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April 2014
SAFETY FIRST! KEEPING COOL IN HOT SITUATIONS
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CANADIAN Mining Journal
Departments 5 Editorial
This month Editor Russell Noble talks about business travel and how even Prime Minister Stephen Harper seems to be tired and fed up with the long distances between appointments.
CONTENTS
7 Investing
Ned Goodman’s regular ‘Investing’ column looks at China and its mission to buy as much gold as possible in an attempt to eliminate the U.S. dollar.
9 Law
Norton Rose Fullbright Canada’s Andrew Godfrey talks about Resource Revenues and the creation of transparency standards.
Mine Safety 10 Nyrstar’s Myra Falls B.C.’s Myra Falls mine goes from
10
16 Outsourcing mine closures
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‘worst’ safety record in 2008 to ‘best’ in the province thanks to dedicated Safety Teams.
32 Company Profile This month Canadian Mining Journal
takes an in-depth look at ATCO Structures & Logistics of Calgary and the various types of portable storage and mining structures they manufacture and where they are located across Canada.
36 In My Mine(d) This month’s guest columnist is former PDAC President Ed Thompson who comments on “Why Grassroots mineral exploration is undergoing a massive decline.”
38 Unearthing Trends EY’s Doug Burcham, an associate
partner and the company’s Canadian Major Capital Projects Leader in Calgary, looks at what to consider when engaging an Engineering, Procurement and Construction Management (EPCM) team.
A look at the economic benefits of outsourcing mine closures and how it can save owners money and headaches.
21 Capping mines safely
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A guide to safely capping and sealing mines using stainless steel plates.
26 Vale’s Copper
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Cliff Mine
A technical report detailing how Vale used a dynamic support system to reduce the threat of rockbursts at its Copper Cliff Mine.
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www.canadianminingjournal.com
ABOUT THE COVER Photo taken by Editor Russ Noble during Safety Team training using foam during an underground fire exercise.
SAFETY FIRST!
Canada Post Canadian Publications Mail Sales Product Agreement No. 40069240
KEEPING COOL IN HOT SITUATIONS
Coming in May
Canadian Mining Journal will take a look at “Coal and Oil Sands” projects.
30 Safety against cyber hackers EY’s Global Information Security
30
Team looks at cyber hacking and why the mining and metals sectors are prime targets for thieves.
For More Information
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
www.canadianminingjournal.com April 2014 • Canadian Mining Journal |
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Editorial
CANADIAN Mining Journal April 2014 Vol. 135 — No. 3 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 613-270-0213 mscales@canadianminingjournal.com Art Director Mark Ryan roduction Manager Print Production Manager P Steve Hofmann Phyllis Wright
Let’s not forget we need help too By Russell Noble
T
here was a story on the evening news recently about Prime Minister Stephen Harper flying off somewhere and it showed him climbing the Publisher & Sales Robert Seagraves stairs to his plane with his parting view 416 510-6891 to us as usual, but what really caught my rseagraves@canadianminingjournal.com attention was that he really looked like he Sales Western Canada, Western U.S.A. didn’t want to go. Bonnie Rondeau Head down, one hand on the rail as he 416-510-5245 brondeau@canadianminingjournal.com trudged up the stairs and when he got to Toll Free Canada: the top, not even a turn and a wave. He 1-800-268-7742 ext 6891 or 5245 Toll Free USA: just got on and the door closed. Again, he 1-800-387-0273 ext 6891 or 5245 looked like he was muttering to himself: Group Publisher “Why me, why do I have to go there Doug Donnelly President Vice-president again. They don’t understand me and I Bruce Creighton Alex Papanou hate the food?” Established 1882 Anyway, unlike other foreign trips Canadian Mining Journal provides articles and information of practical where he’s often hand-in-hand with his use to those who work in the technical, administrative and supervisory aspects of exploration, mining and processing in the Canadian mineral exploration and wife Laureen as they climb the stairs, turn, mining industry. Canadian Mining Journal (ISSN 0008-4492) is published 10 times a year by Business Information Group L.P. BIG is located at smile and wave, then board the plane, this 80 Valleybrook Dr., Toronto, ON, M3B 2S9. Phone (416) 442-5600. time the Prime Minister looked weary 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 and dragged out; fed up with travelling. 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 In fact, I bet if someone asked him obtain the permission of the owner of the copyright. For further information please contact Russell Noble at 416-510-6742. what he’d rather be doing than flying for Subscriptions — Canada: $47.95 per year; $76.95 for two years. USA: US$60.95 eight or 10 hours with an entourage of per year. Foreign: US$72.95 per year. Single copies: Canada $10; USA and foreign: US$10. Canadian subscribers must add GST and Provincial tax where necessary. staff and various other invitees, including GST registration # 809744071RT001. the Press, he’d probably say, “Nothing.” From time to time we make our subscription list available to select companies and organizations whose product or service may interest you. If you do not Some may say he does a lot of that wish your contact information to be made available, please contact us via one of the following methods: Phone: 1-800-668-2374; Fax: 416-442-2191; already but I’m not going to get political. E-mail: privacy officer@businessinformationgroup.ca; Mail to: Privacy Officer, Business Information Group, 80 Valleybrook Dr., Toronto, ON, M3B 2S9. However, but staying on a political Publications Mail Agreement #40069240. PAP Registration No. 11000. We note for a moment, what about Foreign acknowledge the financial support of the Government of Canada through the Publication Assistance Program towards our mailing costs. Return undeliverAffairs Minister John Baird and his recent able Canadian addresses to: Circulation Dept., Canadian Mining Journal, 80 Valleybrook Dr., Toronto, ON, M3B 2S9. E-mail: bigcirculation@bizinfogroup.ca travels to Syria and most recently Ukraine, Canada Post: Publications Mail Agreement PM40069240. Please forward to have a fist-hand look at what’s going on Forms 29B and 67B to 80,Valleybrook, Toronto, ON M3B 2S9. Canadian Mining Journal, USPS 752-250. US office of publication: 2221 Niagara over there and to evaluate how Canada Falls Blvd., Niagara Falls, NY 14304-5709. Periodicals Postage Paid at Niagara Falls, NY. US postmaster: Send address changes to Canadian Mining Journal, can help? PO Box 1118, Niagara Falls NY 14304. He too must be weary of hopping on We acknowledge the financial support of the Government of Canada through the Canadian Periodical Fund of the Department of Canadian Heritage. planes to far-off places then coming back to report to the Prime Minister where and how much money Canada should give in aid to those troubled countries. Flying from Ottawa to Kyiv (about 14,400km round trip) and Syria (about 17,500km round trip) adds up to almost Circulation Manager Cindi Holder 416 442-5600, ext. 3544 cholder@bizinfogroup.ca
32,000km and that’s a lot for any one person in a relatively short period of time. And so is the amount of financial assistance that Canada has agreed to provide those two countries as a result of travelling all of those miles just to see how desperate the people really are. I sympathize with the situation(s) and applaud Canada in general for stepping up to help but I also have a bit of a problem with our government committing $631.7 million in Humanitarian and Development Assistance to Syria and just recently, another $220 million to Ukraine for, as Minister Baird says, “To promote sustainable economic growth, democratic development and good governance.” That’s all well and good but I think if Foreign Affairs Minister Baird had flown in the other direction, northwest about 750km from Ottawa instead of some 32,000km east to Syria and Ukraine, he would have also seen a place worthy of government assistance “To promote sustainable economic growth,……” It’s called the “Ring of Fire” and it’s also in need of our Federal Government’s support. I mentioned here last month about the importance of the “Ring of Fire” to the Canadian economy and how it could be Ontario’s equivalent in value to Alberta’s oil sands but unlike the oil sands, there’s no suitable access to the site. It needs a road, plain and simple, and I think we could build a pretty damn good one from some of the $851.7 million Canada has and is providing in assistance to once again, “Promote sustainable economic growth” in other countries. Let’s hope that Prime Minister Harper and Foreign Affairs Minister Baird think about that on their next ‘humanitarian’ flight overseas to dole out our money. CMJ
Canadian Business Press Indexed by Canadian Business Periodicals Index
April 2014 • Canadian Mining Journal |
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Investing
China is on a mission to eliminate the U.S. dollar Ned Goodman is President and Chief Executive Officer of Dundee Corporation
By Ned Goodman
A
book authored by Martin Jacques and first published in 2009 is entitled: “When China Rules The World.” Well-known author and Harvard University Professor Niall Ferguson said of this book, “The rise of China may well prove to be the defining economic and geopolitical change of our time.” Others have said that the movement of China is creating a 21st Century world no longer modelled on and shaped by Western ideas and consumption. The implication of China’s recent gold bullion acquisition program is part of the rise for the changing world order and the way that people all over the world will live their lives. When, not if, China’s economic growth develops such that the entire Chinese population achieves our kind of modern living standards and ability to gain educational superiority, it is not likely that they will continue to be controlled by the authoritarian Communist Party. When China becomes a competitive commercial economy and the rural lands are being looked after by less than 10% of the population, China will be a multiparty, non-oppressive state with the freedoms of speech and religion. Looking back at the previous 200 years of human history, there have been massive life changes – population, increase in freedom and large amounts of wealth created and accumulated by many. The leaders of the U.S. are, unfortunately, living in an environment where they have to make important decisions
without having sufficient knowledge or information available to them, which means their decisions – while impactful – are also powerful and dangerous. They can do a lot of good and a lot of harm. As a result, as former U.S. Federal Reserve Chairman Ben Bernanke has told us, we live in great uncertainty and possibly grave financial danger. It is very difficult to accept uncertainty which may be the only thing in my life that has never had scarcity. I have been favoured in my personal life and business career to work hard on fundamental values in order to get that understanding of reality in spite of uncertainty. Looking forward to financial markets, what do I see as reality? What do I see as the history of the future? The majority of countries in the world are in a transition to modern lives resembling the U.S. and Canada and France and
Germany. We started to change about 100 years ago after going through the previous 100,000 years of progress, which enabled us to have a world with just 1.5 billion people 100 years ago and 7 billion people today. In the next 100 years, the world could have 10-15 billion people living just like we live. That period is going to need a lot of the hard stuff that comes from the ground, and for those of us who produce food, we will have to work harder. China is buying gold bullion daily by the hundreds of thousands of ounces with the ultimate intent to eliminate the U.S. dollar as the reserve currency of the world. That elimination does not bode well for the balance sheet and the increasing debt load of the United States. The negativity that it may create is yet not totally known. CMJ
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Law
Transparency in payments to governments Andrew Godfrey is an Associate, Norton Rose Fulbright, Ottawa
By Andrew Godfrey
T
he Resource Revenue Transparency Working Group (the “Working Group”) released its final recommendations for the creation of mandatory transparency standards. These would see mining companies traded on Canadian stock exchanges publicly disclose payments to governments. The Working Group, consisting of the Mining Association of Canada, the Prospectors & Developers Association of Canada, Publish What You Pay Canada and the Revenue Watch Institute, was formed in September 2012. Its objective is to improve transparency in the mining sector in Canada and overseas. Legislation is expected to be introduced in Canada this year to implement the Government of Canada’s commitment to mandatory reporting. The Working Group’s final recommendations will weigh heavily on legislators. The Honourable Joe Oliver, minister of Natural Resources Canada confirmed the Government’s commitment to mandatory reporting on Monday, March 3, 2014 at the PDAC conference in Toronto. He encouraged the provinces to play a leadership role and enact their own equivalent legislation, but noted that if equivalent standards are not implemented the federal government will enact legislation by April 1, 2015. Scope of reporting The Working Group’s recommendations are for all mining issuers to publicly disclose certain categories of payments made to national and sub-national authorities. This includes: states, provinces, counties, districts, municipalities and state-owned enterprises. In addition, companies will need to detail the mining project to which these payments are associated.
Control of subsidiaries The Working Group’s recommendations ensure reporting by not only parent companies but also subsidiaries, recognizing that projects are often held by subsidiary companies. The recommendations cover parent companies, subsidiaries, jointly controlled entities and/or associated entities. When to disclose The Working Group’s recommendations suggest that payments should be disclosed over the life of the project—from exploration to remediation—and over the value chain of the project, from exploration to export. This recommendation will ensure comprehensive payment reporting throughout the project life cycle. What to disclose The payment categories outlined in the recommendations align with other global standards, including the Dodd-Frank Act, the accounting and transparency directive in the EU and the Extractive Industries Transparency Initiative. The final categories of payments recommended are: • Profit taxes
• Dividends
• Royalties
• Bonuses
• Fees
•P roduction entitlements
• Infrastructure pay- • T ransportation ments as required and terminal by law or contract operations fees
Companies shall be expected to disclose all payments, or a series of related payments above C$100,000, for large issuers, and C$10,000 for venture issuers. The addition of the lower threshold for junior mining companies marks a departure from both the Dodd-Frank Act and the
EU requirements, which set the minimum threshold at $100,000. The Working Group noted this was to ensure the “made in Canada” approach would lead to reporting by all Canadian mining companies, including Canada’s important junior mining sector. Form and forum of disclosure Following the release of its draft recommendations, the Working Group received comments on both the form and forum of disclosure. In response, the final recommendations include a new section on the form of disclosure, namely that companies shall disclose their payments in a separate form, to be filed on SEDAR, on an annual basis. This ensures that companies will not have to include payment disclosure in a prospectus or other offering document, thereby mitigating any risk of payment disclosure causing delay in public offerings. The venue of payment disclosure is the next challenge. The Working Group recommends that the venue for payment disclosure be within provincial securities requirements. It recognizes the challenge inherent to passing a new disclosure requirement without a national securities regulator, but cites the Canadian Securities Administrators’ past successes in developing national instruments for mandatory disclosure, such as National Instrument 43-101. Next steps Mining companies would do well to prepare internal accounting systems to track payment disclosure on a project-by-project basis in the coming years. This can help ensure that compliance with the coming regulations is not a costly or overly burdensome process. CMJ April 2014 • Canadian Mining Journal |
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| Mine Safety
ZERO
Scenic view of Myra Falls Mine located in B.C.’s Strathcona Provincial Park.
IS A TOP
MARK Company’s goal is to remain accident and fatality free By Correspondent David Godkin trathcona Provincial Park is better known as British Columbia’s “crown jewel.” Nestled within its boundaries are the highest mountains on Vancouver Island, the highest waterfalls in all of Canada, and one of the most successful mines in Canada’s western-most province. In fact, successive sulphide deposits have been discovered at Myra Falls Mine since 1966, prompting the installation of new infrastructure, facility expansion and increased value of the zinc and other metals mined there. “We’ve also just renewed our park permit and a lease we have with First Nations at our shipping facility in Campbell River,” says General Manager Robert Behrendt. “Our goal is to run the mine for the next twenty years or close to it.” But that doesn’t mean there haven’t been bumps along the way. 10 | Canadian Mining Journal • April 2014
According to Behrendt, in 2008 the company payroll at Myra Falls was cut from 415 employees to 287. The worldwide financial crisis that same year cut the number of employees further to 207 with annual production of 1.2 million tonnes plummeting to 450,000 tonnes. Since then, it’s been a long slow climb back to the top, say Behrendt. “We’re up to 520,000 right now with a vision to grow higher. But what we have also done is significantly increase the grades and metal unit recoveries. So even though we’re not running the same production, portions of the mill are maxed out because the grades are that much higher.” This in turn has helped mine owner Nyrstar reduce costs and achieve favourable concentrate production at the same time. But the company hasn’t stopped there. It also embarked on a successful
hydro power plan that has nearly eliminated the need for diesel-generated power and Mill upgrades to improve recoveries of primary products and production of a new lead concentrate product. Do no harm… When your mineral claims are surrounded entirely by a pristine provincial park, you have to take extra care to keep it pristine. As Behrendt puts it, “We have to function with an Olympic gold medal performance twenty-four hours a day.” But every bit as important as its environmental success (witness the Mining Association of Canada’s environmental award in January) has been the ability of Nyrstar’s Myra Falls’ operations to keep its employees safe - both above and below the mine’s surface. “In 2008 we were told we had the worst record for safety,” says Behrendt. “Last www.canadianminingjournal.com
A rescue team during training. Photos by Brian Latta
Avoiding Disaster: Safety Teams simulate accidents as part of Intensive Training
year we had the best record in British Columbia and the Yukon.” “We’re below chicken farmers for safety,” adds Rory McFadden, Myra Falls’ Safety Manager, “and that goes for B.C.’s entire mining industry. There hasn’t been a fatality since 2008 and that includes gravel and everything in the province.” For its achievements, Myra Falls won the 2012 Large Underground Mines Award for more than 240,000 worker hours with the lowest lost-time accident frequency rate. Even open-pit mines rarely have accident frequency rates that low. Behrendt says several factors make an underground operation riskier. These include poor ventilation and air quality, ground faults, poor access to miners if a ground collapse does occur and that most lethal of risks – fire. Fire can be devastating. “You bring a truck up if it’s on fire in an open pit, it’s a lot different than if you have a truck fire underground.”
It stands to reason that underground mine safety must begin long before an underground mine starts operating. Enter the “rock doctors.” These are degreed engineers who understand the structural capacity of rock as it changes from one area to another. Their design calculations ultimately determine steps Behrendt and his staff take to safeguard the mine and its employees - for example, preserving rock stability through bolting, screening and, in some cases, shotcreting drifts. “They can be cable bolted or rigid bolted with different spacings and lengths of the bolt,” says Behrendt. “And understanding where the fault zones are and the different competencies of the rock is important too. You’ve got to deal with all that accordingly.” Meantime, Myra Falls’ reliance on offthe-grid power generation in a very active seismic zone requires constant monitoring of its hydro dam, as well as its tailings and earthen dams; sometimes even its underground blasting is picked up by seismic detectors in the Comox Valley. Fortunately, says McFadden, these tremors are very deep. “We’re told unless the epi-centre is right here it’s not a bad area to be in in the event of an earthquake.”
In addition to adequate ventilation and ground support, make sure you ask about staff working at height, Behrendt advises. Should they be tied off? If staff are working on equipment is it “locked-out, tagged-out” to prevent release of hazardous energy, electric shock, chemical combustion or falling counterweights. A staged victim, complete with makeup, provides the rescue team with a real-life situation in terms of weight and flexibility. Photos by Brian Latta
April 2014 • Canadian Mining Journal |
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| Mine Safety A close look at equipment helps ensure that everything is operating properly and safely.
At Myra Falls, scoops are operated by remote control; in front of each scoop is a wedge behind which the remote-control operator must stand to assure his or her safety. “There’s a temptation to get too close to the (scoop’s) brow. They’re not allowed to get within 15 metres of the brow.” All mines are not created equal… Over the years, all kinds of check point systems have been employed by mining companies to help ensure staff understand and avoid risk. These include the Neil George, Five-Point Safety System which helps the workforce recognize hazards and put controls in place to address them. Another is the Positive Attitude Safety System (PASS) which requires, among other things, workers to meet before every shift to talk about what went well the day before and what needs improving. Using a card system to rank risks and list safety controls can be very effective, says Michael Hajaistron, Vice-president of Behavioral Science Technology Inc., a
Proper equipment lighting not only helps operators perform their duties safely but it also warns underground workers of where machines are located.
12 | Canadian Mining Journal • April 2014
www.canadianminingjournal.com
California-based workplace safety consultant. “But it’s not the total solution.” Key to any safety program, he says, is the worker’s perception of the company’s “organizational value.” “Does the company and its leadership team value me as an employee? Do they really do the things that they need to do to invest in safety performance?” Other factors include “upward communications,” i.e. how quickly unresolved safety issues on site go up the chain of a command for a solution and how willing staff are to both alert each other to immediate safety risks and accept those alerts. The biggest mistake mining companies make, Hajaistron says, is devising a “one size fits all” program for safety for all their operational sites. The key is to fully delineate risk exposures at each particular location “and address them accordingly.” It’s also important to better understand a word which is often used when talking about industrial safety, i.e. “behaviours.” “We don’t think behaviour is good or bad,”
Equipment inspections are critical to the safe operation of machines.
Hajaistron says. “Behaviour is something I can take a picture of.” Hajaistron classifies behaviour in three different ways: “Enabled behaviours,” which are solely within the control of the employee such as such as climbing stairs with railings but not holding onto the rail-
ings, “difficult behaviours” that an employee attempts but is unable to perform safely, such as standing on a steam pipe to break a valve because the maintenance superintendent has locked up the ladders to prevent theft. “It’s not impossible for me to do it safely,” says Hajaistron,
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| Mine Safety
Clearly visible signs in dark places help underground workers find essential safety equipment in case of emergency.
“but the way we’re set up to do business makes it very difficult.” The third behaviour, says Hajaistron, is “not enabled” behaviours “so that no matter what I do as an employee there are barriers from a conditional perspective enabling to do that job safely.” An example: the absence of stair railings for an employee to grab onto. Finally, Hajaistron says never confuse behaviours with employee states of mind, i.e. Am I complacent performing this particular task? Am I just being lazy? “These,” Hajaistron explains, “are more cultural issues than behaviour issues.”
14 | Canadian Mining Journal • April 2014
“The Road to Zero”… That’s the phrase Robert Behrendt uses to describe his company’s central safety goal at Myra Falls. Zero fatalities. Zero injuries. But that doesn’t mean all risks can be entirely eliminated or accidents avoided. When things do go wrong, above or below ground, it’s vital that your company respond effectively. Myra falls boasts four rescue teams trained in the use of selfcontained breathing systems, rope rescue, fire-smoke suppression, emergency transport response and first aid, “anything we need to get a person out from below ground,” says Rory McFadden.
As proof, McFadden cites repeated awards presented to Myra Falls at annual provincial and western national mine rescue competitions for best overall underground mine rescue and best first aid delivery. He and Behrendt glow with pride when asked about these. Each stresses the importance, however, of ensuring no company employee has to drop below ground to save the life of another. “I don’t think what we do is rocket science,” Behrendt says. “Safety is always a topic of conversation in most places; you have to have full buy-in and there have to be consequences for unsafe behaviour.” Gone are the days of “lagging indicators” when mining companies only compiled accident and near-miss reports, he adds. The new focus is on “leading indicators” such as job and task observations, monthly safety tours and safety talks “anything that gets ahead of a safety event. We’re starting to develop metrics on those and reporting against those.” All to ensure that a different set of numbers are impacted, Behrendt concludes - the one on your safety report board. “When you see those numbers going down and down and down without an injury then you start to believe `Yeah. It can be done.’” CMJ
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| Mine Safety
Closed Good for
Outsourcing mine closures can save owners headaches Special Report*
M
any mining companies would love to find a better way to manage closure and its ongoing maintenance commitments. Most owners and operators want to be good social and environmental citizens, have good relations with stakeholders, meet their regulatory obligations and manage risk of legal repercussions, yet their main concern is around developing mines and operating them -- efficiently processing resources. 16 | Canadian Mining Journal • April 2014
To help ensure stewardship and that post-closure obligations are met, mining companies in many jurisdictions are required to post financial surety amounts to tens, if not hundreds of millions of dollars. Mine closure projects don’t generate revenue, nor do they contribute positively to the bottom line. As they are completed, however, they do free up surety funds which can then be put to work elsewhere in the company to support and develop mining interests elsewhere. www.canadianminingjournal.com
A team of inspectors examine the condition of an abandoned mine prior to determining the necessary steps required to help ensure that the site is closed properly.
In many cases, the closure and ongoing maintenance of a former mine property are handled by employees who are near retirement. They may have worked at the mine for years and have deep roots in the local community. They don’t want to uproot their lives by moving to another project, and welcome the chance to stay involved in the mining industry and maintain their income by managing the property. Because they are thoroughly experienced and familiar with the property, near-retirement employees have long been a com
mon way for mining companies to meet their regulatory and environmental obligations on a closed property. These employees often report to a small core Closed Sites Management team with oversight duties that extend on a national or international stage. What’s changing is the increased public awareness being felt by politicians and being enshrined in legislation in many jurisdictions, about the environmental, social and economic dangers posed by some closed mines. A failure of a tailings dam due to a severe flood, or of the cap on an underground mine, can cause a significant environmental problem, such as damage to fisheries and fish habitat. This can have serious impacts on the company’s operations, soaking up financial resources, management time and legal resources, as well as impacting the company’s credibility and reputation with regulators and the general public. It can impact financial surety, both present and future and may reduce the company’s abilities to access financing in future. April 2014 • Canadian Mining Journal |
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| Mine Safety A portal following the installation of the necessary equipment to make sure the old mine is safe.
Taking a leaf from the mine-development playbook For an answer to this growing concern, it may be good to look at another established practice within mining companies -- the outsourcing of the engineering, procurement and construction (EPCM) of the mine infrastructure to third parties, usually consulting engineering firms that offer these skills in-house. Many have observed that mining companies are focused on operating mines, not so much on building them. Outsourced EPCM is one way they can focus on their strengths, and accessing the engineering resources of other organizations. Because of the difficulties in managing the closure process and ongoing maintenance -- coupled with the growing penalties for failure in this area -- does it make sense to apply the outsourced EPCM model to closure, in effect, “reverse EPCM?” Commissioning a third party such as a consulting engineering firm to manage the company’s closed mine properties can involve delegating the firm to take charge of the closure operations, which might include capping an underground mine or installing the mine water treatment facilities. Then, the firm takes responsibility for ongoing maintenance, inspection, recordkeeping and reporting. This takes an obligation off the to-do lists of senior executives, allowing them to focus on what they do best -- developing and 18 | Canadian Mining Journal • April 2014
operating mines. This meets regulators’ concerns as well, who like the idea of having just one call to make sure that closure requirements are met on schedule and within established permits. Stakeholders such as NGOs and First Nations also like the fact that their interests will be safeguarded by a single responsible entity. As well, the engineering firm has specialists in areas such as fisheries habitat assessment, evaluating the stability of a tailings dam, and other key aspects of problem-free mine closure. Success factors in reverse EPCM contracts When executing an EPCM contract, there are several factors that need to be considered beyond the management of scope, schedule and budget. Here are some success factors for how mining companies and consulting engineering firms can get good results in working with a contractor that carries out implementation, based on our firm’s experience. Execution team Keep it lean. The contractor’s execution team does not need to be large, but it does need to bring the right people, with appropriate skill-sets and experience. Contractor procurement Select a contractor using a quality-based selection process, supwww.canadianminingjournal.com
W E
ported by evaluation interviews with potential contractors. Closely review the schedule with the contractor and have them show their understanding of project requirements of the project, by having them explain how they intend to execute their scope of services. As well, the consulting engineering firm must work with the contractor to identify suppliers that are capable of successfully delivering the project. Don’t fall into the “low bid” trap.
C O N V E Y
Q U A L I T Y
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Project control When executing a project, it must be controlled, either by the project manager or a dedicated project controller depending on the complexity of the undertaking. Project control refers to all aspects of the work breakdown structure for project execution, the performance of the engineering firm’s team and the performance of the contractor. When delivering the project, a baseline schedule must be developed by the contractor and rigorously tracked by the consultant to help ensure success. Remember that if there is slippage in the delivery of the contractor’s services, it will negatively impact the rest of the schedule as well. In the case of schedule slippage, the contractor must be notified and required to provide a plan as to how they will adjust execution activities and resources to get the project delivery back on plan. The consulting engineering firm must also work with site personnel and the contractor to identify opportunities to accelerate the schedule, reduce costs and recognize savings for the mining company. Risk identification Before work begins, and at pre-determined milestones, the mining company and the consulting engineering firm must review the project work breakdown to identify risks which could manifest over the course of the project. With each risk identified, the likelihood and resulting severity must be gauged. Mitigation measures can then be developed to help control project execution and manage change as it becomes apparent. Risk contingency When risks are identified and mitigation measures developed, it may be necessary to allocate some financial contingency. The amount can be estimated during the budgeting process, and refined during risk evaluation and taking of mitigation steps. Our experience so far, with ‘reverse EPCM’ projects for mining companies, is that this way of working may not be best in all applications, but that it does answer a number of concerns that mining companies have. As the ‘long tail’ of liability for closed properties continues to grow due to increased regulatory and public concern, this approach to closure may see greater application in future. CMJ *Information for this article provided by John Pugh and David Bleiker. John Pugh, M.Eng., P.Eng., is Senior Environmental Engineer and Geotechnical and Mining Project Manager with AMEC, based in Fredericton NB and David Bleiker, MASc, PEng is Principal Engineer, Mining Sector Leader, Environment & Infrastructure with AMEC, based in Mississauga ON.
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April 2014 • Canadian Mining Journal |
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| Mine Safety
A steel plate is moved into place to ensure that an abandoned mine is sealed properly.
20 | Canadian Mining Journal • April 2014
www.canadianminingjournal.com
Sealed Safety for
Stainless steel caps boost longevity for mine closure Special Report*
C
losure design for mine openings requires careful consideration of many factors, including but not limited to strength, installation method, transport and longevity. Following the conclusion of mining activities (including decommissioning and remediation) responsibility for the site is typically returned to the government to be managed in perpetuity. As a result of this process, one of the bigger design factors related to mine closure is longevity. Or, how long will the measures taken to close the mine remain safe and effective? This is a critical question because there is no time horizon on mine closures.
April 2014 • Canadian Mining Journal |
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| Mine Safety The finished product.
One of the more vital, yet vulnerable aspects of mine closure is sealing openings to the mine’s underground workings. Unsecured openings to the underground represent a significant public safety risk and as such, a robust closure design is required. Accordingly, the Saskatchewan Research Council (SRC) set out to develop better closure solutions for the dozens of abandoned uranium mines dotting the province’s north. These mines operated from the 1950s to the 1980s and the remediation of the sites is now managed as a part of Project CLEANS (Cleanup of Abandoned Northern Sites), an initiative of the Saskatchewan government that is being executed by SRC. 22 | Canadian Mining Journal • April 2014
Three-dimensional model of closure design. Image courtesy of McElhanney Consulting Services Ltd.
Most of these mine sites are in the Uranium City area. These closures are an important aspect of public safety, to pre-
vent unauthorized access and to keep people and animals from falling into the openings. Due to the location, logistical and economic challenges, SRC needed to develop something better than that prescribed in legislation, and the industry standard for vertical mine openings, which are generally constructed of monolithic poured concrete. Building a concrete cap, a third of a metre thick, for an opening seven metres by three metres, requires six cubic metres of concrete, placed in one continuous pour. Transporting the materials to a remote location, constructing forms, and hand-mixing concrete on site to meet specifications, is both difficult and costly. www.canadianminingjournal.com
PROJECT NEEDS
Initially the Saskatchewan government, in conjunction with a local Uranium City contractor, implemented stainless steel caps attached to the historic mine shaft collars or surrounding bedrock. These initial designs used large quantities of expensive stainless steel, as well as requiring extensive field fitting in some cases. Seeking a less expensive solution with an acceptable service life, SRC commissioned McElhanney Consulting Services Ltd. Design considerations included: • Sufficient service life and durability: Integrity of the caps must not be reduced as a result of annual freeze-thaw cycles, corrosion, acid rock drainage and other hazards, over a design life of 200 years. • Remote access: Many mines are in remote locations. Specifically for the mines in the Uranium City area, bulk materials are shipped to the area over a winter ice road, or in the open water months via barge. From Uranium City, the access roads to the mines in many cases have long since deteriorated. Access to some of the mines included in Project CLEANS is by boat only. So, any solution must be constructible without use of ready-mix cement trucks, large cranes or other conveniences available in less remote areas. Due to road conditions, loads are typically restricted to a maximum width of four metres.
• Economically effective: As the mine sites in Project CLEANS, and other abandoned nonuranium mine sites, are the responsibility of the provincial government, there is a need to safeguard taxpayers’ dollars. Life cycle considerations meant a need to minimize future replacement or repair costs. With all of these factors combined, care is required in order to reduce the degree of uncertainty in the final design. Design factors such as cost, reducing field fitting during installation, and transport and access to the sites can be anticipated. However, the future climate, long-term human activity in the area, or even whether records containing the mines’ locations will be available to future generations are considerations that must be factored into the final cap design.
SOLUTION To address the aforementioned considerations, a clear definition of the design criteria was jointly undertaken by SRC and McElhanney Consulting Services. They then evaluated several closure materials including ultra high-performance concrete (UHPC), aluminum, weathering steel, galvanized steel, stainless steel and polyurethane foam (PUF). Based on the design criteria, structurally reinforced stainless steel plate, custom-fitted to each mine opening, was chosen as the preferred method for the sites included in the 2013 field season. The caps were manufactured off-site to ensure that appropriate quality control measures were available as well as to eliminate shipment of extra material to the project sites. Several of these caps have now been installed. The design procedure starts with a site investigation to obtain the dimensions of the opening and to determine the attachment points of the cap. The data points
• Prevent unauthorized access: In order to maintain public safety, the installed caps must stand up to unauthorized access. Depending on the type of minerals mined at the site and current industry demands, the future may see prospecting and exploration for ore left behind. • Climate change: Caps must be designed for the possibility of more extreme weather, increased precipitation, including snow loads, and more dramatic temperature changes.
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• Forest Fires: Wildfires are inevitable in the boreal forest. As such, the caps must be able to withstand the intense heat of a fire. • Additional loading: Vegetation may cause organic buildup. Large animals may pass over the caps. There may be snowmobiles and other vehicles driving over the caps. It is foreseeable that exploration and mining may return to the area as well. All of these loading scenarios must be taken into consideration when designing the caps. • Reduced field fitting: A more robust design process reduces the requirement for field fitting during installation. However, the design has to be flexible to accommodate unavoidable alterations when unexpected site conditions are encountered. In cases of very irregular rock surround or installation challenges, field fitting will be required and must be incorporated into the design.
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| Mine Safety describing the size and shape of the mine opening and surrounding ground are collected with a reflectorless total station. Due to the remoteness of the sites, return field visits to pick up missed information are not economically feasible if some information is missed. With this in mind, traditional measurements are also collected with a note pad and tape measure. The design team then develops a 3-D image of the mine opening. This allows the team to optimize each cap by reducing the volume of material needed and determine the best way to fix it to the attachment points surrounding the openings while maintaining a well-defined load path from the cap to the ground. The caps are then fabricated at a qualified shop in Saskatoon and inspected for compliance before being shipped to site. One of the design criteria is to minimize field fitting. However, allowances are made to modify the bedrock around the opening. The stainless steel caps, weighing from 730kg (1600 lbs.) to 2800kg (6200 lbs), are
generally trucked to Uranium City via the Athabasca ice road or by barge across Lake Athabasca in the open-water season. From Uranium City, the caps are transported to each mine site with a rock truck or semitrailer depending on access conditions. During installation the caps are positioned with an excavator, using preinstalled and balanced lifting points. Following positioning of the cap, the anchor plate holes are drilled in the bedrock, the stainless steel anchors are installed with epoxy cement, and columns are cut to length and welded to the cap and anchor plate. Once the epoxy cement has cured, the anchors are tightened and rendered tamperproof. Following installation and compliance inspection, skirting is installed and the stainless steel cap is pickled to improve its corrosion resistance. The general construction of the caps consists of 6.4mm (1/4 in) sheet stainless steel, reinforced with stainless steel beams, which are supported with stainless steel columns to bedrock. A requirement to
prevent people from crawling under the caps and into the openings is skirting to the ground. The skirting is non-structural and is constructed in the field from 4.8mm (3/16 inch) if installed horizontally, or 3.2mm (1/8 inch) if installed vertically. Fastening to the bedrock is done with threaded stainless rod, cemented into the rock, using epoxy. Once closures and other remediation activities of the mine sites are completed, the sites will be entered into the Saskatchewan Institutional Control Program for decommissioned mines, which is managed by the Saskatchewan Ministry of the Economy. CONCLUSION The properties of stainless steel make it an ideal candidate material for engineered mine closures worldwide. The basic strength properties, relatively simple handling and manufacturing practices, and the inherent corrosion resistance makes stainless steel ideal for climate conditions encountered anywhere in the world. With any material there may be specific metallurgy required in certain regions. An example would be if there is a corrosive environment, such as coastal areas near salt water. Future efforts will be to continue to reduce material use, fabrication and installation costs, and the environmental impact during installation, as well as provide closure solutions for increasingly remote sites. There are also on-going design efforts for a component-based closure method, using pre-manufactured parts which will be field adjustable to suit any shaped mine opening in competent or fractured bedrock. Each cap is unique in order to fit each mine opening. However, each cap shares similar requirements to reduce public safety risks posed by unsecured mine openings. Based on this requirement, stainless steel currently is the material of choice to provide long-term protection to the public, as well as the natural environment, from the hazards of legacy mines. CMJ *Information for this article provided by Jonathan Lambert, Dianne E. Allen and Christopher Reid. Jonathan Lambert, P.Eng. is a Structural Engineer and Project Manager in the Terrace BC office of McElhanney Consulting Services Ltd. Dianne E. Allen, M.Eng., P. Eng., PMP is a Remediation Project Manager with the Saskatchewan Research Council and Christopher Reid, EIT is an Associate Geo-Environmental Engineer with the Saskatchewan Research Council.
24 | Canadian Mining Journal • April 2014
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| Mine Safety
Rockburst Dynamic support system helps reduce threat to stopes in deep mine Special Report*
V
ale’s Copper Cliff Mine is located within the Copper Cliff Offset in Sudbury and extends about 8km south from the Sudbury Igneous Complex into the footwall rocks. Of all the major geological structures present at Copper Cliff Mine, 26 | Canadian Mining Journal • April 2014
two structures are known to be seismically active; The 900 orebody (OB) cross fault, which strikes east–west and dips at about 55° towards north and The Quartz Diabase Dyke (trap) located between 100 and 900 OBs striking east–west and dipping steeply towards north.
Rockburst history A review of the rockburst/seismic event history over the past 13 years at Copper Cliff Mine revealed that there were approximately 40 rockburst/significant seismic event incidents in total that occurred in four different orebodies. Of all these incidents, 35 of them (roughly 87%) occurred within the 100/900 OBs, and the remaining five incidents (almost 13%) took place in the 120 and 880 OBs. Of all the rockbursts, the 3.8 Mn event that occurred on September 11, 2008 in the 100/900 OBs following a www.canadianminingjournal.com
Aerial view of Vale’s Copper Cliff Mine shows the top side of a huge mine that contains many levels of stopes that have undergone extensive work to help reduce the threat of rockbursts.
Control crown blast was considered to be the most significant. Although the location of the major event was on 3050 L in the 100 OB, the damage was extended across nearly a 300m vertical block starting from 2700 to 3710 L. Approximately 3000 tonnes of material were displaced at five locations on different levels. The damage was mostly associated with either the trap dykes and/or 900 X-fault. The support system at the damage locations mainly consisted of resin grouted rebars, and mechanically
anchored bolts in the back, and anchored mechanical bolts on the walls to 1.5m above the floor installed through #6 gauge welded wire mesh. At some locations, shotcrete and cable bolts were used as a secondary support system. The installed ground support system was too stiff in nature and it did not provide much yielding capability. Accordingly, the support system that was employed at the damaged locations was incapable of taking the impact of dynamic loading caused by the 3.8 Mn event.
It should be noted that a central blasting system was used and the Copper Cliff Mine re-entry protocol after major seismic events was followed. No personnel injuries occurred due to these events. It has been concluded that the trap dyke and the 900 OB X-fault are major contributing factors for elevated seismicity in the 100 and 900 OBs. Since all the stopes along the 900 OB X-fault were mined out on the mining front between 3500 and 3050 L, the natural confinement that the orebody provided to the fault plane was taken out. April 2014 • Canadian Mining Journal |
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| Mine Safety A close look at some of the dynamic support system Vale has installed at its Copper Cliff Mine.
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As a result, a major displacement might have occurred along the fault-plane and caused the 3.8 Mn event after taking the crown blast in the 94561 stope between 3050 to 3200 L on 11 September 2008. By all means, the crown blast could have triggered the slip and caused the large magnitude event. The 3.8 Mn event was considered to be a result of mining the 94561 stope between 3050 and 3200 L. Since large magnitude events are associated with damage to underground excavations and the installed ground support systems, mining in the burst-prone ground conditions pose a greater challenge both in terms of safety and production. The 3.8 Mn rockburst triggered a series of rockbursts within the limits of the 100/900 OBs and caused damage at multiple locations on different levels. In order to rehabilitate all the damaged areas, considerable time and resources were spent, and production was significantly impacted. Support system A system was introduced in all the burstprone areas at Copper Cliff Mine, with a view to minimize or completely eliminate the damage to the installed ground support and/or the underground excavations in the event of future occurrences. Support elements Based on the guidelines outlined in the
28 | Canadian Mining Journal • April 2014
‘Canadian Rockburst Support Handbook,’ the following ground support elements were identified and used in the burst-prone ground conditions at Copper Cliff Mine. For walls: 1.95m long FS-46 split sets on a 1.2 × 0.75 m pattern with #4 gauge welded wire mesh, followed by a minimum 76mm thick pass of plain shotcrete, and then 2.3m long modified cone bolts on a 1.2 × 1.8m pattern with #0 gauge mesh straps. The wall bolting was usually extended to the floor level. For the back: 2.4m resin rebars on a 1.2 × 0.75m pattern with #4 gauge welded wire mesh, followed by a minimum 76mm thick pass of plain shotcrete, and then 2.3m long modified cone bolts on a 1.2 × 1.8m pattern with #0 gauge mesh straps. In addition, 6.3m long twin cable bolts were used in a ramp, where the depth of failure was almost 5.1m from the seismic events. The purpose of the cable bolts was to reinforce the rock mass as well as hold the broken rock mass by anchoring them in the solid ground. Performance After introducing the burst-resistant system at Copper Cliff Mine, mining in the 100/900 OB was resumed. Four stopes were mined out successfully without any significant damage. With the resumption of mining in the 100/900 OB, Copper Cliff Mine once www.canadianminingjournal.com
Conclusions Even though many seismic events occurred in the 100/900 OBs while mining in the burst-prone ground conditions, no significant damage was associated with such events after introducing the burst-resistant support system at Copper Cliff Mine. It was evident from the underground observations that a well-designed dynamic support system will cope very well in the event of large and repeated seismic events, by sustaining the impact of dynamic loading with no, or negligible damage to the underground excavations and/or the installed ground support system. Four stopes were mined out successfully without any significant damage after introducing the burstresistant support system in the areas at Copper Cliff Mine. CMJ * Information for this article provided by D. Reddy Chinnasane, Dr. Mike Yao, David Landry and P. Paradis-Sokoloski, of Vale Canada Ltd., Canada.
Photo courtesy of Cameco
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again started to experience elevated seismic activity, particularly while mining the stopes surrounding the trap dyke. Several seismic events/rockbursts, ranging from 1.2 to 2.9 Mn, occurred while mining the 9551 and 9281 stopes. It was interesting to observe that there was no damage, after the 2.9 Mn event that occurred on February 18, 2009, while mining the 9551 stope. In fact, the event was located within 20–30m from the top and bottom sills, respectively. This has demonstrated that the rockburst resistant support system that was installed after the large 3.8 Mn event had sufficient energy absorption capacity to withstand the impact of a 2.9 Mn event. While mining the 9281 stope, the installed burst-resistant support system was repeatedly subjected to seismic event impacts and showed some signs of negligible damage. Although it is difficult to assess the impact of previous seismic events in a quantitative manner, the ground control engineer identifies whether there are signs of support yielding based on their observations, and/or field instrumentation monitoring, if any. If so, it may be prudent to install extra support in an effort to compensate for any potential loss in the safety margin.
April 2014 • Canadian Mining Journal |
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| Information Security
HACKERS are a real
THREAT Mining and Metals sectors are prime targets for thieves Special Report*
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yber hacking and the breach of information systems security is emerging as one of the top risks to the mining and metals sector. The threats are real and on the rise. In fact, EY’s Global Information Security Survey 2013 found that 41% of the mining and metals respondents experienced an increase in external threats over the past 12 months, with 28% experiencing an increase in internal vulnerabilities over the same period. Criminals are attracted to the sector because of the massive cash flows on investment. They understand the increasing dependence mining and metals has on technology, and are actively looking for ways to threaten the denial of access to data, processes and equipment. Today’s versions of kidnapping, extortion, blackmail and protection rackets are real threats. For example, a criminal could take a long position on copper on the LME and proceed to use cyber hacking to disrupt supply at key copper-producing facilities causing prices to spike. FOUR REASONS FOR THE INCREASE IN CYBER HACKING 1. Centralized functions make easier targets As a result of increasing cost rationalization, many business functions are being centralized across the supply chain. This has translated into the need for a more sophisticated IT system and network infrastructure to connect the geographically diverse workforce, increasing an organization’s exposure to, and dependency on, the internet. With the trend toward remote operation to improve cost efficiency, there is a convergence of IT and OT (operations technol30 | Canadian Mining Journal • April 2014
ogy). This provides cyber hackers with an access path to the operation systems from the internet. OT systems are inherently less secure as many old systems were not designed with security in mind. 2. Government-led cyber attacks Intelligence agencies and the military of sovereign states, and their funded unofficial affiliates, have become increasingly active in cyber warfare. Their enormous capabilities are being directed at economic warfare and espionage to target key industries, posing a real threat to mining and metals organizations. The objective may be the passive collection of commercially sensitive intelligence to assist national or state-owned companies in contract negotiations. However, the objective may be more sinister, with the use of malware to incapacitate important facilities (made infamous by the Stuxnet attack on the Iranian nuclear facilities). 3. The rise of the informal activists In trying to maintain their social license to operate, mining and metals companies endeavor to meet as many stakeholder demands as they can, but invariably cannot meet them all. Some more militant and extreme activists with unsatisfied demands can turn to hacking. They may disrupt mining and metals companies’ activities, expose confidential information and create communications mischief, such as defacing websites or triggering false announcements. Hactivists’ use of cyber hacking to pursue a political agenda is a real risk in today’s operating environment. 4. Formal security programs not widely deployed Surprisingly, 44% of the mining and metals survey respondents indicated that their organizations do not have a threat intelligence program in place and 38% have only an informal one in place. This leaves them completely unprepared to identify a cyber hacking or an information security threat. It also means these organizations would not have the benefit www.canadianminingjournal.com
of experiencing an early warning or of being prepared for any breaches, potentially increasing the impact. The effectiveness of information security is important, and with only a small percentage of mining and metals respondents (18%) seeing that it fully meets the organization’s needs, there is a long way to go in protecting organizations from these threats. There is usually not an organization-wide risk management approach to these threats. Often, it is viewed as an information systems security issue, and therefore the threat is narrowly defined and not widely embraced. A top-down approach needs to be taken to these threats in order for countermeasures to be effectively taken. The executive level needs to understand and address this issue to get both the budget and buy-in to ensure information and operational security. Steps to combat cyber hacking and bolster information security Strategic • Making information security a board-level and senior management priority • Developing an integrated strategy around corporate objectives, and considering the whole risk landscape • Using data analytics to test the risk landscape and better under-
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stand the data/systems you need to protect the most • Identifying the potential interest groups who would benefit from access to your organization’s systems and information • Assessing the current systems and understanding their vulnerabilities and where a breach could likely occur • Understanding the laws and regulations that help protect your organization from a cyber attack and building a relationship with the agencies that enforce them •C reating a cyber threat or attack response protocol Operational • Using a three- to five-year horizon for budgeting to enable long-term planning • Creating a working team across the organization that includes senior management, risk advisors and information systems •E nsuring accessibility to data across all the organization’s systems • Using data analytics to identify potential threats or a pattern of attacks •C onducting attack and penetration tests more frequently • Innovate, innovate, innovate. CMJ
*Information for this article provided by EY, a global leader in assurance, tax, transaction and advisory services.
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April 2014 • Canadian Mining Journal |
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| Company Profile: ATCO Structures & Logistics
A
SIGN OF THE
TIMES ATCO SIGNS ADORN MULTIPLE STRUCTURES EVEN ‘BLAST-PROOF’ UNITS By Russell Noble
T
he black-on-yellow ATCO signs found at mine sites across Canada are almost as common as rocks are to quarries. In fact, one would be hard pressed to find a site almost anywhere in the country that doesn’t have some structure without an ATCO sign attached to it. From the smallest tool shed at a remote fly-in camp, to storage and maintenance facilities for trucks and other assorted mining equipment, to sprawling accommodations to house more people than many small towns, the structures built by ATCO Structures & Logistics of Calgary have become synonymous with mining at all levels, and in all places. Next to tents and drill rigs, the company’s structures are often the first sign that some form of mining is about to begin. And, because of their portability, a barren site can often be transformed 32 | Canadian Mining Journal • April 2014
almost over night into a noticeable spot on the horizon. With manufacturing facilities in North America and Australia, ATCO’s structures are in use at sites that are drastically different. Currently, the company is constructing accommodations for BHP Billiton’s
Jansen Potash Project, 100 km north of Regina. The 2,586-person lodge is the largest Canadian contract in ATCO Structures & Logistics’ history. “With this project, we a looking at more than 1000 individual units for the complex and engineering to help withTemporary construction camp at Vale’s Voisey’s Bay Nickel Mine in Newfoundland and Labrador.
www.canadianminingjournal.com
stand the snow loads of Saskatchewan,” said George Lidgett, Chief Operating Officer, Americas. “Alternatively, for the Australian market, we design buildings that can withstand cyclonic winds.” One of the key benefits of modular construction is indoor manufacturing, as the modules are manufactured in a dry, secure facility, where predictability of quality centred in a factory benefits the project. Modules are easily transported to site for installation and then the Lego-like fun begins. Within hours, structures of all shapes and sizes can literally emerge from nothing into shelter for both miners and machines alike, and as mentioned earlier, the size and various configurations the structures offer are almost endless when it comes to imagination by the company’s engineers and designers. For example, rarely do you find any structures located adjacent to blast sites but thanks to new and innovative technology, ‘blast-proof ’ modular buildings are now available to crews to be on site during the early and on-going exploration and development stages of blasting rock. This is not only a safety factor, but it’s also a time and money saver because personnel are not required to totally vacate the zone during blasting. Unlike conventional structures that could not withstand the seismic pressures from a blast, the blast-resistant buildings (designed and built in a joint-venture partnership with Hunter Buildings & Manufacturing LP) are certified to meet strict Canadian guidelines and American Society of Civil Engineer blast resistant design criteria. Chad Bjorgan, Product Manager, ATCO Hunter Blast Shelters, says that blast-resistant modular buildings have been around since ATCO and Hunter became partners in 2010 and through ongoing ‘live testing’ with high explosives, they are one of the few companies that has put its buildings through the rigors of actual site blasts. “Believe it or not, blast testing blastresistant buildings is not something done by every member of our industry. It is a very, very expensive and irreplaceable way to test predictable engineering integrity.” Bjorgan said that to help ensure the
ATCO Hunter Blast Shelter
company’s structures meet the strict government requirements of a blast-resistant building, a building is randomly selected from the fleet and blast tested at a test facility. An 8 PSI blast design has become the industry standard for modular buildings, however, higher or lower designs are provided at the customers’ request. To put this 8 psi pressure into perspective, Lynn Efferson, General Manager of Hunter Buildings & Manufacturing in Houston Texas, explained: “People can relate to say, wind-load, and what a 50-mile-per-hour wind load feels like and what a 150-mile-per-hour wind looks like in a hurricane. A hurricane with a 150-mile-per-hour wind can do a tremen-
dous amount of damage so what does wind-load mean on one of our blastresistant buildings?” “A 150-mile-per-hour wind will not even make 1 PSI impact on the structure, it’s actually 0.85, so you can see how strong a building tested for an 8 PSI blast really is and why it’s well suited for mine sites where blasting occurs.” Efferson talked further about the company’s blast-resistant buildings by saying: “Using a third party to conduct and evaluate an 8 PSI test, we subjected a standard, randomly chosen building to a live blast and equipped it with all of the necessary monitors like pressure transducers to measure shock and vibration, acceleration Aerial of Rio Tinto’s Clermont Coal Mine 500-person accommodation and office facilities in Clermont, Queensland, Australia.
April 2014 • Canadian Mining Journal |
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| Company Profile: ATCO Structures & Logistics ATCO Fold-A-Way metal buildings store and protect equipment for the operations at Vale’s Voisey’s Bay Nickel Mine in Newfoundland and Labrador. Work for this contract is carried out by Torngait Services Inc., a joint-venture partnership between ATCO Structures & Logistics and the Labrador Inuit Development Corporation.
compensators, crash-test dummies, and high-speed cameras (inside and out) to record the blast. “We used 1,250 pounds of ANFO, which is ammonia nitrate fuel oil, and placed it 100 feet from the building. It really went ‘boom’.” After the blast, Efferson said the effects of the blast were nothing more than a covering of dust on the test building and inside, the crash-test dummy (positioned sitting in an office chair close to the wall facing the blast and wearing a pair of glasses and holding a can of pop) was intact, still in the chair and still wearing its
glasses. The vibration of the blast, however, caused the dummy to spill some of its drink. Dummy! Anyway, Efferson said the dummy and the structure clearly demonstrated resilience above and beyond the blast resistance requirements of the building. Later in a separate test, forced entry and ballistic testing was conducted by the Oregon Ballistic Laboratory and witnessed by the U.S. Government’s Department of State. This official test was passed with “flying colours” there too. The ATCO – Hunter designed buildings recently passed tornado testing in a west Texas laboratory.
Temporary construction camp at Ekati Diamond Mine near Lac de Gras, Northwest Territories, just 200km south of the Arctic circle.
34 | Canadian Mining Journal • April 2014
But blast-resistant buildings aren’t the only structures manufactured by ATCO because as stated earlier, the company also builds more conventional units designed for stand-alone purposes like lavatories and site offices to multi-unit configurations for workforce housing. A good example of the latter is to build a 1,200-person housing facility for the Shell Carmon Creek Project near Peace River in Northern Alberta. The core building will consist of 94 modular units in combination with a panelized system in the lobby to create an open hotel-like feel. The dormitories will feature singleoccupancy bedrooms with en-suite bathrooms. In addition to relaxation and recreation rooms, a stand-alone gymnasium will include racquetball and squash courts, a running track and separate weighttraining area. Also in the plans is a 200-person openconcept office complex. From blast-resistant structures, to single-purpose buildings for storing tools, to vast housing facilities designed for hundreds and even more than a thousand people, ATCO structures are well-suited to meet the needs of Canadian miners and like the miners themselves, they can be found almost everywhere across the country. CMJ www.canadianminingjournal.com
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In My Mine(d)
Grassroots mineral exploration is undergoing a massive decline E. G. Thompson is a former president of the Prospectors and Developers Association of Canada.
By Ed Thompson
W
ith both the senior and junior mining/exploration companies facing a plethora of problems, grassroots exploration is undergoing a dramatic decline as the industry comes off its recent highs. Most of the senior companies have had massive cost overruns on their projects due to a combination of inflation, permitting, environmental and social costs and delays and difficult engineering supervision in their attempts to develop large projects in remote areas of the world. Virtually no major mining project performed to specification and the financial markets have downgraded these companies. Lower metal prices, especially for gold, and many governments raising taxes, have exacerbated the situation. This negative publicity has not been lost on the investor who understandably says “If the majors can’t perform, why should I risk my money on juniors?” While the majors’ curtailing of grassroots exploration is simply a budget item, the juniors are dealing with a different set of problems due in part to the structural demands of their financings. A typical junior raises enough money to carry out exploration and cover overhead costs for a year, often on one key project. Because of climate constraints, the company generally has a narrow time window to conduct its exploration and get results. These results are then used to raise money for the following year’s program. If the work is delayed for any reason, for example, permitting issues, aboriginal consultations, etc., the season is lost, at which point potential investors are often lost too. The company’s share price declines and further financings are at much lower 36 | Canadian Mining Journal • April 2014
prices. This has been the situation in the last few years, which combined with other problems, endanger a thousand junior companies’ survival. Grassroots exploration is essential to the mining industry’s food chain and almost every major town/city across northern Canada is the result of grassroots exploration and the discovery of mineable deposits. Almost every major hospital and university in Canada has benefited from the charitable donations from people in the mineral sector. As we all know, most items our civilization uses comes from mining. In Canada, the various provinces have provided mixed levels of support for mining. In Ontario, industry people tell me that we have gone from one of the best jurisdictions to one of the worst with the new Mining Act, permitting delays and aboriginal consultation. Major new projects have been delayed and sometimes indefinitely postponed. In the Ring of Fire area, Metallex’s $50-million bulk sampling program has been held up for several years and Cliff Resources’ multi-billion dollar chromite project has been delayed and now postponed due to lower chromite prices. Small deposits in the area that could have been developed if infrastructure were in place, will sit undeveloped and their companies’ shares will be essentially worthless. The Liberal government’s industrial policy seemed to be based on building expensive subsidized green power projects costing 70 cents per kilowatt hour rather than building connecting lines to tie in cheaper hydro power from Quebec
or Manitoba at a few cents per kwh,or even low cost gas plants. The end result is more expensive power for the consumer and business and ultimately the closing of factories due to higher power costs. The logic escapes me when Ontario Hydro sells excess power to the U.S. at 3 cents per kwh and subsidizes green power costing 70 cents per kwh. There will likely be some improvements for exploration companies in a few years’ time. The industry is working on more efficient fund raising ie. cloud funding and rights issues without a prospectus. Australia has shown an ability to deal with native issues and to bring them into the mainstream. We need to do the same and instead of spending $11-12 billion a year on them, make them equal citizens of Canada, looking after themselves, working and paying taxes. This cycle will ultimately end with higher metal prices and new companies being formed. However we still need to lower the mandated regulatory and overhead costs so that a higher percentage of a company’s funds go into the ground. In my opinion, it is not necessary to saddle junior companies with many of the regulations and costs borne by the large companies. The Canadian exploration and mining industry has been the showcase for the world. Our stock exchanges have mobilized money for exploration projects worldwide and created thousands of high- paying jobs in dozens of associated businesses. The Canadian governments flow-through tax system has helped Canadian companies maintain their Canadian base and explore world-wide. Let us do our best to maintain this stature. CMJ www.canadianminingjournal.com
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37
Unearthing Trends
What to consider when engaging an EPCM Doug Burcham an associate partner at EY and the firm’s Canadian Major Capital Projects Leader. He is based in Calgary.
By Doug Burcham
C
ompanies can’t afford to leave cash on the table when it comes to major capital projects in today’s capitallyconstrained mining and metals sector. Effective major capital project execution is imperative. Over the last two years, we’ve already seen a number of highly publicized mega projects being canceled, with others delivered late, over budget or not meeting specification. And recent research of major projects showed nine out of ten experienced cost overruns — and that overruns of 50-100% or higher were common. Those numbers can’t be ignored. They can have a profound impact on a company’s profitability, growth prospects, social license to operate and overall financial health. Canadian mining and metals companies must put the people and processes in place to ensure major capital project success. But often times they lack the skill or capacity to act as a prime contractor themselves. That’s where engineering, procurement, and construction management (EPCM) teams come into play. These teams offer the right kind of experience, leading practices and technology to deliver projects on schedule and budget.
A TRACK RECORD OF SUCCESSFULLY COMPLETED PROJECTS
FINDING THE RIGHT EPCM TEAM Choosing the right EPCM team for a major capital project begins by comparing the full spectrum of your companies’ skills, strengths and needs against what the EPCM team has to offer. It’s about finding the right fit. The following are a number of factors Canadian mining and metals companies should consider before choosing their EPCM team:
The already tight labour market in North America is set to shrink even further over the next 10 years. A lack of skilled resources is one of the primary reasons for project cost overruns — issues with staffing the engineering or project execution often results in project extensions. An EPCM should have an effective program of assurance around obtaining and retaining the appropriately trained personnel, as well a defined program
38 | Canadian Mining Journal • April 2014
It is important to understand the EPCM’s track record on projects of similar scope and scale, focusing on root causes and lessons learned behind successes as well as reasoning for successes. WILLINGNESS TO ENGAGE IN A COLLABORATIVE PARTNERSHIP
A successful project begins with a collaborative team. A teaming mindset should exist throughout the lifecycle of any project. The entire team needs to understand the definition of success with alignment of goals, as well as understanding what a “win” means for all team members. PAST EXCELLENCE IN HEALTH, SAFETY AND ENVIRONMENTAL AND INNOVATION
Due to the inherent risks of major capital projects, particularly on construction sites, health, safety and environmental programs are a critical piece of any capital project. The EPCM needs to have a culture of safety, with programs, targets and assurance with demonstrable successes. TRAINED RESOURCES AND EFFECTIVE SOLUTIONS TO INCREASE TO RESOURCE BASE AS NEEDED
for increasing and reducing staff as needed, with demonstrable past successes. BEST-IN-CLASS SYSTEMS AND PROCESSES
Since for most companies, construction is not focus, the EPCM selected should have best-in-class systems and processes, to assist the company to effectively manage and execute the project, with proven track records on assistance in transparent reporting and satisfied clients. EFFECTIVE LOW-COST SOURCING CAPABILITY
Whether the EPCM will be utilizing the companies preferred supplier list, or if part of their role is to utilize their own preferred vendors to the advantage of the company, they should have a clearly defined supplier program, with documented advantages to the company including rebates, preferred pricing, and schedule benefits. Due to the fact that the EPCM typically works with suppliers on a consistent basis, they should pass those savings on to the company. GLOBAL EXPERIENCE AND REPUTATION
Mining is a global industry and companies stand to benefit by partnering with an EPCM with a global reach. Consider future projects and whether a global scale will enable success down the road. The stakes are high when it comes to major capital projects. Choosing an EPCM is no easy decision but when the right considerations are taken into account and companies identify the best fit for their needs, projects can come in on time and budget. CMJ VISIT US AT EY.COM/CA/MINING AND FOLLOW US ON TWITTER @EYCANADA. www.canadianminingjournal.com
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