### From: Chuck French/RTP/USEPA/US

To: Chuck French/RTP/USEPA/US@EPA

Cc: Amy Branning/DC/USEPA/US@EPA, cortney_higgins@omb.eop.gov, hking@omb.gov, Paula VanLare/DC/USEPA/US@EPA

Date: 04/06/2010 03:23 PM

Subject: Re: Gold Mines ‐ follow

‐ up to teleconference

Hi Heidi,

During our phone conversation the other day, I recall that you asked for more information about costs. Attached is a draft document

that describes the costs of controls and costs for monitoring. Please let me know

if you have comments or questions.

Thank You.

Chuck

(See attached file: Cost draft Apr 6 2010.doc)

### ESTIMATES OF COSTS FOR THE PROP OSED MERCURY EMISSION STANDARDS

FOR GOLD MINE ORE PROCESSING AND PRODUCTION

DRAFT (4/6/2010) – Do Not Cite or Quote

Metals and Minerals Group Sector Policies and Programs Division Office of Air Quality Planning and Standards U.S. Environmental Protection Agency Research Triangle Park, NC

April 6, 2010

### Estimates of Costs for the Proposed Mercury Emission Standards for Gold Mine Ore Processing and Production

1.0 Cost Estimates

This section provides a summ ary of the estimated costs of the proposed rule and background details on how these costs were devel oped. The cost components include both the cost of mercury emission controls and the co sts associated with monitoring, reporting, and recordkeeping (MRR). The costs of mercury em ission controls for each affected facility are

summarized in Table 1. There were cases wher e facilities had insta lled new or additional controls on thermal process units in 2008 – 2010 as a result of the Nevada Mercury Control Program (NMCP). The costs of these newly-insta lled controls are not included in the estimates presented here because the controls were instal led prior to the proposed national standard. For example, mercury controls we re installed at Round Mountain in 2008, at Cortez in 2008 and 2009, and at Jerritt Canyon (roasters) in 2009. De tails on the cost estimates for mercury emission controls are provided in Section 1.1.

Table 1. Estimates of Mercury Emission Control Costs

No. Facility Name Location Hg

reduction

(lb/yr) Estimates of mercury emission control costs

Total capital cost ($2008) Total

O&M cost ($/yr) Total

annual cost ($/yr) Cost

effectiveness ($/lb)

1 Goldstrike Elko, NV 109 658,512 135,968 198,131 1,800

2 Denton-Rawhide Fallon, NV 31 135,100 103,900 116,653 3,800

3 Florida Canyon Pershing Co., NV 98 367,868 165,382 200,109 2,100

4 Gold Quarry Carlin, NV 141 199,400 44,222 63,045 450

5 Bald Mountain Elko, NV 215 432,260 65,522 106,328 500

6 Jerritt Canyon Elko, NV 131 141,933 31,966 45,365 350

7 Lone Tree Valmy, NV 194 453,500 157,858 200,669 1,000

8 Midas Midas, NV 15 430,000 150,421 191,013 13,000

9 Ruby Hill Eureka, NV 30 305,224 88,629 117,442 4,200

10 Twin Creeks Golconda, NV 686 1,654,551 916,105 1,055,067 1,500

Totals 1,650 4,800,000 1,900,000 2,300,000 1,400



### Table 2 presents the costs of MRR and include s all of the gold mine ore processing and production facilities identified as having the thermal processes th at would be subject to the proposed rule. All of these facilities will in cur additional MRR costs; however, several are already controlled at levels th at would be required by the rule and would incur no additional cost for mercury emission controls. The proposed ru le provides options for MRR; consequently, costs are presented for a range of these MRR opt ions that includes the higher and lower costs options. Details for the MRR cost es timates are provided in Section 1.2.

2Table 2. Estimates of Costs for Monitoring, Reporting, and RecordkeepingNo.Facility NameLocationNumber of stacksaHigher estimates of MRR costsLower estimates of MRR costsRoasterOtherNot inNVbMonitoringcapitalMonitoringO&MMonitoringtotal annualMonitoringcapitalMonitoringO&MMonitoringtotal annual1GoldstrikeElko, NV215120,000212,696229,784240,66878,139112,4102Coeur RochesterLovelock, NV340,00031,63437,33040,00011,13916,8353CortezCrescent Valley, NV640,00062,33668,03240,00021,34727,0434Cripple CreekVictor, CO3340,00059,89465,59040,00039,39945,0955Denton-RawhideFallon, NV440,00041,86847,56440,00014,54220,2386Echo Bay/Kettle RiverRepublic, WA3340,00059,89465,59040,00039,39945,0957Florida CanyonPershing County, NV740,00072,57078,26640,00024,75030,4468Fort KnoxFairbanks, AK2240,00040,23945,93540,00026,57632,2729Gold QuarryCarlin, NV11080,000132,399143,791140,33448,04268,02510Golden SunlightWhitehall, MT3340,00031,63437,33040,00011,13916,83511Greens Creek MineGreens Creek, AK1140,00020,58526,28140,00013,75419,45012Bald MountainElko, NV540,00052,10257,79840,00017,94423,64013Jerritt CanyonElko, NV23120,00089,886106,974240,66837,30671,57814Lone TreeValmy, NV540,00052,10257,79840,00017,94423,64015MarigoldValmy, NV440,00041,86847,56440,00014,54220,23816MidasMidas, NV340,00031,63437,33040,00011,13916,83517Ruby HillEureka, NV440,00041,86847,56440,00014,54220,23818Round MountainRound Mountain, NV440,00041,86847,56440,00014,54220,23819Twin CreeksGolconda, NV1340,000133,976139,67240,00045,16650,86220Western MesquiteBrawley, CA3340,00059,89465,59040,00039,39945,09521Wharf ResourcesLawrence Co., SD2240,00040,23945,93540,00026,57632,272Totals5103171,040,0001,351,1841,499,2801,341,670567,326758,380aNumber of stacks that must be monitoredbStacks at facilities outside of Nevada will incur additional costs for Method 29 testing (Method 29 testing is already required in Nevada).3

### 1.1 Cost of Mercury Emission Controls

The primary sources of the cost estimates are the estimates developed by the gold mine ore processing and production facilities in their Phase 2 applications for the NMCP. a 

### In these applications, individual facilities identified their pr ocess units that emit mercury and proposed

additional controls for units that were not curren tly controlled. The cost estimates were based on applying carbon adsorbers to capture mercury em issions and were developed from the actual costs that had been incurred when installing them on other process units. Most of the facilities provided estimates of capital costs for the propo sed emission control systems. For the few facilities that did not provide a capital cost esti mate, a cost algorithm presented in the Phase 2 application for the Twins Creek facility was used. 1 

### This algorithm uses the total installed cost ($184,000) for a carbon adsorption system with a volumetric flow rate of 2,500 cubic feet per minute (cfm). The cost for applying carbon adso rbers to other process units was based on the process unit’s cfm scaled with an exponent of 0.6 to account for economy of size:

Total installed capital cost = $184,000 * (cfm/2,500) 0.6



### Many facilities did not provi de an estimate of the annual operating and maintenance (O&M) costs. However, when a facility es timated annual O&M costs in their Phase 2 application, those estimates were used in this analysis. For fa cilities without their own sitespecific estimates, O&M cost estimates were developed based on the reported costs for other units that had already been equi pped with carbon adsorbers. The Goldstrike facility estimated

the annual labor costs for carbon adsorbers as $4,968/yr for operating labor, $4,752/yr for maintenance labor, and $106/yr for carbon replacement labor for a total of $9,826/yr. 2 

### The annual material and utility costs include the cost of replacement carbon and electricity for additional fan capacity to move the vent stream through the carbon adsorber. The Goldstrike facility estimated carbon replacement cost as $54,000/yr for a system designed for 4,400 cfm, or $12.27/cfm. 2 

### The Florida Canyon facility estimated carbon replacement costs as $23,541 for a 2,000 cfm system, or about $11.77/cfm. 3 

### Carbon replacement costs presented here are based on the average of these two values ($12/cfm of design capacity). For the fan, Florida Canyon estimated annual energy costs as $3,291/ yr for a 2,000 cfm system or $1.65/cfm. 3 

### The combined

O&M costs were then estimated based on each process units flow rate and the following equation:

O&M costs ($/yr) = $9,826 + $13.65 * cfm.

The total installed capital cost was estimated based on a 20-year lifetime, an interest rate of 7 percent, and a capital recovery factor of 0.094. The total annualized cost is estimated from the O&M costs plus the annualized cost of capital. Table 4 presents the estimated mercury emission control costs for each of the process units and provides references for the estimates.

a Copies of the Phase 2 applications are available at http://ndep.nv.gov/baqp/hg/clearinghouse.html

.



### 4

### 5 Table 4. Estimated Cost of Mercury Emission Controls for Affected Process Units

No. Facility Unit Control a Mercury

reduction (lb/yr) Flow (cfm) b Total capital cost c Annual

O&M

cost e Total

annualized

cost Cost

effectiveness ($/lb)

1 Twin Creeks Juniper preg tanks CA 80.0 3,085 209,000 4 51,936 71,666 896

2 Twin Creeks Electrowinning CA 47.2 7,311 434,000 5 109,621 150,591 3,189

3 Goldstrike Carbon kilns WC, CA 109.2 4,406 658,512 d 135,968 198,131 1,814

4 Gold Quarry AARL carbon kiln CA 124.8 900 99,700 6 22,111 31,523 253

5 Florida Canyon Carbon kilns CA 91.5 2,000 183,934 2 82,691 7 100,054 1,094

6 Florida Canyon Electrowinning, preg tanks, melt furnace CA 6.0 1,000 183,934 7 82,691 7 100,054 16,718

7 Denton Rawhide Melt furn ace CA 31.1 6,500 135,100 8 103,900 8 116,653 3,755

8 Lone Tree Electrowinni ng CA 51.6 10,000 423,000 9 146,326 186,257 3,604

9 Lone Tree Preg tanks CA 142 125 30,500 10 11,532 14,411 101

10 Bald Mountain Electrowinning CA 208 496 183,360 11 16,596 33,906 163

11 Bald Mountain Melt furnace CA 6.3 4,220 248,900 12 48,926 72,422 11,378

12 Ruby Hill Electrowinning, preg tanks, melt furnace CA 25.3 2,250 230,000 13 71,118 13 92,830 3,674

13 Ruby Hill Melt furnace CA 4.2 563 75,224 14 17,511 24,612 5,888

14 Gold Quarry Carbon kiln CA 16.0 900 99,700 6 22,111 31,523 1,975

15 Twin Creeks Melt furnace new CA 13.8 3,000 60,776 14 50,776 56,513 4,103

16 Twin Creeks Melt furnace old CA 16.9 3,000 60,776 14 50,776 56,513 3,342

17 Jerritt Canyon Melt furnace CA 131.1 1,622 141,933 d 31,966 45,365 346

18 Midas Furnace CA 14.6 10,300 430,000 15 150,421 191,013 13,056

19 Twin Creeks Autoclave WC, CA 527.8 7,778 890,000 16 652,996 16 719,784 1,364 Subtotal Carbon Group (No. 1 through No. 17) f 1,104 3,458,349 1,056, 557 1,383,025 1,250 Subtotal Non-carbon Concentrate Group (No. 18) 15 430,000 150,421 191,013 13,100 Subtotal Ore Pretreatment Group (No. 19) 528 890,000 652,996 719,784 1,400

Total 1,647 4,778,349 1,859,974 2,293,822 1,400

a CA = carbon adsorber, WC = water chiller (e.g., refrigeration unit or condenser)

b cfm = cubic feet per minute

c Capital costs estimates come primarily from the referenced NDEP Phase 2 applications (exceptions have footnotes).

d Estimated from : $184,000 * (cfm/2,500) 0.6 (see text).

e Unless a reference is given, estimated from : $9,826 + $13.65 * cfm (see text).

f Costs and emission reductions are not included for Cortez b ecause the facility installed carbon adsorbers in 2009 prior to

MACT.

### 1.2 MRR Costs

Two monitoring options are proposed for roasters: a mercury continuous emission monitoring system (CEMS) and periodic sorbent trap sampling. (Costs are not included for parametric monitoring of contro l devices because the facilities are alread y performing that monitoring as a result of State permit requirement s.) The cost estimates for the mercury CEMS were developed from the EPA/OAQPS spreadsheet for estimating CEMS costs and are

summarized in Table 5.

Table 5. Cost Estimate for a Mercury CEMS

Capital cost CEMS equipment (analyzer, sampling lin e data acquisition software, etc.) $90,000 Taxes and shipping $5,400

Install and check CEMS $4,320

Initial calibration $614 Total installed capital cost $100,334

Total annualized cost Daily operation of CEMS $4,608 Weekly checks of CEMS $2,938 Monthly checks of CEMS $2,765

Consumables $1,000
Annual QA $288 Recordkeeping and reporting $1.253

Subtotal $12,852 Capital recovery (10 years at 7%, CRF = 0.1424) $14,288

Total annualized cost $27,140

Costs for the sorbent trap monitoring for roasters were obtained from EPA testing personnel and from vendor quotes for the cost of sorbent tubes and mercury analyses. The capital cost is estimated as $40,000 for the sampling probe, pump, moisture conditioner, metering console, and data logger. The paired tr aps cost $150 each with an analysis cost of $200 each. The estimated labor to install the traps, leak check, and set flow rates is 4 hours or $206/sample (at $51.51/hr). Weekly sampling woul d be required, which results in an annual sampling cost of $28,893/yr per stack.

For process units other than roasters, the co mmon mercury control device is a carbon adsorber. The proposed rule provides options for sampling carbon adsorbers: monthly sorbent trap sample (except going to weekly when the adsorber reaches 50 percent of the operating limit) or quarterly sampling of the ca rbon for mercury loading (going to monthly when 50 percent of capacity is reached). The capital cost for the sorbent trap sampling is the same as estimated above ($40,000). The annual cost is also es timated in a similar manner except the lower frequency of sampling results in lower sampli ng costs. The annual costs for sorbent trap sampling and analysis of carbon adsorbers based on monthly sampling for 10 months and weekly sampling for 2 months is $10,000/yr per stack that is sampled. The carbon bed sampling is much less expensive because there is no capital cost, the analytical cost is less ($110/sample instead of

6

### $200/sample), and the sampling frequency is less . The carbon bed sampling is estimated as $3,170/yr per stack that is sampled.

Reporting and recordkeeping costs are based on an estimate of 16 hours per plant plus 4 hours per stack that is monitored. The reporting co sts for a facility were developed as shown in Table 6 ($931+ $233 * number of stacks).

Table 6. Estimate of Reporting and Recordkeeping Costs

General Description Mean Hourly

Rate a 

### Rate with

overhead b 

### hr/plant $/plant hr/stack $/stack Environmental Engineer $32.13 $51.41 16 $823 4 $206
Management c 

### $50.15 $80.24 0.8 $64 0.20 $16 Office/Admin. Support d 

### $17.24 $27.58 1.6 $44 0.40 $11

Total 18.4 $931 4.6 $233

a Labor rates are for private industry workers in the mining industry (NAICS 212200) and were taken from the United States Department of Labor, Bureau of Labor Statistics, May 2008, available at: http://www.bls.gov/oes/2008/may/naics4_212200.htm

. b Overhead at 60%.

c Estimated as 5% of technical hours

d Estimated as 10% of technical hours



### The proposed rule would also require annua l stack sampling for mercury emissions (e.g., using EPA Method 29). However, most of the gold mine facilities are located in Nevada, and the

Nevada Division of Environmental Protection already requires annual sampling using Method 29. Consequently, only facilitie s outside of Nevada would incur additional costs for stack sampling. The cost of Method 29 testing is estimated as $9,420 per stack test:

Table 7. Estimate of Costs for Method 29 Testing

Cost Description Cost Equipment rental $1,850 Travel and lodging $1,625 Testing cost $2,611 Laboratory analysis $2,650
Test report $680

TOTAL $9,420

The MRR costs were estimated for each facility and are presented in Table 2. The costs

are estimated from the cost functions described in this section and the nu mber of roaster stacks, number of other (not roaster) stacks, and stacks not located in Nevada (for Method 29 testing)

that must be monitored and tested.

7

### 1.3 Beyond-the-Floor Costs

The affected sources with carbon processes us e carbon to recover the gold and have one or more of the following process units: carbon kilns, electrowinning, pr eg tanks, retorts, and melt furnaces. Approximately 9 of the 11 facilities for which data are available will need to improve control to meet the floor limits because these 9 plants have an average emission control performance that is above the Maximum Achiev able Control Technology (MACT) floor average performance. We expect that the carbon process units not curr ently controlled will have carbon

adsorbers installed to effectiv ely control mercury emissions at the MACT floor level. Considering the very low mercury concentrations when the carbon processes are performing at the MACT level of control, it is difficult to identify a tec hnology that can obtain efficient additional percent reductions from low concentrati on streams. The propos ed rule requires close monitoring of the carbon adsorber so that the carbon can be repl aced before breakthrough occurs and mercury is emitted. With careful monitoring, emission reductions on the order of 99 percent could be achieved by the carbon adsorb ers installed to achieve the MACT floor level of control. For a beyond-the-floor analysis, we assumed that theoretically a second carbon adsorption system could be installed in series with the first one and would get an additional 90 percent reduction (a lower reduction because of the very lo w mercury concentrations that result from the MACT floor level of control). We acknowledge th at there is uncertainty as to the additional percent reduction the second cont rol system might achieve. Th e cost estimates for a second carbon adsorption system in series with the first one are presented in Table 8. The capital cost was estimated as $3.4 million with a total annualized cost of about $1.2 million/yr and a cost effectiveness of about $110,000/lb.

The facilities with ore pretre atment processes have installed mercury scrubbers and

venturi scrubbers on their roaste rs and autoclaves, respectively, to achieve the MACT floor for ore pretreatment processes. To achieve fu rther reductions in mercury beyond what can be achieved using mercury scrubbers and venturi scrubbers, one beyond-the -floor option that was identified was the installation of both a refrig eration unit (or condense r) and a carbon adsorber on autoclaves. The Twin Creeks Mine evaluated this option as a potential way to reduce mercury emissions from their autoclaves. 17 

### This additional control system would follow the existing venturi scrubbers to further reduce me rcury emission from autoclaves. Because the exhaust is saturated with water, a refrigeration unit or condenser would be needed to remove water that would otherwise adversely affect the adsorptive capacity of the carbon adsorber. The capital costs were estimated as $525,000 for the refrigeration unit and $365,000 for the carbon

adsorber. 17 

### The operating cost was estimated as $537,000/yr for the refrigeration unit 17 

### and $116,000/yr for the carbon adsorber (using the cost algorithm pr esented earlier for operating costs). The total annualized cost is estimat ed as $720,000/yr. Mercur y emissions would be reduced by 528 lb/yr, assuming the system would achieve a conservative 70 percent reduction in mercury emissions from a level of 754 lb/yr, wi th a resulting cost e ffectiveness of $1,400/lb. Energy consumption would increase by about 730 megawatt-hours per year, primarily due to the refrigeration unit. Solid wast e generation and disposal (spent carbon loaded with mercury) would increase by about 3 tons per year.

8

### Table 8. Estimate of Costs for a Second Carbon Adsorber for Carbon Processes

No. Facility Unit Flow (cfm) Total capital

cost a Annual

O&M

cost b Total

annualized

cost Mercury

reduction (lb/yr)

1 Twin Creeks Juniper P/B tanks 3,085 208,741 51,936 71,641 0.76

2 Twin Creeks Electrowinning 7,311 350,300 109,621 142,689 0.45

3 Goldstrike Carbon kilns 4,406 258,512 69,968 94,371 1.03

4 Gold Quarry AARL carbon kiln 900 99,678 22,111 31,521 1.18

5 Florida Canyon Carbon kilns 2,000 160,943 37,126 52,319 0.87

6 Florida Canyon Electrowinning, P/B tanks, melt furnace 1,000 106,183 23,476 33,500 0.06

7 Denton Rawhide Melt furnace 6,500 326,439 98,551 129,367 0.29

8 Lone Tree Electrowinning 10,000 422,721 146,326 186,231 0.49

9 Lone Tree P/B tanks 125 30,493 11,532 14,411 1.35

10 Bald Mountain Electrowinning 496 69,718 16,596 23,178 1.97

11 Bald Mountain Melt furnace 4,220 251,908 67,429 91,209 0.06

12 Cortez P/B tanks 200 40,427 12,556 16,372 0.02

13 Cortez Induction furnace 1, 400 129,936 28,936 41,202 0.63

14 Ruby Hill Electrowinning, P/B tanks, melt furnace 2,250 172,728 40,539 56,844 0.24

15 Ruby Hill Melt furnace 563 75,224 17,511 24,612 0.04

16 Gold Quarry Carbon kiln S0056,57 900 99,678 22,111 31,521 0.15

17 Twin Creeks Melt furnace new 3,000 205,271 50,776 70,154 0.13

18 Twin Creeks Melt furnace old 3,000 205,271 50,776 70,154 0.16

19 Jerritt Canyon Melt furnace 1,622 141,933 31,966 45,365 1.24

Totals 3,356,102 909,844 1,226,660 11

a Estimated from : $184,000 * (cfm/2,500) 0.6 (see text).

b Estimated from : $9,826 + $13.65 * cfm (see text).



### For the two facilities with non-car bon concentrate processes, we expect that Midas would

need to add a carbon adsorber to its melt furnace to achieve the MACT floor level of control. For beyond the floor, we again assumed that the existing carbon adsorbers would be supplemented by adding a second control system of carbon adsorbers in series for all of the melt furnaces at both facilities. Using the cost algorithms presented earlier as a function of system flow rate, we estimated the capital cost for the second set of carbon adsorb er control systems as $730,000, an annual operating cost of $237,000/yr, and a total annualized cost of $306,000/year. Emissions would be reduced by 7 lb/year, which results in a cost effectiveness of $45,000/lb.

9

### 2.0 References

1. Application for Phase 2 Operating Permit for Twin Creeks. Nevada Division of Environmental Protection. Page 3-21. 2008.

2. Application for Phase 2 Operating Permit for Barrick Goldstrike. Nevada Division of Environmental Protection. Appe ndix 3, Table 3.4, Page 22. 2008.

3. Application for Phase 2 Operating Permit for Florida Canyon. Nevada Division of Environmental Protection. Table 3.4, Page 19. 2008.

4. Application for Phase 2 Operating Permit for Twin Creeks. Nevada Division of

Environmental Protection. Table 14, Page 3-21. 2008.

5. Application for Phase 2 Operating Permit for Twin Creeks. Nevada Division of

Environmental Protection. Table 17, Page 3-24. 2008.

6. Application for Phase 2 Operating Permit for Gold Quarry. Nevada Division of

Environmental Protection. Table 20, Page 3-26. 2008.

7. Application for Phase 2 Operating Permit for Florida Canyon. Nevada Division of Environmental Protection. Table 3.4, Page 18. 2008.

8. Application for Phase 2 Operating Permit fo r Denton-Rawhide. Nevada Division of Environmental Protection. Table 3.4, Page 21. 2008.

9. Application for Phase 2 Operating Permit for Lone Tree. Nevada Division of Environmental Protection. Page 3-10. 2008.

10. Application for Phase 2 Operating Permit for Lone Tree. Nevada Division of Environmental Protection. Page 3-12. 2008.

11. Application for Phase 2 Operating Permit fo r Bald Mountain. Nevada Division of Environmental Protection. Appendix 3, Page 21. 2008.

12. Application for Phase 2 Operating Permit fo r Bald Mountain. Nevada Division of Environmental Protection. Appendix 3, Page 16. 2008.

13. Application for Phase 2 Operating Permit for Ruby Hill. Nevada Division of Environmental Protection. Appe ndix 3, Table 3.8, Page 31. 2008.

14. Application for Phase 2 Operating Permit for Twin Creeks. Nevada Division of Environmental Protection. Page 3-21. 2008.

10

### 11 15. Application for Phase 2 Operating Permit for Midas. Nevada Division of Environmental Protection. Page 3-33. 2008.

16. Application for Phase 2 Operating Permit for Twin Creeks. Nevada Division of Environmental Protection. Page 3-11. 2008.

17. Application for Phase 2 Operating Permit for Twin Creeks. Nevada Division of Environmental Protection. Pages 3-11 and 3-12. 2008.