CIM Magazine March/April 2013

SMS Equipment pr

equipment and integrated solutions pross Canada, SMS Equipment is your local you acr

Utility prof the Construction, ForSMS Equipment pr

ovides a complete solution for your SMS Equipment pr

equipment and integrated solutions pross Canada, SMS Equipment is your local

With various locations to serve oduct users. Utility pr, Mininestryy,of the Construction, For

ovides dedicated focus on the needs SMS Equipment pr

ovides a complete solution for your

. oviderequipment and integrated solutions pross Canada, SMS Equipment is your local

With various locations to serve , Mining industries and

ovides dedicated focus on the needs

Sandvik r

shovels, dozers and wheel loaders—is engineerrugged, rmining equipment needs. Komatsu’SMS Equipment pr

ock drilling equipment is r

shovels, dozers and wheel loaders—is engineereliable mining equipment—including trucks, rugged, r

mining equipment needs. Komatsu’ovides a complete solution for your SMS Equipment pr

eliability and high enowned for quality

ed to:shovels, dozers and wheel loaders—is engineereliable mining equipment—including trucks,

s complete line of mining equipment needs. Komatsu’ovides a complete solution for your

eliability and high

Select Locations Only

oductivityprSandvik r

. Every machine is designed to give the lowest possible cost per hole.oductivityock drilling equipment is rSandvik r

. Every machine is designed to give the lowest possible cost per hole.eliability and high , renowned for qualityy,ock drilling equipment is r

. Every machine is designed to give the lowest possible cost per hole.eliability and high

1 800 881-9828n Region: Easter

1 866 458-0101n Region: esterW

equip.comsms

1 800 881-98281 866 458-0101

equip.com

ONE SOURCEDRILLING SERVICES | DRILLING EQUIPMENT | PERFORMANCE TOOLINGfor Mining and Drilling Companies Globally

For over 120 years, Boart Longyear has served mines around the world, providing innovative and reliable drilling services, drilling equipment and performance tooling – all from one global source.

Learn more at:www.BoartLongyear.com/OneSource

www.BoartLongyear.com ASX: BLY

24

CONTENTS|CONTENUCIM MAGAZINE | MARCH/APRIL 2013 | MARS/AVRIL 2013

NEWS 14 Industry at a glance 20 Labour pains At African Mining Indaba, South

African miners get creative in the face of anuncertain future by A. Reitman

22 Feeling the squeeze Oil sands exporterssearch for pipeline alternatives to deliver theirproduct to market by H. Mathisen

24 Miners shrug off CN project suspensionIron ore companies to forge ahead without newrail capacity by P. Diekmeyer

26 Information to bring investment NorthernVancouver Island communities use geoscienceproject to promote local resources by H. Mathisen

TOOLS OF THE TRADE 10 The best in new technology Compiled by H. Mathisen

COLUMNS 28 MAC Economic Commentary Untapped potential: mining and natural gas by B. Marshall

30 Eye on Business A primer on National Energy Board Act amendments by L. Olthafer and K. Slipp

32 Standards Factors to consider when determining appropriate discount rate for project NPV by G. Gosson and G. Wood

34 HR Outlook Challenging perceptions: technology and the mature worker by Z. Saab

36 Operations Straight talk on longwall mining by A. Strickland

40

4 | CIM Magazine | Vol. 8, No. 2

UPFRONT | Maintenance 38 It pays to appraise Early planning promises

myriad benefits for BHP Billiton’s Jansen potashproject by I. Ewing

40 Spare necessities Parts stocking softwaresaves Teck Resources millions by H. Mathisen

42 Excellence at any cost Reliability for its ownsake drives Luminant’s maintenance program by A. Lopez-Pacheco

44 Big on lean Shop talk with continuous improve-ment leader Raymond Floyd by R. Bergen

SPECIAL REPORT

TECHNOLOGY |Ventilation 58 Air supply on demand New ventilation

technology provides airflow when and where itis needed by K. Lagowski

CIM COMMUNITY 73 Reinventing the mill Industry examines how

to adapt to the future at CMP 2013 by D. Zeldin

74 On the path to success Cameco scholar-ship winners speak on achievements and goalsby C. Baldwin

75 A wise investment How the CIM leadershipdevelopment program provides tools to growby A. Kennedy

76 Centre of the action CIM Montreal Branchis always looking ahead by C. Baldwin

Au coeur de l’action La section locale del’ICM à Montréal pense toujours à l’avenirpar C. Baldwin

79 Exposing the cracks Sergei Shipilov revealsthe perils of corrosion by A. Lopez-Pacheco

TECHNICAL

ABSTRACTS102 CIM Journal103 Canadian Metallurgical Quarterly

IN EVERY ISSUE 6 Editor’s letter 8 President’s notes / Mot du président 84 Innovation Showcase 84 Professional directory 86 Mining Lore by C. Baldwin

March/April 2013 | 5

FEATURE |ARTICLE VEDETTE 48 Supply lines Energy? Everyone needs it. And Western Canada wants to feed that demand

by E. Moore

54 Le jeu de pouvoir Vous avez dit énergie? Tout le monde en a besoin. Et l’Ouest canadien veutrépondre à cette demande par E. Moore

62 On the tip of the iceberg Brazil is demanding on explorers, but potential rewards arehuge by A. Dion-Ortega

64 Who does what in Brazil? Infographic by B. Dubois

65 Probable changes to Brazilian mining and royalty legislation Legal revisions have been years in the making by C. Vilhena

67 Tip-toeing around taxes Canadian suppliers must deliver unique products to accessthe Brazilian market by C. Baldwin

69 From broke to booming Luna Gold improves its fortunes by reworking how it operatesits Aurizona mine by V. Heffernan

48

62


editor’s letter Editor-in-chief Ryan Bergen, [email protected]

Executive editor Angela Hamlyn, [email protected]

Managing editor Andrea Nichiporuk, [email protected]

Section editorsFeatures: Ryan Bergen, [email protected] and Upfront: Peter Braul, [email protected], CIM Community, Histories and Technical Section:Dinah Zeldin, [email protected] Mathisen, [email protected] editor / Communications coordinatorZoë Koulouris, [email protected]

Web editor Nathan Hall, [email protected]

Editorial internMaria Olaguera, [email protected]

Contributors Correy Baldwin, Peter Diekmeyer, Antoine Dion-Ortega,Bruno Dubois, Ian Ewing, Greg Gosson, Virginia Heffernan, AlanaKennedy, Krystyna Lagowski, Alexandra Lopez-Pacheco, DaveMackintosh, Brendan Marshall, Eavan Moore, Lars Olthafer, AnnaReitman, Ziad Saab, Katie Slipp, Antony Strickland, Carlos Vilhena,Graham Wood

Translations SDL

Published 9 times a year by theCanadian Institute of Mining, Metallurgy and Petroleum 1250 – 3500 de Maisonneuve Blvd. WestWestmount, QC, H3Z 3C1Tel.: 514.939.2710; Fax: 514.939.2714 www.cim.org; Email: [email protected]

Subscriptions Included in CIM membership ($170.00); Non-members (Canada),$220.00/yr (PE, MB, SK, AB, NT, NU, YT add $11.00 GST, BC add$26.40 HST, ON, NB, NL add $28.60 HST, QC add $32.95 GST +PST, NS add $33.00 HST) Non-Members USA and International:US$240.00/year. Single copies, $25.00.

Advertising SalesDovetail Communications Inc.30 East Beaver Creek Rd., Ste. 202Richmond Hill, Ontario L4B 1J2Tel.: 905.886.6640; Fax: 905.886.6615; www.dvtail.com National Account Executives 905.886.6641Janet Jeffery, [email protected], ext. 329Neal Young, [email protected], ext. 325

This issue’s coverDesigned by Peter Braul and Bruno Dubois

Layout and design by Clò Communications Inc.www.clocommunications.com

Copyright©2013. All rights reserved.

ISSN 1718-4177. Publications Mail No. 09786. Postage paid at CPA Saint-Laurent, QC.

Dépôt légal: Bibliothèque nationale du Québec.The Institute, as a body, is not responsible for statements made or opinions advanced either in articles or in any discussion appearing in its publications.

Printed in Canada

Iwas a little surprised to hear from a veteran journalist that this year’s PDAC Conventionwas “dull.” Maybe there was nothing shocking

– convention lore includes a tale of gun play inthe Royal York Hotel – but from my impressionthe energy was palpable.

A number of conversations I had underlinedthe urgency for junior companies to either distin-guish themselves from their peers and securefunding or shutter their projects entirely. Fundmanager Eric Sprott railed against what he arguesis the underhanded approach of central banks tokeep one step ahead of inflation and stifle pre-cious metal prices. Regardless of the machina-tions of federal bankers, in the marketplace, gold

miners are losing ground to investment products that 10 years ago were noteven a factor. The market has changed and the imperative to innovate both withrespect to operations and financing was clear.

While providing rich fuel for future magazine articles, for us the event fellright in the middle of the publishing cycle, inevitably forcing us to throttle backon pressing production work. Still, it did serve as a fitting backdrop for the cre-ation of this issue, which explores the challenging combination of jugglingresources and constraints. This proved to be the central theme for both thefocus on energy and for our report on Brazil.

Natural gas and coal project developers are anxious to get their ampleresources to markets that are hungry for their products. Meanwhile, uraniumproducers and developers are biding their time, waiting for a nuclear renais-sance that – given projected future energy demand – seems only a matter oftime. In the feature, “Supply lines” (p. 48), Eavan Moore traces the progressthese energy commodities are making on their route to world markets.

Inside our special report on Brazil, Antoine Dion-Ortega, with his story “Onthe tip of the iceberg” (p. 63), mines the words of Ernest Hemingway to helpdefine the nature of Brazil’s mining industry, which has vast potential andplenty of idiosyncrasies. We discover what Canadian companies have learnedof both the opportunities and limits of working in that country.

Finally, while miners cannot control all of the forces acting upon them, theycan have an impact on downtime and reliability. How did Suncor boost pro-duction by 70 per cent without an equal outflow of cash? By applying the prin-ciples of continuous improvement, explains recently retired Suncor execRaymond Floyd in our Q&A, “Big on lean” (p. 44). Whatever the principlesbehind the improvement, the challenge is in the execution, which is what wefocus on in our Upfront section on maintenance.

Soon enough we will be back in Toronto for CIM 2013 to tackle all of thesetopics and more. We look forward to seeing you there and re-energizing the conversation.

Ryan Bergen,[email protected]

@Ryan_at_CIM_Mag

errata

Base metal alchemyIn “Deeper understanding” (p. 61, February 2013), the article states

that the Reed Lake discovery in Manitoba was a nickel deposit. In fact,VMS Ventures discovered copper. We regret the error.

Energy potential

Introducing Mobil Delvac 1 ESP 0W-40: the ultimate level of year-round efficiency and reliability from an API CJ-4 licensed SAE 0W-40 synthetic. With a relentless commitment to research and development, our products are designed to extend the life of your engine and keep your vehicle operating at peak efficiency. From over 80 years of specialization in heavy-duty lubricants, Mobil Delvac is trusted by the world’s top five heavy-duty engine builders and millions of truck drivers around the world.

Find your nearest distributor at mobil.ca

The Ultimate Synthetic PerformanceOn The Road, And Off

www.mobil.ca

All t

rade

mark

s use

d her

ein ar

e tra

dema

rks o

r reg

ister

ed tr

adem

arks

of Ex

xon

Mobil

Corp

orat

ion or

one o

f its

subs

idiar

ies u

nless

indica

ted ot

herw

ise.

The mining industry hasbeen rocked recently by massiveasset write-downs and majordeclines in profit at some of itslargest companies. So how doesthe mining industry improve itsperformance going forward andavoid these pitfalls?

Last November, Deloittepublished its fifth annual miningreport, which tracks industrytrends and identifies the pressingissues facing the global miningsector, as well as responsescompanies can adopt.

I highlight the following:• Higher costs: zero in on costdrivers, automate and improveasset efficiency.

• Capital projects: make disciplined investment decisions throughproject rationalization and improved capital efficiency.

• M&A activity: engage in more comprehensive due diligence to assesspotential partners and plan integration in advance.

• Resource nationalism: work to strengthen relationships with nationalgovernments, diversify commodity mix and geographic areas of focus,and demonstrate the industry’s value to local governments andcitizens.

president’s notes | mot du président

• Responsible behaviour: set a higher standard for behaviour byembedding sustainability into the approach to capital projects, as wellas into the negotiations with local stakeholders.Many would say that these are simply common sense, back-to-basics

approaches for addressing the challenges before us. Strong focusedaction is required, however.

CIM, through its position as the premier technical society for miningindustry professionals, is ideally placed to support both our corporate andindividual members as they navigate these turbulent times. Every one ofthe challenges cited above is being addressed by CIM, either through thesocieties and branches, technical meetings, courses or publications.

A recent example is the establishment of the CIM-supported GlobalMining Standards and Guidelines Group, bringing together some 80companies and major equipment manufacturers to establish standardsthat cover diverse areas, including asset management and operations;onboard data and access; safety and risk management; and undergroundmining.

All of us at CIM must ensure that the institute continues to focus ontoday’s challenges. Often shareholders and the financial press look toCEOs to provide some miraculous cure to industry challenges,however, experience has shown that mining professionals – who arethe backbone of the industry – have a significant role to play. CIM ishere to ensure they do.

Terence Bowles, CIM President

L’industrie minière a récemment été ébranlée par une dépréciationmassive de son actif et des baisses de profits substantielles decertaines de ses plus grandes sociétés.

Comment, alors, l’industrie minière peut-elle améliorer sonrendement pour l’avenir et éviter de tomber dans ces pièges?

En novembre dernier, Deloitte a publié son cinquième rapport annuelsur le secteur minier, qui fait le suivi des tendances dans l’industrieminière mondiale et dégage les défis immédiats qu’elle devra releverainsi que des mesures que les sociétés peuvent prendre.

J’attire votre attention sur les points suivants :• Coûts accrus : Se concentrer sur les facteurs de coût; automatiser

et améliorer le rendement de l’actif.• Projets d’investissement : Prendre des décisions disciplinées en

matière d’investissements, par la rationalisation des projets et uneproductivité du capital accrue.

• Fusions et acquisitions : Procéder à des vérifications préalables plusexhaustives lorsqu’on évalue des partenaires potentiels et planifierd’avance l’intégration.

• Nationalisme des ressources : Travailler à renforcer les relationsavec les gouvernements du pays; diversifier l’assortiment demarchandises et les régions géographiques choisies; et faire ladémonstration de la valeur de l’industrie aux gouvernements locauxet aux citoyens.

• Comportement responsable : Hausser la barre en matière decomportements en intégrant la durabilité dans la façon d’approcherles projets d’investissements ainsi que dans les négociations avecles acteurs locaux.

Bon nombre dirait que ces approches relèvent du simple bon sens,qu’elles constituent un retour aux sources. Mais une action vigoureuseet ciblée est essentielle.

L’ICM, en tant que société technique de première importance pourles professionnels de l’industrie minière, est dans une position idéalepour appuyer ses membres, entreprises comme particuliers, en cestemps houleux. L’ICM s’occupe de chacun des défis mentionnés ci-dessous, par l’intermédiaire de ses sociétés et de ses divisions, deréunions techniques, de cours ou de publications.

Le nouveau groupe sur les normes et les directives mondiales pour l’exploitation minière, supporté par l’ICM, en est un exemple. Ilregroupe quelque 80 de sociétés et de grands fabricants d’équipementchargés d’établir des normes couvrant divers domaines, dont la gestionde l’actif et l’exploitation; les données de bord et l’accès à celles-ci; lasécurité et la gestion des risques; et l’exploitation minière souterraine.

À l’ICM, nous devons tous veiller à ce que l’Institut continue de seconcentrer sur les défis actuels. Souvent, les actionnaires et lesjournalistes du domaine financier attendent des chefs de directionquelque remède miracle aux problèmes de l’industrie. Cependant, noussavons par expérience que les professionnels du secteur minier, quisont l’épine dorsale de l’industrie, ont un rôle significatif à jouer. Lamission de l’ICM est de veiller à ce qu’ils s’acquittent de cette fonction.

Terence Bowles, Président de l’ICM

CIM focused on today’s challenges

L’ICM se concentre sur les défis d’aujourd’hui


TOOLS OFTHE TRADE the best in new technology

◢ Calm water on rough roadsPhilippi-Hagenbuch has

patented a variable volume

technology on its HiVol Water

Tanks, letting operators

distribute the water load

inside tanks fitted to their haul

trucks by compartmentalizing

the water in certain areas,

says Josh Swank, vice-

president of sales and

marketing. This load-

balancing is useful for trucks

running on roads with steep

grades. The HiVol Water Tanks have flat tops and square corners, as opposed

to traditional cylindrical tanks, and are designed to minimize churning and to

suppress dangerous side-to-side surges. The tanks also have front and rear

doors, and since each internal baffle has a door, workers can efficiently and

safely access the tanks to shovel out fines, for instance. By closing baffle doors,

front-to-back water surges are also suppressed. HiVol Water Tanks can carry as

much as 220,000 litres of water and are used primarily for dust suppression at

mine sites. Swank points out that the tanks can also be used for fire suppression

purposes, as they come with water cannons. The company holds an inventory

of tanks for Caterpillar 789 haul trucks but also customizes tanks to a company’s

fleet. “All options on our water tanks are completely customer-specific, even

down to the drain,” says Swank.

◢ Low-maintenancelighting

Dialight has upped the energy

efficiency of its eight-watt SafeSite

RTO LED Area Light to 100

lumens per watt, providing even

more potent low-maintenance

lighting for hazardous locations.

The solid-state LED lights were

designed to take a beating in

harsh environments. The lights

have a five-year warranty and have

been tested to stay at 70 per cent

luminance for 100,000 hours,

which translates to maintenance

and replacement cost savings over

conventional lights. “We’ve seen a

lot of applications for this fixture on

conveyor belts, draglines and

crane lighting, or anything that’s

going to have tons of vibration and

impact,” says T.J. Struhs, strategic

marketing manager. “You’re going

to install it and forget about it.”

The light saves energy too; it was

designed to replace incandescent

or fluorescent fixtures that use 75

watts. “It’s an 89 per cent energy

savings,” Struhs says. Since the

fixture is capable of running on

DC power, it can operate

underground where backup

battery power is used. The light is

certified for environments where

flammable gasses, liquids or

vapours are occasionally present,

but other Dialight models are

certified to operate in those

locations permanently.


◢ Metal detection, machine protectionEriez has released a new

series of metal detectors

to protect vital and

expensive equipment like

crushers and grinders

from potentially

destructive pieces of

tramp metal. Installed

upstream from these

critical machines, the

Model 1230 Metal

Detector is attached to

conveyor belts carrying

coal and other minerals to protect them against damage from unwanted

metal like bucket teeth. The detector lets magnetic and conductive ores

such as magnetite and pyrite pass, while also ignoring metal splices that are

used to repair conveyor belts. Customizable to most conveyor belt sizes, the

largest detectors available are for belts 254 centimetres wide, with an

aperture height of up to 101.6 centimetres. Eriez has also designed the

Model 1230 detector to operate in outdoor environments. When a piece of

tramp metal is detected, a marking system assists an operator in locating it

on the belt. “The operator can stop the belt, remove the tramp metal, then

restart the belt, minimizing the number of metal detector trips,” says John

Klinge, product manager, metal detection.

Cour

tesy

of S

teve

ns S

trat

egic

Com

mun

icat

ions

Courtesy of Ironclad Marketing

Cour

tesy

of S

SPR


TOOLS OFTHE TRADE the best in new technology

◢ Careful with cablesAn innovative and intelligent cable design on Atlas

Copco’s Scooptram EST1030 may have untangled one

of the biggest snags associated with electric

underground loaders. Historically, electric loaders,

which offer immediate energy and maintenance cost

savings, have failed to catch on due to problems with

the high tension put on the machines’ power cables,

says Erik Svedlund, product manager of electric

vehicles. “The cable is dragged and it’s stretched

around corners and it’s going to get damaged,” he

explains. “That’s costly and causes downtime.” Atlas

Copco has come up with a solution that mimics fishing

lines: constant low tension is maintained on the cable,

without letting it go slack or to be stretched too tightly.

“We looked into it and developed a totally new cable

reel control system that actually reacts to what the

machine is doing,” Svedlund said. This reduces cable

wear and thus maintenance. Compared to their diesel

counterparts, electric machines can help customers cut

their energy costs by 40 per cent. Electric motors also

reduce maintenance requirements and companies get

underground ventilation savings when operating the

emission-free machines. The EST1030 was released

globally on February 1.

◢ Value in the detailsImmersive Technologies has released a new underground

coal mining simulation – an adaptation of the company’s

UG360 hard rock mining platform. The CM360 has five

separate coal mining equipment simulations available,

including continuous miner, shuttle car, roof bolter, longwall

and miner bolter equipment training. Accuracy and realism

are key. During the simulation, a continuous miner operator

can, for instance, signal a shuttle car driver by cap lamp to

relay that it is safe to approach. Immersive Technologies has

also developed virtual coal. “We can simulate the difference

between coal and rock,” said Richard Beesley, a product

manager, adding that a continuous miner will respond with

realistic vibration and sounds according to the material it is

cutting. Operator movements are tracked in the training

simulation and a warning will sound – or a machine will shut

down – if a worker gets too close to a machine. “It’s all about

taking the miner through simulation and seeing how that

correlates in the real world,” says Beesley. Analytics on

operator performance are taken, and trainers can suggest

improvements to increase workers’ safety and productivity,

making mines more profitable. The company provides

software updates to its customers to keep them relevant

with changes in the industry and improvements with the

product.

◢ An exciting boring machineHerrenknecht AG

is bringing its 30

years of tunnelling

expertise to the

mining game. The

German company

has applied

pipejacking

techniques to

develop a Boxhole

Boring Machine (BBM) that protects workers from falling

rock hazards. The transportable and flexible boring

machine is capable of drilling 1.1-metre-, 1.5-metre-, or

1.8-metre-diametre vertical or 30-degree inclined slot

lines and shafts up to 60 metres long. The machine was

designed with a crawler unit that moves the BBM to

required locations underground with ease. Once set up,

the BBM’s cutterhead is thrust upwards from the jacking

frame and, after each metre of drilling occurs, a thrust

pipe is added and attached inside the frame to continue

boring the shaft. Crushed rock funnels down through the

thrust pipes with workers safely operating the machine

via remote control. BBM is useful for block caving

applications and also for drilling ventilation shafts. “The

big benefit of the machine is that the parts are proven,”

says Silke Rockenstein, corporate communications team

leader. “The only thing new is the product itself, the

application of the machine and, of course, the mining

market.” BBM has proven capable of drilling roughly one

metre per hour when factoring in installation and

demobilization times, or two metres per hour when

conducting drilling exclusively, says Rockenstein.

Compiled by Herb Mathisen

Cour

tesy

of I

mm

ersi

ve T

echn

olog

ies

Cour

tesy

of H

erre

nkne

cht A

G

Cour

tesy

of A

tlas C

opco

Toronto (905) 791-1553 · Montreal (514) 367-1124 · Vancouver (604) 946-5535

• Complete drive package

• Plug & play

• Reversible housing design

• Taconite heavy duty sealing system

Industrial Gear Units...Custom is our standard

Driving the world

• Complete drive package

• Plug & play

• Reversible housing design

• aconTTa

Complete drive package

Plug & play

Reversible housing design

aconite heavy duty sealing system

Complete drive package

Reversible housing design



oronto (905) 791-1553 · Montreal (514) 367-1T

• aconTTa

oronto (905) 791-1553 · Montreal (514) 367-1


oronto (905) 791-1553 · Montreal (514) 367-1


ancouver (604) 946-5535124 · V


ancouver (604) 946-5535


news | industry at a glance

Teck to take conservative tack

Following record copper productionin 2012, and an increase in overall coal-producing capacity, Teck Resource’s out-look for 2013 is optimistic but cautious.

In a February conference call to discussyear-end financial results with investors,CEO Don Lindsay confirmed the com-pany would leave some coal in theground in 2013 due to current prices.“Coal production guidance is in therange of 24 to 25 million tonnes, and

this is lower than our current produc-tive capacity of 27 million tonnes, as wecontinue to match our production tomarket conditions,” he said. Coal priceswere down 37 per cent in the fourthquarter of 2012 from that same periodin 2011. Teck also produced a record373,000 tonnes of copper last year –with 103,000 tonnes in the last quarter– but will see a decrease in productiondue primarily to declining ore grades.

While Lindsay said the companypreferred to stay the course, he did notclose the door on a possible acquisition,particularly in either the copper or ironore areas. With a healthy $3 billion inTeck’s coffers, Lindsay hinted that a fewassets had recently become availableand a deal could be made if the pricewas right. “Copper obviously is a prior-ity for us and, with declining produc-tion for the next couple of years, it’ssomething that might fill the gap there,”he said. – Herb Mathisen

Attention and apprehension at PDAC

Despite the doom and gloom sur-rounding the mineral exploration sec-tor, the Prospectors & DevelopersAssociation of Canada’s (PDAC) annualconvention attracted more than 30,000delegates from around the world toToronto from March 3 to 6.

The event, attended by internationalgovernment representatives, miningexecutives, students, geologists andinvestors, included more than 20 tech-nical sessions and a variety of programsranging from aboriginal engagementand consultation presentations to cor-porate social responsibility discussionsand investor workshops.

“Although a lot of people were smil-ing, and I did talk to quite a few peoplewho did deals over the week – and Ithink that is a focal point for the con-vention – for the juniors sector and thegrassroots exploration side of things,these are tough times in terms of raisingcapital,” said Ross Gallinger, PDACexecutive director.

During the current slowdown,Gallinger said PDAC will focus on help-ing companies retain highly qualified

Teck announced that it will leave coal in the ground this year to match production with market conditions.

Cour

tesy

of T

eck

Reso

urce

s

professionals in the exploration fieldand will work on ways for companiesto access capital and reduce costs inorder to stay afloat. The association, forinstance, will devote concerted lobby-ing efforts to get the government torenew and extend the mineral explo-ration tax credit.

As for next year’s convention, to beheld in Toronto from March 2 to 5,2014, Gallinger said broad pieces ofthe agenda are already being lined up,but planning is still in the earlyphase. “We haven’t looked that farahead,” he said. “Of course, we haveto revisit where the industry is in sixmonths’ time.” – H.M.

Stricter mine rehabilitationrules expected in Quebec

Making good on the Parti Québé-cois’ election promises, Quebec’s natu-ral resources minister Martine Ouelletan nounced the government’s intention

to increase the financial guaranteesrequired from mining companies earlyon to remediate the full mine site uponclosure. Currently, companies arerequired to provide guarantees for 70per cent of the clean-up costs for accu-mulation areas like tailings and wasterock piles over a 15-year period. How-ever, that will soon change to 100 percent of all rehabilitation costs withinthe first three years of operation, with50 per cent due within 90 days of a siteclosure plan submission, and 25 percent due each of the next two years.

“What it means for a mining opera-tion is it’s going to tie up capital earlieron in the process,” said Charles Kazaz,an environmental law specialist withBlake, Cassels & Graydon LLP. The reg-ulations are not part of Quebec’s pend-ing draft mining act, as the new closurerules require cabinet and not nationalassembly approval. Kazaz added thesechanges bring Quebec in line with otherCanadian jurisdictions. – H.M.

BHP Billiton CEO MariusKloppers retires

The game of musical chairs con -tinues. This time it was BHP Billitonboss Marius Kloppers who announcedon February 20 that he would stepdown as CEO of the world’s biggestmining company, effective May 10.Andrew Mackenzie, chief executive ofBHP’s non-ferrous division, was namedhis successor. Mackenzie, 56, said Klop-pers had persuaded him to join BHPfive years ago.

Kloppers has been with BHP fornearly 20 years and became the com-pany’s CEO in October 2007, just beforethe onset of the global recession in 2008.“He drove new investments into nextgeneration opportunities, including U.S.onshore gas and liquids, and created oneof the most valuable companies in theworld,” said chair man Jac Nasser in astatement. “He leaves BHP Billiton asafer and stronger company.”



Alternative

Building Solutions

Visit us at the CIM Show - Booth #1316

1.855.385.2782 I norsemanstructures.com

ernativAlt

uilding SB

eernativ

olutionsuilding S

1.855.385.2782 I norsemanstructures.com

I norsemanstructures.com


yet,” said Anastasia Mishanina, a Severstalspokesperson. “It will take some time.”Severstal has pledged roughly $1.33 mil-lion to compensate the miners’ bereavedfamilies. – H.M.

Gravelle back as Ontariomining minister

Michael Gravelle is once againOntario’s minister of northern develop-ment and mines, after Premier KathleenWynne tapped him to replace the retiringRick Bartolucci. Gravelle, a Thunder Baymember of the provincial parliament, whoheld the cabinet post from 2007 to 2011,

said the implementation of Ontario’s minemodernization act will be one of his mainfocuses early on. The act mandates earlyconsultation bet ween First Nations andmining companies, and Gravelle said itprovides clear and progressive guidanceon aboriginal consultation.

One of the first calls Gravelle madeafter his appointment was to JosephCarrabba, CEO of Cliffs Natural Re -sources, in which they discussed infra-structure initiatives related to Cliffs’proposed Ring of Fire chromite project.Cliffs has called for cooperation fromvarious levels of government to developaccess to the area. “There is, I think, arole for us to play, but may I say there isa very important role for the federalgovernment to play as well,” Gravellesaid, adding he is encouraged that theHarper government has assigned TonyClement to provide leadership on theRing of Fire file. – H.M.

Bécancour plant projectaxed

Citing weak market conditions fortitanium, along with its need to curbcosts, Rio Tinto Iron and Titanium(RTIT) announced in early Februarythat it would halt a prefeasibility studylooking at, among other things, build-ing a multi-billion-dollar processingplant in Bécancour, Quebec.

The proposed plant was part ofRTIT’s TiO4 project, designed to growthe company’s global titanium miningand processing operations. While pre -feasibility studies related to TiO4 weresuspended for operations in Canadaand Madagascar, a planned mine expan-sion in South Africa will proceed, as willexploration work in Mozambique.

Bryan Tucker, spokesperson for RioTinto, said the decision will not affect the company’s TiO2050 project. This$800-million investment over five yearsin Quebec, announced in 2011, willexpand the capacity of RTIT’s metallurgi-cal plant at Sorel-Tracy and extend theilmenite mine life at Havre-Saint-Pierreto 2050. “It is important to note that thedecision has nothing to do with therecent organizational changes,” addedTucker. Former CEO Tom Albanese wasreplaced by Sam Walsh in January. – H.M.


Kloppers recently set out to simplifyBHP’s portfolio, divesting of non-coreprojects and focusing on long-life andlow-cost assets, which included sellingits diamond business to Harry WinstonDiamond Corporation. BHP posted aUS$4.23-billion profit in the secondhalf of 2012, down 57.8 per cent year-on-year, citing lower commodity pricesas a factor. Mackenzie has stated hisintention to continue BHP’s focus oncapital discipline. – H.M.

Coal mine blast kills 18 inRussia

A methane explosion at Severstal’sVorkutinskaya coal mine in Russia killed18 miners on the morning of February11. According to the company, threeother workers were injured in the blast –with one requiring medical evacuation toMoscow. The Russian government’sdepartment of emergencies announcedthat 241 workers were successfully evac-uated from the mine, located north of theArctic Circle near the town of Vorkuta.

The mine reopened on February 15,but operations at the affected mine face inthe south section were suspended with itstunnels sealed to allow the government toinvestigate the cause of the blast. “Wecannot tell what may have caused theblast right now because the investigationof the explosion circumstances is not over

Cour

tesy

of M

aya

Gorh

am -

MN

DM

Michael Gravelle, Ontario’s new minister of northerndevelopment and mines

Magna Tough

©2012 Baldor Electric Company

Baldor Dodge® MagnaGear XTR™ speed reducers are designed and manufactured to be the most rugged and reliable reducers in the world for high torque applications. Available in parallel shaft or right angle with torque capacities from 100,000 to 920,000 in-lbs. and capable of accommodating 2,500 Hp or more, the MagnaGear XTR is ideal for bulk material handling in dirty, dusty, harsh environments.

Proven Baldor Dodge planetary and helical gear technology, a universal housing design allowing for multiple mounting configurations, and bearings designed for projected L-10 life twice that of the competition’s, all make the MagnaGear XTR one tough act to follow.

baldor.com 479-646-4711

Unmatched Quality

Superior Reliability

Lower Total Cost of Ownership

Quickest Delivery Available


The mood was cautious at February’sannual African Mining Indaba. The event,trumpeted as one of the world’s largestmining investment conferences, was heldin Cape Town, South Africa, a countrymarred by recent unrest in the miningsector.

In the aftermath of the violence atLonmin’s Marikana mine last August,South African equity market lossesintensified, with Standard CharteredBank reporting US$858.8 million inoutflows in September and October dueto low economic growth and theimpacts from strikes. Hardest hit at themoment are platinum and gold produc-ers, with Anglo American Platinum(Amplats) reporting an eight per centdrop in equivalent refined platinum

Labour painsSouth African miners get creative in the face of an uncertain future

by Anna Reitman

production year-on-year, mainly due tolost production relating to labour issues.

Johnson Matthey, a platinum groupmetals (PGM) manufacturer and Amplats’refining and marketing agent, reported inits interim statement for the period ofOctober 1, 2012 to January 29, 2013,that sales in its precious metal productsdivision fell seven per cent to US$192million during that time. According to acompany statement, lower productionvolumes, particularly from Amplats,more than offset the benefit of slightlyhigher average PGM prices.

Platinum, of which South Africa is byfar the world’s largest producer, hastaken a wild ride since August 2012,jumping from around US$1,400 perounce to over US$1,700 after the violence

at Lonmin, then tumbling to just overUS$1,500 by December. Now, pricesare being driven more by demandexpectations, said Robin Bhar, head ofmetals research at Societe Generale.Platinum rose upwards again to mid-US$1,700 in early February until senti-ment on economic growth souredaround the world. By early March, spotplatinum was at mid-US$1,500.

At the Indaba, keynote speakerDavid Humphreys, principal at DaiEconAdvisors, told delegates that resource-rich countries are increasingly askinghow to leverage minerals to further theirown national economic development,even as the investment community isbecoming more risk averse and the min-ing industry more cost-conscious.

news

Register online

and save!

www.bauma.de/tickets/enEnjoy the benefi ts –Go online and register directly:

Mining The gathering for the entire

mining industry

More than 600 mining exhibitors

from around the world

Approximately

100,000 trade visitors

Contact: Canada Unlimited Inc., Tel. +1 905 813 [email protected]


Speaking to CIM Magazine, Humphreys pointed out thatwhile labour issues in South Africa may be holding the world’sattention, rising labour costs, political uncertainty, powershortages and bureaucratic burdens existed long beforeMarikana erupted. “South Africa has been lagging behind thecurve in terms of attracting investment interest during theyears of peak prices for some years now,” he said.

Miners and developers across the country are tacklingthese problems in a variety of ways. For instance, Gold Fieldsrestructured by spinning out mature assets into a new com-pany, Sibanye Gold. “Given the labour and political issues thathave been making headlines, there is going to be a segment ofGold Fields investors who don’t want South Africa exposure,”said James Wellsted, head of corporate affairs at Sibanye.

The company will also consider courting Asian investors.CEO Neal Froneman arrives from Gold One, a miner that saw90 per cent of its shares taken up by a Chinese consortium.“Big state shareholders from China have a long-term viewtowards investment and could be beneficial in terms of miti-gating political risk,” Wellsted explained.

Outside of gold and platinum, other companies are findingthemselves caught in the crossfire. DiamondCorp is develop-ing the Lace mine in Free State. The project contains 14 mil-lion carats of diamonds in kimberlite and tailings, andDiamondCorp expects to produce from tailings in the secondhalf of this year.

“We are operating at shallow depths using mechanizedmining so we have not had the labour problems that othershave suffered, but certainly it had made putting our financingpackage together a protracted affair because investors hadconcerns,” said DiamondCorp CEO Paul Loudon.

The company benefited from off-take agreements with jeweller Tiffany and support from state-backed IndustrialDevelopment Corporation that contributed US$24 million ofits total US$34.8 million in financing, Loudon added.

These kinds of initiatives seem to back up governmentstatements in South Africa’s budget: the best way to increasetax revenues is to “grow the economy more rapidly.” But witha revenue shortfall of US$1.8 billion due to production inter-ruptions from strikes and low commodity prices, observersare questioning how the country will continue to deliver onits national development plan, which aims to eliminatepoverty and reduce inequality.

In its South Africa - Deficit Surprise report, Standard Char-tered Bank said fears about a radical shift in government economic policy look overdone, adding conservative spend-ing plans are a hallmark of the budget: “While tax reviewswere promised, the absence of any headline-grabbing meas-ures on mining taxation, despite expectations to the contrary,is also notable.” CIM


Oil sands producers are losing $27million each day due to steep discountson Albertan oil, according to a recentreport from Deloitte. This discount isdue largely to the steady and growingsupply of American and Albertan crudeoil that is being stranded in Canada’sbiggest export market, the U.S. Midwest,particularly at a major pipeline hub inCushing, Oklahoma. As a result, oil sandscompanies are looking at creativeoptions to get their oil to new markets.And while the Keystone XL and North-ern Gateway pipelines, designed to con-nect Canadian oil with the U.S. GulfCoast and Asian markets, work throughpolitical bottleneck, new projects tomove oil to thirsty markets withinCanada are gaining steam.

In 2011, eastern Canadian refineriesimported just over 300,000 barrels perday (bpd) from Western Canada butroughly 600,000 bpd from foreign mar-kets. This foreign oil is more expensive

Feeling the squeezeOil sands exporters search for pipeline alternatives

by Herb Mathisen

than western Canadian crude duelargely to its ability to access world mar-kets. As a result, flowing Albertan oileastward would be a win for both pro-ducers and refiners.

Travis Davies, spokesperson for theCanadian Association of Petroleum Pro-ducers, said Canadian pipeline optionscould provide some of the quickestsolutions for Alberta’s pricing problems.For instance, the Enbridge Line 9 rever-sal project could begin as soon as mid-2013, adding more than 200,000 bpdto refineries east of Sarnia, Ontario. AndTransCanada’s plan to convert its natu-ral gas Canadian Mainline to start mov-ing oil to Montreal, and possibly bybarge to Canada’s biggest refinery inSaint John, New Brunswick, is gainingmomentum. This project is attractive,said Davies, because most of the infra-structure is already in the ground, andwith natural gas production rising in thenortheastern United States, demand for

western Canadian natural gas in thatmarket is shrinking.

Grady Semmens, a spokesperson forTransCanada, said their project is tech-nically and economically feasible,adding it could transport between500,000 to one million bpd to Cana-dian refineries. In comparison, withoutany unforeseen regulatory delays, theNorthern Gateway pipeline would flowroughly 525,000 bpd by 2017 and Key-stone XL as much as 830,000 by 2015.“We are having discussions with poten-tial customers and we are pleased withthe interest that has been expressed todate,” Semmens said. “We will have toturn that interest into long-term com-mercial contracts before we could spendthe billions [that are] required to makethis project a reality.” Semmens notedthe earliest the pipeline could beginmoving oil is 2017, and added the loca-tion of where the pipeline would endhas not yet been determined.

news

The pipeline network, including both existing and proposed lines, linking western Canadian oil with Canada and the U.S.

Cour

tesy

of C

APP

Designed by Western Sky Creative www.westernsky.ca

Vancouver to:Japan - 4,300 milesTaiwan - 5,600 milesS. Korea - 4,600 milesChina - 5,100 miles

San Francisco - 800 milesLos Angeles - 1,100 miles


news

Membership in the Canadian Institute of Mining, Metallurgy and Petroleum opens the door to exciting new possibilities for individual professionals and companies alike. You become part of the dynamic community that shapes the mining sector of today and tomorrow, here at home and around the world.

Become one of over 14,000 CIM members today.

Together, the Future is in Our Hands. WWW.CIM.ORG

Meanwhile, both CN and Canadian Pacific (CP) haveexpanded their oil-shipping potential to meet industry demand.Since CN began looking at transporting heavy crude, light crudeand bitumen from Western Canada in 2010, it has scaled up itsshipments from 5,000 carloads in 2011, to 30,000 in 2012, withhopes to double that to 60,000 carloads – or more than 90,000bpd – in 2013. A carload carries 550 barrels of heavy crude or 650barrels of light crude. CP has already upped its overall capacity to70,000 carloads for 2013, and Ed Greenberg, CP spokesperson,said the rail giant could double or triple that volume in the comingyears. “Ultimately though, the market will be developed by theenergy industry,” he said.

Mark Hallman, a CN spokesperson, said rail would not replacepipelines but supplement them. CN’s network gives companiesaccess to new markets not currently served by pipelines. “Onceyou are on the rail network, you are not tied to a specific market,”he said. “You can ship to the most profitable market of the day.”

Southern Pacific Resource Corp., a Calgary-based junior, hasdone just that, signing a five-year deal with CN to ship dilutedbitumen from its STP-McKay Thermal project, located 45 kilome-tres north of Fort McMurray, south to the Gulf of Mexico. Forego-ing the traditional pipeline method gives the company access tomore competitive markets, meaning it can get a better price for itsproduct.

Oil sands production is expected to continue growing, andGeoff Hill, Deloitte’s oil and gas sector leader, insists producersmust convince average Canadians that improving transportationinfrastructure is in the national interest, granted it is done in a safeand environmentally responsible way. The Deloitte report, Gainingground in the sands 2013, estimates a potential for $2.1 trillion ineconomic benefits – including $783 billion in taxes paid – fromthe oil sands to Canada over the next 25 years. “It’s almost impos-sible to think of another source of income that would replace thatfor Canada,” said Hill. CIM

The discount explainedThe majority of crude oil and bitumen exports from WesternCanada are sent to the U.S. Midwest through thousands ofkilometres of pipeline. This supply has recently been sup-plemented by surging production in North Dakota’s Bakkenregion, which has also eaten up some of Western Canada’spipeline capacity. The resulting oil glut at a major pipelinehub in Cushing, Oklahoma, means Alberta has to sell its oilat a cheaper price.

According to the U.S. Energy Information Association, theWest Texas Intermediate (WTI) benchmark sold out of Cush-ing had been trading on par with the European Brent bench-mark as recently as two years ago, but dropped significantlysince the Keystone Phase Two pipeline started sending moreoil to Cushing in early 2011. This spread had expanded tomore than $20 per barrel in February 2013. Western Cana-dian oil sells at a further discount to WTI due in part to itsinability to access other markets. In December, a barrel ofWestern Canadian Select, a heavy conventional and bitumenblend, sold for $40 less than WTI. Other products, like Syncrude’s upgraded light sweet crude, did better, but stillsold at a $2.52 per barrel discount to WTI in 2012. SirenFisekci, vice-president of investor relations with Canadian OilSands, a 36.74 per-cent shareholder in the Syncrude jointventure project, expects this gap will widen to $5 per barrelin 2013. “Given the tight pipeline capacity and the growth insupply, we are seeing more volatility in our pricing,” she said.

“It would be very difficult to see this spread reducing with-out major pipeline announcements,” added Deloitte’sGeoff Hill.


Iron ore miners say it is business asusual following CN’s suspension of afeasibility study on a $5-billion projectto expand rail and ore-handling capac-ity in the resource-rich Labrador Troughregion.

Last August, CN, the Caisse de dépôtet de placement du Québec, and sixmining companies agreed to begin thestudy in order to assess projected costsand engineering parameters for buildinga proposed 550-kilometre multi-userrail network to haul iron ore from theLabrador Trough to the port town ofSept-Îles, Quebec. It also evaluated thefeasibility of building a handling andstorage facility with an annual capacityof 125 million tonnes in Sept-Îles. Cur-rently, the Quebec North Shore andLabrador Railway, owned and operatedby the Iron Ore Company of Canada, isthe common carrier for two mines runby Cliffs Natural Resources, as well asthe Labrador Iron Mines Holdings proj-ect. ArcelorMittal uses its own railroadthat connects its Mont Wright opera-tions to Port Cartier.

Despite reported progress, in Febru-ary, CN cited existing market realities

Miners shrug off CN project suspension Iron ore companies to forge ahead without new rail capacity

by Peter Diekmeyer

and “anticipated delays with minedevelopment projects in and around theLabrador Trough,” as justification for itsmove. Conflicting construction sched-ules and the diverging needs of the proj-ects made it hard for the rail carrier to

round up the iron ore volumes neededto support the new capacity. AdrianaResources and Century Iron Mines didnot sign on to be part of the study,which also played a role in CN’s deci-sion. The mining companies involved inthe study were Cliffs Natural Resources,Champion Iron Mines, Labrador IronMines Holdings, New Millennium IronCorp., Cap-Ex Ventures Ltd. and AlderonIron Ore Corp.

For Labrador Iron Mines Holdings,the impact will be small. “Our facilityhas been producing for some time, andwe thus have access to existing trans-port solutions,” said Keren Yun, vice-president of investor relations andcommunications. “While we agreed toparticipate, it was only at minimal cost,to see what alternatives could be madeavailable. However, the projected com-pletion date for the new line was only in2017 or 2018, which reduced its poten-tial value to us.”

Ian Chadsey, a spokesperson forAlderon, said his company will moveahead using existing transportation

news

Iron ore miners in the Labrador Trough will, for now, rely on existing transportation options after CN shelved plansto look at constructing a $5-billion, 550-km rail line through the region.

Cour

tesy

of C

N

BHP Billiton picks up gold safety award

BHP Billiton Canada received the Safe Day Everyday Gold Award for attaining morethan 391,000 person hours without a lost workday incident in 2011. The award waspresented by the Association for Mineral Exploration British Columbia (AME BC) atMineral Exploration Roundup in January. Winners of the Safe Day Everyday Awardswere honoured at the event as well. AME BC, together with the Prospectors & Developers Association of Canada (PDAC), recognized 52 organizations in Canadianmineral exploration activities, which succeeded in achieving a full year without a lostworkday. “We are very pleased to recognize companies, government geological surveys, and independent contractors that are successful in achieving a safe day,every day in their operations,” said Gavin C. Dirom, AME BC’s president and CEO.Award recipients included: Anglo American Exploration (Canada) Ltd., Boart Longyear,Cornerstone Resources Inc., New Millennium Iron Corp., Rio Tinto Exploration Canada Inc.,Xstrata Copper and Yukon Zinc Corp.

ACHIEVEMENTS


infrastructure. Alderon is not slated tobegin production at its Kami projectnear Labrador City until 2016, whichgives it flexibility with planning. Chad-sey said the company was not relianton the proposed development, as theQuebec North Shore and LabradorRailway covers projected needs. “Weare located close to an existing rail line,which currently has more than enoughcapacity, so we should be okay,” hepointed out.

New Millennium Iron issued a state-ment noting that while the projected railsolution was a possible option to trans-port production from its Taconite proj-ect to the coast, its base case is totransport slurry concentrate through aferroduct. “This suspension will have noimpact,” said Dean Journeaux, the com-pany’s president and CEO. The Taconiteproject is currently in the feasibilitystage.

The Labrador Trough, which strad-dles the Quebec-Newfoundland andLabrador border south of Ungava Bayfor 1,600 kilometres, has hosted ironore mining operations for almost 60years. However, the region has beenattracting increased attention, as growthin emerging economies drives updemand.

While development opportunitiesabound, economic times are tough, mak-ing investors hesitant about fronting theconsiderable dollars needed to get newoperations off the ground. Their reti-cence is exacerbated by the region’s relative isolation from existing infra-structure, particularly the port facilitiesrequired to send production off tomajor markets.

The rail feasibility project is off thetable for now, but it is unclear for howlong. When the initiative was an -nounced last August, the price of ironore, which is driven by demand fromChinese markets, languished belowUS$90 per dry metric tonne. However,prices bounced back up to more than

$150 per tonne in February, driven byshrinking Chinese inventories thatreportedly hit a three-year low. Shortlyafter CN suspended its study, Champion

Iron Mines announced it would refocusits efforts on building support for a railline south from its Fire Lake North prop-erty to Sept-Îles. CIM

news


A new survey project fromGeoscience BC, funded in partby northern Vancouver Islandcommunities, is aimed at boost-ing investments in the region’sonce-flourishing mining in -dustry. Geoscience BC, a non-profit organization devoted toencouraging exploration invest-ment in the province, recentlyreleased high-resolution aero-magnetic survey results for 4,204square kilometres of the north-western portion of VancouverIsland.

The airborne survey was thefirst of two datasets GeoscienceBC will make public as part of theNorthern Vancouver IslandExploration Geoscience project.Findings from an extensive geo-chemical survey are expected tobe released in April, according to’Lyn Anglin, the organization’sCEO. “When we looked at thestatistics, Vancouver Island wasunderrepresented in terms ofexploration expenditures when you com-pare it to other parts of B.C.,” she said.

In 2010, Anglin met Port HardyMayor Bev Parnham and some of thetown’s councillors over lunch at theAssociation of Vancouver Island andCoastal Communities conference inPowell River. The town council becameinterested in collaborating with Geo-science BC to renew mining interest inthe region. Parnham sits on the IslandCoastal Economic Trust (ICET) board, agroup that invests in economic oppor-tunities on the north island, and itpitched in $400,000 for the project,with Geoscience BC adding $530,000.

“We really wanted to try to dispelany kind of perception that we’re notopen for business here on VancouverIsland,” said Parnham. The sparsely-populated northern part of the islandis home to forestry and fishing sec tors,

Information to bring investmentNorthern Vancouver Island communities use geoscience project to promote local resources

by Herb Mathisen

quarry mining operations and Hills-borough Resources’ Quinsam coalmine. The Myra Falls copper-zincmine, located southwest of CampbellRiver, has been operating since 1966and, not so long ago, BHP’s IslandCopper mine was a major economicengine in the region. The open pitmine produced more than 1.3 milliontonnes of copper over 24 years, clos-ing in 1995. “We know the benefits ofmines to communities,” said Parnham.“We’ve lived it. We have a legacy ofthat and we wanted to get that mes-sage out there.”

Dallas Smith, chairman of the Nan-wakolas Council Society, which directlyrepresents 10 of the 16 First Nationswith land in the survey area, said withthe forestry and fishing industriesdeclining, a reinvigorated mining sector would provide opportunities for

residents. “First Nations in the area par-ticularly are looking for some environ-mentally and culturally sustainableeconomic options going into thefuture,” he said.

The aeromagnetic data was collectedby Laval, Quebec’s Geo Data Solutions,last summer at an elevation of 80metres, and a line-spacing of 250metres. This new survey provideshigher-resolution data, compared withpreviously conducted surveys from1962 and 1971 that used an 805-metreline-spacing. Prior to this work, Geo-science BC had reanalyzed 480 till sam-ples taken in the 1990s to look for 53different elements using an ultratraceaqua-regia digestion ICP mass spec-trometry package. This reanalysis proj-ect, Anglin said, sparked some claim-staking activity in the area. Geochemistsalso took more than 700 new moss-mat

news

Last summer, Geoscience BC conducted an extensive moss-mat and stream sediments geochemical survey on northernVancouver Island and flew an aerial survey over 4,204 square kilometres of the northwestern portion of the island. Theaeromagnetic results were released in February, while the geochemical results are expected sometime in April.

Cour

tesy

of G

eosc

ienc

e BC


and stream sediments samples to ana-lyze for 51 metals.

Combined, the new data couldmake it easier for prospective explorersto pinpoint anomalies in an area knownfor its thick brush and unforgiving ter-rain. Del Ferguson, earth sciencesinstructor at Vancouver Island Univer-sity and president of Aztec Geoscience,said the island boasts several interestingexploration targets, including massivesulphides and copper porphyry, coal,and gold and magnetite-rich skarndeposits.

NorthIsle Copper and Gold is a jun-ior exploration company with claimsnear the old Island Copper mine,including its Hushamu site with anIndicated Resource of 1.4 billion

pounds of copper, 2.8 million ouncesof gold and 65.7 million pounds ofmolybdenum. CEO Jack McClintocksaid NorthIsle has already flown itsown aeromagnetic survey but addedthe company that previously ownedthe properties conducted geochemicalstream samples in the early 1970s thatonly looked for “copper, molybdenum,lead, zinc and silver” anomalies. He isinterested to see what other elementsthe new geochemical survey willreveal.

McClintock said Geoscience BC’sproject has brought attention to the areaand to his company. “At least here inB.C., there has always been the percep-tion on Vancouver Island that it’s atough place to explore,” he said. “But

the fact that even the municipalities areinvolved in this gives people the correctunderstanding that the north end ofVancouver Island is quite different fromthe south in that it’s a resource-basedeconomy.”

Geoscience BC will soon announce anew survey initiative in B.C.’s Interior,but if the Vancouver Island data is well-received, the organization could returnto the island. While Parnham admittedit is tough to measure the immediatesuccess of the project, Anglin knowsthe true barometer will be whether itconverts interest into investment. “Thereal test of how influential it’s been is ifwe do see more money being spent onthe island in the next couple of years,”she said. CIM

news

™ Trademark of Suncor Energy Inc.

Connect with your future!

Personal success. Career success. Team success.We’re hiring experienced engineers and earth science professionals.

Go ahead. Apply now! www.suncor.com/engineering


ciate this price increase,consider that one MACmember consumes an aver-age of 2.2 million litres ofdiesel each month at a sin-gle operation. On a strictprice comparison, givensome 36,500 Btu per litre ofdiesel, the energy cost sav-ings for this one operationswitching to natural gaswould exceed $2.5 milliona month (more than $30million annually) at 2012average prices. Given thatnatural gas prices are sub-ject to volatility – such asthe 2013 winter pricespikes in the northeasternU.S. – questions over theviability of switching needfurther detailed analysis.

Currently, miners facesimilar challenges inaccessing natural gas asthey do with other diesel-

replacing alternatives. In remote areas, particularly in theNorth, no direct transmission or distribution pipeline net-work exists, and building one would be a capital-intensiveinvestment. Maritime transportation of natural gas is alsoexpensive as it requires ships, and unloading and storagefacilities. It is a compounded challenge since very little portinfrastructure currently exists and all-weather road systemsare scarce. This leaves many mining operations isolated, withsunk costs in diesel generation and storage facilities.

Natural gas technologies, however, continue to improve,incrementally enhancing the fuel’s usability for miners. Somenatural gas generation technologies have been designed toretrofit existing diesel systems, making a fuel switch less capital-intensive. From an end-use perspective, progress hasbeen made towards the development of liquid natural gasengines for heavy vehicles. In June 2012, Westport InnovationsInc., a global leader in natural gas engines, signed agreementswith Caterpillar Inc. to co-develop natural gas technology for off-road equipment, including mining trucks (see Efficient injection,p. 51). Cat 793, 795 and 797 trucks, equipped to run on naturalgas, are expected to roll off the assembly line in 2017. Efficiencygains in combined cycle technology have improved significantly

In 2010, energy inputs (fueland electricity) cost Cana-dian miners $2.2 billion –

the third most expensive pro-duction cost after materials andwages. Frequent dependencyon diesel due to limited or non-existent energy infrastructure inremote locations contributedsignificantly to this cost.

This dependency on dieselleaves miners with little flexi-bility to reduce greenhousegas (GHG) emissions. Amidthese concerns, recent devel-opments in natural gas havecaught the attention of min-ers. Technological advances ingas extraction have boostedsupply through new finds andhave increased access toknown deposits. Due to mar-ket developments in NorthAmerica, gas prices remainlow on average. And the fuelhas a smaller GHG footprintthan diesel. This positions natural gas well to assist miners inreducing both their energy costs and carbon emissions.

With anticipated emissions reduction regulations from thefederal government, along with several provincial emissionsprograms and, most recently, the advent of the Western ClimateInitiative, incentives to reduce carbon emissions are increasing.Diesel releases roughly 0.9 tonnes of carbon dioxide (CO2) permegawatt hour (MwH) of electricity generated, whereas in pro-ducing the same amount of electricity, natural gas emits 0.6tonnes on a single cycle unit and 0.4 tonnes on a combinedcycle generator. Depending on the market value of a tradingpermit, or the price per tonne of a carbon tax, the potential todecrease emissions and to increase compliance-related cost sav-ings is significant.

In the North American market, the price of natural gas closedat around $4 per million British thermal units (MMBtu) in 2012– the same rate it opened at in 2000. The fuel had an average2012 price of US$2.75 per MMBtu based on Henry Hub, thepricing point for natural gas futures traded on the New York Mer-cantile Exchange. The price of diesel, on the other hand, morethan doubled from $16 to $34 per MMBtu over the same periodand had an average 2012 price of $34.88 per MMBtu. To appre-

Untapped potential: mining and natural gas

BY BRENDAN MARSHALL

M A C E C O N O M I C C O M M E N T A R Y

Sour

ce: C

GA, K

ent G

roup

, Sta

tistic

s Can

ada

326-

0009

Natural gas prices have remained stable, while diesel prices have increased.


over the last decade, rendering greater generationoutput per volume of fuel input.

Increasing interest in tapping into the poten-tial of natural gas is likely to continue fuellinginnovation, the developments from which willhelp miners overcome existing hurdles.Although uptake has been limited to date,opportunities where miners can harness theseadvantages are being explored and implementedwhere possible. To aid in this process, MAC iscurrently engaged in an exploratory dialoguewith the Canadian Gas Association.

Progress already made in the area of heavymining vehicles demonstrates a trend that is likelyto continue as market demand for natural gassolutions grows. While no home-run scenarioexists now, miners are keeping their eyes on the ball. CIM

columns

• 24/7 service hotline• Original OEM parts• On-site field service• Equipment re-manufacturing• Full “As New” warranties

Get theDetails!

5-Star ServiceTechnicians provide preventivemaintenance evaluations andemergency repair service.

Rebuilds • Parts • Service

Keeping Your Equipment Operating at Peak Performance

Before After

Before After

Electro Magnet Rebuilds

Wet Drum Separator Rebuilds

Call 888-300-3743 or visit www.eriez.com

Endress+Hauser turns 60

Endress+Hauser celebrates its 60th anniversary this year. The 10,000-strongSwiss company, whose operations focus on measurement and automationengineering, created 500 jobs worldwide in 2012 and plans to continue to expand. Meeting clients’ needs and requirements is the company’s mostimportant objective. “Our strength is that we are entirely driven by the market,” said CEO KlausEndress. “We learn from ourcustomers and strive to cre-ate sustained and outstand-ing benefits and value forthem.” Endress+Hauser’snetwork consists of 40 salescentres in 12 countries.

ACHIEVEMENTS

Brendan Marshall is director of economic affairs at MAC. Heworks to advance the mining industry’s interests andunderstanding of key economic issues such as taxation,international trade and investment, transportation, energyand climate change, and innovation.

Phot

o cr

edit:

End

ress

+Ha

user

Company founder Georg H. Endress(centre, back row) with workers inLörrach, Germany, 1955

that there are off-ramps from the process, which can put thetimelines on hold, including exclusionary periods approvedby the NEB chairperson and ministerial extensions. In thisregard, legislated timelines are not absolute.

Criteria for obtaining export licences being revisedNEB Act amendments include changes to the licensing of

oil and gas exports. In its interim guidance document, NEBconfirmed that public hearings are no longer mandatory forsuch applications and that the only relevant consideration iswhether the quantity of oil or gas to be exported will exceedthe surplus remaining after due allowance is made for rea-sonably foreseeable requirements for use in Canada.

NEB recently issued its first export licence decision underthe new regime, approving LNG Canada Development Inc.’sapplication for the export of liquefied natural gas. In thisdecision, NEB recognized that the export licence would notdirectly or indirectly authorize physical activities, such asconstruction, or result in potentially adverse environmentaland social impacts that might be associated with those activ-ities. Therefore, environmental and social factors did notneed to be considered. NEB is currently reviewing its proce-dure for assessing export licence applications, and furtherrequirements are expected to be put in place.

Non-compliance finesAdministrative monetary penalties (AMP) are fines NEB

may impose for non-compliance with the regulatory regime.They are intended to encourage compliance without impos-ing excessive punishment for wrongful activity. Althoughdetails of the activities that trigger AMPs and specificamounts will be the subjects of future regulation, maximumAMPs will range from $25,000 for individuals to $100,000for corporations. The AMP amount will depend on the viola-tor’s history, on the economic benefit associated with the vio-lation, and on efforts at mitigation and co-operation after aviolation has occurred.

While the long-term impacts of NEB Act amendments areyet to be seen, it is expected that the changes will bothencourage and expedite natural resource development underNEB jurisdiction, while helping to align the regulatoryprocess with broader government policies. CIM

Lars Olthafer is a partner and Katie Slipp is a senior associate in the regulatoryand environmental practice group at Blake, Cassels & Graydon LLP. Olthaferand Slipp regularly advise and represent energy clients on regulatory andenvironmental compliance and approval processes, public and aboriginalconsultation, and land rights acquisition and compensation, in the context ofboth provincially and federally regulated projects.

Many changes occurred to the environmental assess-ment and regulatory review processes for federallyregulated energy development in 2012. The recently

passed Jobs, Growth and Long-Term Prosperity Act addressesthe federal government’s stated frustration over regulatoryinefficiencies and codifies Ottawa’s commitment to stream-lining reviews. The changes are intended to stimulate invest-ment in Canadian natural resources by bringing more clarityto the review process. Among other things, the Jobs, Growthand Long-Term Prosperity Act amends the National EnergyBoard (NEB) Act to alter NEB’s powers over interprovincialand international energy development and to make thereview process more predictable and timely, while ensuringcontinued environmental protection.

Many of these amendments will impact NEB-regulatedentities. The following four examples may be of interest tothe mining industry.

Certificates of public convenience and necessity nowfederal cabinet’s domain

The federal cabinet now has the power either to approveor deny certificates of public convenience and necessity,which authorize the construction and operation of pipelines.Prior to the amendments, the cabinet had the final authorityto deny an application for a certificate that had beenapproved by NEB but no authority to approve an applicationthat had been denied by NEB. NEB’s role in the certificateprocess is now limited to carrying out the environmentalassessment and the regulatory review processes, and to rec-ommending terms and conditions and a positive or negativedisposition to the minister.

Whereas NEB’s denial of a certificate was formerly thefinal word, the expansion of cabinet powers and the narrow-ing of NEB powers suggest that government policy maybecome the primary driver behind certificate decisions.

Timelines set to prevent delaysA primary reason for the passage of the Jobs, Growth and

Long-Term Prosperity Act and the resulting amendments to theNEB Act was to prevent unwarranted delays of energy proj-ects. To this end, NEB must now finish its assessment of, andreporting on, a certificate or an exemption order applicationwithin 15 months of receiving a complete application. Afterthat, the cabinet has three months to make its decision. Thisputs the onus on project proponents to ensure that applica-tions are both thorough and complete prior to filing.

While timelines provide some certainty about the timingof decision-making, it is important for proponents to know

A primer on NEB Act amendments

BY LARS OLTHAFER AND KATIE SLIPP


E Y E O N B U S I N E S S

The MagnaGear XTR® is manufactured to provide maximum reliability in tough applications and improve your total cost of ownership. The innovative design incorporates state of the art techniques to meet the high standards expected of Baldor Dodge® reducers. The MagnaGear XTR® is the perfect solution for your high torque application needs in the mining industry.

And, you can find Baldor Dodge MagnaGear XTR at your local Motion Canada location. Our local sales and service specialists are experts in application and technical support, providing the parts and the know-how you need to stay up and running.

The brands you count on from the people you trust…that’s Baldor and Motion Canada.

©2012 Motion Industries, Inc.

1-800-526-9328 for the location nearest you

MotionIndustries.com

Over 50 locations More than 4 million productsIndustrial maintenance training courses Call. Click. Visit.

cash flows as these regions are viewed as relatively stable juris-dictions for developing long-term mines. However, projects insome areas of Australia may now attract additional discountingdue to the uncertainty around mining taxation. Projects in theDemocratic Republic of Congo may also need to tack five toseven per cent onto the discount rate due to sovereign risk per-ceptions, as well as political and taxation uncertainty.

Also, when precise information pertaining to access and themining or processing methods to be used are lacking, or whenenvironmental sensitivities and permitting requirements areuncertain, higher discount rates should be applied. Forinstance, a project in production would be considered low-risk, so no additional discount would be added; a project atthe Preliminary Economic Assessment stage could have anadditional two to three per cent discount rate added to coverunknowns associated with the level of project definition andcost accuracy. However, when adding to the discount rate inthe latter situation, a company should be careful to avoidhandicapping the project by using overly conservative produc-tion costs and process parameters – these should already beaccounted for by increases to the discount rate.

The size and experience of the project owner is another fac-tor to be taken into consideration. If the owner is a recognizedmajor miner with credible experience in operations and minedevelopment in the project’s jurisdiction, no additional discount would be added to the cash flows. However, a two-to-three per cent increase to the discount rate could beconsidered if the owner is a junior whose management teamhas limited development and operational experience, if it facesobstacles in developing major infrastructure requirements, orif it has had no previous exposure to mine development in theproject’s jurisdiction.

All of the points mentioned should be considered whendetermining an appropriate discount rate for NPV. And, as pre-viously mentioned, caution should be exercised when consid-ering comparable disclosure by credible sources on SEDAR.The discount rate used in a financial analysis of an operatinggold project in Nevada, owned by a major, should not be con-sidered appropriate as the discount rate for a junior’s basemetal project at a PEA stage in Mali. CIM

Greg Gosson is the technical director of geology and compliance for AMECAmericas Limited. He is a member of the CIM Standing Committee on MineralReserve and Mineral Resource Definitions, and a member of CSA MiningTechnical Advisory and Monitoring Committee. Graham Wood is the technicaldirector of Financial Services for AMEC Americas Limited. He directs theeconomic evaluation services of AMEC’s Mining & Metals division. He hasconducted financial and economic analyses on dozens of advanced miningprojects worldwide.

To find examples of industry consensus or approaches toparticular issues and techniques, mining staff of the secu-rities commissions in Canada will use technical reports

filed on the system for electronic document analysis andretrieval (SEDAR), which were prepared by highly crediblesources, including international consulting firms, well-knownexperts, and major mining companies. However, one assump-tion in which there appears to be no obvious consensus onSEDAR is the appropriate discount rate applied when calculat-ing a project’s net present value (NPV).

Discount rates are dependent on many project factors andcharacteristics, including the marketability of the commodityto be mined, the location of the project, the stage of develop-ment, and the size and capability of the project’s owner. Whilereports filed on SEDAR can be useful guidelines, it is impor-tant to ensure that the reports a company relies upon assources for determining its project’s discount rate come frommining companies of a similar scale, stage of development, andwith comparable characteristics. A company’s key considera-tion when selecting discount rates for a project is the rate ofreturn that is likely to attract a major investor. Often the actualdiscount rate used by the company does not address the risksof the individual project.

To begin, different discount rates should be applied to differ-ent commodities. For example, mixed base metal/preciousmetal projects, such as copper-gold, would be expected toattract higher discount rates than precious metal projects like silver-gold. Because precious metal projects encounter fewerbarriers to sell their product, they should have a basic discountrate of six to eight per cent; base metal projects should have a 10per cent discount rate; and industrial minerals or speciality met-als with no purchase agreements in place and no clear marketingstrategy should have an additional two to three per cent added.

The jurisdiction of the project should also be reflected inthe discount rate. For example, Chile- or Nevada-based proj-ects would not typically attract additional discounts to their

Factors to consider when determining appropriate discount rate for project NPV

BY GREG GOSSON AND GRAHAM WOOD


S T A N D A R D S

New role for Golder’s Rodriguez

Emmanuel Rodriguez was named the global chief informationofficer for Golder Associates Ltd. With more than 20 years ofexperience as a CIO, Rodriguez will oversee Golder’s infor-mation systems, including the technical and architecturalinfrastructures needed for its strategic growth.

MOVING ON UP

Registration open! – Certification in Ore Reserve Risk and Strategic Mine Planning OptimizationSpread over a period of four months, this four-week course isdesigned for busy mining professionals who wish to update theirskills and knowledge base in modern modelling techniques for orebodies and new risk-based optimization methodologies forstrategic mine planning. Gain practical experience by applyingthe following hands-on concepts and technical methods: methodsfor modelling ore bodies; stochastic simulations, case studies andmodels of geological uncertainty; and demand-driven productionscheduling and geological risk.

INSTRUCTOR: Roussos Dimitrakopoulos, McGill University, Canada •DATE: Week 1: June 10-14, Week 2: July 2-5, Week 3: August 26-30,Week 4: September 16-19, 2013 • CITY: Montreal, Quebec, Canada •INFO: www.mcgill.ca/conted/prodep/ore

Strategic Risk Management in Mine Design: From Life-of-Mine to Global OptimizationLearn how you can have a significant, positive impact on yourcompany’s bottom line by utilizing strategic mine planningmethodologies and software; improve your understanding ofstrategic mine planning and life-of-mine optimization concepts, aswell as your understanding of the relationship of uncertainty andrisk, and how to exploit uncertainty in order to maximizeprofitability. Note: The strategic mine planning software used isWhittle. An optional half-day skills refresher workshop on Whittlemay be available.

INSTRUCTORS: Tarrant Elkington, Snowden, Australia; and RoussosDimitrakopoulos, McGill University, Canada • DATE: To be determined •CITY: Montreal, Quebec, Canada

An Introduction to Cutoff Grade: Theory and Practice in Open Pit and Underground MinesCutoff grades are essential in determining the economic feasibilityand mine life of a project. Learn how to solve most cutoff gradeestimation problems by developing techniques and graphicalanalytical methods, about the relationship between cutoff gradesand the design of pushbacks in open pit mines, and theoptimization of block sizes in caving methods.

INSTRUCTOR: Jean-Michel Rendu, Newmont Mining Corporation, USA •DATE: September 4 - 6, 2013 • CITY: Montreal, Quebec, Canada

Geostatistical Mineral Resource Estimation and Meeting theNew Regulatory Environment: Step by Step from Sampling to Grade ControlLearn about the latest regulations on public reporting ofresources/reserves through state-of-the-art statistical andgeostatistical techniques; how to apply geostatistics to predictdilution and adapt reserve estimates to that predicted dilution; howgeostatistics can help you categorize your resources in an objectivemanner; and how to understand principles of NI 43-101 and theSME Guide.

INSTRUCTORS: Marcelo Godoy, Golder Associates, Chile; and RoussosDimitrakopoulos, McGill University, Canada • DATE: September 9 - 13,2013 • CITY: Montreal, Quebec, Canada

Quantitative Mineral Resource Assessments: An IntegratedApproach to Planning for Exploration Risk ReductionLearn about exploration risk analysis for strategic planning.Understand how to demonstrate how operational mineral depositmodels can reduce uncertainties; make estimates of the number ofundiscovered deposits; and integrate the information and examinethe economic possibilities.

INSTRUCTOR: Don Singer, USA; and David Menzie, U.S. GeologicalSurvey, USA • DATE: September 23 – 25, 2013 • CITY: Montreal,Quebec, Canada


retire by 2015 and around half of the workforce by 2020.The retention of these workers is essential for the miningindustry; the alternative is to let a wealth of knowledge andexperience walk out the door in the next 10 years, instead oftransferring it to new entrants to the workforce. The intro-duction of new technology and its role in the retention ofmature workers could be instrumental in addressing skillsshortages in the Canadian mining industry.

In addition, both the retention of older workers and adop-tion of new technologies enable mentoring relationships that

are needed for new,younger workers seek-ing to develop theirskills and abilities.MiHR’s Virtual Mine-Mentor program is aprime example of howtechnology can fosterknowledge transferbetween mature work-ers and the next gener-

ation of mining employees. The program connectsparticipants through email, video conferencing, instantmessaging and other virtual forms of communication. Vir-tual mentoring is time-efficient, requiring only one to twohours per week, while providing a number of benefits toboth parties.

There will be a need for ongoing research into the roletechnology plays in retaining mature workers, and, in turn,how it can affect the sharing of knowledge and experiencewith the new generation of workers. However, the time hascome to challenge past perceptions that mature workers arereluctant to adapt to new and innovative technologies thatultimately make their jobs safer and less physicallydemanding.

To access these reports, please visit www.mihr.ca. To learn moreabout MiHR’s Virtual MineMentor program, contact Ziad Saabat [email protected].

CIM

I ntroducing new technology in the workplace poses alearning challenge for all workers. Employers, however,are particularly concerned with how it affects mature min-

ing workers who have become accustomed to a certain wayof operating over the course of their careers. According toMature Workers in Alberta and British Columbia: Understandingthe Issues and Opportunities, “Employers may be reluctant tolook at initiatives to attract or retain mature workers becauseof unfounded concerns about the willingness of matureworkers to learn new skills and new technologies and practices.” However,research suggests thatthis may be a perpetu-ated myth.

Staying Ahead of theCurve: The AARP Workand Career Studyreveals that “on-the-jobtraining” and the“opportunity to learnsomething new” aretwo aspects that mature workers look for in a job.

This sentiment was echoed by participants in MiHR’srecent studies, Managing the Skills Shortage: Technology and theCanadian Miner; and X, Y, Boom: Managing Mining’s Multigen-erational Workforce.

Data reveal that a quarter of mature workers surveyed seeworking with new technology as a major source of job satis-faction, and that they would benefit the most from theimproved efficiency and the reduction in manual labourstemming from these advances. The remote operation ofmachinery, for example, means that in some cases, miners areno longer required to be in the same physical location as theheavy equipment they operate. The adoption of new tech-nologies like driverless haul trucks could make work lessphysically taxing as well as safer and more efficient formature workers.

New ways of working made possible by technologicaladvances provide mature workers with a challenge that keepsthem intrigued and engaged. Since job satisfaction is positivelyimpacted by training workers on new technology, employersshould invest in this as part of their worker retention strategy.Retention is key because one of the most daunting challengesfacing the industry is the loss of knowledge and experiencethat occurs when older workers retire.

MIHR’s 2010 National Employer Survey indicates that, onaverage, more than half of the mining workforce is aged 45or older, with a third of the mining workforce eligible to

Challenging perceptions: technology and the mature worker

BY ZIAD SAAB

As communications coordinator, Ziad Saab is responsible for supporting MiHR’svarious communication initiatives while also contributing to event planning andpromotion. He holds a bachelor’s degree from the University of Ottawa, majoringin communications with a minor in political science. He also completed amaster’s degree in communications from the University of Ottawa, specializingin media studies.

columnsH R O U T L O O K

“Data reveal that

a quarter of mature workerssurveyed see working with new technology

as a major source of job satisfaction.”

the shearer, 300 metres of face conveyor, 200 support units,electrics and other ancillary equipment – must be disassem-bled and transported up to four kilometres to the new faceand then re-assembled. The process requires careful planningand special equipment for loading and transporting large,heavy loads over long distances, and special care of roof con-trol while the hydraulic face supports are being withdrawn.In the U.S., this process is done in about seven days.

From my observations of the longwalls in China, which Ivisited as a technical advisor in 2004, I doubt that a longwallequipment transfer would be accomplished safely in sevendays. At mines I visited in Heilongjiang Province, only singleentries were used at each end of the face so that there was noway to keep “gob” gases away from the working face. In theU.S., having three entries is common practice. In China, thehydraulic supports oil reservoir allowed dirt to enter the sys-tem. I saw four or five hydraulic support legs out of serviceand awaiting replacement. Where I visited, there were nogeologists on the engineering staff for 12 mines. Rockmechanics was not applied to mining and roof control – itwas hardly understood.

And finally, to address the issue of Chinese labour, let usconsider the manpower requirements of both the longwalland the development phases: longwall equipment is simpleto operate, requiring no special physical strength or dexterity.The equipment can only be operated as it is designed; there-fore, little decision-making skill is needed. In the U.S., a typ-ical longwall operating crew consists of 10 miners or less pershift, including the supervisor. Longwall operations requireno more than 30 miners for three shifts. Canadian minerswith underground experience could, in my opinion, masterthe process in one week. Excluding the various support andmaintenance workers, typical longwall development workrequires about 48 miners, including two mechanized devel-opment units, working three shifts per day.

Most Canadian miners can handle this work and it wouldnot be difficult to find men familiar with the equipmentused. In addition, British Columbia legislation requires themine manager to be conversant in the English language andto know the Provincial Mines legislation. Employees, too,should be able to read and understand the literature given tothem. There is also a need for communication between theinspectorate, mine management and miners.

How these safety-related questions might be resolved hasnot yet been addressed. CIM

A s an experienced longwall miner, who has worked onlongwall coal mining projects around the world includ-ing in Canada and China, I feel the need to dispel mis-

conceptions about the technique and to comment on the ideaof Chinese miners being imported to work in B.C. For theCanadian mining community, finding skilled miners to oper-ate the longwall is not the greatest concern; instead, it is thegeology of the site and the logistics of sustaining longwall oper-ations in the long term that are crucial to safe and successfulmining. Longwall failures in Western Canada have occurredunder foreign (British) management before, in geological con-ditions with which they were unfamiliar, at sites operated byimported longwall miners. Let’s not repeat this mistake.

In mountainous areas of Western Canada, there will befew (if any) places where the geology will be suitable forlongwall mining. Faults with a displacement greater than halfthe thickness of the seam are difficult for longwalls to nego-tiate. Roof and floor conditions are often weakened bymountain building tectonic forces.

Even if a suitable site exists, any longwall mine will failwithout attention to efficiency and best practices. Detailedlogistics planning is key to success. While a panel is beingmined, the next panel has to be developed. As soon as apanel is mined out, the longwall equipment – which includes

Straight talk on longwall miningBY ANTONY STRICKLAND


Antony Strickland received his mining education and training in the U.K. Hecame to Canada in 1967 where he worked as supervisor, mine manager, andproject engineer in Rocky Mountain underground coal mines in Alberta andB.C. He joined Norwest Mining Consultants in Calgary in 1982 and has workedon longwall projects in the western U.S., Indonesia, Australia and Mexico. He isnow retired.

columnsO P E R A T I O N S

Atlas Copco and Sandvik Mining collect innovation awards

Atlas Copco and Sandvik Mining received the first NorthernLights Awards at the ninth Annual Raw Materials Group (RMG)Exploration & Mining Investment conference in Sweden lastNovember. Atlas Copco was presented with the Northern LightsEquipment Award for Innovation that recognizes the design ortechnique used to improve working conditions in a hostile oper-ating environment, above 60 degrees north. Atlas Copcoreceived the award for its Secoroc EDGE, the world’s first contin-uous-monitoring system for exploration drillers, developed incooperation with SPC Technology AB from Sweden. SandvikMining won the North Lights Equipment Award for SustainableDevelopment for Vibrocone, its eco-efficient comminution sys-tem. “The RMG Exploration & Mining Investment conference isthe key event for any industry player wishing to learn more aboutthe Nordic resources sector,” said Chris Hinde, editorial directorof IntierraRMG, who presented the awards. “The 2013 confer-ence, our 10th anniversary, is already shaping up to be the mostinformative, innovative and exciting conference of the year.”

MOVING ON UP

Get the free CIM Convention app at

eventmobi.com/CIM2013

Build your personalized schedule | Locate sessions and exhibitor booths withthe interactive floor map | Find out who’s attending | Stay up to date with event alerts

THE CIM CONVENTIONhas gone mobile!

The

CIM

Con

vent

ion

is o

wne

d an

d op

erat

ed b

y th

e Ca

nadi

an In

stitu

te o

f Min

ing,

Met

allu

rgy

and

Petro

leum


BHP Billiton is not taking any chances with mainte-nance planning on what could become one of theworld’s premier potash mines. Tens of millions of dol-lars are at stake in potential unforeseen parts, labour

costs and lost productivity over the life of the site. To minimizeits maintenance risk, increase cost planning certainty and testprocesses and equipment before they become entrenched,BHP Billiton has engaged consulting firm ARMS Reliability toperform early asset reliability analyses for its Jansen project,situated 140 kilometres east of Saskatoon, Saskatchewan.

The goal of asset reliability analysis is to predict and thenminimize lifetime maintenance costs and downtime, but bystarting the process at the prefeasibility stage rather than at theexecution stage, the results can be implemented with moreease and less impact on cost. The information provided willassist the BHP Billiton team in its plant design decision-makingprocess.

“We were able to provide them with maintenance budgetpredictions, and also some production predictions,” explainsJason Ballentine, engineering manager for North America atARMS. “It’s not so much what we’re doing that’s unique. It’s thefact that they’ve applied it at very early stages of the project.”

The methods that ARMS Reliability and BHP Billiton areusing for the Jansen mine are becoming increasingly commonacross the rest of the mining industry but have been slow to beadopted in potash, partly because Jansen will be the firstgreenfield potash mine built in over 30 years.

Ballentine says companies fail tounderstand how asset reliabilityanalyses can provide value early onin the process. “They’re sort offocused on executing and getting theplant up and running, and they kindof forget about some of the long-term operability of the plant and theinfluence maintenance can have onthe actual production and thedesign,” he explains.

Detailed analysisOnce process flow sheets had

been created in prefeasibility, ARMSbegan making reliability block dia-grams (RBDs) using a powerful reli-ability simulation tool. Preliminaryprocess flow diagrams were used tomodel the relationships between themajor pieces of mechanical equip-ment in the process. In one section

of the model, for example, material from a single wet sizingscreen feed distributor is split into two paths, heading toanother feed distributor and a secondary feed distributor.From those two points, the material is routed to one of fourwet sizing screens, each of which sends output material intoone of two secondary cage mills. Each component has a prob-ability of failure associated with it. Simulations of the processwere performed using this detailed model; rough performancepredictions could be made and capacity losses due to particu-lar pieces of equipment quantified.

As the project progressed into the feasibility phase, processflow diagrams were revised, equipment selections were made,and equipment vendors were chosen. ARMS began identifyingthe individual failure modes of the main process equipment.By the time the initial feasibility stage was complete, nearly6,000 failure modes – specific ways equipment could fail –were identified in the process plant, and nearly 4,000 morebelow ground. For each failure mode, a probability wasassigned, based on a combination of manufacturer data, indus-try experience of the teams at BHP Billiton, as well as ARMS’library of data gathered over the last 10 years.

Planning and due diligenceThe analyses informed the team about how much inventory

they would need for spare parts, and will eventually let themknow what their critical spares will be. They also includedmajor scheduled maintenance and generic maintenance tasks,

upfrontM A I N T E N A N C E

BHP Billiton's multi-billion-dollar Jansen potash project under construction in September 2012

It pays to appraiseEarly planning promises myriad benefits for BHP Billiton’s Jansen projectby Ian Ewing

Cour

tesy

of B

HP B

illito

n


and considered storage and surge buffers, which allowedARMS to predict the total availability of the plant and to verifythat the plant would achieve its designed throughput capacity.

“Because we’ve considered all the possible maintenance fail-ures, we’ve considered the maintenance outages, and we under-stand that it is possible to get what we’re promising,” saysBallentine.

The solid data behind such predictions affords BHP Billitonan envious level of certainty in cost planning – plus or minus15 per cent for maintenance budgets and labour requirementsat the feasibility stage. Ryan Posnikoff, BHP’s principalmechanical engineer for the project, says it helps the companyknow what it is getting into: “It’s part of the puzzle.”

Influencing designThe benefits of early reliability studies extend beyond cost

planning and productivity verification. They also allow relia-bility and maintenance planning to influence the plant design.By showing very early on what the major sources of downtimein a process are expected to be, the model can point to helpfuldesign modifications when they can still be easily implemented.

One such modification on the Jansen project was with thebaghouses, used for removing particulate from the air. Duringthe initial process modelling, the baghouses unexpectedlystood out as one of the biggest causes of downtime. A bag-house shutdown, once the site reaches itsfull proposed capacity of eight milliontonnes per year, could cost BHP Billitonas much as an estimated $100,000 perhour, depending on the facilities that areaffected.

“We didn’t want to have to stop thewhole process just to go in and see ifthere was a bag blown because we have apressure drop trip,” explains Posnikoff.“Or, alternatively, shut the unit down andkeep running, risking creating a reallydusty environment in the plant.”

With the problem identified, the BHPBilliton team consulted a potential ven-dor, who was able to take the large bag-houses and subdivide them into foursmaller compartmentalized units. It wasthen possible to isolate any one of thefour, and still run on the remaining threewith adequate capacity.

“We changed our baghouse strategyeverywhere we had one, and basicallytook it right out of the picture in terms ofmaintenance,” says Posnikoff.

The long gameThe legacy of this reliability planning

will be apparent in the Jansen project’s

future day-to-day operations, as data compiled now willpropagate through the operating and maintenance plans.Equipment data sheets and procedures for routine inspectionand maintenance will be available when work orders are cre-ated, and the software will be used to create schedules toplan the preventive maintenance program. As the real-worldoperational history increases over the life of the mine, moredata will become available for each piece of machinery. Mod-ifying the model with this observed data will further improvereliability predictions and maintenance planning. The modelcan also be easily modified to analyze what-if scenariosregarding process changes.

The ability to justify design decisions, make accuratecost and productivity predictions, and easily modify main-tenance procedures throughout the life of the plant willplace BHP Billiton’s first-ever potash mine well againstentrenched competitors. And it seems like a worthwhileinvestment. Ballentine notes that with the high cost ofdowntime, the eventual savings for BHP Billiton could wellbe 10 to 20 times the value of its contract with ARMS.

For his part, Posnikoff is proud that his company is ahead ofthe game. “My hope, and my full expectation, is that we’re goingto bring a step change in maintenance processes toSaskatchewan,” he says. “That’s part of our plan – to be a lower-cost producer – but it’s also part of our plan to attract people.” CIM


LEACH TANKS

3787, West Frontenac blvd Thetford Mines (Quebec) Canada G6H 2B5

Phone: 418 423-4241 www.fournierindustries.com

Established in 1960, Fournier Industries is a leader in the mining industry.

> Leach Tanks

> Process Tanks

> Plateworks

> Ore Bins

> Chutes

> Etc.

Design Engineering Fabrication Installation Turnkey Projects


Teck Resources made the Komatsu 930E its primaryhaul truck in 2010 and, over the following two years atits three Elk Valley, B.C., coal mines, the number ofthose trucks nearly doubled from 51 to 99. With the

expanding fleet, the company needed to find a way to keepjust the right number of the critical spare parts in stock.

Hitting that moving target proved difficult because thecompany’s inventory management software at the time was notable to add new trucks as they came into operation, says RobKalwarowsky, reliability analyst with Teck. He had to look else-where, and because Teck is a member of the University ofToronto’s Centre for Maintenance Optimization and ReliabilityEngineering (C-MORE) consortium, Kalwarowsky had accessto spares management software designed to solve this specificproblem. Using resources from C-MORE, it quickly becameapparent that stocked parts were not keeping up with the bur-geoning fleet. “In all of the cases, we weren’t carrying enough,”he points out.

Since June 2011, Kalwarowsky says Teck has saved morethan $30 million by getting critical spares stocks to optimallevels.

Smarter stocking finds costs to cut Spares management is an area companies often overlook

for potential cost savings, Kalwarowsky says. “If we stepback and look at why we are here, it is to make money forthe shareholders,” he explains, adding that fulfilling this

purpose is closely tied to sparesmanagement.

“We have a value for downtime,”says Kalwarowksy. “If our truck runsfor so long, it produces ‘x’ amount ofcoal. Given that, we can sell that coalfor ‘y’ dollars and then we get thatprofitability. Do we hold more partsand reduce how many hours we’regoing to be down? Or are we going tohold fewer parts and increase thenumber of hours we’re down?”

Teck used the program to stockparts for 18 separate critical compo-nents for its Komatsu 930E fleet. Forexample, at the end of 2011, Teckcarried five GE GDY-106 wheelmotor spares, worth $1.2 millioneach. Using the C-MORE software,Kalwarowsky concluded that holdingeight spares was the optimal stockingoption for 2012. The average cost of

holding five spares was $4,683.08 per hour, while holdingeight parts costs $3,196.93 per hour. Taking the differencebetween the two options’ hourly costs and multiplying it by6,000 hours – the amount each truck operates per year – thecalculated savings comes out to more than $8.9 million.

Teck’s calculations take into account the component’sprobable rate of failure, its repair and manufacturer leadtimes, and the truck’s fleet number and age, while also factor-ing in potential downtime costs, the part’s overall cost andthe $250,000 it costs to rebuild it. Holding more than eightparts would further reduce the likelihood of equipmentdowntime but would wind up being less economical sincethe probability of needing those added spares would not out-weigh their cost.

Identify what is criticalBefore using the software, Teck had managed its spares

inventory through a combination of two conventional parts-stocking philosophies: criticality and turns. But there was nosystematic way to evaluate when each ought to be applied.

Criticality-based stocking increases the number of sparesheld when a component is vitally important for continuousoperation. Consider a mine using 10 transformers, each with a100-year lifespan: “If one transformer goes out, we lose powerto the plant and we can’t produce,” says Kalwarowsky. “By crit-icality, we would hold 10 transformers. Now is that correct? Ifthe transformers are five to 10 years old, that might not be the


Teck used spares optimization software developed by the University of Toronto’s C-MORE to stock parts for 18 separatecritical components for its Komatsu 930E fleet at its three Elk Valley, B.C., coal operations.

Spare necessitiesParts stocking software saves Teck millionsby Herb Mathisen

Cour

tesy

of T

eck


right answer. If they’re 95 years old, then that’s probably theright answer.”

Managing by turns, on the other hand, is based on howoften spare part stocks are expected to turn over in a giventime; if a component fails four times in one year and a com-pany stocks two spares, the company would have two turns.Companies often have between two to five turns a year,Kalwarowsky says, but that range creates a lot of uncertaintyover cost. If a company were to manage by turns alone, com-ponents like transformers, which rarely turn but have signifi-cant failure consequences, would not theoretically have anyspares, thus increasing the risk of production disruptions.

Before applying the software, companies must first identifyparts they consider critical, says Neil Montgomery, seniorresearch associate with C-MORE. These components are oftenconsidered highly reliable yet vital to operations, and investi-gating past rush orders can pinpoint such items.

With these components identified, companies must thendetermine probable failure rates for them. These can be foundusing historical failure information gathered internally over theyears, through reliability engineer assessments, data providedby original equipment manufacturers (OEMs), or even bydividing the number of overall components by their failures.“It’s often the case that if a part is so important that it deservesto have spares, then there is a very good chance that you arekeeping track of how often they fail, even if you are doing it byaccident in your computerized maintenance management sys-tem,” says Montgomery.

Setting a standardThe software has been evolving since 2003, with more

options added and becoming easier to use with each version,says Andrew Jardine, C-MORE director. An updated version ofthe spares management software will facilitate spare analysison multiple components for a project instead of just one at atime, he says.

Jardine has been researching asset management since 1967.He founded C-MORE in 1994, with the realization that part-nering with industry was required in order to get the organi-zation’s research into the field. A consortium of companiesfrom the mining, energy and defence sectors provides C-MORE with funding, and every six months the centre meetswith members to update them on its work and let them sug-gest future projects or focus areas.

For instance, C-MORE developed condition-based mainte-nance software and later spares management software from itstheoretical research at the request of consortium members.“They don’t explicitly want the mathematics or the statisticsbehind getting the answer, they just want something that’s easyto use, knowing that underneath the tool, there is rigour in theunderlying mathematics going on,” says Jardine.

Rio Tinto’s Iron Ore Company of Canada (IOC) recentlybecame a consortium member and getting access to the soft-ware provided an incentive to do so, according to Jon Gibbons,asset management reliability advisor with IOC. The companywants to adopt the software at its Carol iron ore

project in Labrador City, Newfoundland, where spares acrossthe site are currently stocked based on a combination of OEMrecommendations, hunches and past history, Gibbons says.“That’s not to say that some people may not have their own sta-tistical method, but as far as a standard method across thebusiness, we currently don’t have one here at IOC specifically.”

In January, C-MORE demonstrated the software in LabradorCity, using IOC’s current data to find out how effectively thecompany was stocking spares. “In some cases, they were beingmanaged quite well, in other cases, not so well,” Gibbons says,adding the statistical analysis showed spare parts for the com-pany’s haul truck fleet was lower than optimal.

Next, Gibbons wants to use the software to optimize thestocking of spare parts for the concentrator plant’s 32 horizon-tal filter pans, which extract moisture from the product at theend of the concentration process. The $200,000 pans consistof several different parts. The company rebuilds three filterpans each year, and the cost and time associated with therebuilds depend on the age of the components that make upthe filter pans.

Jardine says C-MORE can help many companies use infor-mation they already own to make better management deci-sions. “Companies are collecting more and more data thesedays, and they are looking for tools to smartly interrogate thedatabases and that really is what our group is all about.” CIM



Four years ago, Luminant, the largest generator of electric-ity in Texas with a mining division that produces 33 mil-lion tonnes of coal per year to fuel its plants, embarkedon a complete shift in its maintenance approach.

“As Jim Collins, author of ‘Good to Great’ put it, the enemyof great is good,” says George Boudreau, director of mainte-nance at Luminant. “Without trying to become too preachy,our goal was to go from where we were – good – to the bestwe could be, with the goal of being great.”

Luminant focused on processes that maintained equipmentat optimal capacity and standardized processes across all of thecompany’s eight mines. “Our goal was not to reduce mainte-nance costs but to better maintain our equipment and itscapacity, reliability and safety,” says Boudreau. Yet, as a resultof its new approach, Luminant has experienced an 18 per centreduction in maintenance spending.

Core to the improvement was changing the mindset ofpractically everyone in the organization – from seeing mainte-nance as the repair of broken machinery to viewing it as anongoing process of preservation.

Bringing people togetherThe company sought to put in place standardized, repeat-

able processes across the board. “If we have something that isn’tworking and everyone is doing their own little tweak, we’llnever know it isn’t working,” says Boudreau. “If we standardize

across all eight mine sites and it isn’t working,we’re going to know pretty quickly.”

Luminant’s Mine Maintenance SupportServices (MMS) brought together project man-agement support workers – a group responsi-ble for providing support for railroads, 15draglines, 10 loading stations and 500 pieces ofmining rolling stock. The MMS group is com-posed of 44 employees from electrical engi-neering, mechanical engineering, technicaldesign, reliability, predictive services and plan-ning, which support more than 600 miningemployees and equipment across the eightmine sites. MMS now unifies each site’s func-tional departments with the support organiza-tion to maintain mining assets and improvereliability, says Keith Lawson, Luminant’s pre-dictive maintenance specialist supervisor.

The right tools for the jobTo facilitate standardization, Luminant

introduced computerized maintenance man-agement system software used to track every-

thing from equipment inspections to work orders. The MMStoolkit includes its condition based maintenance (CBM) pro-gram, which monitors all of its draglines and mobile miningequipment, tracking and evaluating large mining tire perform-ance, amongst other things. The company also uses the data itcollects for predictive maintenance (PdM), employing ultra-sonic, ultrasound, infrared, vibration analysis, magnetic parti-cle, liquid penetrant, weld inspection and visual inspections topredict and correct possible failures.

“If we see vibration on a bearing increasing, Keith’s grouppicks it up, identifies whether something is loose or misalignedor if there’s a lubrication problem,” says Boudreau. “At thatpoint, early enough in the failure, we can do something aboutit. If you wait, then you have to replace the bearing, or themachine, and that leads to delays and more serious problems.”

Each component is initially rated based on its critical impor-tance or safety risk, and then on its cost. “We implemented areliability centred maintenance (RCM) program about 18months ago,” says Boudreau. “We have completed RCM analy-sis on 60 per cent of our assets. Our schedule is to have 100 percent of our assets complete in the next 12 months. The resultof that analysis is an individual criticality prioritization numberthat ranks all assets in order of importance, a detailed mainte-nance strategy and proactive maintenance tasks.”

Luminant has been fortunate, as many of its maintenanceemployees have been working with the company for decades.


More than 100 people were involved in this dragline outage. The reinstallation of a walking arm is seenabove.

Excellence at any costReliability for its own sake drives Luminant’s maintenance programby Alexandra Lopez-Pacheco

Cour

tesy

of L

umin

ant

The company also introduced a behaviour-based safety ini-tiative for employees in the field. Employees observe co-workersin the field anonymously and identify behaviours that couldlead to injuries. “We, as a company, do thousands of observa-tions every single month, and we compile the statistics anddisseminate the findings out to the field so we can learn fromthem,” says Boudreau.

The new program makes heavy use of metrics to trackprogress and set goals. But maintenance superintendents,supervisors and technicians are given goals based on factorsthey can control instead of factors they cannot, like reducingmaintenance costs.

Nevertheless, since introducing its corporate maintenancestandardization initiative four years ago, Luminant has seen aneight per cent improvement in asset availability and even greatermaintenance spending reductions. In 2011, its PdM group wonthe Uptime Award for the Best Non-Destructive Testing Programand, last year, its MMS Department won the 2012 Best Condi-tion Monitoring Program Uptime Award.

“The last three years have been our best in production andsafety,” says Boudreau. “You have to be disciplined, stay thecourse, believe in the process and wait for the results. If youare looking quarter to quarter and you’re not committed to thelong term and doing the right thing, then you will hit bumpsand make short-term decisions and you will fail. For us, thisyear, we were better than last and next year, we’ll be betterthan this one.” CIM


They have valuable experience and knowledge, but these keypeople are nearing retirement age.

“One of our main goals is to get these employees’ tribalknowledge documented so when the next group of supervi-sors come in, they don’t have to make the same mistakes thepeople who have been here for 30 years had to figure out ontheir own from day one,” says Boudreau. With this in mind,Luminant added 17 maintenance organization planner posi-tions across eight locations. “These planners are responsible forputting together detailed job plans that include safety precau-tions, lockout-tagout procedures, tools needed, number ofpeople to do the job, time to do the job, and detailed instruc-tions to do the job.” Over four years, the company has builtabout 3,000 jobs. “That is a great start but we still have a longway to go,” notes Boudreau.

Luminant also introduced the human performanceimprovement (HPI) initiative, designed to create a culture thatencourages reporting and learns from mistakes. As a result, thenumber of near misses reported at Luminant in recent yearshas quadrupled. “This program distinguishes between willfulviolations of policy and latent organizational weaknesseswithin the company,” points out Boudreau. “HPI is all aboutchanging and creating a company culture.”

Maintenance not just for maintainersThe new maintenance approach relies on the collaboration

of everyone using – or even working near – equipment. “It’s areal team approach,” says Lawson. “We have a very good rela-tionship with operations, which isn’t always the case in allmines. Sometimes they work against each other. When MMS[staff] go to the site, we deal with the maintenance superin-tendents and managers, and we talk to everyone. We do this atleast once a week with each site, and then we re-contact themat a later date and track what they’ve done, using the CMMSsoftware. All the data is kept on file, so the software triggersfollow-ups. We also have a good training department thattrains the equipment operators so they understand everythingabout that component they’re using, what it can and can’t do,and how to inspect it, so if they see something, they can fill outa sheet and make sure the right people get to it.”

The company also added monitoring technology to itsdraglines to reduce behaviour that can lead to equipment fail-ure or damage. “You can overload a dragline and increase pro-duction in the short term, but you are putting stresses on theequipment that it wasn’t designed for and that’s eventuallygoing to lead to failures,” says Boudreau.

The new technology includes Sony cameras using Exacqsoftware that tracks the way the equipment is being used. If anoperator overloads the dragline over and over, an alert is set offin the web-based management software. This triggers a meet-ing with the operator – not to assign blame, but to attempt toidentify what factored into the overloading. “We try to under-stand why someone made the decision and why they thoughtit was the right decision,” says Boudreau. “If it is a willful vio-lation, there is recourse for that. But if a mistake was made,what we want to do is learn from that.”


PotashCorp targets global food security

Potash Corporation of Saskatchewan announced it willcommit $35 million over the next seven years for the creationof the Global Institute for Food Security (GIFS) at the Universityof Saskatchewan. The provincial government will also provideanother $15 million in the same period. GIFS’s objective willbe to develop Saskatchewan-led solutions for secure and sus-tainable food and nutrition worldwide. This is PotashCorp’slargest donation to date, demonstrating its commitment tofood security. “Food security remains our biggest challenge as populations increase and diets change, putting immensestrain on food production,” said Bill Doyle, president and CEO, PotashCorp. “As the world’s largest producer of crop nutri-ents, supporting food production is a mandate for our com-pany and we believe this institute can play an important rolein improving global food security.” Saskatchewan PremierBrad Wall said: “The plan for growth positions Saskatchewanas a global leader in food security and innovation by 2020.Advancing Saskatchewan’s agricultural advantage allows us tosignificantly increase the global food supply – our moral obli-gation as a good global citizen – while building the next econ-omy, an innovation economy, here at home.”

GIVING BACK


Plenty of people will promise big returns if they areallowed the chance to step in and change how miningoperations are run. But thanks to a record of improvingperformance across multiple sectors, Raymond Floyd has

executives at the biggest mining companies asking him how theycan “make their workplace right.” While working at GeneralMotors early in his career, Floyd was instrumental in adoptingthe lean manufacturing principles made famous by Toyota. Helater adapted them to the processing sector with Exxon beforeSuncor Energy lured him to Fort McMurray. From 2008 to 2012,Floyd helped trim waste and improve output at Suncor’s miningand processing operations by using those lean methods gleanedfrom the automotive industry. Some of those experiences aredetailed in his 2010 book, Liquid Lean: Developing Lean Culture inthe Process Industries. Floyd now serves on the board of directorsof two companies and says more books are in the works.

CIM: Can you give a hands-on example of how lean processesmake a difference?Floyd: At Suncor, there are more than 40 bays available formaintenance on trucks, shovels and dozers, and that sort ofthing. In the original 2008 configuration, whatever bay

became empty received whatever truck was next in line to beworked on. The problem with that was, although every crafts-man had a big box of tools, they almost invariably didn’t havea tool or a part that was needed for that job, which they hadto go get. As we organized to make the workplace right, wededicated two bays for routine service, and those bays hadevery single thing needed: tools, equipment and parts, andtrained craftsmen who knew all about routine service. So atruck that previously needed routine service and took 36hours – and in some cases 72 hours – to get it, could pull intoone of those special service places just like Jiffy Lube and go inand out in a couple hours and have the full service done.

As we expanded, we also set up bays that were right fortransmissions, or suspensions, or engines. We also managedparts so that we never took a truck out of line until we had a bay,the required parts, and craftsmen available for that kind of work.

CIM: You also stress the need for a clean workplace. Why is thisimportant?Floyd: The emphasis on cleanliness is to make the status of theequipment visually apparent. If you have 10 years’ worth of leaksthat have never been cleaned up and repaired, a small leak today


Big on leanShop talk with continuous improvement leader Raymond Floyd by Ryan Bergen

Cour

tesy

of R

aym

ond

Floy

d


is invisible. But if the equipment is clean, a small leak is instantlyvisible and you can fix it before something bad happens.

CIM: Since improving maintenance relies on people to both dotheir basic jobs and improve their work, how do you make surestaff are most effective?Floyd: You have to have strategic goals that become meaningfulto every individual, so that they know what to do. Then youhave to have the improvement tools and you must make surethe people know how to use those tools correctly. You have tohave a system for delivering the tools, and since the tools areoften team-based, you need to have a system for organizing theteams so that the tools are used right. That way, people can say,“I know I’m doing the right thing and I know I’m doing it inthe right way.” But, boundaries are also important. For exam-ple, we allowed our mechanics to make great improvements inthe way they worked on a truck, but they weren’t allowed tochange the design of the truck without engaging an engineerwho approved the changes, which the front line teams thenexecuted throughout our fleet.

CIM: How successful would you say companies across allindustries have been at implementing lean principles?Floyd: At this moment, more than half of the entities thatattempt lean implementation abandon it at some point.Sometimes they go on for years before they abandon it. That’salways the result of not developing the culture and the sys-tems that surround the lean tools, so that people can usethem effectively and the company retains control of its sys-tem of production.

CIM: So how can the success rate be improved?Floyd: Senior leadership is the exclusive owner of systems andculture. Unfortunately, execution of the lean tool set is largelythe domain of mid-management or evenlower in big organizations. If senior leadersdo not understand that lean practice mustlead to and be enabled by a cultural trans-formation, they are content to leave lean inthe middle to lower parts of the organiza-tion. This means that cultural transforma-tion never occurs and lean implementationnever matures to its full potential.

CIM: The work at Suncor discussed inLiquid Lean covers less than the first twoyears you were there. What were some ofthe longer-term impacts of theimprovements at Suncor’s operations?Floyd: Suncor has essentially the same kit ofmining equipment it had in 2008 and it’spublic knowledge that they are producingabout 70 per cent more product these days.There are a lot of things that go into that,but most of it is what we’re talking about.

CIM: That is impressive. Can you give an example of the processthat helped you get to that point?Floyd: You start with the routine maintenance that we talkedabout earlier. When it used to take three days for routinemaintenance, the trucks often didn’t get it on time. Or trucksgot to the point when they needed routine maintenance, andthey sat and waited for their turn. When we got to doing itvery quickly, the trucks always got the routine maintenance,and they always got it exactly on time. That enabled moretruck-hours in the mine.

And we moved to other things like suspensions. Just likewe did with routine maintenance, we got to the point wherea truck would come in to get its suspension fixed and goback out in the mine very quickly. But once the suspensionis fixed, it turns out that you can activate the onboard weigh-ing system. It works off of the suspension, but not if the sus-pension’s not working right. From there, you know howmuch to put in each truck to optimize the load withoutexceeding the truck’s limits, and all of a sudden it’s carryingmore because it’s well- maintained – not only the suspensionand lubrication but everything is well-maintained because ofthe things we’ve talked about. The trucks can carry heavierloads at higher speeds. It’s a more robust truck – what italways was intended to be.

CIM: Do you think there is a strong appetite for lean in mining?Floyd: Oh, certainly. I’ve talked with folks at BHP in Canadaand elsewhere. Before he left Rio Tinto, former CEO TomAlbanese and I would frequently exchange emails or phonecalls. He’s very interested in it and had actually tried some ofthat work in several of his mines. It’s been slow in the chem-ical processing industries, it’s been slow in mining, but it issuch a powerful technology that sooner or later it will geteverywhere. CIM



Supply linesEnergy? Everyone needs it.

And Western Canada wants

to feed that demand.

by Eavan Moore


Back in black

The seaborne thermal coal market promises growth for current andfuture coal producers in North America. Cheap natural gas is accelerat-ing Canada’s and the United States’ transition away from coal-fired elec-tricity generation, yet, globally, the International Energy Agency foreseescoal increasing its share of the energy mix by 1.2 billion tonnes by 2017,thanks in large part to Chinese and Indian electricity demand.

In that same time period, Canada’s exports will roughly double. They stand now at a comparatively small six million tonnes per annum(mtpa), the bulk of which is supplied by Sherritt International’s

Although oil sands hog the headline of theCanadian energy story, western provincesalso boast rich deposits of thermal

coal, uranium,& natural gas.With shifting regulation in Canada andimmense potential overseas, producers anddevelopers are beating a path to Asianmarkets to peddle their resources. And forgood reason – China and India alone areexpected to require nearly a third of theworld’s energy production by 2035.


four mtpa Mountain operations. Hillsborough Resources’ 0.5mtpa mine on Vancouver Island, as well as thermal coal pro-duced by B.C.’s and Alberta’s metallurgical operations also con-tribute to exports.

By 2017, Coalspur Mines Ltd. promises to add five mptawith its Vista project, a dedicated thermal coal mine near Hin-ton, Alberta. The mine is expected to produce 12 mtpa from2019 through to the end of its 29-year life.

David Montpetit, Coalspur’s vice-president of externalaffairs and logistics, says new funding should allow productionto begin in 2015 as scheduled. A US$300-million debt facilityfrom EIG Global Energy Partners “will fund construction for2013 and partially into 2014,” he predicts. “We are confidentthat we will have the remaining funding requirements in placeby the end of the first quarter 2013.” At lowest estimates, thetotal construction cost would be $445 million.

Projects further on the horizon could also boost Canadianthermal exports. Hillsborough Resources has applied to builda second mine, Echo Hill, near Tumbler Ridge, B.C., whichwould produce between 1.0 and 1.5 mtpa during a 10- to 14-year mine life using a combination of contour and highwallauger mining, beginning in 2015. Around the same time, if itgets the go-ahead, the metallurgical-focused Donkin coal proj-ect proposed by Morien Resources Corp. in Nova Scotia,would also produce thermal coal over its 20-year life, initiallyfeeding local generators but entering the export market if con-ditions are favourable.

Struggling U.S. coal miners have set their sights on thesame opportunity, but at higher volumes. U.S. producersexported about 25 million tonnes in 2011 and are seekingways to export more, which includes increasing access to WestCoast ports. Montpetit points out that this development hasencouraged B.C. ports to expand their coal terminals, whichmay benefit Canadian producers as well.

Planning and patience

Nearly half of U.S. thermal coal exports were Europe-bound in 2011. Countries that suspended their nuclear pro-grams in response to the Fukushima meltdown have madeonly tentative motions to restart, relying on gas and coal to fillthe gap.

This weak demand for nuclear fuel has put a number ofuranium projects on hold until markets improve. Uraniumgiant Cameco Corporation has revised its global growth plans

from 20 to 16 additional million pounds of uranium oxide by2018.

But a dearth of major projects coming on stream in the nextfew years suggests that when demand does pick up, supplycould be tight. The forecasts used by Cameco show worldwideuranium demand growing three per cent annually. ProjectedAsian electricity demand, as usual, accounts for a large chunkof this; of the 64 new reactors under construction around theglobe, 36 are found in China and India. Cameco’s growth fig-ure also factors in restartsamong Japan’s 48 idled reac-tors. In January, the country’snew nuclear authority releaseddraft guidelines for the restartof reactors and anticipatesfinalizing those in July. “Weexpect six to eight of the unitsto be restarted this year andthen growth going forward,”said Tim Gitzel, president andCEO of Cameco, in February.

Nuclear plants in the U.S.will lose 24 million annualpounds of uranium oxide sup-ply when America’s Megatonsto Megawatts agreement – whereby uranium from Russianwarheads is converted for use in American generating stations– expires this year. Without political motivation to extract ura-nium from stockpiled weapons, further nuclear warhead sup-plies will be limited, says Ian Hiscock, senior consultant atCRU Group. “Warheads are expensive to dismantle,” heexplains. “You need some highly specialized skills to do it.”

The stable, high-grade Athabasca Basin of Saskatchewanwill help meet uranium demand, especially since the Canadiangovernment has completed a bilateral export agreement withChina and has started negotiations with India. Cameco plansto bump up production at its McArthur River mine from 18.7to 22 million pounds in 2018, and its Cigar Lake mine, with alate-2013 start-up date, will produce 18 million pounds ofuranium oxide annually. French nuclear conglomorate Areva,with shares in these two Cameco-oper-ated mines, anticipates exportinguranium to China later this year.

Exploration activity alsocontinues in the AthabascaBasin, which produced 17per cent of the world’s ura-nium in 2011, althoughany new projects wouldonly begin producingtowards the end of thisdecade. Areva’s numerous

“We expect six to

eight of [Japan’s

nuclear reactors]

to be restarted

this year and

then growth

going forward”

– Cameco CEO Tim Gitzel

Uranium concentrate is loaded in steeldrums for shipment from Cameco’sRabbit Lake mill in Saskatchewan.

Courtesy of Cameco Corp.

93 % of Canada’s thermal coalexports went to Asia in 2011

JAPAN 35%SOUTH KOREA 34%CHINA 24%

Source: PwC


exploration properties include Shea Creek at about 88.1 mil-lion pounds Measured and Indicated Resources. Rio Tintocontinues to drill and perform environmental baselineresearch at the Roughrider deposit it acquired after completingthe deal to purchase Hathor Exploration in 2012.

Natural gas chills out

Canada used to pipe most of its gas to the United States, butnet exports have steadily declined from a peak of 3.3 trillioncubic feet (TCF) in 2007 to only 2.2 TCF out of a total 5.3TCF produced in 2011. Growing domestic markets, such asAlberta with its expanding oil sands operations and popula-tion, and Ontario, which is phasing out coal-fired powerplants, have drawn on existing conventional gas reserves,explains Bill Gwozd, senior vice-president, gas services at ZiffEnergy.

That shift, says Gwozd, prompted companies in the U.S. torefine their hydraulic fracturing and horizontal drilling tech-niques to open up previously inaccessible shale gas reserves.The export of those techniques to Canada have unlocked largeAlberta and northeast B.C. shale and tight gas formations thatproponents are eager to link to the coast, convert to liquefiednatural gas (LNG), and ship to Asian customers accustomed topaying a premium the North American markets simply cannotmatch.

In Asia, oil indexation values a cubic foot of gas at its oilbarrel heating equivalent of $15, instead of the Henry Hub,Louisiana index recently trading between $3 and $4. Add $6to $9 per barrel for transport and liquefaction costs and somenegotiating space remains, says Gwozd.

“At the end of the day, the alternative that the Asian buyershave to using LNG is burning oil-linked liquid fuels,” saysAsish Mohanty, senior analyst, global LNG, Americas at WoodMackenzie. “So they can never completely leave their comfortzone of oil indexation, other than perhaps for small portionsof their overall portfolio.”

At least six LNG terminals and three pipelines have beenproposed on the B.C. coast. Global gas company BG Group isin the feasibility stage with its LNG terminal near PrinceRupert, supplied with up to 4.2 billion cubic feet (BCF) perday through a pipeline venture between BG Group andpipeline company Spectra Energy.

David Byford, manager of external communications at BGGroup, says the shale resources of northeast B.C. and the shorttravel time to Asia drew the group’s attention to the region. Hecautions, however, that like other LNG players, BG has madeno final investment decision.

People power

Global energy demand is critical for these projects to makesense economically, but so is the employment outlook. Anintensely competitive labour market worsened multi-billion-dollar cost overruns at new LNG developments in Australia. “Ifa few of these [B.C.] projects simultaneously end up under

construction, there will be a crunch, and it could very well gothe Aussie way,” says Mohanty. “Because of that, many poten-tial contractors are heard to be a bit cautious about promisingon the cost figures.”

Project proponents likewise hesitate to quote numbers.Floated expenditures on BC LNG Ltd.’s barge-based operationin the Douglas Channel start with an initial $400-million pricetag and have since risen by an undisclosed amount. BC LNGholds an export licence for 1.8 million tonnes LNG (roughly88 BCF natural gas) per year. At the other end of the scale,Progress Energy estimates its investment in a 7.2-million-

injector body

pilot needle

gas needle

diesel pilot (pilot)natural gas (primary fuel)

lede nesag

loip

ecjni

lede netlo

ydo brotec

alrutnaseid

)leu fyarmirp (sa g)otilp (otil ples

alrutna )leu fyarmirp (sa g

For ignition, a small amount of diesel fuel is injected into the enginecylinder (1), followed by the main natural gas fuel injection (2). The dieselacts as a pilot, igniting the natural gas.

injector body

pilot needle

gas needle

diesel pilot (pilot)natural gas (primary fuel)

Westport HPDI Injector Tip Assemblyt HPDI InjtporseW sembTip Asor ectt HPDI Inj lysemb

eldes neag

loip

ejni

edlee ntlo

dy borotc

glartuanseid

)leu fyarimrp (sa g)tilop (tilo ple

glartuan )leu fyarimrp (sa g

1)

2)

Efficient injectionNot all liquefied natural gas is destined for export.LNG can replace diesel in engines f i t ted withconversion kits or, as is increasingly the case,engines purpose-built by companies like WestportInnovations Inc., which teamed up with CaterpillarInc. in 2012 to develop LNG technology for miningequipment. Its high-pressure direct injection systemuses a small amount of diesel to ignite natural gas,reducing overall emissions and, if gas prices staylow, fuel costs. Caterpillar hopes to launch LNG-powered haul trucks and locomotives within fiveyears. A separate project under development wouldallow owners to convert their existing trucks tonatural gas.

Cour

tesy

of W

estp

ort I

nnov

atio

ns


tonne (351 BCF) terminal near PrinceRupert between $9 billion and $11 bil-lion.

Outside the comfort zone

For now, the West is Canada’senergy king. Eastern provinces haveresponded with caution to the risksinvolved with hydraulic fracturing.Nova Scotia and Quebec put moratori-ums on the practice. Several provinceshave moratoriums on uranium miningas well.

In Quebec, uncertainty looms overfuture uranium developments. StratecoResources CEO Guy Hébert seespotential there, pointing out that hisMatoush uranium property is practi-cally a twin to Saskatchewan’s RabbitLake. He says it could be economiceven at today’s low spot prices and willbe even better in five years’ time. How-ever, Quebec’s environment ministerhas declined to approve undergroundexploration at Matoush until the EeyouIstchee territory Crees, who areopposed to uranium mining, consent.

In Nunavut, similar forces arepulling in different directions. Thelocation is challenging, but the govern-ment is supportive. Areva continues towork its way through the environmen-tal assessment process for its proposedopen pit and underground Kiggavikproject. Watching and learning fromAreva’s experience is junior miningcompany Kivalliq Energy; CEO JimPaterson believes that the future mar-ket for uranium, and grades compara-ble to many Saskatchewan projects,could inspire a new uranium miningdistrict in Nunavut.

Energy drink

While the financial, political andsocial forces cloud the timing of theseprojects, the upward trajectory ofglobal electricity demand makes apowerful case for their development.Selling power to Asia, as Ziff Energy’sGwozd puts it, is like selling water to athirsty person in a desert. CIM

What could be a better prospect than gold? For Stikine Energy Corp. theanswer is “sand.” Scott Broughton, president and CEO of the junior explorationcompany, says he has no regrets about abandoning gold and base metalexploration to pursue silica deposits in northeastern British Columbia. His busi-ness case is simple: shale gas companies pump frac sand into their hydraulicfracture sites, where sand grains prop open the tiny cracks that let gas escape.Today, that sand is imported to northeastern B.C. from mines in Wisconsin,Saskatchewan, even Texas, at prices upwards of $200 or even $300 per tonne.Much of that cost is related to shipping and handling. Local mines ought tobeat the competition handily; indeed, 2011 preliminary economic assessmentson Stikine’s Nonda and Angus frac sand projects suggested they could deliversuitable product at costs in the $60-per-tonne range.

But Broughton’s courtship of gas producers and their contractors has taughthim a few things about the priorities of companies like Shell, Chevron, and Hal-liburton. “There are long-standing [supply] relationships within the industry,which work all over North America,” he says. “It’s become clear to us that thoserelationships and that certainty about supply is something that the gas produc-ers really enjoy. And right now they’re willing to pay for it.”

In the long term, he believes companies looking at multi-billion dollar naturalgas investments in the province will seek strategic, quality supply from localsources with better costs. LNG exports projected for the end of the decadewould require four or five years of aggressive production drilling – meaning alot of frac sand will be required in the not-so-distant future. “In 2009, when wefirst started this, the operations in the Horn River formation in B.C. were pump-ing in something like half a million tonnes” he says. “In the Montney, they werepumping close to a million tonnes in 2010. And that’s all prior to full-on produc-tion drilling.”

Until LNG plans solidify, gas producers are spending as little as possible ondrilling and doing deals. Without investment through 2012 and in difficult juniormarkets, Stikine has limited its expenditure, but once LNG takes off, Broughtonsays it will feed all kinds of businesses. “I think it will surprise a lot of peoplehow fast it will happen, and we think the outlook has already turned in the oilpatch for these large shale-gas plays,” he says.

Crystallizing the natural gas boom

Cour

tesy

of S

tikin

e En

ergy

Stikine Energy’s two-tonne-per-hour frac sand pilot plant in Abbotsford, B.C. The company wants to market locallysourced quartz sand to the growing hydraulic fracturing industry in northeastern B.C.


Même si les sables bitumineux monopolisent l’histoireénergétique canadienne, les provinces de l’Ouest renfermentégalement de riches réserves de charbon thermique, d’ura-nium et de gaz naturel. Les producteurs et les promoteurs deprojet se tournent vers les marchés asiatiques pour vendreleurs ressources en raison des changements de réglementa-tion qui surviennent au Canada et de l’immense potentiel àl’étranger. Ils font ainsi pour une bonne raison : on s’attend à

ce que la demande combinée de la Chine et l’Inde représenteprès du tiers de la production énergétique du monde entierd’ici 2035.

Le retour au noir

Le marché du charbon thermique livré par transportmaritime annonce une croissance pour les producteurs de

Le jeu du pouvoirVous avez dit énergie? Tout le monde

en a besoin. Et l’Ouest canadien veut

répondre à cette demande.par Eavan Moore

Dans les ports de la côte de laColombie-Britannique, incluantRoberts Banks (ci-dessus), on

exporte actuellement lecharbon thermique à partir

des États-Unis et du Canada.

Cour

tois

ie d

e Ca

nadi

an P

acifi

c


charbon actuels et futurs en Amérique du Nord. Le gaz natu-rel à faible coût accélère la transition au Canada et aux États-Unis pour se débarrasser de l’électricité produite par ducharbon. Pourtant, l’Agence internationale de l’énergie pré-voit que la part du charbon dans le panier d’énergies mondialaugmente à 1,2 milliard de tonnes d’ici 2017. Cette augmen-tation serait due en grande partie à la demande d’électricitéde la Chine et de l’Inde.

On estime que les exportations canadiennes devraientsensiblement doubler durant la même période. Actuelle-ment, les exportations ne représentent qu’un maigre 6 mil-lions de tonnes par année (MTPA), dont la majeure partie estcomposée des 4 MTPA provenant des mines en montagne deSherritt International. On peut également compter la pro-duction de 0,5 MTPA de la mine de Hillsborough Resources,sur l’île de Vancouver, ainsi que la production de charbonthermique provenant de l’exploitation métallurgique de l’Al-berta et de la Colombie-Britannique.

D’ici 2017, Coalspur Mines Ltée promet d’ajouter 5 MTPAavec son projet Vista, une mine de charbon thermique prèsd’Hinton, en Alberta. Cette dernière devrait produire 12MTPA à partir de 2019 jusqu’à la fin de son cycle de vie de29 ans.

David Montpetit, vice-président, Affaires externes et logis-tique, de Coalspur mentionne qu’un nouveau financementdevrait permettre de commencer la production comme il estprévu en 2015. Selon lui, une facilité d’emprunt de 300 mil-lions de dollars US d’EIG Global Energy Partners « devraitfinancer la construction de 2013 et celle de 2014 en partie.Nous sommes certains que nous aurons le reste du finance-ment requis en place d’ici la fin du premier trimestre de2013 ». Les estimations les plus basses indiquent que le coût

de construction total serait de 445 mil-lions de dollars.

D’autres projets à l’horizon pour-raient également augmenter les expor-tations thermiques canadiennes.Hillsborough Resources a présenté unedemande pour construire unedeuxième mine, Echo Hill, près deTumbler Ridge, en Colombie-Britan-nique. La production pourraitatteindre entre 1 et 1,5 MTPA sur unedurée de vie de 10 à 14 ans en utilisantune combinaison de méthodes d’ex-ploitation minière : l’exploitation sui-vant les courbes de niveau etl’exploitation à la tarière, au commen-cement de 2015. Au cours de la mêmepériode, si l’autorisation est donnée, leprojet de mine de charbon métallur-gique proposé par Morien ResourcesCorp. en Nouvelle-Écosse devrait éga-lement produire du charbon ther-mique tout au long de sa durée de viede 20 ans. La production initiale servi-rait à alimenter les usines locales, maiselle percerait le marché de l’exporta-

tion si les conditions sont favorables.Les minières étasuniennes en difficulté visent sur la

même occasion, mais à de plus gros volumes. Les produc-teurs étasuniens ont exporté environ 25 millions de tonnesen 2011, et ils cherchent des manières d’exporter davantage,ce qui inclut un accès accru aux ports de la côte Ouest. M.Montpetit indique que ce développement a encouragé lesports de la Colombie-Britannique à agrandir leurs terminauxde charbon, ce qui peut profiter également aux producteurscanadiens.

Planification et patience

Près de la moitié des exportations de charbon thermiqueétasuniennes étaient envoyées en Europe en 2011. Les paysqui ont suspendu leurs programmes nucléaires à la suite dela catastrophe de Fukushima ont fait seulement quelquestentatives pour redémarrer, en se basant sur le gaz et le char-bon pour combler l’écart.

Cette faible demande de carburant nucléaire a placé denombreux projets d’uranium en attente jusqu’à ce que lesmarchés s’améliorent. Cameco Corporation, un géant del’uranium, a révisé à la baisse ses plans de croissance mon-diale pour les faire abaisser de 20 à 16 millions de livres addi-tionnelles d’oxyde d’uranium d’ici 2018.

En outre, l’absence de projets importants en cours dansles prochaines années suggère que la demande n’a pas repris,les stocks pourraient être restreints. La prévision utilisée parCameco indique une croissance annuelle de la demandemondiale d’uranium de 3 %. La demande d’électricité proje-tée en Asie, comme à l’habitude, représente une grande partde cette croissance. Sur les 64 nouveaux réacteurs en

L’uranium est raffiné à l’usine Blind River de Cameco en Ontario.

Cour

tois

ie d

e Ca

mec

o Co

rp.


construction dans le monde, 36 se trou-vent en Chine et en Inde. Cette crois-sance prévue par Cameco tientégalement compte du redémarrage des48 réacteurs en veille du Japon. En jan-vier, l’autorité nucléaire du pays a publiéune ébauche de directives pour le redé-marrage des réacteurs et elle prévoitqu’une version définitive sera prête enjuillet. « Nous prévoyons le redémarragede six à huit unités cette année et lacroissance continuera par la suite », amentionné en février Tim Gitzel, prési-dent et premier dirigeant de Cameco.

Les centrales nucléaires aux États-Unis devraient perdre un approvisionne-ment de 24 millions de livres d’oxyded’uranium annuellement lorsque l’ac-cord « Megatons to Megawatts » en placeaux États-Unis, qui prévoit la conversionde l’uranium des charges militairesrusses pour alimenter les centrales auxÉtats-Unis, prendra fin cette année. Sansmotivation politique d’extraire l’uranium des réservesd’armes, les stocks de charges nucléaires seront restreints,indique Ian Hiscock, consultant principal du CRU Group. « Les charges militaires coûtent cher à démonter, explique M. Hiscock. Cela requiert des compétences hautement spécialisées pour y arriver. »

Le bassin stable et de grande qualité d’Athabasca, en Saskatchewan, aidera à combler la demande d’uranium, par-ticulièrement depuis que le gouvernement canadien a concluune entente bilatérale en matière d’importation avec laChine, et depuis qu’il a entrepris des négociations avecl’Inde. Cameco planifie augmenter sa production à la mineMcArthur River pour la faire passer de 18,7 à 22 millions delivres en 2018. De son côté, la mine de Cigar Lake, ayantdémarré à la fin de 2013, produira 18 millions de livresd’oxyde d’uranium annuellement. Le groupe français spécia-lisé dans l’énergie nucléaire, Areva, qui détient des parts dansces deux mines exploitées par Cameco, anticipe d’exporterde l’uranium en Chine plus tard cette année.

L’exploration poursuit son cours dans le bassin d’Atha-basca, qui a produit 17 % de la production mondiale d’ura-nium en 2011, même si tout nouveau projet necommencerait pas à produire avant la fin de notre décennie.Parmi les nombreuses propriétés d’exploration d’Areva, onretrouve Shea Creek, avec des ressources mesurées et indi-quées de 88,1 millions de livres. Rio Tinto continue de foreret de réaliser des recherches pour obtenir des données debase sur l’environnement à son dépôt de Roughrider, acquisaprès avoir conclu l’accord d’achat d’Hathor Exploration en2012.

Le gaz naturel s’essouffle

Le Canada avait l’habitude de vendre son gaz aux États-Unis, mais les exportations diminuent, depuis le pic de

2007, elles sont passées d’un pic de 3,3 billions de piedscubes (BPC) à seulement 2,2 BPC sur une productiontotale de 5,3 BCP en 2011. Des marchés intérieurs encroissance, comme l’Alberta, dont la population et l’exploi-tation des sables bitumineux augmentent; et l’Ontario, quiélimine progressivement ses centrales au charbon, ont faitdiminuer les réserves de gaz classiques, explique BillGwozd, vice-président directeur, Services du gaz, chez ZiffEnergy.

Ce changement, mentionne M. Gwozd, a poussé les États-Unis à chercher à améliorer leurs techniques de fractionne-ment hydraulique et de forage horizontal afin d’ouvrir desréserves de gaz de schiste auparavant inaccessibles. L’expor-tation de ces techniques au Canada a permis de débloquer degrandes formations imperméables de gaz et de gaz de schisteen Alberta et en Colombie-Britannique, dont les promoteursont hâte de relier la côte pour convertir le tout en gaz naturelliquéfié (GNL), et de l’expédier sur le marché asiatique à unprix que le marché nord-américain n’est tout simplement pasen mesure d’égaler.

En Asie, l’indice du prix du pétrole tient compte de lavaleur du prix d’un pied cube de gaz à un prix d’équivalentbaril de pétrole de 15 $, plutôt que de tenir compte de celuide l’indice de prix de Louisiana Henry Hub, qui s’échangeentre 3 et 4 $. Ajoutez à cela entre 6 et 9 $ pour les coûts detransport et de liquéfaction par baril et cela laisse encoreplace aux négociations, selon M. Gwozd.

« À la fin de la journée, la seule alternative qui reste auxacheteurs asiatiques, qui utilisent le GNL, est de se tournervers les carburants liquides dérivés du pétrole, mentionneAsish Mohanty, analyste principal, GNL mondial, Amériques,chez Wood Mackenzie. Cela fait en sorte qu’ils ne sortent pascomplètement de leur zone de confort en matière d’indexa-tion du prix du pétrole, mis à part, peut être, d’une petitepartie de tout leur portefeuille. »

La propriété d’uranium Angilak de Kivalliq Energy au Nunavut

Cour

tois

ie d

e Ki

valli

q En

ergy


Au moins six projets de terminaux de GNL ont été propo-sés sur la côte de la Colombie-Britannique. Une sociétégazière mondiale, le BG Group, est à l’étape de l’étude de fai-sabilité de son projet de terminal de GNL près de PrinceRupert, il serait alimenté par un maximum de 4,2 milliardsde pieds cubes par jour par un pipeline exploité par une col-laboration entre le BG Group et Spectra Energy, une sociétéspécialisée dans les pipelines.

David Byford, gestionnaire des communications externeschez BG Group, mentionne que les ressources de gaz deschiste du Nord-est de la Colombie-Britannique et les courtsdélais de transport vers l’Asie ont attiré l’attention du groupesur la région. Par contre, il met en garde que BG, comme tousles autres joueurs dans le secteur du GNL, n’a pas encoredécidé d’investir.

Le pouvoir aux peuples

La demande d’énergie mondiale est importante pour queces projets se justifient du point de vue économique, mais ilfaut également tenir compte de l’emploi dans l’évaluation. Un marché du travail concurrentiel intense a empiré lesdépassements de coûts de milliards de dollars dans le cadrede nouveaux projets de développement du GNL en Australie.« Si jamais quelques-uns de ces projets voient le jour simul-tanément en Colombie-Britannique, la demande de main-d’œuvre sera tellement forte qu’il peut arriver la même chosequ’en Australie, dit M. Mohanty. Cela fait en sorte que denombreux sous-traitants potentiels sont prudents quand ilest question de faire des promesses selon les chiffres sur lescoûts reçus. »

Les promoteurs des projets hésitent également à présen-ter des chiffres. Les dépenses préliminaires associées auximmobilisations flottantes de l’exploitation sur barges deBC LNG Ltée dans le chenal marin de Douglas sont éva-luées à 400 millions de dollars, prix qui a augmenté depuisà un montant qui n’a pas encore été divulgué. BC LNGdétient un permis d’exportation pour 1,8 million de tonnesde GNL (environ 88 MPC de gaz naturel) par année. Àl’autre extrémité, Progress Energy estime que son investis-sement dans un projet de terminal de 7,2 millions de

tonnes (351 MPC), près de Prince Rupert, se situera entre9 et 11 milliards de dollars.

Sortir de sa zone de confort

Jusqu’à maintenant, l’Ouest canadien est le maître del’énergie. Les provinces de l’Est ont répondu avec prudenceen ce qui a trait aux risques de la fracturation hydraulique.En Nouvelle-Écosse et au Québec, la pratique est sous l’effetd’un moratoire. Plusieurs provinces ont également mis envigueur des moratoires sur l’uranium.

L’incertitude plane sur les prochains développementsd’uranium au Québec. Guy Hébert, le premier dirigeant deStrateco Resources, voit là un potentiel, il souligne que lapropriété d’uranium de Matoush est pratiquement la jumellede Rabbit Lake en Saskatchewan. Il mentionne que le projetpeut s’avérer profitable même avec les faibles prix en vigueuraujourd’hui, et il sera encore plus profitable d’ici cinq ans.Par contre, le ministre de l’Environnement a refusé d’approu-ver l’exploration souterraine à Matoush jusqu’à ce que lesCris du territoire Eeyou Istchee, opposés à la mine d’ura-nium, y consentent.

Au Nunavut, des forces similaires tirent dans toutes lesdirections. L’emplacement représente un défi, mais le gouver-nement le soutien. Areva continue son processus d’évalua-tion environnementale pour sa mine à ciel ouvert proposée etle projet souterrain de Kiggavik. Le premier dirigeant de lapetite société minière Kivalliq Energy, Jim Paterson, observeet apprend de l’expérience d’Avera. Il croit que l’avenir dumarché de l’uranium et les qualités comparables aux projetsde la Saskatchewan pourraient inspirer un nouveau districtminier d’uranium au Nunavut.

Boisson énergisante

Bien que les forces sociales, politiques et financières pla-nent au-dessus de ces projets, la demande mondiale d’électri-cité en hausse justifie en grande partie le développement deces projets. Comme le mentionne M. Gowdz, de Ziff Energy,vendre de l’électricité en Asie c’est comme vendre de l’eaudans le désert à une personne assoiffée. ICM

Être membre de l’Institut canadien des mines, de la métallurgie et du pétrole, c’est atteindre de nouveaux sommets, à titre individuel ou en tant qu’entreprise. C’est aussi appartenir à une communauté dynamique qui façonne le secteur minier d’aujourd’hui et de demain, tant au pays qu’à l’international.

Joignez-vous aux 14 000 membres de l’ICM dès aujourd’hui.

Prenons l’avenir en main WWW.CIM.ORG


Saving energy and even boostingproductivity are the goals of auto-mated ventilation. “Ventilation ondemand (VOD) is the ability to havethe right amount of air where youneed it, when you need it,” saysCheryl Allen, principal engineer, ven-tilation, mines technical support atVale. “You use automated systems todeliver VOD – we speak of the twosimultaneously.”

“With the older systems, we’d haveto get a crew, we’d have to maybebuild a bulkhead, maybe move heavyboards to change airflow in and out ofregulators,” explains Allen. “The oldersystems can’t react quickly enough.”

VOD, with fan and louver controlsresponding to data relayed fromunderground, directs the required

volume of air to the places in the mine where it is needed. Auto-mated ventilation’s inherently quicker reaction times and greaterflexibility make a compelling business case to decrease energy costswhere production is not possible, while increasing productionwhere possible, says Andrew Dasys, president of the data analysisconsultancy, Objectivity. During a 31-day case study done in concertwith the Centre for Excellence in Mining Innovation (CEMI) tomodel the VOD business case, Dasys says, changing air only onceper shift and redistributing unused air from two operating levelsprovided a potential production increase of a quarter to half a mil-lion dollars, by allowing an additional scoop tram to operate.

Sudbury-based CEMI has ongoing partnerships with operationsto advance the understanding of VOD in Canada. The next phase ofCEMI’s VOD project is to determine how mines can increase pro-duction potential using VOD.

TECHNOLOGY >> VentilationAir supply on demandBy Krystyna Lagowski

Many existing mine ventilation systems are often based on a “set and forget” mentality – amine will set its systems for maximum airflow and keep them that way throughout the day.It is assumed that if air needs to be provided somewhere, it needs to be there all the time. But why provide air to areas that are not being actively used? Why not introduce a systemthat makes it possible to shut off airflow and move it somewhere else in a timely fashion?

The development team atGoldcorp’s Éléonore projectinstall ventilation conductsalong the exploration ramp.Airflow at the mine relies onan automated ventilationsystem furnished bySimSmart.

Cour

tesy

of G

oldc

orp

Communication is criticalOne of the keys to optimizing airflow is an effective mine-

wide communications system, says George Hughes, researchand development program director at CEMI. “That systemhas to control at least three components – the variable fre-quency drive fan system, auxiliary fan operation and someway of opening and closing regulators,” he says. The systemHughes describes is in place at Xstrata’s Nickel Rim mine.The network there enables individuals to access the Internetwhile underground. It also has a mobile and stationary arrayof air quality sensors, and radio frequency identification sys-tem (RFID), to track where people and vehicles are through-out the mine.

To exploit these tools, the mine uses a proprietary three-dimensional (3D)-modelling and simulation software fromSimSmart technology to optimize airflow in the mine. “Youcan create a 3D model, connect it in real-time to sensors andfans, and control your network from that model,” says SarahPerno, director of sales at SimSmart.

The software, known as SmartEXEC,gives mine operators the power to con-trol ventilation using a range of optionswhich can include physical measure-ment or mass-flow balance that cali-brates the best airflow for a specific areabased on depth, temperature, air qualityand demand. Using mass-flow balancecontrol, the actual VOD flow can becompared to an ideal model value andthen adjusted to provide maximumenergy savings. While in the develop-ment stage, a mine can design, test andvalidate the implemented ventilationsystem to ensure it meets all health,safety and operational requirements.

The VOD system at Nickel Rim alsohas instruments mounted on the mobilefleet, which measure air quality and airquantity, in addition to instruments atfixed locations in the mine. The

SimSmart software is also employed atGoldcorp’s Éléonore development inQuebec.

Existing infrastructureoptimized

Pat Dubreuil, vice-president ofoperations, sales and marketing atBestech, says improved technology is

the biggest enabler for automating underground mining venti-lation. “Better technology has liberated automation becausenow we have the ability to transfer and transport data to andfrom different points, at full speed and in large quantities, andwe can do so in a very reliable manner,” he says.

Bestech has developed NRG1-ECO, a mine-wide energymanagement tool that can be applied to ventilation and otherprocesses in an operation to reduce a mine’s energy consump-tion. This product is compatible with the ventilation systemsalready being used by a mine and it is equipped with a user-friendly web-based human machine interface (HMI) thatbridges gaps in the mine’s existing range of process controls byallowing real-time viewing and control of the system. It is cur-rently in place at Vale’s Coleman mine.

NRG1-ECO works with real-time locating systems, taggingsystems based on various technologies, such as RFID or Wi-Fi,to detect tagged entities or equipment and enable or disableprocess control based on need.

SimSmart’s 3D ventilationmodelling tool can be used totrack real-time conditions aswell as run simulations.

Cour

tesy

of S

imsm

art

technology >> VENTILATION



technology >> VENTILATION

“Many mines have someprocess logic controllers (PLCs)controlling fans, or they haveplaced their pumps on PLCs,”explains Dubreuil, “or have com-pressors underground, and they

may have automated some of this. The mine may also haveimplemented tagging and tracking technology, where they pro-vide a tag to a miner, which identifies his location in the mine.You also have tags on the vehicles, to identify the location andhelp us identify the demand for air.”

The locating system can detect movement, and detectorsare placed at different intersections in various blocks andzones throughout the mine. When individuals enter or leave ablock, the NRG1-ECO system knows who it is, what their airdemand is, and it provides air accordingly, through the soft-ware. “The software sends the command to the PLC, whichtells the starter to run, for example, at 20 per cent of capacityand to keep it running until a certain vehicle leaves that zone,”says Dubreuil. “There are different types of starters under-ground that can run equipment at different speeds, so you canoperate at 20, 30 or 40 per cent capacity.”

The software does the calculations in real-time, butDubreuil says each mine has different needs. “You may wanta certain zone of your mine to be running on manual,another to be on automatic, and another to be reactive to theenvironment,” he says. “Our system gives you the capabilityof managing all these different zones according to the needsof the mine.”

Dubreuil cautions that underground communicationscan go down, so it is vital to have automated systems that are

failsafe, with features that make them semi- or fullyautonomous until communications are resumed.

“We have designed our system to have the ability to runa level or a zone on its own, should it lose communicationwith the NRG1-ECO server on the surface,” he says. “If communication systems go down, our hardware/softwarecombination will go into fail-safe mode.” Dubreuil explainsthat the fail-safe mode can be pre-programmed by mine ven-tilation experts to decide what and how the system shouldreact in the event of communication failure. It could turn onall ventilation at full capacity in order to be safe, for exam-ple, and re-evaluate the environment once communicationsare established.

The winds of changeDubreuil foresees changes coming to regulations related to

ventilation in Canada. He cites class action lawsuits in SouthAfrica where miners were exposed to high particulate levelsand are now suffering from silicosis. “The ministry here inCanada is saying they want to audit air quality and monitorwhat’s going on in underground mines,” he says. “There hasn’tyet been legislation imposed to monitor air quality, only regu-latory rules that dictate certain gas levels.”

According to Vale’s Allen, automated ventilation needs topick up momentum since current systems are the biggestwaste of energy and therefore have the biggest potential tobecome more efficient.

“We have challenges underground,” she says. “We’re gettingdeeper, our mines are more spread out and our costs are con-tinuing to increase. It’s more expensive to mine today. We haveto do something and this is a good place to start.” CIM

The open architecture ofBestech’s NRG1-ECOtechnology allows it tointegrate with new orexisting mine infrastructureand control ventilationequipment such as fans andlouvers.

Cour

tesy

of B

este

ch

SPECIAL REPORT

Already one of the world’s mining super-powers, Brazil has massive undevelopedpotential. Modern explorers are still work-ing over hundreds of former artisanal minesites, and the country’s economy continuesto pick up steam. But Canadians lookinginto doing business there should be wary ofregulatory snarls and a business culturewith its own particular rules.

INSIDE:EXPLORERS – HOPING TO COME UP BIG

INFOGRAPHIC – A SNAPSHOT OF THE ACTION

OPINION – MINING LEGISLATION IS CHANGINGUNDERFOOT

SUPPLIERS’ PERSPECTIVES – CANADIAN BUSINESSES INNOVATE TO AVOID TAXES

PROJECT PROFILE – THE RAGS TO RICHES STORYOF LUNA GOLD’S AURIZONA MINE

Workers operate a drill at the Aurizona gold mine Courtesy of Luna Gold

SPEC

IAL

REPO

RT


INV Metals’ Marcelo Schwarz (far right) says, while otherSouth American countries may attract higher explorationspending, Brazil has outsized geological potential.

according to a recent report on mining by Global BusinessReports, Brazil attracts 11 times less exploration capital persquare kilometre than Peru, and 18 times less than Chile. In2010, the country received only three per cent of globalexploration expenditure.

The main debate around exploration in Brazil is centredon who – between the state and the private sector – isresponsible for detailed mapping of the country’s resources.The Serviço Geológico do Brazil, or CPRM, Brazil’s nationalgeological service, considers this task incumbent on the pri-vate sector. Mining companies believe it should be theCPRM’s mandate. Even though CPRM has commissioned aseries of surveys to evaluate the hydrology and geology ofthe country, the debate is far from being over.

Schwarz, who is Brazilian, is well aware of this predica-ment. “I know lots of people who work at CPRM, and whatI can say is that they have great people, but they don’t havegood budgets,” he says. “So it is pretty hard for people whowork there to do a proper job, and that is why Brazil has thislack of geological mapping throughout its territory.”

Exploration companies that operate in Brazil can proba-bly identify with Hemingway’s admiration of the largeand slow-moving. With only one third of its

8.5-million-square-kilometre landmass geologically mapped,Brazil is literally an emerging country, with vast parts of itsterritory shadowed by the Amazon rainforest. On one hand,nobody doubts the country’s huge geological potential coulddouble or even triple its current production. But on the other,Brazil moves at its own pace, mired in bureaucracy, with redtape often hindering exploration and development projects.For the exploration companies that sit on the tip of the ice-berg, the country certainly offers a great lesson in patience.

“I can understand why Peru, Ecuador and Argentina havemore companies and higher budgets in exploration than[what] Brazil has,” says Marcelo Schwarz, country managerfor Brazil at INV Metals. “But when I talk with friends whowork in these countries, we always agree that Brazil hasmore geological potential.”

Schwarz’s feelings are common in exploration compa-nies. Everyone agrees that Brazil is lagging behind. In fact,

“The dignity of movement of an iceberg is due to only

one-eighth of it being above water.” - Ernest Hemingway

On the tip of the icebergBrazil is demanding on explorers, but potential rewards are huge

By Antoine Dion-Ortega

Cour

tesy

of M

arce

lo S

chw

arz

SPECIA

L REPORT


began developing thekimberlite.”

It was while workingon the kimberlite dia-mond project that one ofCancana’s geologists cameacross some manganese,to which Cancana hasnow transitioned. “On thekimberlite project, the ini-tial knowledge came fromgarimpeiros, but on themanganese project, itcame from farmers, whoidentified the resource ontheir property,” Male says.

CPRM was of no helpto Cancana, according toMale. “The area where we

are is still not mapped at all,” he says. “It is even difficult tofind a road map for some areas.” He has noticed that manylandowners in Brazil know exactly what they have on theirproperty but often do not have the means to actually launchexploration projects. “There’s not a lot of exploration capitalin Brazil for internal development,” Male explains. As localsare often unable to gather enough capital, rumours aboutresources usually spread around until they reach the ears ofa public exploration company able to raise money on thecapital and financial market. “As an example, I just receivedan email from a guy who found us on the Internet, saying‘I’ve got gold and diamond properties, are you interested?’”says Male, who will review the information and possiblysend a geologist to check out the claims.

Networking – getting to know the people who will leadyou to the right spots – is of great importance for explorers.This worked to the advantage of Eagle Star Minerals, whichowns three properties in Brazil. The company began bylooking for iron ore but later switched to phosphate after itwas approached by a group of Brazilian geologists who hadbeen working on the mineral for decades. “They had a the-ory on how to find phosphate in Brazil,” says Patrick Bran-dreth, the company’s senior manager. “We took a bit of arisk, but it seems like it has paid off.”

No high-tech maps were needed for Eagle Star, either.“[Our success] is basically the team that we built around ourcompany, with our Bomfim project,” Brandreth says. “Webrought a gentleman by the name of Doctor Campos onboard, who has been working in the field for over 15 years.We used our contacts down in Brazil to source the best peo-ple. That is how we managed to acquire the local knowl-edge, and that is what our whole exploration team is now:solely Brazilian.”

And local content is key to any team, as it is not easy foran outsider to come down to Brazil and simply begin work-ing. “You really need to build up your network, know theright people, and walk in the same circles as the Brazilians,”suggests Brandreth. CIM

Peru invested twice asmuch in geological sur-veys as Brazil in 2009,with a territory seventimes smaller. “Peru has amuch better geologicaldatabase,” points out RickBrown, vice-president ofbusiness development atAmarillo Gold. His com-pany works exclusively inBrazil, attempting todefine gold resources. “InAustralia or in Canada,the provincial geologicalsurveys are getting downto 1:25,000 [scale]. Thereis nothing like that at all inBrazil today.”

This does not mean that CPRM’s services are of absolutelyno use. In fact, they helped in the discovery of INV’s Itaporãgold project, in Pará state. “INV got some of the geophysicalairborne surveys from CPRM, and then got the claims,” saysSchwarz.

The less you rely on maps, the more you rely on peopleStill, blind discoveries are quite rare in Brazil, according

to Brown, who is unfamiliar with INV’s Itaporã. “Generallyspeaking, Brazil has not arrived at the stage where compa-nies make blind gold discoveries based on high-tech explo-ration,” he explains. In his experience, projects are bestdiscovered using previous signs of mineralization.

Where exploration companies cannot rely on geologicalmaps, they rely on people – starting with the garimpeiros, orartisanal miners. This was obvious in Amarillo’s case. Both ofits flagship properties were previous mining areas from as farback as colonial times. The Mara Rosa project, where thePosse gold deposit was found, was partly mined by the Por-tuguese before being rediscovered by BHP in 1982. Amarilloacquired it in 2003. Its other property, the Lavras do Sulproject, is located in the mining region of Rio Grande do Sul,in what Brown calls “the biggest garimpo [artisanal mining]area south of the tropic of Capricorn.” In Brazil, historymight be your best ally.

“Every single gold deposit I can think of in Brazil hasbeen found where there was an old garimpo,” adds Brown.“When you think of all the juniors out there, they all weregarimpos at one stage. The trick has been to find which onesto spend your money on. There are probably 5,000 garimposin Brazil.”

Cancana Resources followed a similar trend with itsValdirao manganese project, in the state of Rondonia. “Weoriginally identified diamond showings that were presentedto us by locals who have been doing artisanal working,” saysAndrew Male, CEO and director of Cancana. “They saidthey knew where the kimberlite was, and we took the riskof proceeding with an exploration program and in turn

Cour

tesy

of M

arce

lo S

chw

arz

Vale conducting explorationdrilling in Brazil

SPECIA

L REPORT


Strategic mineralsThe Brazilian government currently identifies potash and

other fertilizer minerals as strategic. Brazil is a huge producer ofagricultural goods, but it is heavily dependent on potashimports. Special rules for fertilizer minerals will likely seek to

incentivize investment in those minerals’exploration and production. Goodopportunities should present them-selves in these areas in the near futureand the creation of special rules forstrategic minerals is something thatshould not be of great concern for min-ers. But the devil is in the details, and wecurrently do not know exactly what thegovernment will propose on this front.

Royalties Due to a policy of incentivizing

exports implemented in the late1990s, the producing states have

very little room to tax mineral enterprises and are dissatis-fied with current legislation. What they mostly get are roy-alties and those are low when compared to other countries.Nonetheless, the overall tax burden on mining (e.g. local,state, federal taxes) is very high. Very little has beendivulged on how the government intends to deal with roy-alties, but I expect there will be an increase to please theproducing states. This increase will likely be offset by thereduction of other taxes, however, so investors should notexpect an increase in overall taxation of mineral enterprises.

A major concern is the transition from the old law to thenew one. What will happen to existing claims and explo-ration licence? Will they be able to carry on? Will producingmines retain mining rights until the depletion of theirdeposits, or will set periods of time be imposed? These andmany other important questions are creating uncertaintyand there has not been any clear indication from the gov-ernment as to what the answers will be.

To add to this concern, there has been a significant reduc-tion in the granting of mineral rights for both exploration andmining. This reduction has occurred gradually for more thana year, and a drop in the number of exploration licencesgranted, may, in the long run, hinder the knowledge of Brazil’smineral endowment. A reduction in the number of miningconcessions may not only affect Brazilian mineral productionbut also significantly increase so-called political risk.

The Brazilian government has been signalling for yearsnow that it will propose significant changes to Brazil-ian mining and royalty legislations. Recent state-

ments from the government indicate the proposal is in itsfinal stages of preparation and should be submitted toCongress soon.

This regulatory framework hasbeen eagerly awaited by the miningsector, but its text has not yet beendisclosed and openly discussed.Nonetheless, from what governmentofficials have said publicly, I believethere will be four major areas ofchange: (i) the system for staking newground for exploration; (ii) establish-ment of fixed mine lives; (iii) creationof special rules for strategic minerals;and (iv) a likely increase in royalties.

Staking of new exploration ground The government appears to want to move from a first-

come, first-served system to a public bidding process togrant exploration and mining titles. This move could havea significant impact on exploration activity, especially forgreenfield areas. Moving from the current system, whereprivate companies have the initiative to stake ground forexploration, to a model where the government is responsi-ble for organizing bidding rounds may significantly reduceinvestment and mineral exploration opportunities, at leastin the short and medium terms. In addition, the govern-ment’s department of mineral production will have to betotally restructured to cope with this duty. The currentagency does not have the financial and human resourcestructures to carry out this mission. Such a change is likelyto take quite some time.

Fixed mine livesUnder the current system, mining concessions are good

for as long as the mine keeps running, but that is likely tochange. Concessions will probably come with an expirydate in the future. As long as the length of time is appropri-ate for each project, and rules for renewal are clear andobjective, there should not be much opposition to this idea.The issue right now is that the government has not beenclear on what the proposed length of time will be, nor thecriteria for renewal. I expect, however, that the proposalwill be balanced and well accepted.

Probable changes to Brazilian mining and royalty legislation

BY CARLOS VILHENA

O P I N I O N

“Unless the decision

to reduce the number

of grants of mineral

rights is reversed,

the Brazilian mining

sector will deteriorate.”

The effects have already begun to be felt. Projects thatare ready to start operations have been unreasonablydelayed by the government’s stance. This delay createsunnecessary uncertainty in the industry, making both thesector and the country less attractive to domestic and for-eign investors.

Unless the decision to reduce the number of grants ofmineral rights is reversed, the Brazilian mining sector willdeteriorate. The reduction in the number of grants of min-eral rights may also be an indication of the level of discre-tion the government intends to exercise within the contextof the new regulatory framework.

One should keep in mind that Brazil’s legislation estab-lishes very clear-cut rules for exercising discretion. Discre-tionary acts must be justified and must be limited by theprinciples of reasonableness and proportionality. Therefore,the government’s reduction in the number of grants of min-eral rights must be subject to consideration as to its reason-ableness and proportionality in view of its impacts on theparties concerned and on the mining sector as a whole.

Hopefully, we will soon have the details of the govern-ment’s proposal. Brazil is a mature democracy and a strongeconomy. I am confident that the country will be able toreform its mining legislation in a sensible and balancedmanner.

Carlos Vilhena is a partner of Pinheiro Neto Advogados in Brasilia,and head of the firm’s mining practice.

CIM

SPEC

IAL

REPO

RT


Bestech on best employer list again

Bestech has been named one of Canada’s 50 best smalland medium employers for 2013. It is the second straightyear the company has received this honour, which is givento top employers with 50 to 399 employees. How employ-ers have “captured the hearts and minds of their employ-ees” is a determining factor for which organizations arenamed the “best” employers. Employees provide feedbackbased on both their workplace and work experience; theinformation is used to measure their level of engagement.The study examines various engagement drivers: manag-ing performance, career opportunities, recognition, organi-zational reputation, pay and senior leadership. “We are soproud to be recognized again on the list of 50 Best Small& Medium Employers in Canada,” said Denis Pitre, co-CEOof Bestech. “One of our priorities at Bestech is highemployee engagement. The result of this survey is evi-dence that our employees are aligned with the company’sobjectives. We realize that our employees are the founda-tion of Bestech ’s success and therefore, it is important toimplement practices that will encourage them to be com-mitted to our team.”

ACHIEVEMENT

SPECIA

L REPORT


in Brazil: “Brazil has a large local industry that supplies over90 per cent of its internal demand for mining equipmentand services. It’s a very competitive market, and the Brazil-ian government tries to protect this local industry byimposing high taxation on imported equipment, especiallyequipment that is also manufactured locally.” In fact, Brazilnow has as many mining suppliers as Canada, and thenumber of Brazilian suppliers – up 25 per cent in the lasttwo years – is growing fast.

The Brazilian government protects the local industrywell, says Pinto. “Taxation ends up being around 50 to 70per cent of the product price [cost, insurance, freight].With this level of taxation, many products from overseascannot be competitive against similar products manufac-tured in Brazil.”

Some countries, including the U.S., Germany, France,Italy and China, have established local manufacturing facil-ities within Brazil as a way around the taxation problem.Canadian companies have yet to make much headway inthis regard, aside from a few exceptions like Metso. “Cana-dian suppliers of equipment also tend to be small- to-medium-sized companies and not able to invest hugeamounts to have a facility there,” says Brandenberger.

But there is good news. Importers can claim a taxreduction – down to zero per cent duty – if the productthey are importing cannot be sourced from the localindustry. “Before they import,” explains Pinto, “they haveto file a claim with the government, and say: ‘I plan toimport this machine, but it’s not manufactured in Brazil,and there’s no conflict with Brazilian companies, so wewould like to have a tax reduction.’” Marcotte is thus able

With vast mineral reserves, aneducated workforce, improved infra-structure and a recent increase inprivatization, international interestin Brazil’s mining industry is high.More mineral-rich areas are openingup, attracting investors and suppli-ers from around the world. Cur-rently, there are 45 Canadian miningequipment suppliers and 20 servicesuppliers working in the country.

“Brazil is a big market with a lotof opportunities,” says GeraldoPinto, international business devel-opment manager at Marcotte MiningMachinery Services. “The economyin Brazil is very stable. For eightyears now, with the last president,Lula da Silva, and more recentlyPresident Dilma Rousseff, the country has been doing verywell.” Although Pinto says Marcotte is more focused onMexico, Brazil’s underground mines could mean big busi-ness for his company that manufactures and suppliesunderground utility vehicles.

Over the last decade, Brazil has gone from a strugglingto a thriving economy, and is now considered a market ofstrategic importance for investors. Its economy is rankedseventh globally, with a GDP of US$2.4 trillion. Mining andmineral processing account for an increasing portion of itseconomy; they brought in US$39 billion in 2010.

Taxes make it toughBut challenges remain for foreign suppliers, not the least

of which is high tax rates. “Honestly, Brazil is not the pathof least resistance,” says Jean-Phillip Bouchard, miningaccount manager at ISAAC Instruments. “It can be a chal-lenging market, but it is a considerable mining market, andone that definitely requires attention.” ISAAC Instrumentsproduces vehicle telemetry solutions for both open-pit andunderground mining vehicles.

The company, says Bouchard, is not drawn to the Brazil-ian market in particular, but its burgeoning potentialmakes it a strategic target. “Our objective is to be in the top500 mining companies as far as what we offer, and a largenumber of our prospective customers are in Brazil,” henotes. “North and South America are the main focus for usright now.”

The enthusiasm of Canadian business ventures is offsetby the Brazilian government’s protection of local industry,explains Franz Brandenberger, Canada’s trade commissioner

Tip-toeing around taxesCanadian suppliers must deliver unique products to access the Brazilian market

By Correy Baldwin

Cour

tesy

of M

arco

tte

Min

ing

Mac

hine

ry In

c.

Marcotte Mining Machinery Services Inc. is ableto export its equipment to Brazil free of dutybecause it has no competitors in the country.

drilling head, designed for drilling large-diameter boreholesunderground. After finding a customer in Brazil, MachinesRoger is now looking to expand its presence in this market.

With this in mind, last June, Machines Roger hosted aBrazilian mission in Val d’Or, Quebec, through 48e NordInternational, an organization which promotes foreigntrade in the Abitibi-Témisquamingue region of theprovince. “It was a good experience,” says Perron. “Therewere some large companies there, and they gave us a goodperspective. It’s a special place to do business, and theywere helpful in suggesting means of participating in theirmarket differently. Generally we’re seeking visibility for ourproduct, but it’s also important to understand the dynamicsof every country that we need to do business in.”

48e Nord also works with the Canadian Association ofMining Equipment and Services for Export (CAMESE) thatorganizes and participates in export trade missions underthe Canadian banner, often once a month, including theorganization of Canadian pavilions.

“CAMESE is in charge of recruiting companies all overCanada, and paying for their participation,” says Branden-berger, who works closely with the organization. “InBrazil, we, as the Canadian government, promote tradeshows and organize parallel events to them, such as sitevisits. We organize matchmakings and meetings, and gen-erally bring opportunities to the companies joining us fora trade show. We try to increase and to enhance the Cana-dian participation.”

Brazil’s large trade show – the biannual Exposibram –will be held this coming September. The last time it washeld, in 2011, Canada had 25 exhibitors. This year, how-ever, the Canadian presence will be much smaller. Schedul-ing changes at Exposibram made it impossible for CAMESEto organize a pavilion, says Roy Jakola, the organization’sdirector of business development. Several Canadian com-panies will be attending independently, but Jakola admitsinterest is down: “The Brazilian market is of lesser impor-tance to our members. The only true client seems to beVale, which tends to draw suppliers to Brazil.”

For his part, Brandenberger remains optimistic thatCanada’s role in Brazil will only increase, and likely in newareas. “I expect to see growth in the near future in explo-ration,” he says. “Brazil is a priority market for exploration,with a lot of opportunities, especially for junior companies.”

He also sees potential growth in the environmental sectorand in engineering services. “The majority of mines in Brazilare open-pit,” Brandenburger points out. “There are over2,000 open-pit mines and only around 200 underground,which means there is a lack of technology and expertise inunderground mining.” Canada, on the other hand, hasplenty of experience underground, which will be increas-ingly in demand as more underground mines open in Brazil.

Brandenberger advocates for a commercial bilateralagreement between the two countries, pointing to the cur-rent agreement between Canada and Chile as an example.Such an agreement, he says, would help give Canadians theboost they need. CIM

to sell its vehicles in Brazil without paying any duty. “Wehave no local competition,” says Pinto. “Our main com-petitors are here, in Canada.”

Taxes may be high, says Pinto, “but on the other hand,Brazil is very welcoming to new technologies and newproducts that don’t compete against Brazilian products.”This means that international companies must provide aproduct that is innovative, specialized or superior in quality.Most sales of Canadian mining equipment are for specificniche markets.

Brandenberger cites exploratory drill rigs as an exampleof a Canadian product in demand: “Canadian drill rigs aremuch more expensive than the local ones, but they arestate-of-the-art equipment and very reliable.”

Local connections crucial“Brazil is a very conservative economy,” says Bouchard.

“You have to either implicate local business or demonstratethat your solution is very unique and cannot be foundlocally. This way, you can fit into grey areas of their taxationso you don’t end up suffering from it.” Bouchard also men-tions the possibility of working alongside Brazilian compa-nies – striving to complement, rather than compete with,each other.

Local expertise will keep Canadian companies on theirtoes. “No doubt the quality of what the Brazilians produceis as good as what we can produce in Canada,” points outBouchard. “They have very knowledgeable, educated peo-ple. It’s still a developing country in some ways, but tech-nologically it’s very advanced.”

Finding a local dealer and connecting with local contrac-tors is important for Canadians looking to access the mar-ket, says Pinto. “It’s important for Brazilians that they worklocally [to source] service and parts.” Local connections alsohelp break down cultural barriers. “They’re more comfort-able when you make a presentation in Brazil as a Brazilian,”says Pinto, who is Brazilian himself. “And they know thatwhen they have any issues, our dealer is right there, theycan call them right away. Otherwise they can call me, andspeak Portuguese. We don’t have any misunderstandingsabout what they need.”

The success of suppliers from Canada may often rely onthis level of cultural awareness. Pinto can speak five lan-guages – English, Portuguese, Spanish, Italian and French –and is working on Russian and Japanese. ISAAC Instru-ments’ Bouchard has recently learned Portuguese as well.

Still, the best way to kick-start business is to get businessplayers together. Trade shows and trade missions are animportant part of this networking, creating opportunitiesfor companies to connect with Brazilian clients. This isespecially true of missions held in Brazil.

“We’re looking for face time with the end-user,” saysRoger Perron, business development manager, MachinesRoger International. “We need to get out to Brazil and visitthe mines, and understand what their needs are and howour product can fit in with their requirements.” MachinesRoger manufactures and exports the specialized V-30

SPEC

IAL

REPO

RT


SPECIA

L REPORT


ners decided to sell their 660,000-ounce gold resource toLuna in 2007 due to the low gold price and limited acces-sibility of Aurizona at the time. Luna quickly increasedthe resource by about 50 per cent, but, just as the com-pany was gathering a construction team, the 2008 finan-cial crisis hit.

Unable to finance development on its own, Lunabrought in a trio of angel investors who led an equityfinancing that injected $25 million into the company forthe project. Vancouver-based Sandstorm Gold also con-tributed $20 million in cash and shares in exchange forthe right to buy 17 per cent of the life of mine gold pro-duction for US$400 per ounce.

But the influx of cash was not enough. “The buildwent poorly and there were a number of problems withmanagement and the skills needed to build a propermine,” says Lo. At the time, the company had not hiredan EPCM consultant, and instead relied on a patchwork

“We spent our last few dollars on fuel in June2011,” says Duane Lo, CFO of Luna Gold.“But within three months we went from

barely surviving and not being able to meet our payroll, tomeeting our feasibility production target of 5,000 ouncesof gold per month.”

The open pit mine is a shear-hosted orogenic golddeposit consisting of saprolitic, lateritic and low-sulphidefresh rock ores. This year, it is expected to produce at least95,000 ounces at cash costs of about $710 per ounce – abig step up from 42,000 ounces at cash costs of more than$1,000 each two years ago. Once Luna completes itsPhase 1 expansion currently underway, annual gold pro-duction is expected to reach 125,000 ounces, with neweconomies of scale keeping costs in check for this yearand beyond.

Aurizona has come a long way since its days as a jointventure between Eldorado Gold and Brascan. The part-

From broke to boomingAt a time when gold project disappointments frequent the headlines, it is refreshing to encounter

an operation that has bucked the trend. Flirting with bankruptcy as recently as 2011, the Aurizona gold mine,

owned by Luna Gold, in northeastern Brazil, produced over 74,000 ounces of gold in 2012 and is now

generating a net income of about $3.5 million per quarter while in full expansion mode.

BY VIRGINIA HEFFERNAN

Cour

tesy

of L

una

Gold

The build for the Aurizonamine went very poorly, butthe company revamped its

financial and operationalmanagement and turned the

project into a success.

jumped 79 per cent to 720,000 ounces. Surface explorationhas identified another 15 targets near to Aurizona.

“Towards the end of the first quarter, we’ll be updatingour resources and reserves and with that, considering ourprevious conversion rate from Measured and IndicatedResources into reserves, we could be looking at a 20-yearmine life on Piaba alone,” says Mah, adding that Luna hasapplied for a mining licence on Tatajuba and is working onresource estimates for other nearby targets on the 15,500-hectare land package. “There’s a really good brownfieldopportunity here that we’ll leverage into Phase 2,” hepoints out.

By doubling the capacity of the gravity and carbon-in-leach (CIL) processing plant to 10,000 tonnes per day at acost of $50 million, Phase 1 will increase Aurizona’s annualgold production to 125,000 ounces. The expansion is fundedby a combination of internal cash flow and Sandstorm’s contribution – up to a maximum of $10 million.

As part of the expansion, Luna will add downstreamplant throughput capacity by replacing the existing thick-eners and by installing additional CIL tanks, elution andacid columns, an intense leach reactor, and a crusher andwet screen in front of the SAG mill. Because of the deposit’s

Photos opposite page: 1. An operator adjusts equipment at Auri-zona; 2. Some of the employees at Aurizona were top graduates ofCaterpillar's mobile training program; 3. A Caterpillar 374 excavatorloads one of Luna Gold’s 12 740B articulated dump trucks; 4. JimHealy, general manager of the Aurizona mine, reviews the pit; 5. TheLuna Greenfields property encompases 220,000 hectares and over100 historical gold workings.

Courtesy of Luna Gold

of management, execution and equipment and servicessuppliers to build the mine. “In early 2010, we discoveredthat the build was not on spec or on budget, and the com-pany was on the road to bankruptcy again,” he adds.

180 degreesSo how did Luna turn such a broken endeavour into a

gold mining success story when soaring capital and operatingcosts are crippling so many other projects? Vice-president ofoperations Peter Mah attributes the turnaround toimproved operational management, a motivated workforce,and a striving towards best practices in mill recovery, oper-ating time, throughput and grade control.

In mid-2010, the company brought in an experiencedCanadian EPCM company and recruited John Blake aspresident and CEO. John then hired Mah and general man-ager Jim Healy in early 2011 to overhaul the mine site man-agement. Most importantly, contract mining was replacedby an owner-operated set-up. That allowed a reduction incash costs to $651 per ounce by the fourth quarter of 2012.A fully owned and operated fleet consisting of 12 Caterpil-lar 740B articulated dump trucks and three Cat 374 exca-vators replaced a mash-up of heavy equipment operated bythree separate contractors.

“It was a complex combination of doing it all at once or,as we liked to call it, ‘fixing the car as it was moving downthe highway at a hundred kilometres per hour,’” says Mah,who gives credit to the wizardry of Healy and their newdeputy general manager, Alberto Reyes. “We becameowner-operated and took our workers from the local work-force, trained them, had them fully certified, and shatteredthe contractors’ production records, while reducing safetyincidents by more than half.”

Over 720 of the 900-plus workers live within 40 kilo-metres of the mine in the state of Maranhão, with theremainder coming from other parts of Brazil. When Lunabrought in Caterpillar’s representative in northeastern Brazilto train its staff, he was initially skeptical that the lag in edu-cation was too large to be made up. But despite first impres-sions, some of Luna’s employees were among the topgraduates of Cat’s mobile training program. Luna comple-ments the Cat training with on-site education. The com-pany also supports its workers with programs in literacy,furthering their basic education and promoting local cul-ture and dance.

“The average education level is grade four and the stateis the second poorest in all of Brazil, so there was big hill toclimb,” says Mah. “But the schooling level is not a measureof the intelligence and capability of the people in the area.”

Putting bad luck out of the pictureConcurrent success with exploration on the project’s two

main deposits, Piaba and Tatajuba, gave Luna the confi-dence to launch Phase 1 of its expansion and to examinethe feasibility of a Phase 2 expansion of up to 250,000ounces per year. A 44,000-metre drill program in 2011boosted Measured and Indicated gold Resources by 250 percent to 3.2 million ounces of gold, while Inferred Resources

SPEC

IAL

REPO

RT


PROJECT SPECS

MINERAL RESERVESMeasured: 10,782 kt Grade: 1.13 g/t Oz of gold: 391,000

Indicated: 67,231 kt Grade: 1.28 g/t Oz of gold: 2,775,000

PLANTTarget throughput: 4,300 t/d

Leaching: Carbon-in-leach

Plant operating cost: US$12.14/t

Mine operating cost: US$3.38/t

The Caterpillar 740B articulated dump trucks each haul twice the capacityof the company's original vehicles.

Cour

tesy

of L

una

Gold

SPECIA

L REPORT


1 2

3

54

conventional metallurgy and moderateoverburden (the strip ratio is about 5:1),Mah is not anticipating any major technicaldifficulties as throughput expands.

Water management at the site, on theother hand, can be a challenge. “There isthe very dry season (July to December) andthe very wet season (January to May), withalmost nothing in between,” explains Mah.The mine plan, a hold-over from olderdays, was approved by regulators andtherefore never replaced. “That [seasonal]factor was not built into the mine plan interms of water management and tailingsstorage.”

Recent conditions have been drier thanusual, and the company has occasionallyhad to curtail production to conserve water.To mitigate the problem and provide addedwater storage, Luna increased the height ofthe tailings dam to 27 metres and is design-ing successive raises and facilities as pro-duction increases.

As for the future beyond Phase 2, sixdeep holes were drilled at Piaba in 2012,extending mineralization as deep as 600metres. This has Luna wondering what liesbeneath and whether an undergroundmine could lurk below the pit. The explo-ration potential on Luna’s concessions sur-rounding Aurizona is promising. The220,000-hectare Luna Greenfields propertycontains more than 100 historical goldworkings and the geology compares wellwith the gold belts of West Africa and therest of the Guyana Shield.

Positive results from initial drilling onthe Touro target (including 26 metres grad-ing 1.26 grams of gold per tonne) haveencouraged Luna to commit a modest $3million to continue exploring the area inthe first half of 2013. The budget couldincrease if eight million warrants, at a strikeprice of $3.50, are exercised later this year.

“We believe there are another two,three or perhaps more Piaba-style depositsin the Luna Greenfields, but due to ourcash constraints this year, we can’t drill itout at the rate that we would like to,” saysMark Halpin, vice-president of corporatedevelopment. “If the warrants come in,we’ll bank about $28 million and some ofthat could be proportioned to LunaGreenfields.” CIM

SPEC

IAL

REPO

RT


The $27-million trade offThe streaming agreement between Luna Gold and Sandstorm Goldis one of those transactions that looks like a good idea at the timebut becomes increasingly onerous as mine reserves and productiongrow. It could serve as a cautionary tale in these anxious times,when securing more traditional sources of financing – even forgood projects – is challenging.

When the streaming deal was signed in March 2009, to allow Lunato pay for construction, Aurizona had 909,000 ounces of Measuredand Indicated Resources. That figure now stands at 3.2 millionounces, its share of which Sandstorm has the right to buy for $400per ounce. And the resource base is growing.

As a result of its obligation to Sandstorm, Luna receives a weightedaverage price of only $1,479 per ounce of gold if the spot price ofgold is $1,700 per ounce. At a rate of production of 125,000 ouncesper year, that is a $27.6-million annual hit to cash generation thatcurrent Luna management could do without.

But Brazil’s Maranhão state has inadvertently come to Luna’s rescuewith a tax break aimed at increasing income and employment forthe state and its residents, which somewhat offsets the loss fromthe gold stream. As of 2012, Aurizona is eligible for a reduction incorporate taxes – from 34 per cent to 15 per cent – for the first 10years of production. That amounts to an extra $70 per ounce – orroughly $7 million – that goes into Luna’s earnings each year.

If Luna goes underground at Aurizona, Sandstorm will be able tobuy 17 per cent of that production for US$500 per ounce. But ifLuna finds any new resources in the promising greenfield conces-sions around the mine, the junior will be able to keep those ouncesto itself. Assuming Aurizona continues to provide a healthy flow ofprofits, it is a safe bet Luna will not be signing away any more rightsto future production.

Cour

tesy

of L

una

Gold

Sandstorm Gold signed a streaming agreement for 17 per cent of Aurizona'sproduction at $400 per ounce.


CIM communityE v e n t s

Reinventing the millIndustry examines how to adapt to the future at CMP 2013

By Dinah Zeldin

Alternative comminution technologies,improved process control, and appliedgeometallurgy were central to discussions atthe 45th Annual Canadian Mineral Proces-sors Conference. The event, held from Jan-uary 22 to 24 at the Westin Hotel in Ottawa,featured 34 presentations and attracted over650 attendees.

With more variable and lower grade oresfeeding processing facilities, today’s plantsmust not only grind minerals finer than ever– to particles 74 microns and less – butmust also optimize plants to process a rangeof grades and mineral compositions. Thiswas the catalyst for dialogue at the confer-ence’s round table discussion, “Regrindingbelow 100 microns. What we know. Whatwe don’t know. What we need to know,” moderated by DonaldLeroux, principal consultant for Triple Point Technology.

Liberating valuable minerals from finely disseminated orebodies requires rocks to be pulverized into ultrafine sizes,according to Leroux. This means grinding technology mustadapt. “Generally speaking, ball mills are efficient for down toabout 74 microns but rapidly lose efficiency when grinding tofiner sizes,” he explains. “There are alternative technologieslike the tower mill, the ISA mill and the stirred mill, availableon the market, that make better use of energy, but there are stillchallenges.” Among the challenges is maintaining separabilityof valuable minerals, as particle sizes are reduced.

The panel discussion, which drew over 200 attendees, fea-tured six participants: Mike Larson, senior metallurgist atXstrata Technology; David Rahal, product manager of finegrinding at FLSmidth; Louis Steyn, product manager of grind-ing, Outotec; Michel Brissette, account executive at SGS-Lake-field; Jan Nesset, consultant at Nessetech; and PeterRadziszewski, expert on grinding at Metso. According to Ler-oux, the audience was engaged, focusing questions on how toselect and operate appropriate equipment, as well as on howto make ball mills grind finer.

Philip Thwaites of Xstrata Process Support addressed theimportance of automated process control in his plenary pres-entation, “Manual Control, Process Automation – Or Opera-tional Performance Excellence? What Is The Difference?” Hemade the case that automating systems is essential for boostingplant efficiency and for reducing operating costs.

The technical program also included a session on geomet-allurgy for the first time ever. Erin Legault, the 2013 confer-ence chair, explained that the inclusion was well-warranted.“The field is of increasing concern to processors be cause the

AWARD WINNERSMINERAL PROCESSOR OF THE YEAR: Denis Cimon

RAY MACDONALD VOLUNTEER: Richard Robillard

BILL MOORE SPECIAL ACHIEVEMENT: Brent Hilscher

LIFETIME ACHIEVEMENT: Ernie Marcotte

BEST TECHNICAL PRESENTATION OF 2012: Robert J. Visintainer

SCHOLARSHIP WINNERSANDRÉ LAPLANTE MEMORIAL

SCHOLARSHIP: Cooper Meadows (University of Saskatchewan)

BYRON KNELSON MEMORIAL SCHOLARSHIP: Adrian Bill (McGill University)

Visit “CIM – Canadian Institute of Mining, Metallurgy and Petroleum” on Facebook for actionshots of the hockey game

protocol can help establish how lowergrade or difficult ores can be processedmost efficiently,” he says.

Student attendees – 32 of which weresponsored by CMP – also contributed tothe discussion. In his CMP Essay Compe-tition, winning presenter Syed Saad Ali ofMcGill University demonstrated how thesurface energy of particles is related totheir response to flotation.

The conference was also an opportu-nity to showcase some of the hard-working people in the processing world.Denis Cimon, vice-president of technicalservices at Osisko, was recognized as Min-eral Processor of the Year. Cimon wasmanager of the Canadian Malartic opera-

tion before becoming a key member of Osisko’s head office inMontreal. He was honoured for surmounting both technicaland social challenges to make each project he has touched asuccess.

“As manager at Malartic, I had to prove the project wastechnically and socially feasible,” he explains. “It was difficultfrom a processing standpoint because we were dealing with atype of rock that is very resistant to breakage, so the wear rateon equipment was very high. On top of that, it is a hugeopen-pit mine very close to a community, so getting sociallicence to go ahead was a challenge.”

This year’s event also featured five short courses thatattracted 150 participants. “We went from three to five coursesbecause we wanted to offer more variety,” says Leroux, a past-chair of CMP. Topics included grinding, chemistry, processcontrol and metal accounting. CIM

Cour

tesy

of O

sisk

o

Denis Cimon at the Canadian Malartic mine


CIM communityS c h o l a r s h i pW i n n e r s

Jennifer Taylor – Queen’sUniversity

For Jennifer Taylor, the roadto mining started early. “As achild, I was eager to learn howthings worked, how they weremade and where they camefrom,” she says. The manyfamily road trips of her child-hood were formative experi-ences, sparking an interest ingeological formations all over

North America – places thefamily gave affectionate names, she says, “like Fossil Beach, theBrickworks and the Old Quarry.”

Later in life, Taylor discovered the importance of corporatesocial responsibility. While interning with the Prospectors andDevelopers Association of Canada’s Mining Matters AboriginalOutreach program last summer, she worked with communitymembers across northern Ontario, arranging mine site toursfor participants and undertaking other social engagement ini-tiatives. “It gave me an understanding of not only the technicalside of the mining industry, but also of the importance ofbuilding strong relationships between the mining companyand surrounding communities,” she explains.

According to Taylor, mining engineers play a vital role inthis relationship: “The needs of local communities areextremely important to mining engineers. The technical aspectis just one aspect of the profession. Engineering constitutes awide range of skills and disciplines, and public relations is anintegral part of that. This is a large part of what drew me to

mining engineering. It is such abroad profession.”

Caitlyn McKinley – Queen’sUniversity

Caitlyn McKinley likes tobe put to the test. “I work bestwhen faced with a challenge,”she says, “so I’m looking for-ward to the problem-solvingand the technical challengesI will face in helping designand operate mines.”

“I want to have a careerpath that remains challeng-

ing, rewarding and interesting,” McKinley explains. Miningengineering has answered that call, offering her “the challenge

Every year, Cameco awards an array of scholarships tothe brightest and the most dedicated mining engineeringand geology students in Canada. The uranium giant devel-oped its scholarship program to create opportunities “forbright young people” and to encourage them to pursue acareer in engineering, with a focus on the disciplines of min-ing, mineral processing and nuclear energy.

The 2013 Mining and Mineral Process Engineering Schol-arship was awarded to three second-year students whoreceived $5,000 and consideration for a summer employmentterm with the company.

CIM Magazine spoke to this year’s recipients about theircareer goals and about what makes them so passionate about

mining.

Everett Piper – University ofBritish Columbia

Everett Piper is ambitious.Enrolled in just his second yearat university, he has alreadyworked at a gold mine and hasstarted a family business. “I havealways seen a future for myselfin the industry,” says Piper, whogrew up in the northern B.C.community of Dawson Creek.

A couple of years ago, heteamed up with his older brother

to found Sterling Operations, an environmental consultingcompany his brother now runs on his own. “Much of my timewas spent collaborating with landowners and oil companies,developing plans that suited both parties,” Piper explains,adding that his ability to collaborate with these industriescame naturally, as he drew from experiences gained in hishometown. “Growing up in Dawson Creek gave me theopportunity to understand how the different operations –agriculture and the energy industry – can co-exist.”

Prior to Sterling, Piper worked at Ruby Gold, a small open-pit mine in northern B.C. “The allure of handling gold can getanyone interested in the industry,” he says. During his stint atRuby Gold, an enthusiastic mining engineer piqued his interestin the profession. The operation’s small size also allowed him towork in a number of areas and, since then, he has been hooked.

Piper is now looking forward to summer employment,where he hopes to gain “real practical knowledge” of miningengineering. “I’d like to continue to play a role in the develop-ment and advancement of industry,” he says. “And I’d like todo it responsibly and sustainably.”

On the path to successCameco scholarship winners speak on achievements and goals

by Correy Baldwin

Strong leadership has a direct impacton a company’s bottom line: with it anoperation has the clarity of vision andthe direction to meets its goals. In thelast 10 years, leadership developmenthas become an increasingly importantcomponent of business schools’ curric-ula, with Bloomberg Businessweekranking the “Top Schools for Leadershipin 2012.”

For the mining industry, a similarattention to leadership development iscritical for strengthening the sector overthe long term. That is why I, along witha group of industry leaders, signed up forthe first cohort of Leading in Mining, theCIM leadership development program,last February.

The program, which was developedby Rosie Steeves, president of Vancouver-

based Executive Works; and ChuckEdwards, past-president of CIM, dis-solved the myth that “leaders are born,not made.” I realized that the best lead-ers work at it and see the developmentof leadership skills as a lifelong process.The 12-month program showed me thatwe can all develop our leadership skills,but it is not done in a one-day course; ittakes time and is an ongoing process.And the starting point is self-awareness.

This awareness came from an activitycalled a “360 evaluation,” whichenabled me to align my internal view ofmyself as a leader with the views of mycolleagues and peers. The process con-sisted of collecting anonymous, openfeedback from supervisors, colleagues,staff and peers, and comparing it to myperceptions. This was challenging butinvaluable in helping me identify mystrengths and the areas I want todevelop.

In order to prepare for the course,participants had to complete a “Leader-ship Development Profile” – a question-naire designed to identify eachparticipant’s leadership style, strengthsand weaknesses. We were asked toshare our test results openly, and as weall came from different companies, wewere able to be honest and supportivewithout the barriers that can sometimesoccur during in-house training. Myleadership development profile revealedthat I am an “achiever” type, one who isfocused on end-goals and prides herself

on delivery. My challenge was to slowdown and look for opportunities to helpothers achieve their goals through posi-tive influence.

Our group built a lot of trust throughthese activities, which was important aswe continued to learn more about howwe deal with conflict, how our col-leagues and peers view us and about ourability to accurately interpret the worldaround us. We were encouraged to dis-cover the characteristics of leadershipthat we value personally and to sharethose in a group setting.

Ultimately, the program gave me thetools to develop as a leader in a way thatis aligned with my values. I am now bet-ter equipped to support my organization,colleagues and peers, and to encourageeveryone to consider the impact that lead-ership could have in our industry. CIM

A wise investmentHow the CIM leadership development program provides tools to grow

by Alana Kennedy

Alana Kennedy is director of marketing andcommunications at the Mining Industry HumanResources Council, responsible for promotingMiHR solutions and products through stakeholdercommunications. Alana was formerly head ofmarketing for a group of accountants in theUK. She is a Chartered Marketer (UK) with morethan 14 years of experience.

The next cohort of the CIM Leadership

Development Program starts May 8 in Toronto. Register by April 26 at

www.cim.org


CIM community

methods and techniques. Still, McKinley confesses, “I’minterested in almost every aspect of mining.”

Her approach to career advancement is to keep all optionsopen. “Having a focused interest can be beneficial, but youcan also miss opportunities. Having broad interests will allowme to gain more skills and experiences,” she says, addingwith confidence, “and in the end, find the perfect career.” CIM

to constantly improve mining methods and techniques, tooptimize profit and safety, along with the unique challengesthat each ore body presents.”

McKinley has been impressed with the mine visits madeas part of her program at Queen’s – to Xstrata’s Kidd mine inTimmins and the Lafarge quarry in Bath. She is specializingin mineral processing and has a growing interest in mining


CIM communityB r a n c h P r o f i l e

Important centre du secteur minier canadien, Montréalhéberge non seulement des sièges sociaux de sociétés minières,mais aussi des institutions universitaires de premier ordre et degrandes institutions financières. La section locale de l’ICM à Mont-réal en est consciente et en profite en s’associant à des organisa-tions financières, politiques et éducatives pour répondre auxbesoins présents et futurs de ses effectifs dynamiques et diversi-fiés. « Certaines personnes s’intéressent non seulement au voletopérationnel de l’exploitation minière, mais aussi au volet finan-cier », au dire de son président sortant, Martin Poirier. « Nous vou-lons englober différents aspects du secteur. »

La section de Montréal a toujours été plus engagée dans levolet opérationnel. « Les conférenciers que nous avons accueilliss’employaient principalement à donner un aperçu des nouveauxprojets d’exploitation et d’extraction minières en cours auCanada », explique Hani Mitri, président de la section. SelonM. Mitri, la majorité des conférenciers invités par la section traitentdes aspects technique et économique des activités et visent àinformer les étudiants et les gens de l’industrie sur les débouchésqui existent au Canada. Mais les dirigeants de la section aime-raient ouvrir des horizons nouveaux. Le défi, et l’objectif pour l’an-née qui vient, est de continuer à fournir aux membres cesoccasions importantes tout en diversifiant les activités afin des’adapter aux nouveaux besoins et aux nouveaux centres d’intérêtde l’industrie, de même qu’aux nouvelles avenues qu’elleemprunte.

« Nous mettons l’accent sur le développement durable, » ditM. Mitri. « Notre conférencier de janvier, Stephen Kibsey, vice-pré-sident conseil, Gestion des risques, Marchés boursiers à la Caisse

Centre of the actionCIM Montreal Branch is always looking ahead

by Correy Baldwin

Au cœur de l’actionLa section locale de l’ICM à Montréal

pense toujours à l’avenir

par Correy Baldwin

From left: Ian Turner, Dany Belanger, Hani Mitri, Lise Chartrand. Missing: Martin Poirier

2013–15 CIM MONTREAL BRANCH EXECUTIVEMEMBRES DE LA DIRECTION DE LA SECTIONLOCALE DE L’ICM À MONTRÉAL 2013-2015

CHAIR | PRÉSIDENT Hani Mitri

VICE-CHAIR | VICE-PRÉSIDENT Dany Belanger

PAST-CHAIR | PRÉSIDENT SORTANT Martin Poirier

TREASURER | TRÉSORIER Ian Turner

SECRETARY | SECRÉTAIRE Lise Chartrand

FINANCE COMMITTEE | COMITÉ DES FINANCESIan Turner, Mac Watson, Frank Kruzich

STUDENT AFFAIRS COMMITTEE | COMITÉ DES AFFAIRES ÉTUDIANTES Ferri Hassani, Richard Simon, René Dufour

PUBLIC RELATIONS COMMITTEE | COMITÉ DES RELATIONSPUBLIQUES Daniel Gagnon, Martin Poirier, Dany Belanger

Cour

tesy

of t

he C

IM M

ontr

eal B

ranc

h

As an important hub for the Canadian mining industry,Montreal is home not only to mining head offices but also toleading academic institutions and large financial firms. TheCIM Montreal Branch recognizes this and takes advantage ofthat fact by engaging with financial, political and educa-tional organizations to address the present and future needsof a diverse and dynamic mining membership. “Some peo-ple are looking to connect not just to the operations aspectof the mining business but to the financial aspect as well,”says past-chair Martin Poirier. “We want to cover differentaspects of the business.”

Traditionally, the branch has been more involved on theoperational side. “The presentations we have hostedfocused on providing a project overview of new mining andexploration projects happening in Canada,” explains HaniMitri, branch chair. According to Mitri, most presentationsset up by the branch address the technical and economicaspects of the operations and are geared to inform studentsand industry about opportunities in Canada. But, branchexecutives are looking to expand the horizons. The chal-lenge – and a goal of the coming year – is to continue pro-viding members with these important opportunities, whilealso diversifying to meet new needs, interests and changingdirections in the industry.

“We are focusing on sustainable development,” saysMitri. “Our January speaker, Stephen Kibsey, vice-presidentof equities and hedge fund risk management at Caisse de

Who

’s w

ho?

|Qui

son

t-ils

?


CIM community

dépôt et placement du Québec, covered sustainability risksin mining in his presentation, “Winds of change: how theinvestor is trying to account for sustainability risks in theresource sector.” Sustainability has become a central preoc-cupation for everyone connected with the industry, saysMitri. “We are working on building an awareness of theimportance of developing sustainable mining projects andaccounting for risks,” he explains. “Today, investors mustlook into the social and environmental impacts of projectsand translate this information into a quantitative riskassessment.”

The branch is also active in promoting and in organizinglocal and international events. This year, branch executivesare heavily involved in both the leadership and organizationof the World Mining Congress (WMC), to be held in Mon-treal this August. Ferri Hassani, a member of the branchexecutive, is chairing the event, and the branch is sponsor-ing student activities. “We are pleased to support students inMontreal by giving them a global networking opportunity,”says Mitri.

Students are a major focus of the CIM Montreal Branch.The branch has close connections to McGill University andÉcole Polytechnique, both of which offer mining engineer-ing co-op programs that are promoted by the branch. Fur-ther, it provided a $5,000 sponsorship to the schools’ teamsparticipating in the Canadian Mining Games, held in Mon-treal this year. Students make up around 200 of the branch’s500 members.

The branch also puts on an annual auction hosted by MacWatson, branch executive member, and his wife Rena. Theauction raises funds for undergraduate student scholarshipsat McGill and École Polytechnique. “This is a very popularevent,” says Mitri. “It is a 40-year-old tradition of the CIMMontreal Branch and generates well over $2,000 each year.”

Last year, the Montreal branch approved the transfer of$100,000 into a securities fund to be managed by the Cana-dian Mining and Metallurgical Foundation (CMMF). Thefunds will be used to generate two scholarships, each worth$1,750, for students in mining engineering and geology pro-grams in Quebec. René Dufour, a Montreal branch executivemember, is a founding member of CMMF, which was incor-porated in 1972.

“The branch’s national initiatives – from our involvementwith WMC to our sponsorship of the Mining Games – aremotivated in part by our mandate to strengthen ties withother CIM branches,” says Ian Turner, branch treasurer.“There is a lot happening in Montreal and it is important forour branch to serve as a bastion for the eastern side. We arewell-situated to foster sharing of knowledge and of otherresources with the Maritimes, which will help build astronger national industry.” CIM

de dépôt et placement du Québec, a parlé des risques de ladurabilité dans l’exploitation minière dans sa présentation“Winds of change: how the investor is trying to account for sus-tainability risks in the resource sector”. » La durabilité est deve-nue une préoccupation primordiale pour tous ceux qui ont unlien avec le secteur, au dire de M. Mitri. « Nous travaillons à sensi-biliser les gens à l’importance de développer des projets miniersdurables et de tenir compte des risques, explique-t-il. Aujour-d’hui, les investisseurs doivent étudier les conséquences socialeset environnementales des projets et produire, à partir de cetteinformation, une évaluation quantitative des risques. »

La section participe aussi activement à la promotion et à l’or-ganisation d’événements locaux et internationaux. Cette année,les dirigeants de la section sont très impliqués dans la directionet l’organisation du Congrès minier mondial, qui aura lieu àMontréal en août. Ferri Hassani, un membre de la direction de lasection, présidera l’événement; et la section commanditera desactivités à l’intention des étudiants. « Nous sommes heureuxd’appuyer les étudiants de Montréal en leur donnant cette occa-sion de faire du réseautage mondial », affirme M. Mitri.

Les étudiants sont une des priorités de la section de Mont-réal de l’ICM. Elle entretient des liens étroits avec l’universitéMcGill et l’École polytechnique, qui offrent toutes deux des pro-grammes de stages en génie minier dont la section fait la pro-motion. Qui plus est, la section commandite à raison de 5 000 $les équipes des établissements d’enseignement qui participentaux Jeux miniers canadiens, qui se tiendront cette année àMontréal. Environ 200 des 500 membres de la section sont desétudiants.

En outre, la section tient annuellement une vente auxenchères, présentée par Mac Watson, membre de la direction dela section, et son épouse, Rena. La vente sert à collecter des fondsqui permettent de créer des bourses d’études de premier cycleà l’université McGill et à l’École polytechnique. « Il s’agit d’un évé-nement très couru, » affirme M. Mitri. « C’est une tradition vieillede 40 ans de la section locale de l’ICM à Montréal où on recueilleplus de 2 000 $ chaque année. »

L’an dernier, la section de Montréal a approuvé le transfert de100 000 $ dans un fonds d’investissement qui sera géré par laFondation canadienne des mines et de la métallurgie (FCMM).L’argent servira à créer deux bourses d’études, d’une valeur de1 750 $ chacune, pour des étudiants en génie minier et en géo-logie du Québec. René Dufour, un membre de la direction de ladivision de Montréal, est un des fondateurs de la FCMM, qui a étéconstituée en 1972.

« Les initiatives nationales de la section, de notre engage-ment dans le Congrès mondial minier à notre commandite desJeux miniers, sont motivées en partie par notre mandat, quiconsiste à renforcer les liens qui nous unissent aux autres consti-tuants de l’ICM », explique Ian Turner, trésorier de la section. « Ilse passe beaucoup de choses à Montréal et il est important quenotre section serve de bastion pour la région de l’est. Noussommes bien placés pour favoriser le partage des connais-sances et d’autres ressources avec les Maritimes, ce qui contri-buera à l’établissement d’une industrie nationale plusvigoureuse. » ICM


CIM communityD i s t i n g u i s h e dL e c t u r e r

Sergei Shipilov, research professor ofmaterials science and engineering at the Uni-versity of North Texas, specializes in corro-sion science and engineering, includingstress corrosion cracking (SCC), corrosionfatigue and hydrogen embrittlement. He haspenned over 100 scientific papers and bookchapters in his areas of expertise and editedthe two-volume “Environment-InducedCracking of Materials” (Elsevier, 2007) and“Minimizing Infrastructure Corrosion”(NACE, 2009). In his presentation, “Materi-als Degradation and Corrosion in a Sustain-able Society,” Shipilov raises the alarm onthe costly impact corrosion has on industryand on society – not just in dollars but also in lives.

CIM: Why is corrosion such a critical issue today?Shipilov: Corrosion is coming to the forefront because therewas never before such a large volume of ageing infrastructurethat required maintenance. The direct cost of corrosion inCanada is around $41 billion, with indirect costs essentiallydoubling that amount. It is also a major contributor to envi-ronmental pollution due to leakage of hazardous materialsfrom pipelines, vessels and nuclear reactors.

For instance, corrosion was a factor in the world’s worstchemical disaster in Bhopal, India, in 1984, which took thelives of 3,800 people and some 15,000 from related illnesses.Because of North America’s ageing infrastructure, corrosionhas become a major public safety concern. Some examplesinclude the Minneapolis bridge collapse in 2007, which killed13 people, and the Montreal bridge collapse in 2006, whichkilled five people, including a pregnant woman.

It is important to understand that corrosion itself is not theproblem. It is a natural phenomenon like snow or rain. But itcan create problems. The problems manifest as a loss of struc-tural integrity. If corrosion does not affect structural integrity,all is well. But if it does, bridges fall. The problem is how cor-rosion impacts complex engineering structures and high-risktechnologies.

CIM: One of your areas of research is SCC. Can you explain whatthis is?Shipilov: If you look at the statistics on failures in engineeringstructures in a wide variety of industries, 40 to 65 per cent ofall failures are due to this type of fracture. To explain SCC, let’suse the example of a concrete bridge in Toronto. In that envi-ronment, a lot of salt is used during the winter season. Salt is a

very corrosive environmental factor.Through cracks in the concrete, salt canreach the bridge’s reinforcing bars, leading tocorrosion and rust. Rust increases the bars’volume, so it starts to push the concrete indifferent directions, potentially resulting in apiece of concrete falling off the bridge.

One of the biggest issues today is that thematerials we use age and, over time, theirproperties change. Material transforms andbecomes brittle over the years so it can nolonger withstand the same pressure and/ordeformation. We need to recognize howmaterials have degraded over the years.

CIM: When it comes to new structures, is thereanything that can be done to reduce future corrosion?Shipilov: Engineers should be familiar with the critical combi-nations of environmental factors and materials in order toavoid them in next-generation systems. This is critical becauseenvironmental factors in corrosion and SCC are often specificto the material. In some combinations, the environment accel-erates corrosion, while in others the combination is all right.For each material, there is a specific environment that will orwill not accelerate deterioration. If you recognize this, you canprevent corrosion. For example, hot aqueous chlorides readilycause SCC in stainless steels but do not have the same effect oncarbon steels, aluminum or other non-ferrous alloys.

The biggest problem is that we do not educate engineers inthis field. SCC is the number one type of corrosion; in fact, itis responsible for more catastrophic structural failures than allother forms combined. However, the number of people study-ing it is very small and the number of people who understandit is even smaller.

SCC is a very complicated field because it is situated at theintersection of materials science, chemistry, mechanics andengineering. There are not many specialists in this fieldbecause there is no university program that combines thesedisciplines. The first step is creating publicity to draw attentionto this issue. CIM

TO BOOK A DISTINGUISHED LECTURER visit www.cim.org,call (514) 939-2710 or email [email protected].

POUR DEMANDER UN CONFÉRENCIER, visitez www.cim.org, téléphonez au (514) 939-2710,

ou envoyez un courriel à [email protected].

Exposing the cracksSergei Shipilov reveals the perils of corrosion

by Alexandra Lopez-Pacheco

T E C H N I C A L A B S T R AC T S

CIM journal


Advances in continuous monitoring ofwater-cooled tapblocks forpyrometallurgical furnacesP. Gebski, A. Sadri, W.L. Ying, Hatch, Sheridan Scienceand Technology Park, Mississauga, Ontario, Canada; andD. George-Kennedy, C. Nexhip, D. Krippner and R. Kaur, Kennecott Utah Copper Smelter (KUCS), Magna,Utah, USA

Electric load-haul-dump machines: realalternative for diesels?J. Paraszczak, M. Laflamme and K. Fytas, Departmentof Mining, Metallurgical and Materials Engineering,Université Laval, Quebec City, Quebec, Canada

ABSTRACT Water-cooled tapblocks are essential components of modern smelting fur-naces. Uninterrupted operation of a tapblock is critical for the optimal operation of afurnace. This critical function, together with exposure to extreme conditions, drives theneed for an efficient and reliable means for tapblock monitoring. The main objective oftapblock monitoring is to help optimize the life of the tapblocks by better schedulinginner refractory relining and protecting operators by preventing sudden deterioration ofthe tapblock. A taphole acoustic monitoring (TAM) system was developed to meet theabove requirements. This paper describes the principles of the TAM system andselected case studies.

RÉSUMÉ Les blocs de coulée refroidis à l’eau sont une composante essentielle desfours de fusion modernes. L’opération ininterrompue d’un bloc de coulée est critique àl’opération optimale d’un four. Cette fonction critique, de même que l’exposition à desconditions extrêmes, crée un besoin pour un moyen efficace et fiable de suivi du blocde coulée. Le principal but du suivi du bloc de coulée est d’aider à optimiser la vie desblocs de coulée par une meilleure programmation du garnissage des réfractairesinternes et une meilleure protection des opérateurs en empêchant une détériorationsoudaine du bloc de coulée. Un système de suivi acoustique du trou de coulée a étédéveloppé pour rencontrer les objectifs cités plus haut. Le présent article décrit lesprincipes du système de suivi acoustique des trous de coulée et présente quelquesétudes de cas.

ABSTRACT Diesel-powered loaders are a pillar of modern underground metal mining.As these mines are getting deeper and hotter and the emission regulations stricter, ven-tilation costs are soaring, affecting production cost. Also, the cost of diesel fuel isexpected to rise. These may make the use of diesel engines more problematic. Electricload-haul-dump machines (LHDs) are an interesting alternative. This paper comparesfeatures and performance of diesel and electric, cable-powered LHDs. It overviewsequipment offerings, and compares, analyzes and discusses technical parameters,operational problems and cost issues. The paper gives some conclusions about elec-tric LHD applicability and performance, indicates possible applications, and suggestsfurther research work.

RÉSUMÉ Les chargeuses au diésel sont un pilier de l’exploitation souterraine moderne.Alors que ces mines deviennent plus profondes et plus chaudes et que la réglementa-tion concernant les émissions devient de plus en plus stricte, les coûts de ventilationgrimpent en flèche, affectant les coûts de production. De plus, le coût du diésel devraitgrimper, ce qui rendrait l’utilisation de moteurs diésel encore plus problématique. Leschargeuses-navettes (LHD) électriques constituent une alternative intéressante. Leprésent article compare les caractéristiques et le rendement des LHD diésel et élec-triques alimentées par câble. Il offre une vue d’ensemble des équipements disponibles,compare, analyse et discute des paramètres techniques, des problèmes d’opération etdes questions de coûts. L’article présente quelques conclusions concernant l’applica-bilité et le rendement des LHD; il indique des applications possibles et suggère defuturs travaux de recherche.



CIM journal

Processing history at Vale Canada’s(Inco’s) nickel-copper smelter atCopper Cliff, Ontario: post-1950B.R. Conard, Oakville, Ontario, Canada

Autogenous grinding mills for diamondliberationJ.E. Danoczi, Saskatoon, Saskatchewan, Canada; and S. Harvey, Shore Gold Inc., Saskatoon,Saskatchewan, Canada

ABSTRACT It is critical that historical processes and concomitant exposures to specificnickel substances be understood because some diseases linked to inhalation of certainnickel-containing substances have a long latency between first exposure and diseaseonset, and because nickel substances vary significantly in their toxicological properties.A discussion of the smelting history and related processes at Vale Canada’s (Inco’s)Copper Cliff, Ontario, smelter is integral to the understanding of these processes. Thepost-1950 processing history, equipment, propensity for aerosol formation, operationalprocedures, and ventilation controls used by Vale Canada in roasting, smelting, convert-ing, and copper-nickel separation is discussed.

RÉSUMÉ Il est essentiel de comprendre les procédés historiques et les expositionsassociées à des substances nickélifères spécifiques. En effet, quelques maladies liéesà l’inhalation de certaines substances nickélifères ont une longue période de latenceentre la première exposition et le début de la maladie; de plus, les substances con-tenant du nickel possèdent des propriétés toxicologiques grandement variables. Unediscussion de l’historique de la fusion et de ses divers procédés à la fonderie de ValeCanada (Inco) à Copper Cliff, Ontario, est donc une partie intégrante de la compréhen-sion de ces procédés. L’article traite de l’historique des procédés, des équipements, dela propension à former des aérosols, des procédures opérationnelles et des contrôlesde ventilation utilisés par Vale Canada dans le grillage, la fusion, le convertissage et laséparation cuivre-nickel depuis 1950.

ABSTRACT A diamond processing plant is being designed for the Star–Orion Southdiamond project in central Saskatchewan. Key to the plant is diamond liberation, whichoccurs in the comminution section and is the process of breaking up kimberlite rock as gently as possible to minimize diamond damage, particularly in larger, high-valuediamonds. Kimberlite from the crater area of a volcanic pipe is generally softer thankimberlite from the diatreme zone. Softer kimberlite, comprising the majority of Star-Orion South deposits, can be readily broken up using abrasion and attrition byautogenous grinding mills, the preferred comminution method for minimizing diamonddamage.

RÉSUMÉ Une usine de traitement des diamants est en voie de conception pour le pro-jet de mine de diamants Star–Orion South, au centre de la Saskatchewan. Le pointnévralgique de l’usine est la libération des diamants, ce qui se produit dans la sectionde la comminution; il s’agit de briser la roche kimberlitique aussi doucement que pos-sible afin de minimiser les dommages aux diamants, surtout aux gros diamants degrande valeur. La kimberlite provenant du secteur du cratère d’une cheminée vol-canique est généralement plus tendre que la kimberlite provenant de la zone dediatrème. La kimberlite plus tendre, laquelle comprend la plus grande partie des gise-ments Star–Orion South, peut être brisée assez facilement par abrasion et attritiondans des broyeurs autogènes, soit la méthode de comminution de choix pour minimiserles dommages aux diamants.



CIM journal

Review of rare earth mineralprocessing technologyJ. Zhang, Saskatchewan Research Council, Saskatoon,Saskatchewan, Canada; and C. Edwards, AMEC AmericasLtd., Saskatoon, Saskatchewan, Canada

A simple solution to assess pore-waterpressure in barricades made of wasterockL. Li, Department of Civil, Geological and MiningEngineering, Polytechnique Montreal, Montreal, Quebec,Canada

ABSTRACT The versatility and specificity of rare earth elements (REEs) have led to theiruse in an ever-increasing variety of applications in new technologies; consequently,demand for REEs has increased significantly. However, separating REEs safely andeffectively is a complex and expensive process. This paper presents a review of REEmineral processing technologies, providing an update on current capabilities in REEmineral processing and REE extraction from the major commercially valuable REE-bearingminerals such as bastnaesite, monazite, and xenotime, as well as the ion-absorption typeof REE deposits.

RÉSUMÉ La polyvalence et la spécificité des éléments des terres rares (ÉTR) ont con-duit à leur utilisation dans de plus en plus d’applications variées dans de nouvellestechnologies; par conséquent, la demande pour les ÉTR a crû de manière significative.Toutefois, la séparation sécuritaire ou efficace des ÉTR constitue un processus com-plexe et coûteux. Le présent article passe en revue les technologies de traitement desminéraux des ÉTR, fournissant une mise à jour des capacités actuelles en traitement eten extraction des ÉTR des principaux minéraux à valeur commerciale porteurs d’ÉTRtels que la bastnaésite, la monazite et l’xénotime, ainsi que les gisements d’ÉTR de typeadsorption des ions.

ABSTRACT Stope backfilling is a common operation in many underground mines,which requires a barricade at the base of the stope near the drift entrance to retain thebackfill in place. In this paper, the distribution of pore-water pressure in barricadesmade of waste rock is analyzed. An analytical solution is introduced and applied to esti-mate the pore-water pressure along the base and full height of the barricade. Resultsshow that the analytical solution generally accurately predicts the distribution of pore-water pressure obtained from the numerical calculations, especially in the upstreampart of the barricade, where it is most critical.

RÉSUMÉ Le remblayage des chantiers d’abattage est une pratique courante dans denombreuses mines souterraines, ce qui demande une barricade à la base du chantier,près de l’entrée de la galerie, afin de retenir le matériau de remblai en place. Dans leprésent article, nous analysons la distribution des pressions interstitielles dans les bar-ricades faites de roche stérile. Une solution analytique est présentée et mise enapplication afin d’estimer la pression interstitielle le long de la base et sur toute la hau-teur de la barricade. Les résultats démontrent que la solution analytique préditgénéralement de manière précise la distribution de la pression interstitielle obtenue descalculs numériques, surtout dans la partie amont de la barricade, là où elle est la pluscritique.

Excerpts taken from abstracts in CIM Journal, Vol. 4, No. 1.To subscribe, to submit a paper or to be a peer reviewer—www.cim.org



canadian metallurgical quarterly

Effect of mechanical activation oncarbothermal reduction ofchromite with graphiteF. Apaydin, Bartin University, Metallurgy & Materials Engineering, Bartin, Turkey; A. Atasoy, Sakarya University, Tech. Edu. Fac.,Extractive Metallurgy, Sakarya, Turkey; and K. Yildiz, Sakarya University, Metallurgy & Materials Engineering, Sakarya, Turkey

Variation of dimensionalproperties of particulate materialsduring grinding and their nonfractal natureE. Stamboliadis, E. Petrakis and O. Pantelaki, Technical University of Crete, Chania,Greece

ABSTRACT The carbothermal reduction of mechanically activated chromite with graphiteunder an argon atmosphere was investigated at temperatures between 1100 and1400°C and the effects of the mechanical activation on chromite structure were ana-lyzed by X-ray diffraction, scanning electron microscopy and specific surface areameasurement. An increase in specific surface area resulted in more contact points. Theactivation procedure led to amorphization and structural disordering in chromite, andaccelerated the degree of reduction and metallization in the mixture of chromite andgraphite.

RÉSUMÉ On a effectué une investigation de la réduction carbothermique avec dugraphite, de la chromite activée mécaniquement, en atmosphère d’argon, à des tem-pératures entre 1100 et 1400°C, et l’on a analysé les effets de l’activation mécaniquesur la structure de la chromite par diffraction des rayons x, par microscopie électroniqueà balayage et par mesure de la surface spécifique. Une augmentation de la surface spé-cifique résultait en des points de contact plus nombreux. La procédure d’activationmenait à une structure plus amorphe et en désordre de la chromite et accélérait le degréde réduction et de métallisation dans le mélange de chromite et de graphite.

ABSTRACT Dimensional properties of a particulate material are considered to be themass, the surface area, the length and the number of its particles. The paper examinesthe variation of the distribution of these properties versus size as a function of the energyconsumption during grinding. The data obtained show that the distributions of theseproperties have one maximum and one minimum size limit. Additionally the presentationof the cumulative distribution of each of these properties, versus size between these twolimits can be approximated by an exponential curve, which if plotted in a log-log diagramgives an almost linear relationship. However, only about 50% of the data can bedescribed by this linear relationship. The question that rises is whether these propertiescan be considered to be fractal.

RÉSUMÉ On considère que la masse, la superficie, la longueur et le nombre de partic-ules constituent les propriétés dimensionnelles d’un matériau particulaire. L’articleexamine la variation dans la distribution de la valeur de ces propriétés en fonction de laconsommation d’énergie lors du broyage. Les données obtenues montrent que la distri-bution de ces propriétés a une valeur limite maximale et une valeur minimale. De plus,la présentation de la distribution cumulative de la valeur de chacune de ces propriétésentre ces deux limites peut être approximée par une courbe exponentielle qui, lorsquetracée sur un diagramme logarithmique, donne une relation presque linéaire. Cependant,on peut seulement décrire environ 50% des données par cette relation linéaire. La ques-tion est de savoir si l’on peut considérer ces propriétés comme étant fractales.

Excerpts taken from abstracts in CMQ, Vol. 50, No. 2.Subscribe—www.cmq-online.ca

MINING AND METALS

ENERGY

OIL, GAS AND CHEMICALS

.........................................

.........................................

MINING

ENERGY

ALSAND MET.........................................

CHEMICALS

GAS ANDOIL,.........................................


professional directory

Mining Contractors and Engineers

PETRO-CANADA LUBRICANTSGoing beyond today’s standards for the Canadian miningindustry

Petro-Canada has been anintegral part of the Canadian min-ing industry for over 30 years. Weunderstand the circumstances thattoday’s operations face. To ourcustomers, we’re more than justsuppliers – we’re partners in help-ing them meet their businessgoals.

We know the challenges in find-ing the right lubricants for the job,which is why we work with ourcustomers to identify the rightproducts across their equipment.And with proven experience work-ing with major OEMs, we makesure your machinery is kept running the way it was designed to. We carrythis service leadership and support right through to daily operations,upgrades and change outs – every step of the way.

It’s this expertise that we put behind our full suite of products, designed tokeep operations reliable and efficient. We understand the importance inextending the life of your equipment and in minimizing maintenance costs.Whether it’s on-road or off-road equipment, our lubricants are formulatedto improve equipment performance,reduce downtime, cut operating costsand extend equipment life. We prideourselves in being the total solutionprovider – no matter the operationalchallenges.

professional directory | innovation showcase

ContactJanet Jeffery [email protected] Young [email protected]

1-866-297-5301

ADVERTISE IN THE PROFESSIONAL DIRECTORY

C@dJ

nngNea Yo

tacatantonoJanCo t

NeJ

Yry jeferefefffeff

YalaeaNeal Yeft J

ContactneJanet Jeffer

unuouyoyouyoj

nyerg@ounooung

y@y jjefferil.ctvtdvd@d m

vtail mmomomcom

coil.c

[email protected]@dvtail.com

mm

668-81 -2977 5305 1011-866-297-5301

59 Accutron 19 Baldor Electric 20 Bauma 3 Boart Longyear OBC Climate Change & Emissions Management Corp. 11 Columbia Steel Casting Co. IBC Desjardins Financial Security 45 Drive Line Inc. 29 Eriez Manufacturing Co. 7 Imperial Oil Limited 39 Les Industries Fournier Ltd. 9 L&H Industrial, Inc. 31 Motion Industries 18 MVS Engineering 16 Norseman Structures 17 Pilatus 15 PTI Group 21 RedPath 25 Rousseau Metal Inc. 27 Suncor 13 SEW-Eurodrive Co. of Canada IFC SMS Equipment 41 SRK Consulting 14 Venture Kamloops 84 Professional Directory BBA Independent Mining Consultants Praetorian Management Consultants Redpath

84 Innovation Showcase Petro-Canada

85 Product Files B.I.D. Canada Ltd Industrial Equipment Manufacturing

ad index | product files


COST CRUNCH

When times are tough, preparedness canbe the difference between red and black inthe bottom line. We investigate a variety ofcost control measures and explore waysyou need to spend money to save money,regardless of the phase of your project.

PROJECT PROFILEMining and refining

We talk tungsten with Northcliff ResourcesCEO Chris Zahovskis. To capture the mostvalue from its property in New Brunswick,the company will also process theconcentrate from its tungsten mine underdevelopment.

Technology – Innovations in shafts andhoists

In Upfront, we detail the stories behind theindustry’s award winners and HR leaders.

With over 40 years of engineering and manufacturing experience, IEM offers a complete range of bulk materials handling equipment for the mining industry

Web: www.iem.caISO 9001: 2008 Certified

ADVERTISERS

IN THE NEXT ISSUE

Pete

r Bra

ul

From coal-crowned to ghost town: the life and death of Alberta’s Coal Branch

by Correy Baldwin

Nestled among the eastern slopes ofthe Canadian Rockies near present-day Jasper, Alberta’s Coal Branch

region must have been the most scenicplace in the country to mine for coal. Thislittle-remembered but vitally importantregion, now an alpine wonderland, wasonce as lush with coal-mining activity as itis today with mountain panoramas.

John Gregg, a prospector from theUnited States, was guided to the area by hiswife, Mary Cardinal, and staked the firstclaim in 1909. Cardinal was the daughterof a local Stoney chief, and the Stoneysknew of the coal deposits in the NikanassinRange, which would become known as theAlberta Coal Branch after several rich claims drew Canada’srailways to the region.

The following spring, Gregg and Cardinal showed the siteto a team of Scottish mining engineers, sent by ChristopherLeyland, a British industrialist. The Scots were both impressedwith Gregg’s coal claim and mesmerized by the area’s naturalbeauty. They named the claim Mountain Park. By early 1911,Leyland had set up the Mountain Park Coal Company and hadpurchased Gregg’s share. Soon many prospectors began comb-ing the alpine valleys and picturesque slopes of the region.Gregg himself staked another claim that year, at Luscar.

The coalfields in the southern Rockies near the CrowsnestPass, were first reached when the Canadian Pacific Railway(CPR) passed through in 1884. But other rail companies likethe Grand Trunk Pacific Railway (GTPR) and the CanadianNorthern Railway (CNoR) were just as eager to reach otherlucrative areas. Both of these companies went north, enteringthe Rockies at Jasper and crossing through at the YellowheadPass. The rail companies were trying to reach the Pacificcoast but they also wanted to get to the coal. The trains ranon coal, meaning the resource was vital to the expanding rail-way system.

After Gregg opened up the Alberta Coal Branch, GTPRbegan building a line south into the area. It established a rail-way hub at Coalspur, where the trail branched. GTPR’s con-struction of the east branch got off the ground, while theMountain Park Coal Company began building the west branch– an expensive undertaking that GTPR eventually took over.

But there was other competition. In 1909, CNoR joinedforces with German-born entrepreneur Martin Nordegg,whose company, Brazeau Collieries, had eight coal claims


spread across the Rockies – from Grande Cache in the north toKananaskis in the south.

In 1911, Nordegg discovered another coalfield just 100kilometres southeast of the Coal Branch. CNoR began layingdown track from the east, just as GTPR was coming in fromthe north. In the end, the two areas tapped separate coalfieldsand both became prosperous. The Alberta Coal Branch was byfar the most extensive. Nordegg’s Brazeau Collieries did well,but sadly Martin Nordegg did not: he was declared an enemyalien when the First World War broke out in 1914 and wasforced to sell all of his shares in his company.

The Alberta Coal Branch thrived, especially in its earlyyears. From 1922 to 1926, the area produced 3.9 milliontonnes of coal, accounting for 22 per cent of Alberta’s coal pro-duction. By 1926, the region’s population was over 2,700, andboth Cadomin and Luscar had grown larger than the originalcommunity of Mountain Park. Cadomin even boasted the onlysymphony orchestra between Edmonton and Vancouver.

By the end of the First World War, however, trains wereusing diesel rather than coal, and the domestic market hadswitched to oil and gas. One by one, the mines of the AlbertaCoal Branch closed, leaving a valley full of ghost towns. CIM

Miners enjoy a Sunday ball game outside Mountain Park, Alberta, 1930. Photo by Charles Lee.

Imag

e co

urte

sy o

f the

Pro

vinc

ial A

rchi

ves o

f Alb

erta

As one of Canada’s original and largest cooperatives, Desjardins Group has been doing this for over a century and has gained international respect as one of the safest financial institutions in the world.

With almost 45,000 employees Canada-wide, we have the strength to get things done. From big to small, we give tailored solutions to our clients whether it’s in group benefits or pensions.

With Desjardins, you have more than a company, you have a partner you can trust and depend on.

desjardinslifeinsurance.com

Desjardins Insurance refers to Desjardins Financial Security Life Assurance Company.

– IT’S PERSONALIT’S NOT JUST BUSINESS

Proud Partner of

GRANDCCEMC

CHALLENGE:INNOVATIVE CARBON USES

Climate Change & Emissions Management Corporation

The solution to the world’s carbon challenge seems daunting; as the world grows, so does the demand for fossil fuels.

The time to act is now. The CCEMC Grand Challenge is an Alberta initiative to find and support bold ideas from around the world that will make significant reductions in greenhouse gas emissions. We’re committing up to CAD$35 million in funding for the most innovative technology that will convert CO2 emissions into new carbon-based products and markets.

Find more information and submit your proposal at ccemcgrandchallenge.com

A GLOBAL QUEST TO TURN CARBON INTO A VALUED RESOURCE.

Documents

CIM Magazine March/April 2013