Why feasibility studies fail! – A summary

Last week I attended a very interesting presentation by AMC Consultants chairman and past AusIMM president, Peter McCarthy on “Why feasibility studies fail!”.  Peter has been involved in running studies for over 40 years and has seen many different reasons for projects not achieving the targets set out in the original feasibility study.

Some of the key points of project failure were around the very human desire to see projects be developed, even when objectively they may be doomed to failure.  A lack of communication between study teams, construction teams and eventually operations teams also led to plans from feasibility not being implemented on the proposed schedule and leading to difficulties later in the project cycle.

In McCarthy (2003) a study of where things went wrong in feasibility studies showed that 27% of the issues arose in the metallurgical testwork, scale up or process plant equipment design.  Of these issues the key areas where things went wrong included:

• Metallurgical domains within the orebody not understood
• Testing done on unrepresentative composites
• Failure to identify process contaminants
• Inability to handle ore types as per mining schedule
• Process water chemistry differs with lab

These are all issues that should constantly be considered in development of any testwork program. They highlight that generating a fundamental understanding of the ore domains we are going to be dealing with and the chemistry of the system is a key tool in technical risk management.

At MinAssist we are involved in a lot of conceptual, scoping and pre-feasibility studies but the underlying issues remain the same.  We generally focus on the process development side of things and see many of the issues highlighted by Peter repeated for a variety of reasons.  A key development step that I use in any study is to include a preliminary technical risk assessment, identifying any potential hurdles to generating representative and meaningful results.  This process can then be repeated at the completion of the program to assess its success.

The final message that Peter gave was that the “Scope of work must be “is it feasible?” and not “make it feasible”.  Sometimes the answer is “no”.” He highlighted the importance of using a peer review process and stepping back to take an objective look at projects.  In many projects we get caught up in the excitement of the opportunity to create something new and forget that it should only be created if it makes business sense.  All levels of studies are there to assist a Company Board to make investment decisions worth hundreds of millions of dollars and with this in mind every effort should be made to get them right and learn from the errors of the past.

If you would like to view Peter’s presentation, find it here at “Why Feasibility Studies Fail!”.  If you would like to ask any questions or find out more about MinAssist’s approach to testwork development feel free to contact MinAssist.

McCarthy 2003 Managing technical risk for mine feasibility studies in Mining Risk Management , The AusIMM ISBN 978-1-920806-00-2