Learning to live with Risk

As we write, oil continues to gush from the sea floor and newspapers speculate on the fate of BP: Will or won’t it go bankrupt paying for the cleanup? As we write, miners continue to die in accidents in China, Russia, the United States, and elsewhere. As we write, academics and corporate apologists generate technical papers on management by a risk- based approach.

We have all been in conference presentations where some committed and charismaticacademic pumpsup slides showing how much money could be saved by mining companies if only they would implement a risk-based approach. “You cannot afford to do it all, so take the risk and get the probabilities right,” they will tell you.

All too often these prophets of probability prevail. And equally often their statistics are proven right: something fails and somebody in the mine dies. Or worse, they are proven wrong; and something fails, and many people at the mine die.

A committed mining statistician will tell you: “There is no suchthing as a risk- free world. Thus we must incorporate risk, probability, and consequence in our real-world view, analyses, and decisions. After all, we will all die sometime, the tailings will flow to the ocean eventually, and the pit will become a part of the topography.”

Theoretically, the mining statistician is correct. Practically, we must incorporate probability into decision-making and action. I will drive the freeway today, fly in a plane tomorrow, and smoke a cigarette when drunk. Will I die of skin cancer, a heart attack on the dance floor, or by the revenge of a jilted lover?

The funny thing is how upset people become when the statistic becomes reality. Take coal mine deaths as methane explodes, environmental devastation when another tailings dam fails, and the impact on the ocean when the biggest oil platform fails. We should not be upset. We should nod our compliments to the statisticians who predicted the one in a hundred, or the one in a million, event. Hey, it occurred only once in a million tries. Which I think I read is the statistic of the Deepwater Horizon oil rig mess. The odds that a big oil company will go bust is surely greater than one in a million, so why bemoan the loss of just one company? In recent memory we have lost quite a few well-known companies.

The fascinating thing to contemplate in the light of coal mine deaths, tailings dam failures, and oil rig blowouts, is this: What, if anything, do these recent, admittedly spectacular events, mean to other mining projects? One blogger recently asked: Can the Alaska Pebble Mine survive BP? In other words, how can one defend probability in building 700-ft high slimes dams above the salmon hatchery? In the enormity of time, any probability of failure, no matter how small, will come to pass and those baby salmon are toast.

I have recently been at mines around the world where the emphasis is on filtered or thickened or comingled tailings. In Alberta, the regulators demand that the oil sands folks get the tailings dewatered and “strong” soon after production. We must wonder if the searchfor a less risky world is not leading to the demise of the old-fashioned slimes dam, full of hydraulically- placed tailings and supernatant water. We must wonder if awareness of risk is going to result in all tailings being essentially dry before they can be disposed of back in underground mines, in open pits, or in new mountains made erosion-resistant with comingled waste rock.

In search of a risk-free world, in deference to the near-demise of BP, and in recognition that extreme statistics do play out, are we headed to a new mining world; one where only reasonable projects involving rich ore bodies in dry, non-seismic parts of the world proceed? Are we headed to a more conservative  perspective where the old mining risk profiles are no longer acceptable? Is mining going to be stung by the BP oil spill to avoid projects, to do better project engineering, and to try to make living near andworking on a mine as safe as commercial flight? Funny how we accept that commercial airlines should be safe, but happily accept far less in a coal mine, in a slimes dam, and on an oil rig.

I hope that you do not lose money as BP goes bust or as Pebble Mine is shelved. But if you do, think of it this way: The world is a safer place for it — or at least as safe as you demand when you board a plane.

Jack Caldwell is a mining industry commentator who blogs at ithinkmining.com.