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Technical Assessment of Environmental Performance and Emission Reduction Options for the Base Metals Smelters Sector - Final Report

Costs to Achieve Gazette I Targets

4.1 Overview
4.2 Conclusions


4.1 Overview

To better understand the implications of the proposed emission reduction targets presented in Table 8, costs were estimated for adopting existing and possible pollution prevention and control techniques for each of the six smelters. In cooperation with the smelters, emission reduction techniques were identified as listed in Table 9, and indicative cost estimates were prepared. For SO2 emissions, capital costs, annualized capital costs, and annual operating costs were developed. Cost-effectiveness estimates were prepared based on annualized capital costs plus annual operating costs divided by the emission reductions achieved.

Total capital costs to achieve the 2015 Gazette I SO2 emission targets are estimated at $1,400 million, and annual operating costs are estimated at $150 million for the 6 base metals facilities. Total annualized capital costs9 plus total annual operating costs were $280 million per year. The weighted average cost-effectiveness of the emission reduction techniques is $484 per tonne-SO2-reduced. The accuracy of these estimates should be considered as order-of-magnitude. They represent the sum of costs for each facility adopting the most cost effective option (i.e., lowest $/tonne-reduced) to achieve the reductions necessary to meet the Gazette I target.

Table 11: Summary of Total Costs for Achieving 2015 SO2 Emissions Targets
(sum for 6 facilities)
Capital CostsAnnual Operating CostsTotal Annual CostsCost-effectiveness
($ million)($ million/yr)($ million/yr)($/tonne-reduced)
$1389$149$280$484

In general, facilities that have yet to adopt acid plants have options that offer better cost- effectiveness ($/tonne-SO2 reduced) versus plants that have already installed acid plants. Lower cost options include new acid plants (for facilities with no acid plants), acid plants for high volume, concentrated streams (e.g., roaster, furnace off-gases), alkali scrubbing, and some options that are unique to facilities. In general, options that have the worst cost-effectiveness (i.e., high $/tonne reduced) are applicable to low volume and dilute emission streams.

A cost curve illustrating the cost-effectiveness of available techniques at increasing increments of SO2 emission reductions for the six smelters is presented in Figure 1. The cost curve reflects the following emission reduction techniques, which are numbered and shown in Figures 1, 2, and 3 by corresponding number.

  1. Elimination of copper roasting for a portion of feed;
  2. New acid plant (with double absorption) treating roaster, furnace and converter gases;
  3. Increased pyrrhotite rejection;
  4. Capture and alkali scrubbing of converter gases (plant A);
  5. Capture and alkali scrubbing of converter gases (plant B);
  6. New acid plant for roaster and furnace gases;
  7. Converter modifications, with liquid SO2 plant to balance existing acid plant;
  8. Conversion of existing acid plant to double absorption (plant C);
  9. Alkali scrubbing of emissions from desulphurization vessels;
  10. Capture and scrubbing of converter gases with alkali;
  11. Capture and alkali scrubbing of electric furnace gases;
  12. Conversion of existing acid plant to double absorption acid plant (plant D); and
  13. Alkali scrubbing of small SO2 emission stack.

The list includes one or more options that offer the best identified cost-effectiveness ($/tonne-reduced) for each facility to meet its 2015 Gazette target. However, base metal smelters may prefer other options than the set used to establish this indicative cost-curve due to facility-specific operational factors, economic criteria (e.g., availability and cost of capital to facility) and other factors. The list is ranked in increasing order of cost- effectiveness. That is, the lower cost options, expressed as $/tonne-SO2-reduced, are at the top of the above list (and at the bottom left in figure 1). As can be seen from the list, the same emission reduction technology (e.g., New acid plant with double absorption) can have different costs at different facilities. This is in part due to different SO2 emission quantities, flow rates, and concentrations from similar sources. In general, lower-volume SO2 streams have higher cost-effectiveness ($/tonne-reduced) emission reduction options.

This indicative cost-curve shows that cost-effectiveness ranges from about $190 per tonne-SO2-reduced to approximately $1,944 per tonne. It is estimated that approximately 90% of the reductions necessary to meet the 2015 Gazette target can be achieved with technologies that have cost-effectiveness at or less than about $600 per tonne-SO2.

By comparison, a recent exchange transaction on the Chicago SO2 Futures Exchange market was carried out at approximately C$1,200 per tonne-SO2. Prices on the exchange have increased substantially since 2003.10 The 2005 US EPA auction of SO2 allowances had a weighted average price of approximately $965 per tonne.11

Figure 1: Indicative Cost-Curve to Achieve 2015 Gazette Targets for SO2 Emissions

Figure 1: Indicative Cost-Curve to Achieve 2015 Gazette Targets for SO2 Emissions

Estimated cumulative capital costs (only) for these same 13 emission reduction techniques are presented in Figure 2 along with cumulative SO2 emission reductions needed to achieve the Gazette I targets for the 6 base metal smelters. To establish this graphic, the capital costs were ordered in the same increasing rank of the cost- effectiveness ($/tonne) they achieve as shown in Figure 1.

Figure 3 shows the cumulative total annual costs in absolute dollars to achieve the Gazette I targets. Total annual costs include annualized capital costs12 plus annual operating costs. Annual operating costs include labour, maintenance, reagents, energy, by-product disposal, netbacks on acid sales (where relevant), and other similar recurring items to operate the emission reduction options. Again, the total annual costs for this graph were ordered according to increasing rank of the cost-effectiveness ($/tonne reduced). In this way there is a matching of the emission reduction quantities (along the X-axis) to the cost-curve ($/tonne-reduced) in Figure 1, above.

Figure 2: Indicative Cumulative Capital Costs to Achieve 2015 Gazette Targets for SO2Emissions

Figure 2: Indicative Cumulative Capital Costs to Achieve 2015 Gazette Targets for SO2 Emissions


Figure 3: Indicative Cumulative Total Annual Costs to Achieve 2015 Gazette Targets for SO2 Emissions (Annualized Capital Plus Annual Operating Costs)

Figure 3: Indicative Cumulative Total Annual Costs to Achieve 2015 Gazette Targets for SO2 Emissions

4.2 Conclusions

Figures 1, 2 and 3 indicate that a reduction of 525 kilotonnes per year, or approximately 90% of the gazetted targets, can be achieved at or below a cost-effectiveness of about $600/tonne of sulphur dioxide-reduced. This cost level is approximately half of recent transaction prices on the Chicago SO2 Futures Exchange market. The total cumulative capital costs to achieve close to 90% of the gazetted targets is $1.2 billion, with an annualized capital plus annual operating cost of $227 million/year for the six smelters.


9 Capital costs are amortized at 7% over 20 years.

10 Personal interview with representative of Chicago Climate Exchange, October 11, 2005.

11 US EPA, (2205), 2005 Acid Rain Allowance Auction Results. Available at following website: www.epa.gov/airmarkets/auctions/2005/05summary.html

12 Capital costs are amortized at 7% over 20 years.

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