Canadian Mining Journal May 2013

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May 2013

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ALL

‘SEAMS’ GOOD B.C. MINERS ARE

CANADA’S TOP COAL EXPORTERS

Plus:

Petroleum producers continue to expand

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CANADIAN Mining Journal

Departments 5 Editorial

International relations are so important to Canadians working with foreign partners and that’s why the recent deal between Canada and China involving the loan of two giant pandas is vital to maintaining “good” relations between the two countries. Editor Russ Noble says that anything “bad” happening to the pandas while under Canada’s care would create international tension, resulting in potential problems for the mining industry too.

CONTENTS

COAL

14 Coal Country (Cover Story)

9 Investing

British Columbia is called “Coal Country” thanks to the record number of tonnes its miners export annually.

Ned Goodman’s regular “Investing” column talks about the five main investment themes for 2013 and says: “There continues to be many moving parts to the investment outlook as we get deeper into 2013.”

20 Delivering the Goods

13 In My Mine(d)

Coal producers answer the world’s needs through an extensive shipping network involving rail and oceangoing vessels.

This month Paul Smith, President and CEO of Mountain Lake Minerals, Halifax, talks about the differences of working in the Maritime provinces.

26 Prestigious Pacific Port

48 Technology

A look at real-time data and how it can help miners increase productivity and help ensure safety.

54 Company Profile

30

30 Pit Power

58 Products

Pumped storage from flooded open-pit mine helps make renewable energy possible.

60 CSR and Mining

34 Proud Producers

A look at the latest tools and other devices available in Canada for the mining industry.

Marketa Evans, Extractive Sector, CSR Counsellor, Government of Canada, says that dialogue offers more than the alternatives when dealing with conflicts and disputes.

62 Unearthing Trends

Bruce Sprague, a partner and leader at Ernst & Young’s National Mining and Metals Team, talks about how the cost and execution challenges have created a very different environment in the mining sector over the last year. ’

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May 2013

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ENERGY

This month’s featured company is Atlas Copco.

20

British Columbia’s Ridley Terminals continue to provide outstanding service thanks to modern equipment.

52 Equipment

A first-hand look at heavy mining equipment in use under rugged Canadian conditions.

14

34

Canada’s petroleum producers continue to overcome controversy and other challenges.

36 Poised and Powerful

Geothermal technology holds potential and promise for future generations.

36

ABOUT THE COVER This month’s cover supplied by CAT.

For More Information

ALL

‘SEAMS’ GOOD B.C. MINERS ARE

CANADA’S TOP COAL EXPORTERS

Canada Post Canadian Publications Mail Sales Product Agreement No. 40069240

Plus:

Petroleum producers continue to expand

Please visit www.canadianminingjournal.com for regular updates on what's happening with Canadian mining companies and their personnel both here and abroad. A digital version of the magazine is also available at www.digital.canadianminingjournal.com

VAST ENERGY RESOURCES

Coming in June/July

www.canadianminingjournal.com

A look at Mining in the Prairies.

May 2013 • Canadian Mining Journal |

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Editorial

What happens if the pandas die?

By Russell Noble

I

’m sure most of you have either read or heard by now that China has loaned Canada two of its Giant Panda bears and whether you’re familiar with this news or not, you’re now probably asking yourself; “What’s the relevance and why is it even being discussed in a mining magazine?”

Well let me explain. First of all, the loan of the bears for the next 10 years (five in Toronto, five in Calgary) is more than a way of China unloading the care and maintenance of two bamboo processors on us. There’s far more to it than that. In fact, feeding and cleaning up (they defecate up to 40 times a day) after the pair is just the start.

The Chinese expect and trust us (meaning Canada) to provide the bears with the right environment (and mood) for them to survive and hopefully, procreate while they’re here.

Even Prime Minister Stephan Harper is so excited by this possibility that he and his wife were at the airport to greet the bears like giddy expectant grandparents. He even signed the FedEx Bill of Lading, thus confirming the safe arrival of these animals. I wonder why the Prime Minister didn’t trust Canada Post to deliver the animals and chose a US-based carrier instead?

Anyway, now that the bears are safely here and the Prime Minister has signed for them, does that mean the federal government has also guaranteed the Chinese government that the bears are now in the safe hands of our government?

If so, good luck on that one because our government hasn’t shown too much compassion lately when it comes to matters involving the care and concerns of the warm blooded. The walkers who covered

1600 kilometres from Whapmogoostui, Quebec to Ottawa in support of the First Nations’ “Idle No More” campaign, comes to mind.

After that grueling walk, the walkers knocked on the Prime Minister’s door to ask for help, and the answer they got was that Mr. and Mrs. Harper were in Toronto greeting foreign dignitaries and were asked could they come back later, or leave a message?

Again, I’m concerned for the bears’ care because of this kind of behaviour.

As we know, the Chinese truly love and revere their Giant Pandas and some may even go so far as to say they care more for their bears than they do for their own countrymen, especially their miners, but that’s a different issue.

The point is, by entrusting Canada with two of it’s most prized possessions, China is showing trust in Canada and that’s a big ‘plus’ for our country, especially when it comes to relations on a broader scale down the road.

As anyone who has, or had, business dealings with the Chinese know, gaining their trust but moreover, showing respect for their beliefs and the ways they work, is paramount to getting their business.

No other country that I know of demands such a degree of respect from its business partners than the Chinese and that’s why the issue of their Giant Pandas is so important to Canada/China relations and good luck to us should anything bad happen to those bears while on our watch here in Canada.

The slightest illness or injury to the animals would send headlines across China faster than it took the Prime Minister to scatch his name on that FedEx receipt and

who knows what ramifications there would be to future, and existing relations… including those involving mining?

I know these comments and the scenario I just painted about the Giant Pandas are a bit extreme, but knowing what I know and hear about how delicate deals can be with the Chinese, I just hope the Pandas are treated and guarded accordingly because, should something happen to them while under our government’s care, I have a feeling that Mr. Harper’s signature on that FedEx Bill of Lading will be looked upon as being as ‘meaningless’ as some of the other Bills he has signed.

In this case, however, more than ‘domestic’ issues will be at stake. China will be let down too and eventually, it will find a way of getting compensation for the loss of its cherished exports.

All of this rhetoric may sound a little farfetched and not worthy of mention in a mining magazine but then again, Corporate Social Responsibility (in this case, the “Corporate” being the government) is one of the hotter topics in mining today and I strongly feel that the Giant Panda issue will do wonders for Canada/China relations provided that everything goes as hoped; especially if the bears have a baby and it goes back to China with them.

Conversely, however, look out should one of the bears chokes on a Tim Horton’s “Tim Bit” thrown into its enclosure, or that Er Shun, the five-year-old female, passes away during or after giving birth.

Anything that goes wrong will hurt relations between the two countries and no amount of talking or visits to China by Prime Ministers will help regain the ‘trust’ we now have during this “Care Bear” episode of Canada/China relations.

CMJ May 2013 • Canadian Mining Journal |

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CANADIAN Mining Journal May 2013 Vol. 134 — No. 4 80 Valleybrook Drive, Toronto, Ontario M3B 2S9 Tel. (416) 442-5600 Fax (416) 510-5138 www.canadianminingjournal.com Editor Russell B. Noble 416 510-6742 rnoble@canadianminingjournal.com Field Editor Marilyn Scales 613 832-9087 mscales@canadianminingjournal.com

Mining Matters Volume 134

May 2013

Aerial view of a massive hauler dumping tonnes of material clearly shows the type of wear and tear that truck bodies must withstand.

Art Director Mark Ryan Production Manager Print Production Manager

Steve Hofmann Phyllis Wright Circulation Manager Cindi Holder 416 442-5600, ext. 3544 cholder@bizinfogroup.ca Publisher Robert Seagraves 416 510-6891 rseagraves@canadianminingjournal.com Sales Western Canada, Western U.S.A.

Bonnie Rondeau 416-510-5245 brondeau@canadianminingjournal.com Toll Free Canada: 1-800-268-7742 ext 6891 or 5245 Toll Free USA: 1-800-387-0273 ext 6891 or 5245 Group Publisher Doug Donnelly President

Bruce Creighton

Vice-president Alex Papanou

Established 1882 Canadian Mining Journal provides articles and information of practical use to those who work in the technical, administrative and supervisory aspects of exploration, mining and processing in the Canadian mineral exploration and mining industry. Canadian Mining Journal (ISSN 0008-4492) is published 10 times a year by Business Information Group L.P. BIG is located at 80 Valleybrook Dr., Toronto, ON, M3B 2S9. Phone (416) 442-5600.

Legal deposit: National Library, Ottawa. Printed in Canada. All rights reserved.

The contents of this magazine are protected by copyright and may be used only for your personal non-commercial purposes. All other rights are reserved and commercial use is prohibited. To make use of any of this material you must first obtain the permission of the owner of the copyright. For further information please contact Russell Noble at 416-510-6742.

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6 | Canadian Mining Journal • May 2013

Behind the scenes at the oilsands

Each and every day, more than 1.5 million tonnes of moist sand, laden with bitumen, are loaded into trucks for transport to crushers for the oil extraction process at Canada’s oilsands.

Also working at a non-stop pace are massive shovels that dump scoops of 100 tonnes into the truck beds. Loaded with up to 400 tonnes of material, the trucks then transport and dump the material for separation.

On the surface, it may appear as though truck bodies don’t deviate much from one design to another but upon closer look, some of the newer dedicated oil sands truck bodies are designed from the floor up to meet the challenges specific to these mining operations.

With an average performance life of about three years for most dump bodies, at least one manufacturer has taken this short lifespan into account and has designed a body to last longer and outperform many others.

With the intense, around-the-clock work at the oil sands, it’s been accepted that the truck body floor will wear through within three years due to the abrasive nature of the materials hauled as well as the significant weight and the force with which the load is released dozens of times each day.

Thanks to Philippi-Hagenbuch, a cost – saving design has been engineered for an oilsands-specific truck body that’s expected to increase the life of the trucks by more than 25 per cent – an entire extra year of work.

The Casino project.

Gold project to have major impact on Yukon

Western Copper and Gold Corporation just announced the results of an updated study on the potential economic impact of the Casino project on Yukon.

The Casino project, located about 380 kilometres northwest of Whitehorse, is estimated to contribute $9.7 billion to Canada’s Gross Domestic Product, create 51,373 full-time equivalent (FTE) positions, and generate $2.5 billion in wages and salaries. Note that the use of full-time equivalent positions (“FTEs”) is a method to account for partial employment or employment for different durations and 1.0 FTE is equivalent to a full-time job for one year of employment.

A Report estimates the GDP generated in Yukon by the construction of Casino at $363 million, or 14% of Yukon’s 2011 GDP. The construction phase is es-

timated to contribute $2.0 billion to Canada’s economy while generating 22,601 FTEs resulting in $1.1 billion in wages and salaries across Canada.

During each of its 22 years of operation, the Casino mine is expected to contribute $274 million to Yukon’s economy. Operation of the mine is estimated to contribute $350 million to Canada’s GDP annually while creating 1,308 FTEs and generating $61 million in wages and salaries across Canada.

The Casino project is also expected to generate $3.1 billion in taxes and royalties to various governments during the life of mine. www.canadianminingjournal.com

Wick Drains – Oil Sands Tailings Pond, Fort McMurray, Alberta, Canada

Anchors – Cement Plant, Missouri, United States (not shown: Grout Curtain, Shotcrete, and Rock Fall Projection)

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Investing

“Almost always correct” advice worth considering Ned Goodman is President and Chief Executive Officer of Dundee Corporation.

By Ned Goodman

T

ony Boeckh, the former leader of the ‘almost-always-correct’ Bank Credit Analyst is someone I respect and still follow. His recent piece on his own letterhead (dated January 10, 2013) “Five Themes for 2013” is especially interesting.

He opens with, “There continues to be many moving parts to the investment outlook as we enter 2013.”

• World growth will remain low on average but negative in the UK and Europe • Price inflation will remain sufficiently subdued for a while longer so as to impose no constraint on monetary expansion; • Central banks will sustain a regime of negative real interest rates and rapid momentary expansion • The risk of a eurozone collapse is off the table-for now • Stock markets should continue to perform better than expected, even though the four-year old cyclical bull market is long by historical standards

I was particularly interested in Tony’s concern about the less-than-robust US economic outlook “which is about to get whacked with a fiscal drag of as much as 3% of GDP this year” and that US stimulus is likely to remain in place.

For some time now it has been my belief that we were in a secular bear stock market (which began in 2000), when the previous 18-year secular bull

market ended. It is also my belief that secular bear markets can last as long as secular bull markets, which is between 15 and 20 years. During the secular periods, we enjoy some cyclical periods of rising stock markets, which sometimes make us feel that the bear is over.

Given the lifespan of bear markets, I believe we have just entered the fourteenth year of that particular market in the US. We have enjoyed a shorterm cyclical bull market brought on by a ‘Botox Monetary’ solution of massive money printing to overshadow equally massive debt leveraging on a global basis.

I made some of these comments at the recent Prospectors and Developers Association of Canada (PDAC) International Convention in Toronto where I reminded the audience that the gold price (and most other commodities for that matter), actually act as an opposite in the mirror image. That is, gold and resource products entered a secular bull market in 1999-2000 and we are witnessing a cyclical bear market for gold and other minerals, which should be over soon thanks to the commodity super cycle. For my money, the secular bear for normal markets is still in place.

In the longer term, the gold price will be driven by those strong underlying factors of monetization of debt and money pricing, which has no likelihood of being reversed. The bull market for gold may have some downs and ups but it is not a good idea to be short. The bull market

that we have had for more than 13 years now is not dead.

The stock market euphoria, or depression on the US budget and taxing, will not eliminate a $1 trillion US deficit. The tax increase, less the spending, is a rowdy error on the budget. The deficit will be paid for by the Federal Reserve’s printing press.

Although the deficit seems to be under control, the ultra stupid sequestration program is causing some scaring events. The US population is aging and inflation is causing costs to rise and it’s likely that Medicare and ‘Obamacare’ will soon eat up any US budget gains.

Republican Senator Bowles recently said, “Nobody knows when, but at some point the markets will force us to deal with this and when they do, there is just not that many other solutions. We are quickly approaching a day of reckoning for the US dollar.”

And Federal Reserve Chairman Ben Bernanke isn’t helping matters as he continues to print money by the truckload.

Unfortunately, however, he has to, because President Obama will not reduce spending.

He believes he was re-elected to spend, borrow, and tax America into prosperity.

Sadly, all of President Obama’s spending has brought on a national debt-toGDP ratio of 103%. The US is officially underwater and just like Greece, more trouble is likely on its way and what’s worse is that there’s a good chance of the US losing its global reserve-status dollar as currency at some point.

CMJ May 2013 • Canadian Mining Journal |

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Law

Mining securities in Quebec?

Miguel Manzano, Partner, and Marilyne Rougeau, Associate, Norton Rose, Montreal

By Miguel Manzano and Marilyne Rougeau

I

t is common practice in mining law in Quebec to consider that the registration of a hypothec against a mining claim at the Register of Real and Immovable Mining Rights (“Mining Registry”) is sufficient to render such hypothecs opposable against third parties. This practice, however, may need to be reconsidered.

Section 8 of the Quebec Mining Act provides that mining claims and other mining rights are immovable real rights.

As such, it is possible to register these mining rights at the Register of real rights of State resource development (“the Resource Register”) which is part of Quebec’s land registry system. Section 10 of the Mining Act goes on to say, however, that mining claims (and certain other mining rights) are exempt from registration at the [land] registry office. It should be noted that, as provided by Section 14 of the Mining Act, a registration at the Mining Registry is only opposable against the State. It is principally due to the exemption set forth in Section 10 of the Mining Act that many practitioners only register hypothecs at the Mining Registry, the logic being that since a mining claim does not need to be registered at the Resource Register, there is no obligation to do so in regards to any security affecting such mining claims.

Our discussions with representatives of the Mining Registry indicate that the exemption to register set forth in Section 10 of the Mining Act likely stems from the lack of longevity of these rights. For example, a mining claim is only valid for two 10 | Canadian Mining Journal • May 2013

years and a significant number of claims are not renewed after this time in part due to the unfeasibility of successfully mining the minerals relating to the claim.

Consequently, due in large part to the relative short duration of the right, it would be inefficient to require registration at the Resource Register for all mining claims. This “temporary duration” reasoning to justify why mining claims are exempt from registration at the land register is also supported by many Quebec mining law practitioners.

The exemption’s evolution The exemption granted to mining claims appears to be evolving however as evidenced by Bill 14, An Act respecting the development of mineral resources in keeping with the principles of sustainable development. The Bill, despite not being adopted by the National Assembly, was going to do away with such exemption. It is expected that the new Quebec government will submit its own bill to modify the Mining Act before June 2013 and although the new legislation may be different from Bill 14, it is expected that it will still provide for the removal of the exemption of registration. While this change should not necessarily be interpreted as a confirmation that hypothecs against mining claims not registered at the registry office are not opposable to third parties, it nonetheless must be viewed as to how the legislature wishes to resolve the debate of what must be done to render mining claims (as well as any security

registered against mining claims) opposable against third parties.

In addition, when one reads Article 2663 Civil Code of Quebec (“C.c.Q.”) (providing that, in short, hypothecary rights may only be set up against third persons when the hypothec is published in accordance with the relevant sections of the C.c.Q), Article 2695 C.c.Q. (which states that hypothecs are published in the land register) and Article 3040 C.c.Q. (which provides that that a real right of state resource development is enforceable against third parties only from the time the relevant correspondences are entered in the land register), it seems clear that a hypothec on an immovable right must be registered at the appropriate land registry office in order to render it opposable to third parties.

Consequently, the justification for not registering a hypothec on a mining claim at the Resource Register, due to the fact that the registration of the mining claim itself at the Resource Register is not required, may be overreaching since it presumes that one exemption should automatically lead to another exemption.

Conclusion It is hoped that the proposed amendments to the Mining Act will clarify matters. It may be prudent however in the interim to open land files for mining claims which are to be hypothecated and register such hypothecs at the Resource Register—in order to avoid any debates regarding the enforceability of such hypothecs against third parties (other than the State). CMJ www.canadianminingjournal.com

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In My Mine(d)

Making things better for all Maritimers Paul Smith is President & CEO, Mountain Lake Minerals Inc, Halifax.

By Paul K. Smith

N

ever has the old addict, “time-ismoney” been more clear to me than since I left government and joined the private sector. Although missing a deadline in my past career was frowned upon, generally there weren’t any huge, life-threatening consequences or dire adverse administrative and financial issues … or at least that’s what I used to think. Six years on the outside and I now realize the urgency of getting things done in a timely manner and minimizing all time-consuming distractions, both in government and the private sector.

Jumping to industry, I soon found myself busily reviewing regulations and legislation in all three Atlantic Provinces; Nova Scotia, New Brunswick and Newfoundland & Labrador; herein termed the “3N” provinces. Atlantic Canada is blessed with a wealth of mineral resources and each 3N province can boast its own resource sweet spot; Nova Scotia with natural gas and industrial minerals, New Brunswick with massive sulphide and potash, and Newfoundland & Labrador with iron ore, nickel and oil.

Although the provinces afford stable, mining-friendly places to do business, it’s also true that each province has a slightly difference set of rules and regulations encompassing just about all aspects of exploration. No one province is more onerous or complicated than the other, they’re simply different and working in each jurisdiction requires a basic knowledge of these idiosyncrasies to ensure compliance mandates are met.

On the regulatory side of things, Nova Scotia offers its One Window process in addition to its strong network of highways and other infrastructure however, impairment burdens posed by protected lands and a relatively high percentage of anti-development sentiment offset these benefits to some

extent. That said, land claims and special interest groups are increasingly placing differing demands to operations around the globe, not just in the 3N provinces.

Both New Brunswick and Newfoundland have vast tracks of underexplored lands but with limited road access and infrastructure. Tracking down all the necessary regulatory contacts is also slightly more challenging in these two provinces. However, these limitations are often insignificant as a result of these two province’s complex geology and abundant mineral potential.

The key for any company moving a project forward is in knowing that there is a clear path to opening day. Although this may sound like a trivial item, those currently dealing with land access/tenure/ claim issues, in addition to both timely and costly environmental delays, may not share the same point of view, especially when the costs run into the hundreds of thousands, or even millions of dollars.

Each of the 3N provinces operates with similar, but differing sets of acts, regulations and policies, regardless of the Department.

Natural Resources, Environment and Government Services are the most notable for the exploration and mining industry.

Although the overall objective to balance responsible mining activities and job creation with environmental sustainability and/or protection is abundantly clear in each 3N province, the regulatory path for achieving this differs to some extent.

A simple task of searching a website for information can often lead to frustration.

But I think there’s a workable solution.

Let me explain.

Collectively, the 3N provinces have very good working relationships, especially within DNR. So, why not collaborate and use the best parts of each provincial system to develop and share a single, more functional system to minimize the learning curve between the provinces? To me, sharing resources to come up with a better system simply makes good business sense.

In this day and age there are too few public dollars being allocated to each provincial mineral branch not to consider giving this concept some form of merit.

The one consistent thing that leads me to believe this is possible, revolves around the single fact that there are highly motivated staff throughout the government systems who are dedicated to the public sector and are always eager to seize on any opportunity to make things better! CMJ

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May 2013 • Canadian Mining Journal |

13

| Coal

COAL COUNTRY BRITISH COLUMBIA MINERS ARE CANADA’S TOP EXPORTERS

By Russell Noble

T

he coal mines of British Columbia are the best in Canada. That’s a bold and perhaps brash statement but nevertheless, few can argue with the fact that B.C.’s coal mines are among the best producers in the country and certainly, no one can challenge the word “best” when it comes to location.

Located in “postcard-like” settings worthy of tourism brochures, most of the mine sites are in, or back-dropped by the famed Rocky Mountains and most of them are also carefully blended with their surroundings to help ensure obscurity.

Naturally, however, producing more than 30 million tonnes of coal in 2012 (a 20-year-old record) can’t go unnoticed because they are, in reality, mines, and mines do create noise, and dust, and to some, a nuisance.

But the one thing that can’t be complained about is that B.C.’s coal mines also accounted for about $5.1 billion of the $7.4 billion in production revenues from all mines in the province last year.

And that’s something that can’t be 14 | Canadian Mining Journal • May 2013

ignored, and it’s not. In fact, a team of regional geologists from the Ministry of Energy, Mines and Natural Gas (Geological Survey) are located throughout the coal regions of the province monitoring and reporting on the exploration and development of new and existing sites.

Historically, coal mining operations in the province’s southeastern regions near Cranbrook have gained most of the headlines since the 1800s (when the TransCanada rail lines opened) because of their big-name owner and production levels (1 billion tonnes of proven and probable reserves at five sites in 2011), but recent developments near Chetwynd and Tumbler Ridge in the northeast are now earning recognition thanks to the potential of their resources.

With almost 20 mines and exploration sites already identified, the “Northeast Region” is said by many to hold the future because of its infrastructure; most notably B.C. Hydro’s expanding power grid, and the deep-sea coal handling facilities directly across the province at Prince Rupert.

Drilling and other equipment at the bottom of this mine gives scale to the size of this project. www.canadianminingjournal.com

PRODUCTION REACHES RECORD NUMBER OF TONNES IN 2012

May 2013 • Canadian Mining Journal |

15

| Coal Exploration and continuous drilling helps ensure that coal will be available for years to come.

Rail service from B.C.’s interior to port facilities is one of the reasons the province’s coal producers have become so widely recognized for their reliable delivery to world markets.

Last year, for instance, was a record year for coal exploration and activity, due to continued mine development and exploration. Spending more than doubled from 2011 levels to $109.3 million, and as already mentioned, the “Northeast Region” is moving forward thanks to expansion work being carried out adjacent to operating mines, and other exploration projects moving towards opening new mines.

In a recent Provincial Summary of what’s happening throughout the province, including and beyond the “Northeast 16 | Canadian Mining Journal • May 2013

Region,” five regional geologists (Paul Jago, Jim Britton, Dave Grieve, Jeff Kyba, and Bruce Northcote, plus Bruce Madu, a former RG who is now Director of the Mineral Development Office) collaborated to prepare a 30-page overview of mining and exploration in B.C..

The Summary features the full range of mining activities in British Columbia but for the focus of this article, here’s some of what the geologists had to say about coal and specifically its importance to the province and its economy.

First and foremost, as mentioned ear-

lier, coal accounted for about $5.1 billion of the $7.4 billion in production revenues from all mining in B.C. last year and what’s also interesting is that British Columbia is also Canada’s largest exporter of coal; primarily to major Asian markets, most notably Japan, China and South Korea.

Most coal produced is of metallurgical grade (hard coking) coal and is shipped offshore for steel making, and the Summary forecasts that the demand for coking-quality by foreign manufacturers will remain healthy in the long term.

New interest in thermal coal has also risen as external governments explore clean technologies for power production and diversify their energy production.

Coal is currently produced from 10 mines in three regions of the province.

Five mines are located in the historic Southeast Region near Cranbrook, and four in the Northeast part of the province.

The tenth mine, the Quinsam thermal coal mine, is located on Vancouver Island.

In the East Kootenay Coalfields (the Southeast Region), there are five large open-pit coal mines operated by Teck Coal Limited in the Elk Valley area of the Region. The Fording River, Greenhills, Line Creek, Elkview and Coal Mountain mines employ more than 3,600 people and combined to produce about 24.2 million tonnes of clean coal last year.

Hard coking coal (HCC) is the predominant product at four of the Elk Valley mines while pulverized coal injection www.canadianminingjournal.com

A look at one of B.C.’s coal mining operations located amidst the province’s many forested regions.

(PCI) coal is produced at the Coal Mountain operation.

Farther north in the Peace River coalfield (the Northeast Region), four open-pit mines are located at Trend, Perry Creek (Wolverine), Brule, and Willow Creek.

Again, like the Elk Valley mines in the south, hard coking coal (HCC) of low-tomedium bituminous rank is the main product, but ultra low-volatile pulverized coal injection (ULV-PCI) is also found at the Brule and Willow Creek mines.

Because of the location of the Peace River coalfield’s mines, coal is shipped directly westward across the province by rail to Ridley Terminals at Prince Rupert.

A more detailed look at the terminal is featured later in this issue.

Down the coast on Vancouver Island is where the Quinsam thermal coal mine is located near Campbell River. Unlike the

nine other coal mines in B.C., Quinsam is underground operation where about 140 miners produced about 365,000 tonnes of clean coal last year.

The island mine supplied coal to local cement plants as well as shipping product to the international energy market.

As mentioned earlier, there has been extensive exploration and development activity throughout the province in recent months and The Summary says that Coalmont Energy Corp. anticipates reopening its Basin thermal coal mine in Southcentral B.C. sometime this year.

The mine has been under care and maintenance since 2007, but a proposed open-pit area has been prepared for mining, oxidized coal has been stockpiled, and a road has been upgraded to connect with the nearby Coquihalla Highway.

Once permit amendments have been

approved, coal production at the Basin mine is expected to increase to 500,000 tonnes per year.

With 10 operating coal mines and one in the final permitting stage, British Columbia is well positioned to maintain its status as Canada’s largest exporter of coal, but as The Summary says, exploring for new coal reserves is always on going.

In fact, the provincial Environmental Assessment Office reports that by the end of last year, 28 mine proposals were in the process, with two currently under review and 26 at the pre-application stage.

Eleven of the 28 proposals are for coalmining operations.

While it’s encouraging to see such interest in coal mining and future developments, it’s even more reassuring to witness the

Massive pieces of mining equipment continuously work to keep the supply of B.C. coal ready for export markets.

May 2013 • Canadian Mining Journal |

17

| Coal A shear wall of coal dwarfs the mining equipment being used to load and transport the ore for processing.

growth and expansion of port facilities designed for the export of the province’s coal to foreign markets.

The Westshore Terminals coal port in Delta, for example, which services the Elkview and Crownest coalfields in the “Southeast Region,” recently showed that it’s confident in B.C.’s coal-mining industry by completing Phase 2 of an ongoing equipment upgrade.

Figures from the B.C. Government’s “Coal Industry Overview 2012” show that

the annual capacity at Westshore Terminals’ Delta port has increased from 23.5 to 33 million tonnes in the past five years.

Also servicing the “Southeastern Region” coalfields, as well as the Quinsam mine on Vancouver Island, the Overview says that Neptune Bulk Terminals in North Vancouver recently received approval from Port Metro Vancouver to increase its coal export capacity from nine million to 18 million tonnes.

The government document also says

that coal from mines in the “Northeast Region” that are transported by rail to the Ridley Terminals at Prince Rupert will also be handled quicker and more efficiently thanks to plans to increase annual capacity from 12 to 24 million tonnes.

This will accommodate the anticipated increase in coking and PCI coal from the Peace River coalfield.

It’s also reported that Fraser River Docks in Surrey has also applied to Port Metro Vancouver for approvals to develop part of its facility to transfer thermal coal from Wyoming.

Moving the coal would involve loading it onto barges for transport to the deepwater port on Texada Island in the Strait of Georgia, and from there be loaded onto ocean-going ships.

Regardless of where coal is mined in British Columbia or how it’s moved within or out of the province, B.C. coal is the best and as stated at the outset, its mines are the best too!

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T Rail and massive ocean-going vessels work in harmony to deliver coal to foreign markets.

20 | Canadian Mining Journal • May 2013

he headline “Coal Country” on the previous article refers primarily to activities in British Columbia but those two words can also be used to describe Canada as a whole because of the vast reserves and resources of coal this country possesses.

Naturally, British Columbia is a leading producer and exporter of coal, but a recent “Economic Impact Analysis of the Coal Mining Industry in British Columbia, 2011” study conducted by PricewaterhouseCoopers LLP (PWC) for The Coal Association of Canada (CAC) clearly supports that Canada also plays a major role in the supply of coal on a world scale.

Prior to PWC’s recent study, the last official survey of Canada’s coal reserves was

reported by the Geological Survey of Canada in 1989. That report listed the official estimate of Canada’s coal reserves and resources at December 1985: coal reserves were 8.8 billion tonnes, of which 6.6 billion tonnes were recoverable coal reserves.

With vast reserves often comes extensive mining and exporting and in 2011, Canada was the third largest exporter of metallurgical coal after Australia and the United States, and according to the World Coal Association’s AME Mineral Economics Report, “Eighty-nine per cent of the Canadian metallurgical coal exports come from British Columbia, the province can be considered the third largest exporter of metallurgical coal in the world and one of the top ten global producers.”

Delivering Canadian coal to offshore www.canadianminingjournal.com

Coal Association of Canada’s President Ann Marie Hann.

A look at where B.C.’s coal is located.

Rail cars filled to the brim head to market.

markets is a major undertaking and on average, coal makes up 11% of total railway traffic carried across Canada annually and in 2011, British Columbia was the destination for 92% (38.5 million tonnes) of the total coal tonnage carried by rail in Canada.

While much of the information in

PWC’s study to CAC is privileged and confidential, CAC President Ann Marie Hann did highlight some of The Study’s findings for Canadian Mining Journal insofar as coal mining in British Columbia is concerned.

In support of what was mentioned in the previous “Coal Country” article,

President Hann added that “Coal makes a significant contribution to the British Columbia economy through employment, tax revenue and contribution to provincial GDP. “In 2011, the coal industry generated an estimated $3.2 billion in provincial GDP and approximately $715.2 million in tax revenue from all levels of government including $399 million in tax revenue generated by economic activity and $316.2 million in mineral tax payments to British Columbia.”

With 12 billion tonnes of potentially mineable resources, coal should obviously help ensure that B.C.’s economy remains strong for years to come, and Hann agrees by saying: “Coal is essential to British Columbia as a catalyst for economic development, international trade, investment in regional communities, and the employment of thousands of British Columbians.”

In fact, the coal industry in British Columbia employed more than 26,000 people in 2011, including many professional mine engineers, geologists, and other skilled and certified tradespeople.

The estimated average annual wage of those directly employed by coal companies was $95,174, twice the average provincial wage of $43,500.

The average national wage for coal mining was, according to the PWC Study (2011), $92,768.

While the wages paid by B.C.’s coal mining sector are impressive, they key to what has put the province’s coal mining industry on the map is again, coal, and it’s interesting to see how it compares to the May 2013 • Canadian Mining Journal |

21

| Coal Huge buckets are required to move the millions of tonnes of coal that are dug from the ground each year.

Exploration and what it’s all about.

export of other natural resource products.

Coal represented almost 22% of total provincial exports, followed by 7% from all other mining activities, 6% from oil and gas production, and 2% from forestry and logging.

In terms of buyers of B.C. coal in 2011, Japan bought 27% and South Korea 26% of the province’s metallurgical coal export while China’s demand for 10% continues to rise. Coal is also shipped to Europe and the United States with 16% and 3% respectively.

More figures from PWC’s Study show the next largest shipments are at 9% to Brazil, Taiwan with 4%, exports to Turkey at 3%, and India at 1%, with the balance to other world destinations (Chile, Mexico, Pakistan, and Egypt).

While these figures are impressive and clearly show why British Columbia’s coal miners are among the top exporters in the world, reaching that status comes with a cost and the PWC Study says that while “The coal mining industry provides employment, pays higher than average wages, and generates overall economic value to the provincial economy, the economic contribution of the coal mining indusrty is also greater than these direct effects.

“Also included are effects from construction and operations expenditures generated from coal mining companies that includes the purchase of goods and services from suppliers. These activities

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| Coal are considered spill-over effects and also contribute economically to the provincial economy. Taxes are collected at the federal, provincial and local levels on mining company activities which in turn provides services to the general public.”

Like all mining sectors, coal miners pay their fare share in taxes and as already quoted from the PWC Study, the coal mining industry in British Columbia con-

24 | Canadian Mining Journal • May 2013

tributes handsomely in value-added GDP activity to the tune of just over $3.2 billion to the provincial economy.

Contributions to provincial GDP included $2.2 billion of direct mine-site activity and under $1 billion estimated from mining supply and other related economic activity.

As a result, the province’s coal mining industry paid to all levels of government a

total of approximately $399 million in direct and indirect tax revenues, a figure that represents 57.2% of the estimated taxes paid to all levels of government by the national industry.

And furthermore, additional mineral taxes collected and reported by the provincial government in 2011, according to PWC’s Study, of $316.2 million and are in addition to the tax revenues just mentioned.

Paying taxes is a part of doing business and to be able to pay those taxes, the coal miners had to spend money to make money and PWC estimates that the total output of operating expenditures in 2011 was approximately $2.6 billion, made up of $1.8 billion and $766 million in direct and indirect impacts respectively.

Direct impacts include activities attributable to mining, such as employees and output of mining companies. These effects include the ongoing operations and maintenance of the mine site including transportation of mine output from the mine to the purchaser.

Indirect impacts are the activities of suppliers to mining companies and include contractors and other companies providing inputs to mining companies.

Indirect effects also include the activity of suppliers to these companies.

Operating expenditure impacts in terms of contributions to GDP were estimated in the PWC Study at $1.6 billion and consisted of $1.2 billion in over $400 million in estimated direct and indirect impacts respectively.

The economic impacts for capital expenditures, including construction materials, the purchase of lands and mineral rights, expenditures on all buildings and other surface structures, machinery, equipment, mine shafts and other underground work, was $1.5 billion made up of $1.1 billion in direct capital spending impacts and over $400 million in indirect impacts.

Mining is a rewarding profession for British Columbia’s coal miners and while there’s little doubt concerning their skills and dedication to the industry (and for meeting the world’s demands for their products), the province and the country, for that matter, are indebted to the companies and individuals who have made Canadian coal such a treasured commodity.

CMJ www.canadianminingjournal.com

A101768 AEL IRON 178x254 CMJ fa.pdf

1

2012/07/03

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| Coal Aerial clearly shows the effectiveness of the Ridley Terminals. Coal is stockpiled adjacent to rail lines and conveyors for ship loading.

Prestigious

Pacific Port Huge marine port continues to upgrade to meet growing demands

By Correspondent David Godkin

I

t is by just about any measure you care to use one of the most impressive marine port developments in the Pacific Northwest: passenger cruise terminals meshing with a world-class intermodal (ship to rail) container terminal.

Marine loading facilities to ship LNG cargoes to energy hungry consumers in Japan, South Korea and China. A $42 million marine terminal to ship wood pellets overseas and a $90 million road-rail corridor that will enable this and other bulk materials like coal, and sulphur link up with mining and natural resource operations across northern BC and Alberta.

“We’re now seeing an incredible hybrid port facility here,” says Michael Gurney, Manager, Corporate Communications, for Prince Rupert Port Authority, “made up of terminals in operation, under development and pro26 | Canadian Mining Journal • May 2013

posed that represent billions of dollar of investment in Prince Rupert and thousands of jobs in the offing.”

Add to this Ridley Terminals Inc. (RTI), one of North America’s most advanced coal unload and loading terminals and you have a highly sophisticated export point for vast reserves of Western Canadian coal and petroleum coke. Despite its street cred here and overseas, however, it’s been a bumpy ride for the west coast terminals. Built in the 1980s at a cost of $250 million to ship coal from newly opened Tumbler Ridge coal mines in northeastern, B.C., the Crownowned terminal has been placed on the sales block twice, most recently by the federal Tories in December – a puzzling choice given the terminal broke records the year before in revenue, profits and production, signed 11 new contracts and cut its debt by 70 per cent.

Answering China’s call…

What makes the announcement of the sale more mystifying is the increased appetite for Canadian coal in Asia, notably China. With an annual shipping capacity of 12 million tonnes and onsite storage for another 1.2 million tonnes Ridley Terminals has the added advantage over other western ports of being a day and a half closer to the Asian giant. China is virtually bursting at the seams in new manufacturing and an enormous emerging middle class hungry for goods created with the help of Canadian coal.

The prospect of all that increased activity is the main driver behind tremendous engineering and construction activity at Ridley Terminals, in particular two main components that were extremely complex to engineer and build. The first is RTI’s new rail mounted stacker reclaimer – with www.canadianminingjournal.com

Metso’s rotary railcar dumper barrel is one of the largest and most impressive additions to the entire coal export operation in British Columbia.

A coal stacker precisely maintains a ready supply of material destined for shipment to foreign markets.

a vast complex of interconnecting conveyors, transfer points and ancillary equipment including scales, feeders, dust collection and suppression – and the ability to deliver high volumes of coal and petroleum coke. “The stacker reclaimer,” says RTI’s Director of Project Engineering Emil Tomescu, “is a huge piece of equipment to assemble in terms of the precision needed and the alignment.”

The second major piece was the assembly and installation of tandem rotary railcar dumper barrels designed to unload a coal handling rail fleet that in recent years has transitioned from steel rail cars to lighter, aluminum-made railcars. First job, though, was taking apart and disposing the existing dumper barrels, not an easy task by anyone’s standards. “They were monsters,” chuckles RTI’s project manager Matt LaFiandra.

“Each barrel was about 330 tonnes. These

were removed from the vault in a single piece using a 600 tonne Liebherr crane and then cut up and shipped out as scrap.”

Substantially lighter at 150 tonnes apiece, the newly commissioned dumper barrels were still a handful, says Prince Rupert managing engineer Andy Cook. “To me it’s the logistics of getting those large heavy load components moved to the site as big and heavy as they are and assembled to the level of precision as they need to be.” Add installation of hydraulic and other components to the very precise lowering of the barrel dumper into an existing 60 foot deep concrete vault and you have, says fellow managing engineer Travis Bernhardt, “a massive mechanical, electrical, hydraulic and civil engineering effort.”

Designed by Metso’s Mining and Construction division the dumper barrels sit on large trunnion beams and bearings.

But the really important action occurs at the top of the platen inside the barrel where success lining it up to the rail line is measured in very small fractions of an inch. Based on a bridge and drawbridge design, that platen is also special, says LaFiandra, because its adjustable length accommodates the difference in length between steel and aluminum cars.

“The barrel has end rings that are about 33 feet across and when all is said and done, the platen inside has to match up within approximately 1/16th of an inch of the existing rail line. So it’s very precise.”

It’s all about capacity…

The real eye-catching piece of infrastructure stretched across the Ridley Island skyline is RTI’s third, newly commissioned stacker reclaimer. Typically, companies choose between a trench-type stacker May 2013 • Canadian Mining Journal |

27

| Coal reclaimer, ideal for installations with lowvolume, high-active storage pile capacities, and a slewing type stacker reclaimer where much larger quantities of material must be available. And while both machines are horizontally pivoted (slewed) about the vertical axis, only the slewing stacker reclaimer utilizes this motion for operating in the pile during stacking and reclaiming.

Because of its high capacity demands, RTI settled on Sandvik’s PD200-2200/60, a slew type bucket wheel stacker/reclaimer that employs a straight-through tripper to handle material entering from one end of the yard and leaving toward the other end.

Sandvik calls it a “super-duty machine” that also minimizes the migration of the centre of gravity in operation and eliminates any

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interference that might occur between the stacking and reclaiming modes. Built in Jiang Su province, China, the machine was shipped to Ridley Terminal in five separate pieces aboard the HHL Macau.

From there it was transferred to barges at Porpoise Harbour on the east side of the Ridley Island and eventually moved to site with the assistance of Mammoet Heavy Lift and Gat Leedm Trucking. At approximately 1,500 metric tonnes, 140 metres long and 30 metres tall, the machine is a “humongous piece of equipment,” says Tomescu, boasting a reclaim rate of 6,000 tonnes per hour, the stackers a rate of 8,000 tonnes per hour.

As owner and prime contractor of this EPCM project, RTI oversees the construction of everything, including the 14 km long road rail utility corridor (i.e. three inbound and two outbound tracks for coal, potash and other bulk materials).

RTI buys directly from suppliers, some of whom deliver it to site where RTI subcontractors install it. “Other times if it’s a complicated machine like a stacker reclaimer or dumper,” says LaFiandra, “they install it, commission it, and hand us the keys once it’s proven out.”

Meantime, installation of a yet another tandem rotary dumper is planned for 2014, this in turn requiring construction of a new concrete vault. During construction, the rest of the PLC controlled plant has to be in continuous operation, says LaFiandra, which will mean digging the 60 foot vault in close proximity to those facilities. He likens it to building a sky scraper in downtown Vancouver or Toronto. “You’ve got buildings all around, you have to build this massive hole and not disturb the stuff around you. So it’s a substantial job.” Like the existing dumper barrels, this one will process a unit train of up to 75 cars an hour.

Asked if there’s anything to the rumour that yet another stacker reclaimer may also be in the offing, LaFiandra was characteristically cautious. “There is space to install a fourth stacker reclaimer, but at this point a fourth stacker reclaimer has not been ordered.” That may be enough for now. By 2015, however, RTI and the port authority expect the newly commission stacker-reclaimer and tandem rotary dumper barrels will more than double the terminal’s capacity to 25 Mt/y and three million tonnes of ground storage. CMJ www.canadianminingjournal.com

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Marmora Iron Mine’s flooded pit lake is more than 160 metres deep

PIT POWER An old mine on its way to becoming part of a new energy future

By Correspondent Carl Friesen

A

closed mine in southern Ontario may be about to see new life helping unblock a stubborn barrier to renewable energy.

The open pit Marmora Iron Mine, located midway between Toronto and Ottawa, was in operation from 1955 until 1979, and since closure has filled with a pit lake over 160 metres deep.

It was the volume and depth of water, plus the waste rock piled next to the pit, that caught the eye of electrical power producer Northland Power Inc. This company, which operates several wind and thermal power sites in Canada and Germany, sees an opportunity for the mine to generate revenue once again, as well as help manage some of the growing challenges facing the Ontario power sector.

Pumped Storage helps make renewable energy practical Some of these challenges come from what many members of the public think of as a good thing — the growth of renewable energy, mostly solar and wind power. Although non-polluting, solar energy is limited by being available only when the sun shines, and wind turbines do not turn without enough wind.

Energy consultant Bob Stasko, President and CEO of Science Concepts International, says that in utility terms, wind and solar power is “unregulated” —it cannot be easily increased or decreased to match the peaks and valleys of demand. Also, there is no way to store it. So depending on whether the sun shines or the wind blows, the renewable energy that flows into the grid must be May 2013 • Canadian Mining Journal |

31

| Energy

An artist’s illustration showing the existing Marmora pit lake (left) and higher-level reservoir with turbine installation in white.

balanced by other sources of power such as hydro, nuclear or gas, ramping up or down.

“That becomes a destabilizing element in the energy mix,” says Stasko, adding that as the installed base of renewable energy grows, this effect becomes more pronounced.

Yet the world needs power sources that are renewable and do not contribute to climate change.

The key? An effective way to hold power available until it is needed. “Energy storage is the magic bullet,” says Stasko. He says that entrepreneurs and governments worldwide have been looking for practical means of “utility scale” power storage.

Part of the solution may lie in one of the oldest ways to store power: pumped storage. This involves pumping water from one reservoir to another at higher elevation at times of day when power is plentiful and cheap, and then running the

water back down through a turbine at times of peak demand.

The only pumped power installation in Canada, at the Sir Adam Beck generating station near Niagara Falls, was completed in 1957. It has an elevation differential of about 10 metres, for a capacity of 174 megawatts (for comparison, one MW can power about 800 houses in North America).

Success factors for pumped storage include the need for a good differential in elevation, the ability for the penstock between upper and lower reservoirs to have a steep gradient, and a short distance to electrical corridors with capacity to provide and receive power.

What makes Marmora Mine feasible for pumped storage?

John Wright, Executive Director, Business Development for Northland Power, believes that the Marmora Mine site meets these

requirements. His company’s plan involves moving the waste rock piled on the surface so it forms an upper reservoir, lined to prevent water release, with the existing pit lake forming the lower reservoir.

Combination pump/generator units, in an underground powerhouse, will use power from the electrical grid to pump water into the upper reservoir during offpeak periods when power prices are low, and then release that water back down into the pit to generate electricity at highpriced peak demand times.

The design provides for an average head — elevation differential — of 140 metres, making it able to produce 400 MW of power for about five hours, until the upper reservoir needs refilling. That will add significantly to the province’s ability to store surplus power so there is less need to sell it at a discount, or even pay other utilities to take it, as sometimes happens.

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Wright says that there are several factors that make the Marmora Mine site particularly attractive to Northland: • Pumped storage depends on a significant height differential between upper and lower reservoirs — and at the Marmora site, the head of water available is about four times the height of Niagara Falls.

• Success also depends on being able to have the two reservoirs close together, so that the penstock between them can be near vertical — a situation rarely found in nature, but available at Marmora.

• The site is close to the Golden Horseshoe — the urban concentration around the west end of Lake Ontario, for more efficiency in regulating the power supply.

• It is within eight kilometres of a major power utility corridor that has the capacity to provide and absorb the power that will be generated.

While there are many other closed open pit mines that might be used to generate power, says Wright, many are located in remote areas and far from the highcapacity power corridors needed to transmit the power, limiting their usefulness for pumped power.

Wright says that the Marmora Mine project has the support of local political leaders. Northland is now working with Ontario’s new leadership to ensure provincial support for the project. If the project receives the necessary support, there would be about a year and a half for the environmental review process, followed by about four years of construction.

Proposed Operating Range

60 40 20 0

Niagara Falls Projected Reservoir

Upper Intake Structure

Max Level EL. 33.7

53 m

Min Level EL. 13.7

Datum EL. 0.0

-20

Estimated Current Water Level EL. -36.0

-40

Marmoraton Pit (Existing)

-60 -80

Penstock

Estimated head: 200m

-100 -120 -140 -160 -180

Operating Range Powerhouse

-200

EL. -213.0

-220 -240 -260 -280

Lower Intake

A look at how the Marmora project would work.

Capacity: 400 MW for 5 hrs.

Pumped storage in underground mines Given the depth of some underground mines, it’s perhaps natural to wonder if they could be used for pumped storage, moving water from one level of a closed mine to another.

Doug Morrison, President and CEO of Sudbury-based Centre for Excellence in Mining Innovation, says that this is a question he has investigated in his current and previous roles.

“Underground mines were designed to be temporary,” Morrison points out.

Unlike underground structures that have been designed for longevity and built to civil-engineering standards, mines are vulnerable to collapse if not properly maintained. Repeated flows of water in

and out of the workings would likely accelerate this.

As well, Morrison says, the depth of mine workings is not necessarily optimal for the appropriate head of water needed for pumped storage — and the mines’ distance from electrical power corridors may also make them impractical.

Morrison advocates specially designed and constructed underground facilities, using excavation technologies that have been proven to work in mining, for purposes of pumped storage.

This means that the mining sector may have a role to play in helping gain greater acceptance for green energy, in Canada and elsewhere.

CMJ Carl Friesen is a Mississauga, ON - based writer specializing in environmental and energy topics.

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May 2013 • Canadian Mining Journal |

33

| Energy

PROUD PRODUCERS

By Eastern Correspondent D’Arcy Jenish

C

anada’s oil and gas producers have a major problem on their hands these days and it has nothing to do with performance, production or profitability. Nor do the industry’s troubles have much to do with its contribution to the Canadian economy or to the well-being of individual Canadians.

Energy companies employ 550,000 people directly and indirectly, according to the Calgary-based Canadian Association of Petroleum Producers (CAPP). They paid $18 billion in taxes to various levels of government in 2010, again according to CAPP, and that year invested $51 billion in new plant and equipment, making the industry the largest single source of private investment in the country. Canada ranks third in the world in crude oil reserves, behind only Venezuela and China, and has enough natural gas to meet demand — at current levels — for 100 years. In short, oil and gas companies can continue to be an economic force for decades to come.

The industry’s problem — and it is immense, given the forces gathered against it — is its image. Environmental activists, non-governmental organizations and even some wealthy individuals have launched blistering attacks on the oilsands of northern Alberta. They are equally determined to halt Trans-Canada’s Keystone XL pipeline that would deliver bitumen to the U.S. and Enbridge’s proposed Northern Gateway pipeline that would transport the same product to tidewater at Kitimat, B.C. and, ultimately, to Asian markets. The industry stands accused of being a major contributor to greenhouse gas emissions, and therefore climate change. Opponents portray the oilsands as a global threat to the environ-

34 | Canadian Mining Journal • May 2013

ment and, by extension, to the planet and humanity itself.

“The NGO activity against the oilsands began to accelerate about 10 years ago and it hasn’t subsided,” says Janet Annesley, CAPP’s vice-president of communications. “The NGOs have initiated campaigns against the pipelines because they think that if they can stop the pipelines they can stop the oilsands. They have tried to brand Alberta and the oilsands as a global threat which is utterly ridiculous.”

The industry is up against adversaries of all sorts--some with money behind them, other with hefty academic credentials. Tom Steyer, for instance, is a California-based billionaire who made his fortune as founder of Fallon Capital Management, a hedge fund that frequently invested in energy companies, but he has emerged as a powerful opponent of the Keystone pipeline.

Recently, he hosted a $5,000 a head fundraiser for U.S. President Barack Obama, who will ultimately decide Keystone’s fate, likely this fall.

Canadian academic Thomas HomerDixon, another prominent opponent, argued against the oilsands in an op-ed article that ran in the New York Times on March 31 under the headline “The Tar Sands Disaster.” Homer-Dixon, who teaches global governance at the University of Waterloo’s Balsillie School of International Affairs, described bitumen as “junk energy,” called the oilsands “one of the world’s most environmentally damaging activities,” and charged that “Canada is beginning to exhibit the economic and political characteristics of a petro-state.”

Homer-Dixon wants no part of environmentally sustainable development. As he put it: “Many of us want to see the tar sands wound down and eventually

www.canadianminingjournal.com

stopped, even though it pumps tens of billions of dollars annually into our economy.” The key first step to achieving that objective is to stop the construction of new pipelines and an American organization called All Risk No Reward has begun broadcasting 30-second anti-Keystone ads nationally. The voice-over text warns that oil spills are inevitable, that the oil will be shipped through the U.S. and on to export markets “putting us at risk while big oil gets the rewards. Connect the dots.

It’s a pretty ugly picture.”

Both the federal and Alberta governments have been vigourously lobbying for Keystone in Washington and taking out ads in prominent media like the New York Times to counter the opponents. In midApril, Alberta Premier Alison Redford made her fourth trip to the U.S. capital in recent months to meet with congressional leaders and policy makers. Furthermore, her government is now floating its so called 40-40 plan, which would compel companies to reduce their emissions by 40 per cent and impose a $40 per tonne carbon tax.

Alberta currently levies a tax of $15 per tonne. The province also passed regulations stipulating that facilities emitting more than 100,000 tonnes of greenhouse gases per year had to reduce the per barrel intensity by 12 per cent as of 2007.

Environment ministry compliance results show that the industry made reductions of 10.1 million tonnes in 2011 and had reduced greenhouse gas emissions by a cumulative 32.3 million tonnes between 2007 and 2011.

“Alberta’s 40-40 plan is a reaction to Obama,” says Bob Page, director of the Enbridge Centre for Corporate Sustainability at the University of Calgary. “Obama has made it very plain to both the Alberta and Canadian governments that without significant and dramatic change on the environment, Keystone will not be approved.”

If the U.S. president vetoes Keystone, it will have a significant impact on Alberta producers, Page adds. “By the end of next

year, we will have run out of pipeline capacity,” he says. “Then you have to shut in oilsands capacity and lose all that revenue to industry and government. New productive capacity is coming onstream and the only market is the U.S.” For the opponents, a victory in the Keystone fight would have real and symbolic ramifications. “They imagine if they do that, they’ve made a great start toward shutting down the hydrocarbon industry worldwide,” says Michal Moore, a professor of energy economics at the University of Calgary. “The idea that you can shut down the worldwide hydrocarbon industry by shutting down the Canadian industry is remarkably naive and dangerous.”

Apart from its ideological opponents, Canada’s oil and gas producers are facing market conditions that are largely unfavorable to their cause. At the moment the U.S. is awash in new supplies of domestic oil from the Bakken formation in North Dakota and the revival of the long-established Permian Basin in west Texas. As well, the return of Iraq as a major producer has changed the international supply picture.

“Canada’s oil producers find themselves in a position where they’re pushing on a string,” says Moore. “If you could erase the Bakken, erase the new supplies coming out of the Permian, if Iraq oil was still off line, then the dynamic would be dramatically different. You would have a very different climate in which to propose new pipelines.”

The Canadian public has been bombarded in recent years by claims and counter-claims, arguments and counterarguments about the oilsands and pipeline. But most Canadians appear to be largely unmoved by the doomsday scenarios presented by extremists such as Homer-Dixon. Annesley says CAPP polling routinely shows that only 12 to 15 per cent of respondents want to see an end to fossil fuel consumption and would support the closure of the oilsands. A national Harris Decima poll conducted in June 2011 revealed that 78 per cent of partici-

pants believed that a strong oil and gas sector is in Canada’s interest and 75 per cent supported the same level of development or more. The same percentage indicated they would support more development provided environmental impacts were manageable or being reduced.

In addition to polling, CAPP has mounted a major communications effort in recent years to sway public opinion, including slick TV ads that frequently run during Saturday evening Hockey Night In Canada broadcasts. Environmental groups say polished public relations won’t solve all the industry’s problems. “We understand why CAPP spends the money they do on communications,” says Simon Dyer, the Edmonton-based policy director of the Pembina Institute, an energy and environmental think tank.

“Pembina’s position," he adds, “is that there are legitimate environmental issues that need to be addressed. We’ve identified 19 key gaps in environmental management and we haven’t seen much uptake or dialogue from the industry. Canada’s industry is now environmentally uncompetitive and it’s hindering their market access.”

The industry is currently producing about 1.8 million barrels per day from the oilsands and output is scheduled to rise to 2.3 million b/d in 2015 and 5.0 million b/d in 2030. Extraction techniques and technologies have improved greatly over the years, but technology alone won’t improve the industry’s performance on environmental metrics or its image, Dyer argues.

He says new government policies and regulations are needed if the industry is to become environmentally competitive. “In almost every instance where we've seen breakthrough technology, it’s been because policy provided the prod to get us there,” Dyer adds. “Policy drove companies to take the lead out of gasoline. Policy changes drove the acid rain issues in eastern Canada.

Regulations change and smart people quickly figure out how to comply. That’s where we’re at with the oilsands.”

CMJ

May 2013 • Canadian Mining Journal |

35

| Energy The potential geothermal site.

Poised & Powerful Geothermal site holds potential for future generations

By Craig Dunn*

T

he Canoe Reach Geothermal Project, located in southeast B.C., about 35 km south of the Town of Valemount, is a notional +/- 10 MWe standard hydrothermal project currently in the exploration and assessment phase.

The development of this project would represent the first commercial geothermal power production in British Columbia, and the first GHG-Free (Green House Gas), renewable baseload power generation alternative to large-scale hydro.

As commonly understood, geothermal energy is extracted from naturally occurring heat within the Earth and is a clean and renewable source of both power and heat. It’s a proven technology that provides base-load power, meaning that the supply is constant, stable and invariable 24 hours a day, 365 days a year, contrary to other types of popular renewable energy options.

In general, the production of energy from geothermal sources works as follows: Non-potable water present in underground reservoirs, known as formation water, is naturally heated to high temperatures by the Earth’s abundant heat resources. Production wells are drilled into the subsurface, where the heat resource exists, to bring the hot formation water and steam to surface. The formation water is moved to surface via natural pressure as well as pump systems. At the surface, the formation water travels through the wellhead and into the power facility, which typically utilizes binary turbine technology. Here, the hot formation fluids are used to heat a secondary, or binary fluid via a simple heat exchange system. The binary fluid has a lower boiling temperature than water and is capable of flashing to vapour at temperatures lower than 100°C. In the vapour state, the binary fluid spins the turbine blade (much like steam rising from a kettle would turn a pinwheel that is held over it), and this turns the shaft to an electrical generator, thus generating electricity that is delivered to houses and businesses via 36 | Canadian Mining Journal • May 2013

the transmission grid system. The used binary fluid is then condensed back to a liquid state and used again in the same manner, being recycled within the system. The used, cooled formation water is re-injected back into the subsurface reservoir to be reheated.

This entire process is renewable as the Earth has a nearly infinite heat source in the mantle and core, and the upper crust constantly naturally produces heat. With proper resource management, geothermal projects offer a viable and stable energy resource for the future.

Borealis GeoPower of Calgary holds three contiguous permit areas at Canoe Reach, encompassing a total area of 12,848 hectares. The company obtained the geothermal exploration permits from the Ministry of Energy on October 17, 2010, which were renewed again in 2011 and 2012. The geothermal permits straddle the northern arm of Kinbasket Lake, which lies within the Rocky Mountain Trench, between the Rocky Mountains and the Columbia Mountains. The region is one of rugged topography,

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with mountain peaks rising steeply from the lake (at 730m a.s.l.) to elevations of as much as (2,600m a.s.l.) The permits are also strategically located at the end of the power line, which needs upgrading.

Borealis has been collecting data and performing work towards constraining the resource potential of the Canoe Reach area since 2010. Geophysics, biogeochemistry and soil geochemistry surveys have been performed throughout the permit areas.

The collected data has been used to map and be subsequently correlated with various other collected data sets to assist in establishing the feasibility of the project. Work in the area is continuing with additional field work planned for spring/summer 2013.

Magnetotelluric geophysical surveys have been performed in the area. These surveys are useful for mapping geological contacts and contrasts in resistivity as well as deep conductors that could potentially represent alteration or mineralization.

The data is used to identify and define regions of anomalously low subsurface

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May 2013 • Canadian Mining Journal |

37

| Energy

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electrical resistivity that could be indicative of hydrothermal activity, such as a geothermal reservoir.

Field work conducted in the summers of 2011 and 2012 consisted of coincident biogeochemistry and soil geochemistry sampling. After being processed, the resulting data from the samples were used to map the distribution of individual key elements. The distribution of the elements provides potential surface indicators for geothermal resources and structural features in the subsurface that are conducive to heat flow and circulation of heated hydrothermal fluids. The biogeochemistry and soil samples were taken simultaneously from the same locations in order to be able to crosscheck the results and confirm anomalous zones with results consistent between the two methods.

Borealis is currently working with McGill University on this cutting-edge research.

Hot springs also exist within the permit boundaries but are commonly submerged as Kinbasket Lake is subject to seasonal flooding as it is the catch basin for downstream hydroelectric dams.

There are streams feeding into the lake that have reported elevated water temperatures; these were located, examined and tested by Borealis during field work.

Outside of geological considerations, the company has also received support from both the Town of Valemount and surrounding First Nations. In both cases, MOU’s have been signed regarding their participation in the project.

Of note, the company is also the first geothermal energy company to be supported with SDTC (Sustainable Development Technology Canada) funding, announced February 2013. The funding will go towards implementing an exploration strategy for a project in British Columbia and is expected to benefit geothermal exploration as a whole.

Borealis GeoPower Inc. is a private Canadian corporation focused on developing high temperature geothermal energy projects. They are currently working on geothermal projects in Alberta, British Columbia, Saskatchewan and the Yukon Territory.

CMJ Craig Dunn: Chief Geologist, Borealis GeoPower, Calgary. www.canadianminingjournal.com

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| Fracking Technology Mechanical pullers prove a useful tool at fracking sites and maintenance locations by safely removing rolling bearings from shafts.

(Photo courtesy of SKF USA Inc.)

BOOSTING BEARING AND PUMP RELIABILITY IN FRACKING OPERATIONS Special Report*

I

n oil and gas hydraulic fracturing operations, nonstop operation has always been the top priority but as the industry continues to expand and mature, fracking operators and energy providers are focusing increased attention on machine reliability and maintenance issues, especially those affecting key bearings and rotating components.

There are several reasons for the change. One is the recognition in the fracking community that component failures have an adverse impact on operational costs and machine availability.

Rotating-equipment problems disrupt production and sometimes lead to shutdowns. Other reasons include environmental and safety concerns.

Fracking companies can potentially benefit from a number of innovative solutions that address different reliability 42 | Canadian Mining Journal • May 2013

issues. These include more robust bearing technologies, improved pump rebuilds, more effective condition monitoring, and more consistent lubrication methods.

High-Quality Components Central to the fracking process are highvolume fracking pumps, powered by large diesel engines. The pumps are either quintuplex (five-piston) or triplex (three-piston) varieties. Quintuplex pumps have six crankshaft bearings, while triplex pumps have four main bearings. These are usually cylindrical roller bearings. Both pump types also contain two high-speed pinion bearings on the pump input shaft, usually spherical roller bearings. In addition, there are a number of plain bearings in frack pumps that do not have rolling elements,.

Fracking pumps and their engines are mounted on large trailers and trucked to

Robust spherical roller bearings having optimized internal geometries and made with stronger steels potentially offer more reliable operation and longer life in fracking pumps’ pinion bearing application. (Photo courtesy of SKF USA Inc.) www.canadianminingjournal.com

the drilling site. The typical site has between 10 and 20 trailer-mounted pumps; the average is about 15 per site. A number of replacement pumps are kept idling as backups in case of problems with the operating pumps.

During operation, the pumps inject fracking fluids composed of water, chemicals and other substances at extremely high pressures into the wellbore. The purpose is to create and expand fractures in oil and gas formations deep underground. A fracking stage can take up to three or four hours to complete. It’s critical for fracking pumps to operate reliably for the entire job and not to fail mid-stage. Even though replacement pumps are usually available on site, it can be difficult to restart the fracturing process after an unplanned shutdown.

Many fracking operators are interested in improving pump reliability and prolonging the interval between pump rebuilds. On average, a frack pump rebuild lasts about 1,100 operating hours, or the equivalent of 10 to 12 months of operation. One solution

is to install more robust, higher-quality bearings during rebuilds, replacing the original pump bearings. The higher-quality bearings are made of stronger steel and have greater surface hardness, and can tolerate the heavy loads found in fracking applications. They offer possible solutions at the main bearing and pinion bearing locations.

Better pump performance has the immediate benefit of reducing the risks of failure, but it could also have long-term advantages. Fracking operations today have a large footprint. The sites take up a lot of land. Each trailer requires a truck and a driver, and the idling backup equipment produces emissions and wastes energy.

More reliable pumps might allow operators to reduce the amount of equipment needed on site, lowering costs and lessening the environmental impact. With fewer vehicles and machines needed, the site’s space requirements could also be reduced.

Effective Condition Monitoring Currently, only minimal condition moni-

Portable induction heaters quickly heat bearings of various sizes and prepare them for mounting. (Photo courtesy of SKF USA Inc.)

toring of rotating components takes place at fracking sites. But that is changing as more companies begin to implement condition-based monitoring programs as a means of boosting reliability.

Online monitoring technologies that offer continuous monitoring of the main pump bearings hold the most promise.

One such system, for example, is designed for harsh mining environments and employs sensors to monitor both temperature and vibration. Users can select from

May 2013 • Canadian Mining Journal |

43

| Fracking Technology early warning of component or machine failure, and forecast how many hours of productivity remain in a given pump. The data can enable fracking operators to pull faltering pumps out of service at the right time and replace them in an orderly way.

Fracking sites normally have a satellite communications link and transmit production data multiple times during the day. That same link could be used to Fault detection systems designed for harsh envi- transmit monitoring data to a central location for trending and analysis. ronments can monitor rotating components in fracking pumps and other machines, identifying problems in advance of failure.

(Photo courtesy of SKF USA Inc.)

several vibration options, including acceleration enveloping and velocity vibration analysis. Acceleration enveloping analysis identifies repetitive impact vibrations generated by bearing damage, machinery faults and lack of lubrication. Velocity vibration analysis identifies general faults such as looseness and misalignment.

Condition-monitoring data can give an

Lubrication Lubrication quality and distribution are also issues that affect pump reliability.

Fracking pumps are lubricated with circulating oil. The pumps operate outdoors and are exposed to harsh weather conditions and to contaminants such as dirt and gravel. Ambient contaminants sometimes work their way into oil reservoirs and are circulated to pump bearings, causing damage and eventual failure.

In addition, the lubricating systems

currently used in most frack pumps often fail to provide consistent lubrication to all bearing locations. Here, air-oil centralized lube systems can provide a better solution.

The systems employ an oil pump and compressed air to supply a consistent, accurately metered amount of oil to each bearing location. Overall lubricant usage is reduced and bearing life increased.

Another useful technology is an online metal particle sensor that can be used in conjunction with condition monitoring systems. The sensor analyzes the lubricating oil as it circulates, eliminating the need to take lubricant samples manually. It counts the metal particles in lubricating oil and provides data on particle type, size and count per minute. The sensor alerts operators to problems and motivates maintenance actions such as changing oil filters.

Efforts are also underway to improve lubrication of the plunger packing application, located on the frack pump’s fluid end. Its failure during operation can lead to a pump shutdown. These improve-

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Maintaining Secondary Equipment A number of smaller, secondary machines such as motors and compressors also operate at fracking sites. Advanced maintenance tools can help workers maintain these machines and properly mount and dismount bearings of different sizes.

Portable induction heaters with energysaving features, for example, can safely heat medium-size bearings to the right mounting temperature in less than 20 minutes.

Bearing pullers allow safe mechanical dismounting of bearings and components even in confined spaces. These technologies can also be helpful off-site at locations where pump rebuilds are performed. CMJ

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Efficiency

& Safety THANKS TO REAL-TIME DATA

By Heidi Levitt*

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don’t have to tell you that the resource industry is very competitive and to run an efficient business, managers need timely and accurate data. Waiting for month-end or quarterly reports, and the subsequent interpretation and reaction time, is not acceptable as it places companies at a serious competitive disadvantage.

Thanks to on-going changes in technology, however, real-time data can inform shift supervisors, maintenance foremen and mine managers of key statistics on staff and equipment allowing immediate adjustments for efficiency and safety.

For example, if a 360-ton haul truck is only carrying 350 tons (short by 2.7%), team leaders have the ability to quickly find out why and make changes so subsequent loads are full. It’s virtually instantaneous and allows problems to be fixed before they show up on the bottom line.

Real-time data drives directly to the bottom line. Any piece of surface or underground equipment can provide important data. The challenge is to provide the most pertinent information to a supervisor, foreman or manager so quick action can be taken.

Network Requirements Many mines currently have some sort of data network. To have real impact, that network needs to be highly available, scalable and have the capacity to easily carry the data load.

Today, many mines are moving toward Wi-Fi networks that have a combination of fiber and wireless networks. The fiber network provides the “big pipe” for data.

48 | Canadian Mining Journal • May 2013

The wireless network collects data quickly anywhere that work is being performed.

Wi-Fi networks are advantageous because they operate on an 802.11 open standard, providing flexibility to choose solutions from various manufacturers. Voice and text communications, tracking solutions for employees and assets, access control, and wireless video conferencing can all be utilized on a Wi-Fi network.

Manufacturers also have equipment specifically for targeted applications. In coal, Wi-Fi nodes can be added to longwall shearers. The node has the ability to send information to small nodes under the pan line or under the shields through wireless and fiber based nodes that provide data integrity under all conditions.

Another manufacturer has a mesh product that uses software to send data in more than one frequency and multiple paths simultaneously Data Sources Virtually every piece of equipment and every employee can be a source of data.

With mobile and stationary equipment, real time data can be broadcast and received by making the equipment a “client” on a Wi-Fi network, similar to a computer being a client on a network in an office. A Wi-Fi device is installed on the equipment to capture data in the format native to the machine and then translates it for transmission over the Wi-Fi network. At the other end, the data is displayed through software that pulls disparate information from various manufacturers into one easily viewed “dashboard.” www.canadianminingjournal.com

Real-time data can be used for keeping in touch with workers and equipment located in remote areas.

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May 2013 • Canadian Mining Journal |

49

| Technology Once all the data sources on a piece of equipment are connected to the Wi-Fi device on the vehicle, that data is available wherever there is a network or internet connection. Valuable data for equipment maintenance (hours of operation, tire and oil pressure), and load cells (measuring load capacity) is easily collected along with operational notifications such as

whether a cutting head on a continuous miner is engaged.

Data from employees can also be collected easily in real time, allowing the tracking of critical information related to employee and equipment location and movement within the mine for ventilation on demand requirements. Cap lamps for the mining industry are now

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available with tracking tags housed directly in the lamp. This approach offers many advantages, not the least of which is reduction in costs due to lost or misplaced tags. These cordless cap lamps house a variety of RFID and Wi-Fi tracking tags, making them adaptable to a wide spectrum of networks. The ability to quickly and accurately locate workers is critical should an incident occur in the mine. Rescue efforts can be focused and valuable time saved simply through the use of a reliable tracking solution.

Wireless Input Output Devices (WIOD) Once a network is installed and information is available from various sources in the mine, another component to optimize the system is a device that captures the information from the equipment and sends it up over the network.

Wireless input output devices (WIOD) can now be used in mines. WIOD’s are small and very cost effective all-purpose client devices that provide many advantages to transferring data through WiFi. WIOD’s for mining currently have two configurable data inputs, a great deal of processing capacity, and a large amount of storage.

They also have built-in temperature and pressure sensors as well as a three-axis accelerometer to monitor movement. The device works in or out of network coverage and can be mounted to fixed or mobile equipment and be line or battery powered.

Management Reporting The beauty of collecting data in this manner is that it is highly flexible and compatible with a variety of management reporting systems. With this data, centralized management information reporting systems provide information that allows mine operators to provide a safer working environment and increase productivity and equipment reliability.

New technology like cap lamps with tracking tags, WIOD devices and Wi-Fi technology work in concert to help managers drive efficiency into leading organizations.

CMJ

Heidi Levitt, President, NLT (Northern Light Technologies). Heidi can be reached at hlevitt@nltinc. com For more information, visit www.nltinc.com. www.canadianminingjournal.com

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| Equipment

HEAVY

MACHINES T

ARE KEY TO FUTURE DEVELOPMENT

Special Report* he history of many First Nations’ communities in Canada is one of unique cultures, traditions and often changes. Thankfully, however, many of the issues currently facing a growing number of these communities are “positive” in nature.

In the Village of McLeod Lake , B.C., for example, the McLeod Lake Indian Band, (a small group whose people are part of the TseK’ehne, or People of the Rocks), is instrumental in helping make its community one of the more progressive regions in the province in terms of mining and infrastructure development.

Under the leadership of Chief Derek Orr, the McLeod Lake Indian Band’s people have created Duz Cho Construction (with its head office`in Chetwynd, B.C.), a key supplier of road construction, site preparation and reclamation services to several large coal mines in the region as 52 | Canadian Mining Journal • May 2013

well as a number of gold, copper, molybdenum, lead and zinc mines.

McLeod Lake is located 150 kilometres north of Prince George in the north-central region of the province within the confines of the Rocky Mountain Trench and is on the doorstep to the mineral and energy resource rich northeast region of British Columbia. A significant geological area, The Trench separates the Rocky Mountains on the east from the Columbia Mountains and the Cassiar Mountains on the west and stretches 1,600 kilometres (990 miles) from the Flathead Mountains of Montana to the Laird River, just south of the British Columbia/ Yukon border. This area is often referred to as the province’s center of mining, oil and gas exploration as well as hydroelectric and wind energy development.

It is within this region that the proactive McLeod Lake Indian Band established Duz Cho Logging in 1998, a com-

pany capable of harvesting over one-million cubic metres of timber annually. The success of Duz Cho Logging was followed by the creation of Duz Cho Construction, with head offices in nearby Chetwynd in 2003, and the purchase of Summit Pipeline Services in 2004.

Wind. Coal. Copper. Gas. Along with the managed growth of Duz Cho Construction, the company has developed a very positive business relationship with Volvo Construction Equipment and their local dealer group, Great West Equipment.

Duz Cho Construction is a key supplier of road construction, site prepara-

www.canadianminingjournal.com

tion and reclamation services to several large coal mines in the region as well as a number of gold, copper, molybdenum, lead and zinc mines. Additionally, they are a key player in the site preparation, site decommissioning and site reclamation for the regional oil and gas industry.

With the development of the area’s wind energy sites, Duz Cho has been instrumental in road construction, infrastructure development as well as site preparation. Their first wind energy project, the 48 tower, 144 megawatt Dokie Ridge Wind Farm was fully operational in 2011.

Currently, they are winding up work on the 79 tower, 156 megawatt Capital Power Corporation’s Tumbler Ridge Quality Wind Energy project and have begun preliminary site surveys and preparation on the proposed 100 tower, Dokie Ridge II Wind Farm.

On the Tumbler Ridge Quality Wind Energy site alone, Duz Cho was responsible for over 22 kilometres (14 miles) of 12 metre (40 ft) wide roads, tower site excavation, foundation work, crane pad construction as well as back filling and all site and area reclamation. Here the company’s fleet of Volvo excavators, articulated haulers, motor graders and skid steers were instrumental in achieving on-time, on-budget completion.

Coal mining in this part of the world is a very robust industry with production averaging in excess of 35 million tons per year. “Mining in this area is a 24 hour, 365 day a year job and a number of the area’s

major mining companies are counting on us to be there when they need us,” states Wade Caven, Divisional Manager, North East Mining Division. “We need reliable and productive equipment that is cost effective and Volvo delivers that for us.”

Staying with the mining theme, Chris Leatherdale, Divisional Manager, North West Mining Division is heading up Duz Cho’s involvement at one of the province’s newest copper/gold mines, the 1.6 billion dollar Thompson Creek Metals’ Mount Milligan project. Leatherdale is leading the 120 man Duz Cho team in the construction of the mine’s massive tailings storage facility which involves moving up to 20 million cubic meters of motherearth. To get the job done, they are utilizing up to 45 pieces of Volvo iron including 700, 460 and 330 series excavators and a fleet of 35 and 40 ton articulated haulers.

When asked if their Volvo fleet was getting the job done, Leatherdale was very affirmative in his reply, “I have nothing but good to say about Volvo and Great West. We believe 100% in the Volvo product and know that it is what has allowed us to stay competitive in the mining industry. We just wish they would build some bigger equipment. Like 80 and 100 ton solid frame trucks and a large dozer line. We’ve told them, if they will build ‘em… we will buy ‘em.”

Just to the northwest of the nearby community of Tumbler Ridge, Duz Cho is working on site reclamation for Talisman Energy. Here a combination of two new

Volvo EC380D tracked excavators and a fleet of six Volvo A35D and A40F articulated haulers are restoring depleted natural gas-well sites back to their original rugged mountain condition.

Production. Performance. Challenge.

In speaking with Jim Humphreys, Duz Cho Construction’s General Manager, he was very straightforward, “We are very satisfied with the support provided by Volvo and Great West Equipment. We have had a long relationship with Tim Martin, Dillon Healy and the Great West team. They are always there when we need them and go above and beyond expectations just to keep us up and running. It’s because of them that every piece of Volvo equipment that we have in our inventory performs for us. Their excavators, especially the large 700 series are excellent and what can I say about the ‘wiggles’ (articulated haulers), they are the best. Nobody can even touch Volvo for production and performance.”

As First Nations’ communities work to provide a legacy of change for their peoples, perhaps Chief Derek Orr sums it up best, “It’s an honorable challenge to achieve the right balance between growth and development, while maintaining the positive traditions of the past.” To date the McLeod Lake Indian Band, under the guidance of Orr, has certainly achieved that.

CMJ *Information for this article provided by Volvo Construction Equipment.

May 2013 • Canadian Mining Journal |

53

| Company Profile – Atlas Copco

140 YEARS

By Russell Noble

A

STRONG

ny company that has been in business for more than 140 years is obviously doing something right. Companies like the Canadian Imperial Bank of Canada (CIBC) and Canadian Pacific Railways (CPR) are two familiar names that have both reached that 140-year plateau, but in the world of mining, the name Atlas Copco stands alone when it comes to sustainability through “staying in touch” with the times.

54 | Canadian Mining Journal • May 2013

Thanks to innovation, imagination, and keeping pace with modern technology, the company has positioned itself at the forefront of delivering solutions to world-wide problems and demands.

From its beginning in Stockholm, Sweden, in 1873, Atlas Copco has gone from designing and manufacturing products for railways to now, 140 years later, being recognized in more than 180 countries as an industrial leader in the supply of mining and construction equipment,

compressors and power tools, as well as entire air-treatment systems.

It’s been a long road since the late 1800s, but the company has travelled it well and since arriving in Canada in 1949, it has grown from its modest headquarters in Kirkland Lake operation to 33 locations from coast to coast.

In fact, history shows that the company has been “pushing ahead” ever since George Blomdal, a Norwegian Engineer, arrived here in Canada and started selling www.canadianminingjournal.com

a new type of Swedish-designed handheld rock drill featuring a “pusher” leg.

Word of the drill, with its unique supportleg attachment, soon spread throughout the mining industry and the term “The Swedish Method” soon became synonymous with Atlas Copco’s revolutionary tool that not only performed well but moreover, made rock drilling less of a backbreaking job.

As more and more miners heard about the drill, more orders were placed and within a year of being introduced to the Northern Ontario mining market, Atlas Copco opened two branches in 1950, one in Port Arthur (now Thunder Bay) and the other in Vancouver.

With orders continuing to come in, administrative requirements also grew and in 1951, the company moved its headquarters from Kirkland Lake to Dorval, Quebec, where there was a greater supply of clerical workers available to handle the increase in business.

Toronto and Montreal offices soon followed thanks to a growing demand for the drills and because the tools are powered by their own compressors, that area of business also started to grow.

As mentioned earlier, designing and manufacturing compressors for power tools was a big part of the company’s business and as more uses for compressed air emerged, like air-treatment systems, the company spread out farther across the country and in 1952, a branch office was opened in Truro, N.S. to handle the emerging mining industry in Canada’s eastern townships.

Throughout the balance of the 1950s, “The Swedish Method” continued to grow in popularity and so too did the company and its other products.

With branches now located from St. John’s, Newfoundland, to Vancouver, and a host of locations in between by the 1960s, the company broadened its focus to the forest industry as a source of new business.

One of the first tools Atlas Copco built for the forest industry was a drill rig built on a log skidder with a PTO-driven compressor on board to power a pneumatic rock drill.

But mining, the company’s “bread and butter,” was (and still is) its main source of interest and as mines grew in size and excavations got wider and deeper, so too did the machines required to drill farther and faster.

Most of the 1960s were spent designing and building drill rigs designed to handle the likes of Quebec’s massive hydro electric projects or the growing number of mines in Ontario’s Sudbury region.

With the 1970s came the start of infrastructure rehabilitation in Canada’s major urban centres and once again, Atlas Copco engineers were called upon to design and build drill rigs capable of working on subways and other underground facilities without disrupting above-ground services.

Compressors and air tools, too, have a very diversified customer base and the most important segments are manufacturing, process industries, utilities and the service sector, By the late 1970s they made their way (from the east) to Alberta’s oilsands.

The 1980s and 1990s saw continued growth and Louka Geladi, Vice-president, Atlas Copco Canada, credits the company’s success to its ability to translate longtime values into daily activities.

“Our history guarantees long-term industrial experience as well as innovative products and solutions to current and new customers, to suppliers as well to current and future employees.

May 2013 • Canadian Mining Journal |

55

| Company Profile – Atlas Copco

With more than 39,800 employees world wide, Geladi says that “celebrating 140 years is a fantastic opportunity for everyone in the company to create pride among themselves and show enthusiasm about future opportunities.”

As mentioned earlier, one of Atlas Copco’s greater strengths is in its employees’ abilities to come up with new and innovative products and solutions for current and potential customers and Geladi is confident this will continue as the company expands and modernizes its facilities around the world to meet global demands.

“In India, for example,” says Geladi, “we just opened a compressor manufacturing plant near Pune, as well as making a donation to safe drinking water projects from the company’s Water for All organization in the United States, and several customer events in Australia.

“And in keeping with our global interests, Atlas Copco proudly earned a spot on the Global 100 Most Sustainable Corporations in the World list, the most prestigious corporate sustainability ranking.”

56 | Canadian Mining Journal • May 2013

It’s achievements like this that Geladi says helps maintain the company’s world-wide status, but he emphasizes that it’s the corporate presence within local communities that is the real reason the company’s success.

With its 33 locations across Canada, Geladi says the company operates within reach of its customers; even as those customers stretch from Prince George, British Columbia, to Pasadena, Newfoundland, over 9 million square kilometers.

With regional hubs located strategically in Langley, BC, Winnipeg, MB, Sudbury, ON and Val D’Or QC, and with 23 Branch locations scattered throughout Canada, Atlas Copco’s mission to increase its presence in Canada is coming into place now.

Anne Marie Grossi, Branding and Communications Manager for Canada says: “It is evident that customers want their supplier to be close and we recognize that customers shouldn’t wait more than 24 hours for parts or service. The intention is to have key parts available closer to where customers need them.”

From its Sudbury (Lively) facility, Grossi says they are strategically located in the heart of Ontario’s mining community, and now with the new head office in Mississauga (just a few miles from Pearson International Airport), it is even closer to the crossroads to all points north for shipping.

“Consolidating Atlas Copco’s national offices in Mississauga made it possible for the customer centre to be located in Lively to streamline operations. Consequently, the hours at the Central region hub have been increased to seven-days-a-week from their previous five-day-a-week schedule.

“It only makes sense that service sup-

port is available seven-days-a-week to accommodate the vast majority of customers who operate seven-days-a-week as well,” says Grossi.

“Sustainable productivity is within reach — now, more than ever.”

Just over an hour to the east along Highway 17 in North Bay is the Atlas Copco Exploration Products centre where Daniel Misiano, Vice-president of Marketing, Consumables, says about 110 people work with state-of-the-art equipment to make specialized products for the mineral exploration industry.

“Our team manufactures a complete range of diamond core drilling equipment for distribution globally. We export into just about every major mining area of the world and we’re proud of what we make. It’s an extensive range of products including everything from the top of the drill to the tip of the bit, and comprises well-known products such as Christensen surface core drills, Diamec underground core drills, in-hole tools, Craelius, Hobic and Excore diamond tools, and Swellex rock bolts,” says Misiano.

From Stockholm to Sudbury, from St. John’s to Vancouver, Atlas Copco has Canada and the world covered and it’s through its global outlook, yet community thinking, that has resulted in the company being recognized as one of the Global 100 Most Sustainable Corporations.

It’s a lofty status that each and every employee at the company has worked hard to achieve but what’s even more worthy of congratulations is for Atlas Copco reaching its 140th Anniversary.

Well done, and Canadian Mining Journal salutes you!

CMJ www.canadianminingjournal.com

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a brand of

Jeffrey Rader electromagnetic vibratory feeders can process 1,800 TPH and are found in operation worldwide–primarily in mining and quarry operations, but also in aggregate, chemical and industrial processes.

Additional feeder applications include coal, minerals, oil sands and various blending materials.

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The Mountaineer™ II Sizer is a rugged, high-capacity crusher that can be used in primary and secondary applications. Its low horsepower requirements and abrasion-resistant construction make it ideal for the reduction of abrasive materials such as oil sands.

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| Products TRACK CARRIER The Panther T6 is a Canadian-made six-track carrier designed and manufactured by PRINOTH to handle up to 5443 kg (12,000 lb). Its unique tread pattern allows operators to get in and out of hard-toaccess terrain while minimizing the footprint.

Thanks to its huge payload, these vehicles can be equipped with a multitude of specialized attachments, thus makes them suited for all types of operations in mining, construction, oil and gas and electric utility.

With its two-person cab, large deck space, as well as ease of implement installation, the Panther is well equipped to perform without fail in the mining, electric and utility, oil and gas sectors.

Longwall roof equipment

Caterpillar is pleased to announce the availability of its underground longwall equipment designed with an electro-hydraulic control system for semiautonomous face operation. All roof supports are readied for the retrofit installation of the Cat MotionMonitor system.

The system employs the use of several strategically placed inclinometers that supply angularity data. With this data, the system can calculate the geometric attitude (pitch, roll and yaw) of each roof support. That information is needed to steer the face when operating in a semi-autonomous or autonomous mode.

By monitoring the angular rate-of-change during times when the roof support has not been given a command to move, the system also can be used to detect unexpected movement of roof supports as well as roof convergence. The detection of unexpected movements helps in preventing equipment collisions and enhances prediction of impending geologic activity such as rockbursts.

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Philippi-Hagenbuch, Inc has just introduced its water tanks based on designs and proprietary technology featuring square corners and integrated side-surge-stabilizes for the most effective compartmentalization of water available. When transporting and dispersing the quantity of water required within a mine, minimizing the movement of water within a tank is of extreme importance.

A first in the industry, access doors allow for easy and unencumbered access into the tank. Furthering the ease of access, the company patented the use of doors that close within water tanks, allowing people and natural air to move freely within the tanks without needing to crawl through holes when the doors are open.

The enhanced access to individual compartments has decreased harmful anaerobic bacteria from building within water tanks as fresh air can flow freely from the outside throughout all compartments when open. While in transport mode, all doors are closed, compartmentalizing water to eliminate water surges between compartments, while still allowing the water to flow as needed.

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Vibrating Screen

The XL-Class Vibrating Screen from W.S. Tyler combines advanced exciter drive technology with a wide body to offer better screening action and more throughput. Larger than any other vibrating screen from W.S. Tyler, the XL-Class is intended for high tonnage production rates, yet designed for low maintenance, easy operation and unmatched reliability. Traditionally developed for copper and iron ore, the XL-Class is suitable for almost any application, which either requires above average production rates and/or above standard process reliability.

Exciter drive technology ensures smooth operation and high uptime. The linear stroke is generated by counter weights which are mounted on two machined shafts and spin in opposite direction via two heavy duty spur gears mounted in a nodule iron casting.

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May 2013 • Canadian Mining Journal |

59

CSR and Mining

Dialogue offers more than the alternatives

By Marketa D. Evans

I

’m often asked if conflicts and disputes between mining companies and surrounding communities can be resolved through dialogue, or non-confrontational avenues. It seems that many people believe the only avenues that exist are confrontational – either go to court, or stage a protest of some sort.

In the course of the last few years of our work, we’ve certainly come across many instances where dialogue doesn’t just work, it works better than the alternatives. But the PDAC Convention this year brought a whole new depth of this reality to light – people in Latin America are actually creating organizations just with this approach in mind.

At PDAC, these individuals had an opportunity to present this type of approach. They were in Toronto as representatives from the Latin American Group of Dialogue “Mining, Democracy and Sustainable Development” (GDL as per its Spanish acronym). The GDL gathers multi-stakeholder dialogue initiatives on mining from Argentina, Brazil, Chile, Colombia, Ecuador and Peru, fostering increased understanding and dialogue among stakeholders in the very region where Canadian mining companies are most active. According to Natural Resources Canada, Canadian mining investments in South America and the Caribbean totaled about $70 Billion in 2011.

The GDL group had a three-hour presentation window at PDAC, designed to introduce the GDL to the industry and other key mining stakeholders, to share its vision and objectives. A facilitated dialogue format was used to encourage productive, informal sharing of knowledge, perspectives and expertise across a mix of stakeholders. More than 200 people came out to hear the speakers.

Peru’s initiative has been active for more than a decade and has convened over 300 workshops with issue experts. José Luis López Follegatti, representative from the Peruvian Group of Dialogue, began the GDL outreach session with an introduction to the importance of multi-stakeholder dialogue initiatives in a context of high uncertainty.

One area where I often see disconnects between industry and communities is around objectives – what is the “dialogue” actually for? For companies, it’s often about the outcome – reach an agreement of some sort, or move on to the next stage in the process. But the GDL speakers that day highlighted something else – dialogue as a process - a way to reduce polarization, and at the same time improve capacity within communities. The aim of dialogue then is not just about reaching agreements, but also about exchanging information and build-

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PROFESSIONAL DIRECTORY

Marketa Evans is the Government of Canada’s Extractive Sector CSR Counsellor. The CSR Counsellor is a special advisor to the Minister of International Trade. The Counsellor has no policy-making role and does not represent Government of Canada policy positions.

ing relationships based on trust and empathy. That’s why, in GDL’s experience, it is important to have a dialogue, for example, about the pressures of permitting. It is not designed to achieve any specific outcome, but rather to share information and to hear concerns and issues. It often meets a company’s needs as well – we often hear that companies are pretty frustrated that the information they provide does not get attention. The very act of the dialogue builds trust, and many disputes begin because trust is very low. This tends to be exacerbated when improvements in the quality of life don’t seem to be happening.

I had the privilege of serving as a “commentator” to the GDL panel, along with Tony Hodge, President, ICMM, Ian Thomson of On Common Ground Consultants and Ricardo Labo of Rio Tinto. The audience asked engaged, sometimes pointed, questions. “What do you do about anti-mining activists?” “How to bring governments into the dialogue mix?” “What are the key resistance points for industry engagement?”

Not everyone wants dialogue, that is clear. But what GDL does show is that we need an increasing number of legitimate places to accommodate those that don’t want to litigate or engage in social protest.

CMJ

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Advertisers Index 3D-P......................................................... 24...................................................... www.3D-P.com AEL Mining Services............................ 25..............................www.aelminingservices.com Atlas Copco............................................ 29.......www.atlascopcoexploration.com/Swellex AUMUND Foerdertechnik GmbH....... 49................................................www.aumund.com B.I.D. Canada......................................... 61.......................................www.bidcanadaltd.com Brookville............................................... 58.....................................www.brookvillecorp.com CG Industrial Specialists..................... 47.......................................................... www.cgis.ca Chicago Pneumatic.............................. 59..........................................................www.cp.com Diemme................................................... 33.....................................www.water.bilfinger.com DMC Mining Services.......................... 59...........................................www.dmcmining.com Doosan Infracore CE............................ 46.......................www.doosanportablepower.com Dundee Capital Markets...................... 64.....................................www.dundeewealth.com Eco Waste Solutions............................ 61....................................... www.ecosolutions.com Ford Motor Canada............................... 39................................. www.ford.ca/WeOwnWork HAULMAX.............................................. 43............................................... www.haulmax.com Hayward Baker Canada Ltd.................. 7....................................www.HaywardBaker.com Henkel..................................................... 51.................................www.henkelna.com/mining Hitachi....................................................... 8...................................... www.hitachimining.com Industrial Equipment Mfg.................... 38........................................................... www.iem.ca Liebherr-Canada................................... 45....................................................www.liebherr.ca Luff Industries........................................ 62.......................................www.luffindustries.com

Mechanix Wear..................................... 11.............................................www.mechanix.com Metso Minerals..................................... 12................................................... www.metso.com Motion Canada ..................................... 23................................www.MotionIndustries.com Norseman Structures........................... 44..........................www.norsemanstructures.com Orica.......................................................... 4..........................www.oricaminingservices.com Petro Canada........................................... 2.........www.lubricants.petro-canada.ca/mining Polydeck Screen Corporation............ 22.................... www.polydeckscreen.com/mining Royal Sun Alliance................................ 19........................................www.rsabroker.ca/GSL Safe Air Filtration Systems.................. 13...................................www.safeairfiltration.com Sellick Equipment................................. 18................................www.sellickequipment.com Showa Best Glove................................ 46.................................www.showabestglove.com Sommers Motor Generator Sales...... 32....................................... www.sommersgen.com SRK Canada........................................... 61.........................................................www.srk.com Strongco................................................. 28.............................................. www.strongco.com Technosub.............................................. 50............................................. www.technosub.net Terra Source Global............................. 57........................................ www.TerraSource.com Tetra Tech............................................... 38............................ www.tetratechindustries.com TMEIC..................................................... 60.................................................... www.tmeic.com Volvo Construction................................ 63.............................................. www.strongco.com Westeel................................................... 37................................................ www.westeel.com

May 2013 • Canadian Mining Journal |

61

Unearthing Trends

Capital strike drives new growth challenges Bruce Sprague is a partner at Ernst & Young and the firm’s National Mining and Metals Practice Leader. He is based in Vancouver. For more information on Ernst & Young’s report, Mergers, acquisitions and capital raising in mining and metals visit ey.com/ca/mining

By Bruce Sprague

C

ost and execution challenges have created a very different environment in the sector over the last year and, as a consequence, far more risk-averse shareholders for mining companies. These new investors are more tuned in to changes in market conditions and less comfortable with longer-term returns — a mindset that’s challenging all mining companies’ ability to grow and stay alive.

The global mining and metals capital strike has hit junior miners the hardest. Risk-averse investors have left very few options for early-stage explorers. Equity markets are also very limited to juniors, and it’s even more difficult to find other

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235010 Wrangler Road, Rocky View, Alberta, Canada T1X 0K3 TF: 1.888.349.LUFF (5833) F: 403.279.5709 w: www.luffindustries.com e: info@luffindustries.com CONVEYING PERFORMANCE

62 | Canadian Mining Journal • May 2013

financing sources. That’s why exploration stage companies exposed to current capital constraints are pursuing unique, creative financing arrangements and thinking about how they can advance to the next stage in their growth agenda.

These companies must be realistic in their projections about financing needs. Those that identify smaller funding requirements, linked to achievable, phased development targets, are more likely to attract investors. Promoting strong teams and track records can also provide a competitive advantage; investors are on the look-out for familiar names and those with a history of success. More and more majors are also paying attention to juniors with high quality assets and teams to build their project pipelines.

Consolidation between juniors with cash and those with property, mergers of equals, and streaming deals that sell off a royalty interest from a non-strategic asset for up-front financing are also sources of capital up for consideration in the year ahead.

It’s all about diversifying sources and types of funding to spread risk, drive efficiency, and limit exposure or loss of control to any one single party. Juniors that build relationships with the widest range of potential capital providers will secure the right funding at the right price more easily.

Capital optimization is at the top of the boardroom agenda for the majors on the other end of the spectrum. These companies’ shareholders have become increasingly frustrated by weakening share prices and lower profitability in the face of huge planned capital spending. Majors are now facing increased pressure to rethink capital allocation decisions and reduce capital expenditures.

Some of these allocation decisions include recycling capital through ongoing appraisal of portfolios, redistribution and diversion of capital from higher cost to higher return projects, and divesting non-core assets. Companies at this stage are well on their way to a new chapter of price-moderated margin growth as they try to balance the desire to build and maximize shareholder returns.

What next? The capital strike by many companies and investors alike will continue until commodity prices recover sufficiently to encourage new investment in the sector — a shift expected in the latter half of the year when companies welcome back leaner business models and stronger balance sheets. It’s then that companies will re-focus on growth as the pressure to replace depleting reserves and maintain production mounts.

CMJ www.canadianminingjournal.com

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nedgoodman@dundeecorporation.com — 416-365-5665