The initial plan is for Veolia The initial plan is for Veolia to build a remediation plant - somewhere.
That was about the extent of details in joint press releases by the pair on Monday, but Richard Boudreault, Orbite president and CEO, was a bit more forthcoming in an interview on Tuesday.
Location, location, location
An exact location may not have been on offer for the first plant now in the works, but in speaking with Mineweb Boudreault whittled down the possible locations given the approach Veolia and Orbite are taking in marketing the red mud processing business.
First, Boudreault explained, the Veolia-Orbite plan is to target jurisdictions with tough regulations and intense social pressure to rid land of red mud.
Two countries that cropped up repeatedly in the interview were Germany and France, where there are stringent regulations on industry.
Indeed, Boudreault pointed out that in countries like Germany and France, aluminum processors looking to expand or re-permit operations may find it “easier to treat red mud than get additional permits.”
Boudreault also noted that maintaining a red mud pond can be costly in terms of insurance premiums, especially in highly populated areas in well regulated jurisdictions. Thus there can be a “lot of pressure from insurance companies” to lessen impacts from red mud, Boudreault said.
Population density itself is a consideration. Boudreault said Orbite and Veolia would target areas for remediation in areas with high population density where land values are higher and thus the pressure to remediate red mud ponds will be highest.
“Germany, France would be in that league,” he said.
Boudreault added that China, Australia and “even India” might also apply here.
Of course the first plant is going to be near a red mud pond, as the waste - bulky - is not the kind of material you would ship from far flung locations around the world to remediate at a centralized plant.
Expansion
If Boudreault’s hopes are realized, then further remediation plants would then be built at numerous other red mud sites around the world, each at cost somewhere between $50 million to $200 million, he said.
Payback on these plants would be within a few years from proceeds of the sale of various products within the red mud including alumina and rare earths, he said.
A second prong to the joint venture, beyond remediation and the plan to build an initial plant, is to convince aluminum producers of the merits of adding a red mud processing circuit to existing operations.
The advantages might be twofold: lessen red mud output and at the same time capture additional metal and minerals.
Timing and terms
Boudreault put the timeline for the plant this way: by summer he said a decision would be made on location; by Christmas there would be a feasibility study; and then in early 2014 construction would start.
“Yes it’s a quick timeline,” he agreed.
As for Orbite’s potential profit from the deal with Veolia - which were not outlined in a press release on Monday - Boudreault said “It’s going to be on a royalty basis.”
He added that fairly standard royalties in this sort of business were in the five to 10 percent range and that Orbite’s take was “very significant.”