Feasibility of re-processing mine tailings to obtain critical raw materials using real options analysis

• Published in: Journal of environmental management 2021-04, Vol.284, p.112060-112060, Article 112060
• Main Authors: Araya, Natalia, Ramírez, Yendery, Kraslawski, Andrzej, Cisternas, Luis A.
• Format: Article
• Language: English
• Subjects: Chile; Circular economy; Critical raw materials; Feasibility Studies; Mine tailings management; Mine tailings valorization; Mining; Net present value; Real options
• ISSN: 0301-4797; 1095-8630
• DOI: 10.1016/j.jenvman.2021.112060

The re-processing of mine tailings to obtain critical raw materials (CRMs) could reduce the mining of new deposits as well as ensure the profitable use of the waste materials. Though, it requires large scale industrial installations and the development of specialized technologies to obtain CRMs. New investment in mining activities is an operation, engaging for considerable financial resources involved. The scale of such an endeavor makes a new mining activity a high-risk operation due to several uncertainties present. Therefore, there is an acute need to use new tools to assess the risk associated with the planning and development of new mining activities. This study introduces a framework to evaluate the economic risk related to the re-processing of mine tailings to obtain CRMs. The framework, based on real options analysis (ROA), and sensitivity and uncertainty analysis, was applied to analyze the profitability of using mine tailings as a source of CRMs in the Chilean mining industry. The novelty of this approach consists in enabling the investment decision making including the uncertainties related to a novel investment mining project. show that tailing storage facilities in Chile have some stocks of CRMs, like scandium, whose extraction could be profitable. For the data used, the results of uncertainty and sensitivity analyses show that capital expenditure has a more significant influence than the other variables. Therefore, for the case of mine tailings re-processing, it is essential to develop processes and technologies that enable lower capital expenses. •Copper mine tailings contain considerable quantities of critical materials including rare earths.•Net present value is negative for mine tailings investments for scandium production.•Capital expenditure is the most influential variable in sensitivity analysis of net present value.•Scandium production is economically justified when option value is positive.