% 70%  $50  80%  $0  2011  2021  2031  2041  Carbon Credit Price ($/t CO2)  CO2 Reduction Requirement (below 2006 emission levels)  Correlation Between Carbon Price and CO2 Reduction Requirement  2051  Year CO2 Reduction Requirement  Carbon Credit Price  Figure 3.2. Estimated relationship between the CO2 reduction requirement and carbon credit price.  37  4  RESULTS  4.1 Base Case Scenario The base case scenario constructed for analysis of integrating mineral carbonation into proposed mining operations at the Turnagain nickel site is composed of two parts. Firstly, cost modeling was performed in order to evaluate the life cycle cost of mineral carbonation by evaluating all the necessary steps and phases involved from start to finish. Secondly, the results determined through cost modeling were incorporated with other influential parameters into a discounted cash flow (DCF) analysis in order to assess overall project value taking into account the time value of money. The results of these two evaluations are presented here.  4.1.1 Cost Modeling  Results derived for cost modeling aimed at providing an estimate of the unit cost of mineral carbonation in terms of $/t CO2. Input parameters and results are summarized in Table 4.1 below.  38  Table 4.1. Cost model input parameters and base case scenario results. Input parameters  Unit  Base case value  Throughput  tpd  87,000  Strip ratio  -  0.74  Dunite in waste  %  20  wt. % MgO  wt. %  48.54  Processing cost  $/t feed  8.00  Sequestration efficiency Sequestration operating cost CO2 capture cost  %  80  $/t CO2  32.39  $/t CO2  25.00  CO2 transport distance  km  250  CO2 transport cost  $/km  0.02  Total operating cost  $/t CO2  82.51  Best case scenario  $/t CO2  27.98  Worst case scenario  $/t CO2  237.91  Base Case Result  39  Taking into account all the separate steps and process requirements necessary in the complete life cycle of mineral carbonation, this cost modeling incorporated cost items such as: mining, processing of feed, capture and transport of CO2, mineral carbonation reaction, disposal and monitoring. Of these items, many of the associated costs were minimized or eliminated through integration with proposed nickel mining at the Turnagain nickel site. Mining costs were effectively eliminated from the cost of mineral carbonation, as the movement of waste rock is already a necessary component of mining and the costs are borne as such. Disposal costs of mineral carbonation by-products were also significantly reduced due to the presence of waste rock disposal facilities already onsite, thus eliminating lengthy haulage requirements. Although minimal costs may still be incurred in relation to disposal of dominant MgCO3, these were ignored for all intents and purposes due to its relative insignificance and the potential for waste MgCO3 to alternatively be used as a value-added product such as aggregate or back-fill. Due to the benign nature of the by-products of mineral carbonation, cost associated with waste management and monitoring is also effectively eliminated. Although it may be necessary to undergo some form of verification process to ensure that trapped and stored CO2 is appropriately contained, reported and credited, this is an unknown variable at this point that will likely be dependent on governmental regulations and requirements. This aspect of the mineral carbonation process has been omitted in the present analysis, to be further developed and investigated as the guidelines surrounding CO2 reduction measures are clarified. Results derived through cost modeling generated a unit cost of $82.51/t CO2 for mineral carbonation, taking into consideration the complete life cycle of process  40  requirements. This included major cost factors such as feed processing, CO2 capture, CO2 transport and the reactions costs of mineral carbonation itself.  Figure 4.1  demonstrates the anticipated break down of the complete cost of mineral carbonation. Although other more minor cost items may be necessary, these four parameters are anticipated to be the major contributors to the overall operating cost of mineral carbonation. Breakdown of Major Cost Factors of Mineral Carbonation at Turnagain CO2 transport cost 8% Processing cost 23%  CO2 capture cost 30%  Sequestration cost 39%  Figure 4.1 Breakdown of major cost factors of mineral carbonation at Turnagain.  In addition, best and worst case scenarios were evaluated through the input of maximum or minimum values for each parameter as appropriate. This generated a best case scenario total operating cost of $27.98/t CO2 and a worst case value of $237.91/t CO2.  41  These extreme values were further used in DCF modeling sensitivity analysis as the upper and lower bounds on the total operating cost of mineral carbonation at Turnagain.  4.1.2  DCF Analysis  Discounted cash flow analysis allowed for evaluation of value potential for mineral carbonation at Turnagain. Input parameters and results are summarized in Table 4.2 below.  42  Table 4.2. DCF model input parameters and base case scenario results. Input parameters  Unit  Base case value  $  139,668,169  Capital cost Development phase duration Mine life  yrs  2  yrs  24  Operating cost  $/t CO2  82.51  Total sequestered CO2  tpy  1,992,518  CO2 avoidance ratio  -  0.77  Site CO2 emissions  tpy  1,089,197  Carbon credit price CO2 reduction requirement Decommissioning  $/t CO2  200  %  20  $  20,000,000  Discount Rate  %  8  Inflation Rate  %  2  NPV8  $  131,449,380  IRR  %  25.1  Simple payback  yrs  3.72  Discounted payback  yrs  4.77  Base Case Result  43  Figures 4.2 through to 4.6 graphically present the results of DCF analysis, demonstrating discrete cash flows, net cash flows, discounted net cash flows, cumulative cash flow and discounted cumulative cash flow respectively. It was important to consider and present discounted versus un-discounted cash flows in order to demonstrate the importance of the time value of money.  44  Base Case Discrete Cash Flow of CO2 Sequestration at Turnagain $600  Total revenue $400  Total costs  (Millions)  Cash Flow  $200  $0  -$200  -$400  Time (years)  Figure 4.2 Base case discrete cash flow of CO2 sequestration via mineral carbonation at Turnagain.  45  $120  Base Case Net Cash Flow of CO2 Sequestration at Turnagain  (Millions)  Cash Flow  $80  $40  $0  -$40  -$80  -$120  Time (years)  Figure 4.3 Base case net cash flow of CO2 sequestration via mineral carbonation at Turnagain.  46  Base Case Discounted Net Cash Flow of CO2 Sequestration at Turnagain $60  (Millions)  Cash Flow  $40 $20 $0 -$20 -$40 -$60 -$80 -$100  Time (years)  Figure 4.4 Base case discounted net cash flow of CO2 sequestration via mineral carbonation at Turnagain.  47  Base Case Cumulative Cash Flow of CO2 Sequestration at Turnagain $1,400 $1,200 $1,000 $800 $600  (Millions)  Cash Flow  $400 $200 $0 -$200 -$400  Time (years)  Figure 4.5 Base Case cumulative cash flow of CO2 sequestration via mineral carbonation at Turnagain.  48  Base Case Cumulative Discounted Cash Flow of CO2 Sequestration at Turnagain $400  $300  $100 (Millions)  Cash Flow  $200  $0  -$100  -$200  Time (years)  Figure 4.6 Base case cumulative discounted cash flow of CO2 sequestration via mineral carbonation at Turnagain.  49  4.2 Sensitivity Sensitivity analysis was performed in order to gauge the variability present in attempting to accurately estimate the cost of mineral carbonation. This was particularly important in this research given the inherent uncertainty surrounding a number of the input parameters and the conceptual nature of such an investigation. Sensitivity analyses allowed for a more complete presentation of the results obtained through this research, as well as a basis for the evaluation of the most sensitive factors in order to assist in guiding future research efforts.  4.2.1 Cost Model Sensitivity  Initial sensitivity testing was done on the cost model to determine the anticipated sensitivity of the unit cost of mineral carbonation in response to variety of contributing factors. The inputs investigated are summarized in Table 4.2, showing the base value used in the base case scenario as well as the upper and lower bounds as a percentage change from the base. The sensitivity results are graphically presented in Figures 4.7 and 4.8 as a spider plot and a tornado diagram respectively.  The tornado diagram allows for a visual  representation of the range of influence of each parameter on the total cost of mineral carbonation at Turnagain. This information is extremely useful in evaluating the factors that present the greatest uncertainty and that required more detailed analysis to reduce the range of potential deviations from the base case scenario. It is, however, the spider plot  50  that ultimately presents the ranking of variable sensitivities. Those input parameters with the steepest slope, whether positive or negative, represent the inputs with the greatest influence per unit of change, as represented by ∆x/x giving the percentage change from the base case value. The ranking of sensitivities of the cost model input parameters are presented in Table 4.3. From the spider plot in Figure 4.7 and the rankings seen in Table 4.3 it is apparent that the parameter with the greatest range of influence on the sequestration cost per unit of change is the sequestration efficiency.  Further consideration of the sensitivity  rankings of all investigated parameters are discussed in Section 5.  51  Table 4.3 Cost model input parameters, including upper and lower bounds, used in sensitivity analysis. Input  Unit  Base Value  Lower Bound % Change  Lower Bound Value  Upper Bound Upper Bound % Change Value  Reference  Throughput  tpd  87,000  -43%  50,000  +15%  100,000  Wardrop, 2010  Strip ratio  -  0.74  -41%  0.44  +35%  1.00  Wardrop, 2010  Dunite in waste  %  20  -50%  10  +100%  40  Wardrop, 2010  wt.% MgO  %  48.54  -16%  41.00  +5%  51.00  Scheel, 2007  Processing cost  $/t  8  -50%  4  +100%  16  Sequestration efficiency  %  80  -25%  60  +13%  90  Sequestration operating cost  $/t CO2  32.39  -38%  20  +116%  70  CO2 capture cost  $/t CO2  25  -100%  0  +120%  55  CO2 transport distance  km  250  -100%  0  +300%  1000  CO2 transport cost  $/t km  0.02  -80%  0.004  +60%  0.032  Lackner, 2008 O’Connor et al., 2000 Lackner, 2008; Lackner, 2002 Singh et al., 2003; Simbeck, 2001 Voormeij, 2004 IPCC, 2005; Rao and Rubin, 2002  52  Sensitivity Analysis of Cost Model Input Parameters: Spider Plot $120  Sequestration Cost ($/t CO2)  $110 $100 % dunite in waste  $90  wt.% MgO Sequestration efficiency  $80  Processing cost Sequestration operating cost CO2 capture cost  $70  CO2 transport distance CO2 transport cost  $60  Strip ratio Mine throughput  $50 -150%  -100%  -50%  0%  50%  100%  150%  200%  250%  300%  350%  ∆x/x Figure 4.7 Spider plot outlining sensitivity of cost model input parameters and their proportional contribution to the unit cost of sequestration.  53  Sensitivity Analysis of Cost Model Input Parameters: Tornado Diagram  CO2 capture cost Sequestration operating cost Processing cost Sequestration efficiency CO2 transport distance CO2 transport cost wt.% MgO % dunite in waste Strip ratio Mine throughput $50  $60  $70  $80  $90  $100  $110  $120  $130  Sequestration Cost ($/t CO2) Figure 4.8 Tornado diagram showing sensitivity of cost model input parameters in terms of their range of influence on the unit cost of sequestration.  54  Table 4.4 Overall sensitivity ranking of cost model input parameters. Rank  Parameter  1  Sequestration efficiency  2  Sequestration operating cost  3  CO2 capture cost  4  wt. % MgO  5  Processing Cost  6  CO2 transport distance  7  CO2 transport cost  8  Mine throughput  9  Strip ratio  10  % dunite in waste  55  4.2.2  DCF Model Sensitivity  Further sensitivity testing was done on the DCF model to determine the anticipated sensitivity of the NPV of mineral carbonation at Turnagain in response to variety of input parameters. Investigated parameters are summarized in Table 4.4, showing the base values used in the base case scenario as well as the upper and lower bounds as a percentage change from the base. The sensitivity results are graphically presented in Figures 4.9 and 4.10 as a spider plot and a tornado diagram respectively. The tornado diagram allows for a visual representation of the range of influence of each parameter on the NPV of mineral carbonation at Turnagain. While the tornado diagram is useful in determining the variables with the greatest range of influence on the NPV of mineral carbonation, it is highly influenced by upper and lower bounds placed on the base case values. This is therefore heavily dependent on the amount of information available for a particular parameter and the confining bounds able to be applied to it. It is for these reasons that it is the spider plot that ultimately presents the ranking of variable sensitivities. Those input parameters with the steepest slope represent the inputs with the greatest influence per unit of change, as represented by ∆x/x giving the percentage change from the base case value. The sensitivity ranking of the input values used in DCF modeling are presented in Table 4.5.  56  From the spider plot in Figure 4.9 and the rankings seen in Table 4.5 it is apparent that the parameter with the greatest range of influence on NPV per unit of change is the CO2 avoidance ratio.  Further consideration of the sensitivity ranking of all investigated  parameters is discussed in Section 5.  57  Table 4.5 DCF model input parameters, including upper and lower bounds, used in sensitivity analysis. Input  Unit  Base Value  Lower Bound % Change  Lower Bound Value  Upper Bound Upper Bound % Change Value  Reference  Capital cost  $  139,668,169  -74%  36,292,765  +128%  318,251,010  Lackner, 2008  Construction period  yrs  2  -50%  1  +50%  3  Assumption  Mine life  yrs  24  -17%  20  +67%  40  CO2 site emissions  t CO2/yr  1,089,197  -50%  544,599  +50%  1,633,796  Total CO2 sequestered  t CO2/yr  1,992,518  -89%  215,670  +267%  7,316,512  CO2 avoidance ratio  -  0.77  -35%  0.50  +30%  1.00  Operating cost  $/t CO2  82.51  -66%  27.98  +188%  237.91  Reduction requirement  %  20  -100%  0  +225%  65  Price of carbon  $/t CO2  200  -98%  5  +50%  300  Decommissioning  $  20,000,000  -100%  0  +150%  50,000,000  Wardrop, 2010 BHP Billiton, 2004 Derived from cost model O’Connor et al., 2004 Derived from cost model Government of Canada, 2009 Government of Canada, 2009 Assumption  58  Sensitivity Analysis of DCF Input Parameters: Spider Plot $1,000 Decommissioning Capital cost  $500  Development phase duration Mine life  NPV  (Millions)  $0  Operating cost Total sequestered CO2  -$500  Avoidance rate Carbon credit price  -$1,000  CO2 reduction requirement Site CO2 emissions  -$1,500  -$2,000 -150%  -100%  -50%  0%  50%  100%  150%  200%  250%  300%  ∆x/x  Figure 4.9 Spider plot showing sensitivity of DCF model input parameters and their proportional contribution to the NPV of mineral carbonation at Turnagain.  59  Sensitivity Analysis of DCF Model Input Parameters: Tornado Diagram  Operating cost Carbon credit price Total sequestered CO2 Avoidance rate Reduction requirement Site CO2 emissions Capital cost Mine life Development phase duration Decommissioning -$2,000  -$1,000  $0  $1,000  $2,000  NPV (Millions)  Figure 4.10 Tornado diagram showing sensitivity of DCF model input parameters in terms of their range of influence on the NPV of mineral carbonation at Turnagain.  60  Table 4.6 Overall sensitivity ranking of DCF model input parameters. Rank  Parameter  1  CO2 avoidance ratio  2  Carbon credit price  3  Operating cost  4  Total sequestered CO2  5  Site CO2 emissions  6  CO2 reduction requirement  7  Mine life  8  Capital Cost  9  Development phase duration  10  Decommissioning  4.3 Correlation Further investigating the impact of correlation on project valuation, a DCF scenario was built to demonstrate the effects of correlation between the price of carbon and the CO2 reduction requirement. This scenario involved holding all other parameters from the base case constant, however the carbon credit price and the CO2 reduction requirement were altered to coincide with the relationship seen in Figure 3.2. In this relationship, the CO2 reduction requirement increased in a straight line fashion based on the Government of Canada (2009) CO2 reduction targets, which aims to achieve a 20% reduction in CO2 emissions below 2006 levels by the year 2020, ramping up to a 65% reduction by 2050. Corresponding carbon credit prices were estimated based on a straight-line price increase to $300/t CO2 according to carbon credit price forecasts  61  developed by the Government of Canada (2009). Results of this scenario are summarized in Table 4.7.  Table 4.7 Correlation scenario results. Correlation Case Result NPV8  $  -195,499,203  IRR  %  N/A  Simple payback  yrs  N/A  Discounted payback  yrs  N/A  From these results it is evident that the correlation between the carbon credit price and the CO2 reduction requirement plays an extremely important role in project valuation and ultimately the viability of implementing a mineral carbonation scheme at Turnagain. Figures 4.11 through to 4.15 graphically present the results of correlation analysis, demonstrating discrete cash flows, net cash flows, discounted net cash flows, cumulative cash flow and discounted cumulative cash flow respectively. The results and implications of these analyses are further discussed in Section 5.  62  Discrete Cash Flow of CO2 Sequestration Including the Effects of Correlation $400  Total revenue Total costs  (Millions)  Cash Flow  $200  $0  -$200  -$400  Time (years)  Figure 4.11 Discrete cash flow of CO2 sequestration via mineral carbonation at Turnagain including the effects of correlation between carbon credit price and CO2 reduction requirement.  63  Net Cash Flow of CO2 Sequestration Including the Effects of Correlation $80  (Millions)  Cash Flow  $40  $0  -$40  -$80  -$120  Time (years)  Figure 4.12 Net cash flow of CO2 sequestration via mineral carbonation at Turnagain including the effects of correlation between carbon credit price and CO2 reduction requirement.  64  Discounted Net Cash Flow of CO2 Sequestration at Turnagain $20  -$20 (Millions)  Cash Flow  $0  -$40  -$60  -$80  -$100  Time (years)  Figure 4.13 Discounted net cash flow of CO2 sequestration via mineral carbonation at Turnagain including the effects of correlation between carbon credit price and CO2 reduction requirement.  65  Cumulative Cash Flow of CO2 Sequestration at Turnagain $0  -$400 (Millions)  Cash Flow  -$200  -$600  -$800  -$1,000  Time (years)  Figure 4.14 Cumulative cash flow of CO2 sequestration via mineral carbonation at Turnagain including the effects of correlation between carbon credit price and CO2 reduction requirement.  66  Cumulative Discounted Cash Flow of CO2 Sequestration at Turnagain $0  -$100  (Millions)  Cash Flow  -$200  -$300  -$400  -$500  -$600  Time (years)  Figure 4.15 Cumulative discounted cash flow of CO2 sequestration via mineral carbonation at Turnagain including the effects of correlation between carbon credit price and CO2 reduction requirement.  67  5 DISCUSSION  Following feasibility and sensitivity analyses outlined in Chapter 4, full consideration and discussion of the results obtained through this research is warranted. This chapter will explore the reasons behind and supporting the finding of this research, in addition to demonstrating the research significance of the contained work and suggestions for future research.  5.1 Base Case Scenario Results Results of the base case scenarios generated a cost estimate of $82.51/t CO2 and an NPV8 of $131.5 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 further in Section 5.2. In considering the valuation produced through financial modeling of the base case scenario, consideration must also be given to the financial consequences of the alternative. Should a cap-and-trade mechanism develop whereby emitted CO2 must be offset financially, 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 instead whether or not it is greater than the NPV of financial compliance. This increases the attractiveness of pursuing a 68  mineral carbonation scheme as a way in which to adapt to incoming cap-and-trade mechanisms and the financial consequences that may result. As proposed cap-and-trade policy is developed and refined, further consideration must also be given to the penalties that would be imposed in the case of non-compliance.  Having  sufficiently severe penalties in place for those who fail to meet set emissions reduction requirements will be necessary in order to create further incentive for those who chose to implement emissions reduction measures. The impact of these penalties will be an important factor to further consider in the evaluation of alternative scenarios in the context of overall project valuation.  5.2 Sensitivity Rankings The sensitivity rankings seen in Tables 4.3 and 4.5 are integral outcomes of this research that justify further discussion.  The inter-relationships between the various modeling input  parameters, including their individual effects on the value of the entire process, are critical for the development of future research with the ultimate goal of implementing mineral carbonation on an industrial scale. A further look into the reasons supporting these rankings will allow for a more thorough understanding of the process as a whole and how each parameter may impact project valuation.  5.2.1  Cost Model Sensitivity  Considering the rankings in order of sensitivity, the most sensitive parameter outlined through sensitivity analysis of the cost model was the sequestration efficiency of reaction. Unit changes  69  in this parameter are the most influential 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 extremely important in determining the unit sequestration cost in the lifecycle of mineral carbonation. As the determinant of the total amount of CO2 sequestered, sequestration efficiency also directly affects other cost inputs by influencing 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 striving towards minimizing the overall unit cost of sequestration. Operating cost was the second most sensitive parameter determined through sensitivity analysis. As the most significant contributor to total cost in determining unit cost per tonne CO2, operating cost for the autoclave was found to be rather sensitive, resulting from the significant PT 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 efficiency has a greater overall impact and must remain the priority for further research. The cost of CO2 capture follows in sensitivity, also resulting from the significant power and energy requirements necessary in removing CO2 from flue gas. The wt. % of MgO in the waste rock was found to 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, however this was not the case. Similar to the reasons supporting the sensitivity of the sequestration efficiency, a decrease in the  70  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 decrease the size of the denominator in calculating unit sequestration cost per tonne of CO2. The opposite effect would occur if the wt. % of MgO in the waste rock increased. Following in sensitivity of the cost model is 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 finer grind sizes. Carbon dioxide transport distance and cost are also important to consider in terms of their influence on the total unit cost of sequestration, however less so than the preceding factors. The majority of the cost in bringing a significant 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 significant amounts of CO2, a mineral carbonation project such as this would have to rely on the separation and capture of CO2 from flue gases on site which would 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 influential in  determining the amount of CO2 sequestered and therefore impacting the denominator in calculating the total unit cost of sequestration. These factors, however, had only a very minimal impact in terms of sensitivity. Their primary importance would be in terms of determining the scale of a mineral carbonation facility, which may ultimately be dictated by the on-site emissions that must be offset plus the availability of waste rock and CO2 supply. These last factors are heavily dependent on mining operations at Turnagain will likely be determined by the mine economics of such.  71  5.2.2  DCF Model Sensitivity  Hand in hand with the significant influence of sequestration efficiency 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 the same reasons mentioned above, namely that it is imperative to maximize the efficiency at which CO2 is sequestered given the required inputs both in terms of feed materials and costs. The main difference however, 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 ensure that the maximum number of carbon credits are available for sale. As a consequence, it is ultimately the CO2 avoidance ratio that is the most sensitive parameter in determining the NPV of mineral carbonation at Turnagain.  These  results have a direct impact on continued research efforts in the field of mineral carbonation. Going forward, 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 efficiency of reaction, however 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 beneficial 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  72  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. Following CO2 avoidance ratio, the price of carbon credits has the second greatest influence 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 significant ramifications in terms of overall project feasibility by directly controlling the total available revenue. Without a significant 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 towards implementation of a broad-ranging cap-and-trade program ultimately lie with government officials, and are inherently dependant on their stance towards the environment as well as public sentiment at the time.  However, the highly sensitive and  influential nature of carbon price on the feasibility of implementing carbon reduction programs such as mineral carbonation may provide significant 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 investigated parameters that have a noticeable effect on the feasibility of mineral carbonation, albeit with more minimal sensitivity in terms of overall influence.  Operating cost is a significant factor in determining the feasibility of mineral  carbonation. Similar to the importance of carbon price, the operating cost directly influences the total available cash flow and consequently influences NPV. Following in sensitivity, the total amount of sequestered CO2 is influential in being the denominator of all unit costs; a larger  73  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 first offset site emissions prior to claiming sequestered CO2 as credits to sell in the market. The influence of the reduction requirement stems from the same principle by determining the amount of site emissions that are required to first be offset before carbon credits can be claimed. By impacting the amount of carbon first required to be 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 more minimal influence include the mine life, capital cost, development phase duration and the cost of decommissioning. Mine life did not have a significant 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 flow, when discounted back to the present time the effect of mine life is minimal. Capital cost, while initially thought to have a greater influence on project valuation due to the front-loaded nature of the cash flows, did not significantly impact project valuation. The capital cost required may however have a more dramatic impact on the ability to secure project financing, either through debt or equity. While this does not necessarily impact project valuation, it may ultimately 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 did not have a significant influence 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 insignificant influence because of the cash flow timing far in the future. Again, the time value of money is extremely influential in negating the effects  74  of this parameter.  However, the required decommissioning of such a project may have  alternative effects in the need for significant environmental bonds to be held prior to project commencement. We cannot ignore the significance and contribution of each of the individual parameters investigated through this research, however the ranking of sensitivity has provided a means by which to prioritize further research and focus efforts on parameters that will results in the greatest influence on project valuation.  5.3 Correlation The NPV8 of -$195.5 million produced from this modeling scenario suggests that the impacts of correlation between carbon credit price and the CO2 reduction requirement are very important in project valuation and ultimately determining the feasibility of project implementation. Unfortunately it is precisely these relationships that are unknown at this point and are heavily dependent on both governmental decisions and regulation coupled with unpredictable market mechanisms of cap-and-trade. This uncertainty therefore will play a large part in the decisionmaking process when deciding whether or not to proceed with project development. At the moment, further clarity is needed on this subject in order to help guide the future of mineral carbonation research and development. Although this scenario generated a negative NPV which would typically result in the decision not to proceed with development, consideration must be given to the financial consequences of the alternative. Should a cap-and-trade mechanism develop where emitted CO2 must be offset financially, this scenario would generate an NPV8 of -$355.8 million. Therefore,  75  the negative NPV generated from implementation of a mineral carbonation scheme would, although still negative, be greater in value.  In this case, the implementation of mineral  carbonation would be the better option from a financial point of view in order to avoid greater loss. Again, this increases the attractiveness of pursuing a mineral carbonation scheme as a way in which to adapt to incoming cap-and-trade mechanisms and the financial consequences that may result.  5.4 Research Significance and Contributions The use of mineral carbonation for the sequestration of CO2 is an emerging field of research that is gaining attention for its ability to sequester vast amounts of CO2 in a permanent and benign way. Prior research in this area has focused on the technological aspects of maximizing the efficiency of reaction, however little works has been put towards the economics of integrating the technology into an industrial setting. This research has developed a preliminary cost model and DCF financial model for estimating the unit cost of mineral carbonation and the NPV of a mineral carbonation scheme at Turnagain. Sensitivity analysis has allowed for the delineation of the most sensitive input parameters in order to help focus future research efforts to minimize the costs of mineral carbonation and to maximize the project NPV. Through this research, it has been demonstrated that the sequestration efficiency of reaction is an integral factor in minimizing the cost of mineral carbonation, however this must be achieved while considering the CO2 avoidance ratio in order to maximize project NPV. It is the CO2 avoidance ratio that is the most sensitive parameter, and thus the most important to consider in order to develop a project with the greatest value and consequently has the greatest chance of further development on an industrial scale.  This research has outlined the importance of  76  focusing research efforts towards maximizing the sequestration efficiency of reaction while minimizing the amount of CO2 produced through the mineral carbonation process. It is this balance that will ultimately help lead towards the development of a viable mineral carbonation scheme. Demonstrating the sensitivity of such a project to the price of carbon credits will also aid in lobbying for a price to be put on carbon in order to facilitate and encourage the further development of mineral carbonation schemes such as that proposed for the Turnagain nickel site.  5.5 Next Steps This research has led to a number of new ideas that may be valuable additions to future work in the area of mineral carbonation. Brief consideration of each of these aspects and the ways in which they may further contribute to improved understanding of the feasibility of mineral carbonation schemes is discussed herein.  5.5.1  Options Pricing  Options are a valuable aspect of project structuring for the value they provide in the form of built-in flexibility (Cardin et al., 2008). It is therefore important that any mineral carbonation scheme should incorporate and further explore the benefits that options may provide. This is particularly important for projects containing a high degree of uncertainty and in cases where new technology or new markets are explored. Building the flexibility of options into the longterm plan allows for adaptation in the presence of forecasting errors, market variability and operating conditions in order to capitalize on project success while mitigating losses (Mayer and Kazakidis, 2007).  77  Integrating the use of DCF analysis with option valuation is important in order to obtain an accurate understanding of the project in question and to adequately evaluate investment opportunities. Employing DCF analysis as part of traditional NPV analysis may undervalue those project with embedded options by ignoring the value inherent in their available flexibility (Kulatilaka and Marcus, 1992). In situations where early investments into new markets or elaborate R&D schemes may yield negative NPV values, being solely reliant on DCF analysis and NPV values in decision-making may cause the true value of an investment in terms of future potential to be undervalued. It is these initial stages of project development and investment that may be able to open the gateway for future growth potential and eventual project profitability as the markets and technology continues to develop (Jägle, 1999; Myers, 1984).  5.5.2 Qualitative Benefits  While the numerous costs associated with carbon sequestration via mineral carbonation can be reasonably estimated and quantified, difficulties arise when trying to fully evaluate the benefits. From a purely quantitative perspective, financial benefits may be possible from a variety of different sources depending on the regulatory framework in place. In situation where a carbon tax is in effect, offsetting mine site emissions may be able to reduce the financial burden of these taxes. The possible development of a cap-and-trade scheme in North America would also allow for mine emissions in excess of a set cap to be offset, with additional sequestered carbon available for sale as carbon credits on a publicly traded carbon market. Other revenue streams may also be possible if waste rock or mine tailings are sold directly as a by-product to a separate entity for their independent use. There are numerous speculative means by which carbon  78  sequestration may provide financial benefits if the associated costs are adequately low by comparison. However, the relatively infant nature of mineral carbonation technology on an industrial or field-scale basis creates relative uncertainty as to the precise magnitude of these cost and revenue streams. Therefore it is also important to consider the non-quantifiable benefits that may arise from implementing a carbon sequestration project to improve its appeal as a potential investment. These qualitative benefits may aid in the decision-making process and help make a marginal carbon management project become more appealing. Environmental benefits are likely the most prominent asset arising from mineral carbonation and for many, this is justification enough for the implementation of drastic CCS mechanisms such as this. However, aside from the more obvious CO2 reductions to help curb atmospheric GHG levels, the integration of mineral carbonation into mining operations may have the ability to reduce overall quantities of waste and/or tailings by using these materials as mineral carbonation feedstock and thereby transforming the material into benign, and possibly saleable, by-products. Recent reports suggest that the market for magnesite as a source of magnesium metal or refractory magnesia is relatively limited in due to the Chinese domination of the market (Simandl et al., 2006), thereby hindering the sale of these by-products as a source of additional revenue. It is possible, however, that their use as aggregate material or mine backfill may still be able to provide value to mining operations. It is important to consider the promising reductions to the overall environmental impact of mining that may be achievable through mineral carbonation, potentially aiding in the ERA (environmental risk assessment) approval stage of mine development. Incorporating carbon sequestration practices into mining operations may be appealing to the ethically conscious investor and may hold value for stakeholders looking to associate with  79  environmentally conscious corporations or who utilize a specific set of social-screens or criteria when selecting investments (Pava and Krausz, 1996). Particularly in an industry plagued by prominently negative perceptions, it is conceivable that those organizations involved in meaningful corporate social responsibility (CSR) programs may be favoured by investors. It has also been suggested that there exists a positive relationship between corporate social practice and financial performance (Waddock and Graves, 1997). This idea was further examined by Hillman and Keim (2001), indicating that the careful management of primary stakeholders (including the environment) can provide intangible yet valuable assets that may be able to provide a significant competitive advantage against competitors. With the proposed implementation of carbon management policies looming ahead, businesses incorporating carbon management practices should also be better equipped to handle the additional burden imposed by such incoming policies, which would further improve shareholder value by minimizing or eliminating certain costs. Integrating such aggressive carbon management strategies into mine development may help foster new and improved perceptions towards the mining industry. With climate change and CO2 emission currently taking a prominent stand on the world scale, the development of realizable carbon mitigation strategies by the mining industry may be able to provide a beneficial boost to its image. By positioning itself correctly, the mining industry stands to make significant strides in improving its negative reputation of accountability by implementing a culture of innovation and forward thinking towards the environment.  80  5.5.3  Effects of Time  The effects of the time value of money plays a very important role in project valuation. In further evaluating the positive effects that may result from the qualitative benefits of mineral carbonation, it is meaningful to consider how these factors may also lead to quantitative benefits resulting from expedited development timelines. A reduction in permitting time or mitigated political opposition may enable cash flows to brought forward, therefore reducing the impact of discounting on project valuation. Time may also play a key role in ultimately determining the most appropriate technology to use for mineral carbonation at Turnagain.  Although high efficiency forms of mineral  carbonation are also associated with high costs, one of the main benefits of more active technologies is the fast rates of reaction. This allows for carbon credits generated through CO2 sequestration to be claimed sooner, allowing for costs and revenues to be more closely aligned. In contrast, more passive mineral carbonation technologies are likely to be hindered by slow reaction rates. This would result in a significant gap between the time at which the costs of mineral carbonation are incurred and the resulting revenues are realized. Applying the time value of money to these cash flows, this lag would diminish the value of the revenue received through the sale of carbon credits. Although further research is necessary to fully quantify the effects of time on project feasibility, it is likely that the time value of money would be a significant hindrance to implementing more passive mineral carbonation technologies on an industrial scale.  81  6 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 due its ability to provide meaningful incentives to spur innovation and effect change. As such is it 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 significantly impacted by the financial 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 more a more accurate verification process in order to quantify the amount of CO2 sequestered. This research has produced a preliminary analysis of the financial 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 life cycle of mineral carbonation, an operating cost of $82.51/t CO2 was determined. This was necessary due to the wide array of cost estimates in the literature and the inconsistent inclusion of all the necessary steps in the life cycle 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 financial modeling.  A  preliminary financial model using a discounted cash flow approach was then developed, 82  generating a base case NPV8 of $131.5 million and an IRR of 25.1% in the presence of a capand-trade program. This suggests that project implementation may be viable from a financial perspective. However, consideration must be given to the conceptual nature of these analyses and as such a comprehensive sensitivity analysis was necessary. From the cost model, the most influential parameter was found to be the sequestration efficiency of reaction, whereas the most influential parameter in DCF modeling was found to be the CO2 avoidance ratio of reaction. The importance of these two parameters solidifies the fact that a balance must be struck between maximizing sequestration efficiency and minimizing CO2 emitted during the mineral carbonation process. This will help ensure that project economics remain favourable for the industrial implementation of mineral carbonation in conjunction with mining operations.  Sensitivity  analyses performed in this research have also aided in directing further research towards those inputs that will result in the greatest impact on project viability going forward. In addition to sensitivity analyses, the effects of correlation between carbon credit price and the CO2 reduction requirement were investigated.  This was found to be extremely  influential on project NPV, generating a negative valuation that indicates that project implementation is not viable from a financial perspective when considering the currently proposed relationships between carbon credit price and CO2 reduction requirement set forth by the Government of Canada. As a result, it is important that policy makers take into consideration the potentially negative financial effects that may arise from the improper design of CO2 management schemes, and how they will impact the viability of the sequestration projects they are designed to promote. This research demonstrates that, while feasible from a preliminary financial perspective, the viability of implementing mineral carbonation on an industrial scale is highly dependent on  83  decisions made outside the control of research and development. This primarily includes the design and introduction of a comprehensive cap-and-trade framework that will put a price on carbon. Although proposed, it is unknown at this point how, when or if such a regulatory framework will be developed. However, should cap-and-trade become a reality in Canada, this research has demonstrated that it is possible for the implementation of mineral carbonation at Turnagain to be a viable means by which to achieve compliance with set emissions reduction limits and potentially generate additional revenue from the sale of excess carbon credits. Although highly dependent on future governmental decisions, the mining industry must keep a watchful eye on CO2 reduction initiatives and how they may impact mine economics. Mineral carbonation has the unique ability to potentially mitigate these effects, however the viable development of industrial mineral carbonation schemes such as that proposed for Turnagain will ultimately be reliant on the development of appropriate governmental policies that must keep financial viability in mind. It is only by striking a balance between environmental policy and financial viability that projects such as mineral carbonation at Turnagain will become a reality.  84  REFERENCES Alberta Carbon Capture and Storage Development Council. Accelerating Carbon Capture and Storage Implementation in Alberta. A report produced for the Government of Alberta Department of Energy. 2009. Aulisi, A., Farrel, A.E., Pershing, J. and Vandeveer, S. Greenhouse Gas Emissions Trading in the U.S. States: Observations and Lessons from the OTC NOx Budget Program. A report produced by the World Resources Institute. 2005. Bachu, S. Sequestration of CO2 in geologic media: criteria and approach for site selection in response to climate change. Energy Conversion & Management 41: 953-970. 2000. Balat, H. and Öz, C. Technical and Economic Aspects of Carbon Capture and Storage – A Review. Energy Exploration & Exploitation 25(5): 357-392. 2007. Baumol, W.J. and Blinder, A.S. Economics: Principles and Policy. Mason, OH: South-Western Cengage Learning. 2009. Béarat, H., McKelvy, M.J., Chizmeshya, A.V.G., Gormley, D., Nunez, R., Carpenter, R.W., Squires, K. and Wolf, G.H. Carbon Sequestration via Aqueous Mineral Carbonation: Role of Passivating Layer Formation. Environmental Science & Technology 40(15): 48024808. 2006. Béarat, H., McKelvy, M.J., Chizmeshya, A.V.G., Sharma, R., Carpenter, R.W. Magnesium hydroxide dehydroxylation/carbonation reaction process: Implications for carbon dioxide mineral sequestration. Journal of the American Ceramic Society 85(4): 742-748. 2002. Bhimani, A. (ed.). Contemporary Issues in Management Accounting. New York, NY: Oxford University Press. 2006. BHP Billiton. WMC Sustainability Site: Mt Keith Nickel Operations Environmental Data. Data available at: <http://hsecreport.bhpbilliton.com/wmc/2004/performance/ mko/data/index.htm>. 2004. Bowman, E.H. and Moskowitz, G.T. Real Options Analysis and Strategic Decision Making. Organizational Science 12(6): 722-777. 2001. Boyd, R., Krutilla, K. and Viscusi, W.K. Energy Taxation as a Policy Instrument to Reduce CO2 Emissions: A Net Benefit Analysis. Journal of Environmental Economics and Management 29(1): 1-24. 1995. Campbell, H.F. and Brown, R.P.C. Benefit-cost analysis: financial and economic appraisal using spreadsheets. New York, NY: Cambridge University Press. 2003.  85  Cardin, M.A., de Neufville, R. and Kazakidis, V. A process to improve expected value of mining operations. Mining Technology 117(2): 65-70. 2008. Chen, Z-Y., O’Connor, W.K. and Gerdemann, S.J. Chemistry of Aqueous Mineral Carbonation for Carbon Sequestration and Explanation of Experimental Results. Environmental Progress 25(2): 161-166. 2006. Chizmeshya, A.V.G., Béarat, H., Wolf., G.H., Marzke, R., Ito, N. and Doss, B. CO2 Sequestration via Mineralization: In Situ Reaction Studies in “Above Ground” and Geological Settings. Proceedings of the 2nd U.S.-China Symposium on CO2 Emissions Control Science and Technology, Hangzhou, China. 2008. Cipolli, F., Gambardella, B., Marini, L., Ottonello, G. and Zuccolini, M.V. Geochemistry of high-pH waters from serpentinites of the Gruppo di Voltri (Genova, Italy) and reaction path modeling of CO2 sequestration in serpentinite aquifers. Applied Geochemistry 19: 787802. 2004. Clark, T. Petrology of the Turnagain ultramafic complex, North-Western British Columbia. Canadian Journal of Earth Sciences 17: 744-757. 1980. Clayman, M.R., Fridson, M.S. and Troughton, G.H. Corporate Finance: A Practical Approach. Hoboken, NJ: John Wiley & Sons, Inc. 2008. Cogan, D.G. Corporate Governance and Climate Change: Making the Connection. A report produced by the Investor Responsibility Research Centre (IRRC). 2006. Crocker, T.D. The Structuring of Atmospheric Pollution Control Systems. An article in Wolozin, H. (ed.). The Economic of Air Pollution. New York, NY: W.W. Norton. 1966. Dales, J.H. Pollution, Property and Prices. Toronto, ON: University of Toronto Press. 1968. Davison, J., Freund, P. and Smith, A. Putting Carbon Back in the Ground. A report produced by the IEU Greenhouse Gas R&D Programme. 2001. Eschenback, T.G. Technical Note: Constructing Tornado Diagrams with Spreadsheets. The Engineering Economist 51(2): 195-204. 2006. Ellerman, A.D., Joskow, P.L., Montero, J-P., Schmalensee, R. and Bailey, E.M. Markets for Clean Air: The U.S. Acid Rain Program. New York, NY: Cambridge University Press. 2000. Fauth, D.J., Goldberg, P.M., Knoer, J.P., Soong, Y., O’Connor, W.K., Dahlin, D.C., Nilsen, D.N., Walters, R.P., Lackner, K.S., Ziock, H-J., McKelvy, M.J. and Chen, Z-Y. Carbon Dioxide Storage as Mineral Carbonates. A report produced by NETL, ARC, LANL and ASU for the US Department of Energy. 2000.  86  Flanagan, R., and Norman, G. Risk Management and Construction. Oxford, UK: Blackwell Publishing. 1993. Freeman, J. and Kolstad, C.D. (ed.). Moving to Markets in Environmental Regulation: Leassons from Twenty Years of Experience. New York, NY: Oxford University Press. 2007. Gabrielse, H. Geology of the Cry Lake and Dease Lake map areas, north-central British Columbia. Geological Survey of Canada Bulletin 504, 147p. 1998. Gerdemann, S.J., Dahlin, D.C., O’Connor, W.K. and Penner, L.R. Carbon dioxide sequestration by aqueous mineral carbonation of magnesium silicate minerals. Proceedings, 6th International Conference on Greenhouse Gas Control Technologies, Kyoto, Japan. 2003. Gerdemann, S.J., Dahlin, D.C., O’Connor, W.K., Penner, L.R. and Rush, G.E. Ex-Situ and InSitu Mineral Carbonation as a Means to Sequester Carbon Dioxide. A report produced by the Albany Research Centre for the U.S. Department of Energy. 2004. Gerdemann, S.J., O’Connor, W.K., Dahlin, D.C., Penner, L.R. and Rush, H. Ex Sity Aquous Mineral Carbonation. Environmental Science & Technology 41(7): 2586-2593. 2007. Gibbins, J. and Chalmers, H. Carbon Capture and Storage. Energy Policy 36: 4317-4322. 2008. Goff, F., Guthrie, G., Counca, D., Kluk, E., Bergfeld, D. and Snow, M. Preliminary investigations on the carbon dioxide sequestering potential of ultramafic rocks. A report produced by the Los Alamos National Laboratory, New Mexico. 1997. Goff, F., Guthrie, G., Lipin, B., Fite, M., Chipera, S., Counce, D., Kluk, E. and Ziock, H. Evaluation of Ultramafic Deposits in the Eastern United States and Puerto Rico as Sources of Magnesium for Carbon Dioxide Sequestration. A report produced by the Los Alamos National Laboratory, New Mexico. 2000. Goff, F. and Lackner, K.S. Carbon Dioxide Sequestering Using Ultramafic Rocks. Environmental Geosciences 5(3): 89-101. 1998. Goldberg, P., Chen, Z.-Y., O’Connor, W., Walters, R. and Ziock, H. CO2 Mineral Sequestration Studies in the US. Journal of Energy and Environmental Research 1(1): 117-126. 2001. Government of Canada. Achieving 2050: A Carbon Pricing Policy for Canada. A report produced by the National Round Table on the Environment and the Economy. 2009. Guthrie, G.D., Carey, J.W., Bergfeld, D., Byer, D., Chipera, S., Ziock, H. and Lackner, K.S. Geochemical aspects of the carbonation of magnesium silicates in an aqueous medium. Proceesings of the First National Conference on Carbon Sequestration, Washinton D.C. 2001.  87  Hahn, R.W. and Hester, G.L. Marketable Permits: Lessons for Theory and Practice. Ecology Law Quarterly 16(2): 361-406. 1989. Hard  Creek Nickel Corp. Turnagain Project. <http://www.hardcreek.com/s/Turnagain.asp>. 2011.  Data  available  at  Hamel, D. Utilization of Chrysotile Asbestos: Lessons from Experiences. Proceedings of the 33rd Forum on the Geology of Industrial Minerals, Canadian Institute of Mining and Metallurgy Special Volume 50: 121-129. 1998. Hanjürgens, B. (ed.). Emissions Trading for Climate Policy: US and European Perspectives. New York, NY: Cambridge University Press. 2005. Hansen, L.D., Dipple, G.M., Gordon, T.M. and Kellett, D.A. Carbonated Serpentinite (Listwanite) at Atlin, British Columbia: A Geological Analogue to Carbon Dioxide Sequestration. The Canadian Mineralogist 43: 225-239. 2005. Herzog, H. Carbon Sequestration via Mineral Carbonation: Overview and Assessment. A report produced by the MIT Laboratory for Energy and the Environment for the Carbon Sequestration Initiative. 2002. Hillman, A.J. and Keim, G.D. Shareholder value, Stakeholder Management, and Social Issues: What’s the Bottom Line? Strategic Management Journal 22: 125-139. 2001. Hitch, M., Ballantyne, S.M. and Hindle, S.R. Revaluing mine was rock for carbon capture and storage. International Journal of Mining, Reclamation and Environment: 1-16. 2009. Ho, M.S., Morgenstern, R. and Shih, J.S. Impact of Carbon Price Policies on U.S. Industry. RFF Discussion Paper No. 08-37. 2008. Huijgen, W.J.J. Carbon Dioxide Sequestration by Mineral Carbonation. Wageningen University at Wageningen, The Netherlands. 2007.  PhD thesis,  Huijgen, W.J.J. and Comans, R.N.J. Carbon dioxide sequestration by mineral carbonation: Literature Review. A report prepared by the Energy Research Centre of the Netherlands. 2003. Huijgen, W.J.J. and Comans, R.N.J. Carbon dioxide sequestration by mineral carbonation: Literature Review Update 2003-2004. A report prepared by the Energy Research Centre of the Netherlands. 2005. Huijgen, W.J.J., Comans, R.N.J. and Witkamp, G-J. Cost evaluation of CO2 sequestration by aqueous mineral carbonation. Energy Conversion and Management 48(7): 1923-1935. 2007.  88  Humphreys, D. Sustainable development: can the mining industry afford it? Resources Policy 27(1): 1-7. 2001. Huot, F., Beaudoin, G., Hebert, R., Constantine, M., Bonin, G. and Dipple, G.M. Evaluation of Southern Quebec Residues for CO2 Sequestration by Mineral Carbonation: Preliminary Results. Proceedings for the GAC-MAC-SEG Conference, Vancouver, BC. 2003. IPCC. Metz, B., Davidson, O., de Coninck, H., Loos, M. and Meyer, L. (eds.). Carbon Dioxide Capture and Storage. Cambridge, UK: Cambridge University Press. 2005. Jaccard, M. and Rivers, N. Canadian Policies for Deep Greenhouse Gas Reductions. A report produced by the Canadian Priorities Agenda, Part 1 – The Policy Challenge: Climate Change. October 2007. Jaccard, M.K., Rivers, N. and Sawyer, D. Pricing Carbon: Saving Green. A carbon price to lower emissions, taxes and barriers to green technology. A report produced for the David Suzuki Foundation. 2008. Jägle, A.J. Shareholder value, real options, and innovation in technology-intensive companies. R&D Management 29(3): 271-287. 1999. Jones, C.A. and Levy, D.L. North American Business Strategies Towards Climate Change. European Management journal 25(6): 428-440. 2007. Karling, H.M. (ed.). Global Climate Change Revisited. Publishers, Inc. 2007.  New York, NY: Nova Science  Kohlmann, J., Zevenhoven, R. and Mikherjee, A.B. Carbon dioxide emission control by mineral carbonation: the option for Finland. Proceedings of the INFUB 6th European Conference on Industrial Furnaces and Boilers, Lisbon, Portugal. 2002. Kojima, T., Nagamine, A., Ueno, N. and Uemiya, S. Absorptions and fixation of carbon dioxide by rock weathering. Energy Conversion and Management 38(1): S461-S466. 1997. Kolstad, C.D. Empirical Properties of Economic Incentives and Command-and-Control Regulations for Air Pollution Control. Land Economics 62(3): 250-268. 1986. Kulatilaka, N. and Marcus, A.J. Project Valuation Under Uncertainty: When Does DCF Fail? Journal of Applied Corporate Finance 5(3): 92-100. 1992. Kulla, G., Vos, G. and Lipiec, I. Hard Creek Nickel Corporation Turnagain Nickel Project, British Columbia, NI 43-101 Technical Report on Preliminary Assessment. AMEC report available at: http://www.hardcreek.com/i/pdf/AMEC2008.pdf. 2007. Labatt, S. and White, R.R. Carbon Finance: The Financial Implications of Climate Change. Hoboken, NJ: John Wiley & Sons, Inc. 2007.  89  Lackner, K.S. Carbonate Chemistry for Sequestering Fossil Carbon. Annual Review of Energy and the Environment 27: 193-232. 2002. Lackner, K.S., Butt, D.P. and Wendt, C.H. Magnesite Disposal of Carbon Dioxide. Proceedings of the 22nd International Technical Conference on Coal Utilization & Fuel Systems, Clearwater, Florida. 1997. Lackner, K.S., Butt, D.P., Wendt, C.H. and Ziock, H.-J. Mineral Carbonates as Carbon Dioxide Sinks. A report prepared by the Los Alamos National Laboratory, New Mexico. 1998. Lackner, K.S., Duby, P.F., Yegulalp, T., Krevor, S. and Graves, C. Integrating Steel Production with Mineral Carbon Sequestration. A report produced by the American Iron and Steel Institute, Pittsburg, PA, for the U.S. Department of Energy. May 2008. Lackner, K., Wendt, C., Butt, D., Joyce, E.Jr. and Sharp, D. carbonate minerals. Energy 20: 1153-1170. 1995.  Carbon dioxide disposal in  Lasher, W. Practical Financial Management. Mason, OH: Thompson South-Western. 2008. Lee, C.A. Evaluation of the potential use of processed kimberlite to sequester carbon dioxide, EKATI Diamond Mine, Northwest Territories, Canada. MSc Thesis, Queen’s University at Kingston, Ontario. 2005. Lyons, J.L., Berkshire, L.H. and White, C.W. Mineral Carbonation Feasibility Study. A report produced by the National Energy Technology Laboratory. 2003. Mayer, Z. and Kazakidis, V. Decision making in flexible mine production system design using real options. Journal of Construction Engineering and Management 133(2): 169-180. 2007. Maroto-Valer, M.M., Andrésen, J.M., Zhang, Y. and Kutcha, M.E. Integrated Carbonation: A Novel Concept to Develop a CO2 Sequestration Module for Vision 21 Power Plants. Final Technical Process Report submitted to the U.S. Department of Energy. 2003. Maroto-Valer, M.M., Fauth, D.J., Kutcha, M.E., Zhang, Y. and Andrésen, J.M. Activation of magnesium rich minerals as carbonation feedstock materials for CO2 sequestration. Fuel Processing Technology 86(14-15): 1627-1645. 2005. Maroto-Valer, M.M., Fauth, D.J., Kutcha, M.E., Zhang, Y., Andrésen, J.M. and Soong, Y. Study of magnesium rich minerals as carbonation feedstock materials for CO2 sequestration. Proceedings of the 18th Annual International Pittsburg Coal Conference. 2001. McKelvy, M.J., Chizmeshya, A.V.G., Squires, K., Carpenter, R.W. and Béarat, H. A Novel Approach to Mineral Carbonation: Enhancing Carbonation While Avoiding Mineral Pretreatment Process Cost. A report produced for the U.S. Department of Energy. 2006.  90  Mishan, E.J. and Quah, E. Cost-Benefit Analysis. New York, NY: Routledge. 2007. Montgomery, W.D. Markets in licences and efficient pollution control programs. Journal of Economic Theory 5(3): 395-418. 1972. Moyer, R.C., McGuigan, J.R. and Kretlow, W.J. Contemporary Financial Management. Mason, OH: South-Western Cengage Learning. 2009. Myers, S. Finance theory and financial strategy. Interfaces 1(14): 126-137. 1984. Newall, P.S., Clarke, S.J., Haywood, H.M., Scholes, H., Clarke, N.R., King, P.A. and Barley, R.W. CO2 Storage as Carbonate Minerals. An IEA Greenhouse Gas R&D Programme Report. 2000. Newell, R.G., Jaffe, A.B. and Stavins, R.N. The effects of economic and policy inventives on carbon mitigation technologies. Energy Economics 28(5-6): 563-578. 2006. Nixon, G.T. Ni-Cu mineralization of the Turnagain Alaskan-type complex: A unique magmatic environment. Geologic Fieldwork 1997, BC Ministry of Energy, Mines and Petroleum Resources. Paper 1998-1, 18-1 to 18-11. 1998. Norgate, T.E., Jahanshahi, S. and Rankin, W.J. Assessing the environmental impact of metal production processes. Journal of Cleaner Production 15(8-9): 838-848. 2007. O’Connor, W.K., Dahlin, D.C., Nilsen, D.N., Gerdemann, S.J., Rush, G.E., Walters, R.P. and Turner, P.C. Continuing studies on direct aqueous mineral carbonation for CO2 sequestration. Proceedings of the 27th International Technical Conference on Coal Utilization, Clearwater, FL. 2002. O’Connor, W.K., Dahlin, D.C., Nilsen, D.N., Rush, G.E., Walters, R.P. and Turner, P.C. Carbon Dioxide Sequestration by Direct Mineral Carbonation: Results from Recent Studies and Current Status. Proceedings of the First National Conference on Carbon Sequestration, Washington, DC, May 14-17. 2001. O’Connor, W.K., Dahlin, D.C., Rush, G.E., Gerdemann, S.J. and Penner, L.R. Energy and economic evaluation of ex situ aqueous mineral carbonation. Proceedings of the 7th International Conference on Greenhouse Gas Control Technologies, Vancouver, BC. 2004. O’Connor, W.K., Dahlin, D.C., Rush, G.E., Gerdemann, S.J., Penner, L.R. and Nilsen, D.N. Aqueous mineral carbonation: mineral availability, pretreatment, reaction parametrics and process studies. A report produced by the Albany Research Centre for the U.S. Department of Energy. 2005. O’Connor, W.K., Dahlin, D.C., Turner, P.C. and Walters, R.P. Carbon Dioxide Sequestration by Ex-Situ Mineral Carbonation. Technology 7S: 115-123. 2000.  91  Oelkers, E.H., Gislason, S.R. and Matter, J. Mineral Carbonation of CO2. Elements 4(5): 333337. 2008. Organisation for Economic Co-Operation and Development (OECD). Measuring Sustainable Development: Integrated Economic, Environmental and Social Frameworks. Paris, France: OECD Publishing. 2004. Park, C., Pelot, R., Porteous, K.C. and Zuo, M.J. Contemporary Engineering Economics: A Canadian Perspective. Toronto, ON: Pearson Education Canada, Inc. 2001. Pava, M.L. and Krausz, J. The Association Between Corporate Social-Responsibility and Financial Performance: The Paradox of Social Cost. Journal of Business Ethics 15: 321357. 1996. Pearce, D., Atkinson, G. and Mourato, S. Cost-Benefit Analysis and the Environment: Recent Developments. Paris, France: OECD Publishing. 2006. Penner, L., O’Connor, W.K., Dahlin, D.C., Gerdemann, S. and Rush, G.E. Mineral Carbonation: Energy Costs of Pretreatment Options and Insights Gained from Flow Loop Reaction Studies. A report produced by the Albany Research Centre for the U.S. Department of Energy. 2004. Perry, J.G. Risk management – an approach for project managers. International Journal of Project Management 4(4): 211-216. 1986. Perry, J.G. and Hayes, R.W. Construction projects – know the risks. Chartered Mechanical Engineer 32(1): 42-45. 1985. Power, I.M., Wilson, S.A., Thom, J.M., Dipple, G.M., Gabites, J.E. and Southam, G. The hydromagnesite playas of Atlin, British Columbia, Canada: A biochemical model for CO2 sequestration. Chemical Geology 206: 302-316. 2009. Rao, A.B. and Rubin, E.S. A Technical, Economic, and Environmental Assessment of AmineBased CO2 Capture Technology for Power Plant Greenhouse Gas Control. Environmental Science & Technology 36(2): 4467-4475. 2002. Robb, L. Introduction to Ore-Forming Processes. Malden, MA: Blackwell Science Ltd. 2005. Rock, R. An Evaluation of Mineral Carbonation as a Method for Sequestration of Carbon Dioxide. MES (Master of Environmental Studies) Thesis, The Evergreen State College at Olympia, Washington. 2007. Rollo, H.A. and Jamieson, H.E. Interaction of diamond mine waste and surface water in the Canadian Arctic. Applied Geochemistry 21(9): 1522-1538. 2006.  92  Sawyer, T.Y. Pro Excel Financial Modeling. Berkeley, CA: Apress. 2009. Saltelli, A., Tarantola, S., Campolongo, F. and Ratto, M. Sensitivity Analysis in Practice: A Guide to Assessing Scientific Models. Chichester, England: John Wiley & Sons, Ltd. 2004. Scheel, J.E. Age and origin of the Turnagain Alaskan-type intrusion and associated Ni-sulphide mineralization, North-Central British Columbia, Canada. MSc Thesis, University of British Columbia, Vancouver, Canada. 2007. Schwartz, E.S. and Trigeorgis, L. Real Options and Investment under Uncertainty: Classical Readings and Recent Contributions. Cambridge, MA: MIT Press. 2004. Seifritz, W. CO2 disposal by means of silicates. Nature 345: 486. 1990. Simandl, G.J., Irvine, M.L., Grieve, D., Lane, R., Wojdak, P., Madu, B., Webster, I., Northcote, B. and Schroeter, T. Industrial Minerals in British Columbia – 2006 Review. A report produced for the British Columbia Ministry of Energy, Mines and Petroleum Resources. 2007. Simbeck, D.R. CO2 mitigation economics for existing coat-fired power plants. Proceedings of the First National Conference on Carbon Sequestration, presented at the U.S. Dept. of Energy National Energy Technology Laboratory, Washington, D.C. 2001. Singh, D., Croiset, E., Douglas, P.L. and Douglas, M.A. Techno-economic study of CO2 capture from an existing coal-fired power plant: MEA scrubbing vs. O2/CO2 recycle combustion. Energy Conversion and Management 44(19): 3073-3091. 2003. Skjærseth, J.B. and Wettestad, J. Implementing EU emissions trading: success or failure? International Environmental Agreements: Politics, Law and Economics 8(3): 275-290. 2008. Stephens, J.C. and Keith, D.W. Assessing geochemical carbon management. Climatic Change 90(3): 217-242. 2008. Stolaroff, J.k., Lowry, G.V. and Keith, D.W. Using CaO- and MgO- rich industrial waste streams for carbon sequestration. Energy Conversion and Management 46: 687-699. 2005. Tietenberg, T.H. Emissions Trading, an Exercise in Reforming Pollution Policy. Washington, DC: RFF Press. 1985. Tietenberg, T.H. Emissions Trading: Principles and Practice. Washington, DC: RFF Press. 2006.  93  Trabucchi, C., Donlan, M. and Wade, S. A multi-disciplinary framework to monetize financial consequences arising from CCS projects and motivate effective financial responsibility. International Journal of Greenhouse Gas Control 4(2): 388-395. 2009. Trigeorgis, Lenos. The nature of option interactions and the valuation of investments with multiple real options. Journal of Financial and Quantitative Analysis 28: 1-20. 1993. US Bureau of Mines. Bureau of Mines Cost Estimating System Handbook: Part 1 – Surface and Underground Mining. USBM IC 9142. 1987. Vance, D.E. Financial analysis and decision making: tools and techniques to solve financial problems and make effective business decisions. New York, NY: McGraw-Hill. 2003. Victor, D.F. and House, J.C. A New Currency: Climate Change and Carbon Credits. Harvard International Review 26(2): np. 2004. Voormeij, D.A. Carbon Dioxide Sequestration Options for British Columbia and Mineral Carbonation Potential of the Tulameen Ultramafic Complex. MSc Thesis, University of Victoria, Victoria, BC. 2004. Voormeij, D.A. and Simandl, G.J. Geological, Ocean and Mineral CO2 Sequestration Options: A Technical Review. Geoscience Canada 31(1): 11-22. 2004. Waddock, S.A. and Graves, S.B. The Corporate Social Performance-Financial Performance Link. Strategic Management Journal 18(4): 303-319. 1997. Western Climate Initiative. Data available at <http://www.westernclimateinitiative.org>. 2010. Wilson, S.A. Barker, S.L.L., Dipple, G.M., Raudsepp, M., Fallon, S.J. Carbon Fixation in Mineral Waste from the Mount Keith Nickel Mine, Western Australia, Australia. Proceedings of the Geological Society of America Annual Meeting, Portland, Oregon. 2009. Wilson, S.A., Dipple, G.M., Power, I.M., Thom, J.M., Anderson, R.G., Radusepp, M., Gabites, J.E. and Southam, G. Carbon Dioxide Fixation within Mine Waste of Ultramafic-Hosted Ore Deposits: Examples from the Clinton Creek and Cassiar Chrysotile Deposits, Canada. Economic Geology 104: 95-112. 2009. Wilson, S.A., Raudsepp, M., and Dipple, G.M. Quantifying carbon fixation in trace minerals from processed kimberlite: A comparative study of quantitative methods using X-ray powder diffraction data with applications to the Diavik Diamond Mine, Northwest Territories, Canada. Applied Geochemsitry 24: 2312-2331. 2009. Wilson, S.A., Raudsepp, M. and Dipple, G.M. Verifying and quantifying carbon fixation in minerals from serpentine-rich mine tailings using the Rietveld method with X-ray powder diffraction data. American Mineralogist 91(8-9): 1331-1341. 2006.  94  Yegulalp, T.M., Lackner, K.S. and Ziock, H.J. A Review of Emerging Technologies for Sustainable Use of Coal for Power Generation. International Journal of Surface Mining, Reclamation and Environment 15(1): 52-68. 2001. Zevenhoven, R., Eloneva, S. and Tier, S. Chemical fixation of CO2 in carbonates: Routes to valuable products and long-term storage. Catalysis Today 115(1-4): 73-79. 2006. Zevenhoven, R. and Kohlmann, J. CO2 Sequestration by Magnesium Silicate Mineral Carbonation in Finland. Proceedings of the Second Nordic Minisymposium on Carbon Dioxide Capture and Storage, Göteborg, Sweden. 2001.  95  APPENDIX A – Cost Model HIGHLIGHTED BOXES REQUIRE USER INPUT MINING* Mine life Operating days per year Daily production rate (throughput) Strip ratio (waste:ore) Amount of dunite in waste rock Waste production rate Tailings ratio (throughput:tailings) CO2 ratio (tailings:CO2) CO2 production rate  unit yrs days tpd % tpd tpd  value 29 365 87,000 0.74 0.20 12,876 0.98 0.035 2,984  * Mining costs borne by Ni-mining operations and therefore not included PROCESSING Composition assay (wt %) 38.17% 0.04% 0.32% 7.15% 48.54% 0.10% 0.29% 0.02% 0.20% 5.06% 0.09% 99.98%  output (tpd)  unit μ $/t  value  Required grind size Unit processing cost at required grind size Daily processing cost Annual processing cost  $/day $/yr  Unit cost of processing  $/t feed $/t CO2  SiO2 TiO2 Al2O3 Fe2O3 MgO MnO CaO Na2O K2O P2O5 LOI S Total  4,915 5 41 921 6,250 13 37 3 26 652 12 12,873  Processing Costs** 75 8.00 103,008 37,597,920 8.00 18.87  96  SEQUESTRATION Input unit tpd tpd % tpd tpd  value  unit tpd tpd tpd  value  MgCO3 Waste (SiO2) Total for disposal Daily amount of CO2 sequestered Annual amount of CO2 sequestered CO2 avoidance ratio  tpd tpy -  5,459 1,992,518 0.77  Annual CO2 avoided  tpy  1,534,239  Waste feed Ratio feed:CO2 for complete conversion MgO available Sequestration efficiency CO2 from direct source CO2 required for complete reaction w/ available MgO  12,876 2.06 6,250 0.80 2,984 6,824  Output*** 10,459 3,727 14,186  *** Output assumed to follow the generalized equation for olivine reaction Operating Costs**** Operating cost A Operating cost B Daily operating cost Annual operating cost Unit operating cost of sequestration  unit $/day $/day $/day $/yr $/t feed $/t CO2  value 50.684 0.9333 176,834 64,544,500 13.73 32.39  **** Cost estimates from Lackner et al., 2008 using cost relationship y=AX^B where X represents the output of MgO (tpd) CO2 CAPTURE CO2 separation and capture from flue gas  $/t CO2  25.00  97  TRANSPORTATION Waste rock from pit to processing facility CO2 from direct source CO2 from external source Unit feed transportation cost per km Unit CO2 transportation cost per km Total feed transportation cost Total CO2 transportation cost Total transportation cost Unit cost of transportation  unit km km km $/t km $/t km  value 250 0.02 0.02  $/yr $/yr $/yr  12,453,235 12,453,235  $/t feed $/t CO2  2.65 6.25  DISPOSAL Distance from sequestration facility to dump Total output for disposal (MgCO3 + waste) Unit disposal cost per km Total disposal cost Unit cost of disposal  unit km tpd $/t km  value 14,186 0.02  $/yr  -  $/t feed $/t CO2  -  TOTAL Processing cost Sequestration cost  unit $/t CO2 $/t CO2  value  CO2 capture cost Transportation cost Disposal cost  $/t CO2 $/t CO2 $/t CO2  25.00 6.25 -  Total operating cost  $/t CO2  82.51  18.87 32.39  98  APPENDIX B – DCF Model Year Time since present (yrs from 2011)  2011 0  2023 12  Capital spending ($)  2024 13  88,566,505  2025 14  2026 15  2027 16  88,566,505  Site CO2 emissions  1,089,197  1,089,197  1,089,197  Total sequestered CO2 (t CO2)  1,992,518  1,992,518  1,992,518  Total avoided CO2 (t CO2)  1,534,239  1,534,239  1,534,239  CO2 reduction requirement  20.0%  Sequestered CO2 available to sell as CCs (t CO2) Operating costs ($/t CO2) Decommissioning cost ($) Carbon credit price ($/t CO2)  20.0%  20.0%  1,316,399  1,316,399  1,316,399  108.87  111.05  113.27  200.00  204.00  208.08  Total costs Total revenue  $ $  -  $ $  (88,566,505) -  $ $  (88,566,505) -  $ (216,933,649) $ 263,279,847  $ (221,272,322) $ 268,545,444  $ (225,697,768) $ 273,916,353  Net cash flow Discounted net cash flow  $ $  -  $ $  (88,566,505) (88,566,505)  $ $  (88,566,505) (82,006,023)  $ $  46,346,198 39,734,395  $ $  47,273,122 37,526,929  $ $  48,218,585 35,442,099  Cumulative cash flow Cumulative discounted cash flow  $ $  -  $ $  (88,566,505) (88,566,505)  $ (177,133,009) $ (170,572,527)  $ (130,786,811) $ (130,838,132)  $ $  (83,513,688) (93,311,203)  $ $  (35,295,103) (57,869,104)  NPV8  $  IRR Simple payback (yrs) Discounted payback (yrs)  131,449,380 25.1% 3.72 4.77  99  2028 17  2029 18  2030 19  2031 20  2032 21  2033 22  2034 23  2035 24  2036 25  1,089,197  1,089,197  1,089,197  1,089,197  1,089,197  1,089,197  1,089,197  1,089,197  1,089,197  1,992,518  1,992,518  1,992,518  1,992,518  1,992,518  1,992,518  1,992,518  1,992,518  1,992,518  1,534,239  1,534,239  1,534,239  1,534,239  1,534,239  1,534,239  1,534,239  1,534,239  1,534,239  20.0%  20.0%  20.0%  20.0%  20.0%  20.0%  20.0%  20.0%  20.0%  1,316,399  1,316,399  1,316,399  1,316,399  1,316,399  1,316,399  1,316,399  1,316,399  1,316,399  115.54  117.85  120.21  122.61  125.06  127.56  130.11  132.72  135.37  212.24  216.49  220.82  225.23  229.74  234.33  239.02  243.80  248.67  $ (230,211,724) $ 279,394,680  $ (234,815,958) $ 284,982,574  $ (239,512,277) $ 290,682,225  $ (244,302,523) $ 296,495,870  $ (249,188,573) $ 302,425,787  $ (254,172,345) $ 308,474,303  $ (259,255,792) $ 314,643,789  $ (264,440,907) $ 320,936,665  $ (269,729,726) $ 327,355,398  $ $  49,182,957 33,473,094  $ $  50,166,616 31,613,478  $ $  51,169,948 29,857,173  $ $  52,193,347 28,198,441  $ $  53,237,214 26,631,861  $ $  54,301,958 25,152,313  $ $  55,387,997 23,754,963  $ $  56,495,757 22,435,243  $ $  57,625,672 21,188,840  $ $  13,887,853 (24,396,010)  $ $  64,054,469 7,217,467  $ $  115,224,417 37,074,640  $ $  167,417,764 65,273,082  $ $  220,654,978 91,904,943  $ $  274,956,936 117,057,257  $ $  330,344,934 140,812,219  $ $  386,840,691 163,247,462  $ $  444,466,363 184,436,302  100  2037 26  2038 27  2039 28  2040 29  2041 30  2042 31  2043 32  2044 33  2045 34  1,089,197  1,089,197  1,089,197  1,089,197  1,089,197  1,089,197  1,089,197  1,089,197  1,089,197  1,992,518  1,992,518  1,992,518  1,992,518  1,992,518  1,992,518  1,992,518  1,992,518  1,992,518  1,534,239  1,534,239  1,534,239  1,534,239  1,534,239  1,534,239  1,534,239  1,534,239  1,534,239  20.0%  20.0%  20.0%  20.0%  20.0%  20.0%  20.0%  20.0%  20.0%  1,316,399  1,316,399  1,316,399  1,316,399  1,316,399  1,316,399  1,316,399  1,316,399  1,316,399  138.08  140.84  143.66  146.53  149.46  152.45  155.50  158.61  161.78  253.65  258.72  263.90  269.17  274.56  280.05  285.65  291.36  297.19  $ (275,124,320) $ 333,902,506  $ (280,626,807) $ 340,580,556  $ (286,239,343) $ 347,392,167  $ (291,964,129) $ 354,340,011  $ (297,803,412) $ 361,426,811  $ (303,759,480) $ 368,655,347  $ (309,834,670) $ 376,028,454  $ (316,031,363) $ 383,549,023  $ (322,351,991) $ 391,220,004  $ $  58,778,186 20,011,682  $ $  59,953,750 18,899,922  $ $  61,152,825 17,849,927  $ $  62,375,881 16,858,264  $ $  63,623,399 15,921,694  $ $  64,895,867 15,037,155  $ $  66,193,784 14,201,758  $ $  67,517,660 13,412,771  $ $  $ $  503,244,549 204,447,984  $ $  563,198,299 223,347,907  $ $  624,351,124 241,197,833  $ $  686,727,005 258,056,097  $ $  750,350,404 273,977,791  $ $  815,246,270 289,014,946  $ $  881,440,054 303,216,704  $ $  948,957,714 316,629,475  68,868,013 12,667,617  $ 1,017,825,727 $ 329,297,092  101  2046 35  2047 36  2048 37  1,089,197  1,089,197  1,089,197  1,992,518  1,992,518  1,992,518  1,534,239  1,534,239  1,534,239  20.0%  20.0%  2049 38  20.0%  1,316,399  1,316,399  1,316,399  165.02  168.32  171.68 42,445,976  303.13  309.20  315.38  $ (328,799,030) $ 399,044,404  $ (335,375,011) $ 407,025,292  $ (342,082,511) $ 415,165,798  $ $  (42,445,976) -  $ $  $ $  $ $  $ $  (42,445,976) (5,738,771)  70,245,373 11,963,861  $ 1,088,071,100 $ 341,260,953  71,650,281 11,299,202  $ 1,159,721,381 $ 352,560,155  73,083,286 10,671,468  $ 1,232,804,667 $ 363,231,623  $ 1,190,358,691 $ 357,492,852  102  

Cite

Citation Scheme:

    

Usage Statistics

Country Views Downloads
Canada 27 11
China 18 8
United States 15 2
South Africa 4 1
Thailand 4 0
Nigeria 4 0
United Kingdom 3 0
Japan 3 0
France 3 0
Iran 2 1
Ethiopia 2 2
Finland 2 0
Australia 2 0
City Views Downloads
Unknown 36 13
Beijing 13 0
Vancouver 10 10
Ashburn 8 0
Shenzhen 5 8
Kamloops 4 0
Tokyo 3 0
Québec 2 0
Santiago 2 0
Seattle 2 0
London 2 0
Vila Nova de Gaia 2 0
Buffalo 2 0

{[{ mDataHeader[type] }]} {[{ month[type] }]} {[{ tData[type] }]}
Download Stats

Share

Embed

Customize your widget with the following options, then copy and paste the code below into the HTML of your page to embed this item in your website.
                        
                            <div id="ubcOpenCollectionsWidgetDisplay">
                            <script id="ubcOpenCollectionsWidget"
                            src="{[{embed.src}]}"
                            data-item="{[{embed.item}]}"
                            data-collection="{[{embed.collection}]}"
                            data-metadata="{[{embed.showMetadata}]}"
                            data-width="{[{embed.width}]}"
                            async >
                            </script>
                            </div>
                        
                    
IIIF logo Our image viewer uses the IIIF 2.0 standard. To load this item in other compatible viewers, use this url:
http://iiif.library.ubc.ca/presentation/dsp.24.1-0053475/manifest

Comment

Related Items