Canadian Mining Journal May 2015

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May 2015

COAL &OIL

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Departments 5 Editorial

This month Editor Russell Noble talks about the need for government(s) to do more to develop the land North of 60 and how investment will help make the lands a less expensive but more appealing place to live and work.

CANADIAN Mining Journal CONTENTS

6 First Nations

An “Open Letter” to Canadian Mining Journal from Chief Isadore Day regarding the inappropriate use of words in a headline describing First Nations’ activities.

8 Law

A column by Crae Garrett, a Partner in Norton Rose Fulbright’s Calgary office, looks at why miners must innovate to stay profitable.

9 CSR and Mining

A regular column by Michael Torrance, a lawyer in Norton Rose Fulbright’s Toronto office, on Corporate Social Responsibility.

40 Technology

A look at the Geoscience Atlas, a state-of-the-art, web-based technology used by the Department of Natural Resources, Government of Newfoundland and Labrador, that enables users to review mineral occurrences throughout the province.

44 In My Mine(d)

Carolyn Ray, Managing Director, Interbrand Canada, a brand consultancy firm with a network of 33 offices in 27 countries, talks about “Mining for Talent” and how to connect a company’s reputation to recruiting.

46 Unearthing Trends

A regular column by Ernst & Young LLP, Vancouver.

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May 2015

Photo: Thinkstock.com

COAL &OIL

ABOUT THE COVER This month’s theme of “Coal and Oil” is graphically depicted by a coal-oil lamp casting light on the two elements featured in this issue.

COAL IN CANADA

12 Nova Scotia’s Donkin Mine 16 Coal industry and the global markets 21Coal Association looks to the future I nternational investor brings new hope to Cape Breton coal miners.

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Analyist tells it like it as insofar as Canadian coal prospects are concerned.

Coal Association of Canada’s Annual Conference will focus on what market analysts are saying about coal’s prospects.

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22

OIL IN CANADA

22 Economic impact of lower prices 30 Living near the oil sands

A close look at what lower prices are doing to everything from housing, to employment, to future projects.

Custom accommodations make living and working near the oil sands a pleasurable experience.

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CRUSHERS AND CONVEYORS

34 N.B. company does it all 36 B.C. firm serves the world 38 50 Anniversary

FE Manufacturing of Miramichi designs and builds M what it sells.

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IEM of Surrey has material handling equipment operating around the world. th

PR Engineering of Oshawa, ON, celebrates 50 years of serving the mining industry.

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TWO RESOURCES HELPING CANADA REMAIN GLOBAL

Coming in June

Canadian Mining Journal’s June/July issue focuses on “Mining in the Prairie Provinces.”

www.canadianminingjournal.com

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 May 2015 • Canadian Mining Journal |

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Editorial

CANADIAN Mining Journal May 2015 Vol. 136 — No. 4 38 Lesmill Rd. Unit 2, Toronto, Ontario M3B 2T5 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 Stephen Ferrie

Production Manager Steve Hofmann

Print Production Manager Phyllis Wright Circulation Manager Cindi Holder 416 442-5600, ext. 3544 cholder@bizinfogroup.ca Publisher & Sales Robert Seagraves 416 510-6891 rseagraves@canadianminingjournal.com Sales Western Canada, Western U.S.A. and Quebec Joelle Glasroth 416-510-5104 jglasroth@canadianminingjournal.com Toll Free Canada: 1-800-268-7742 ext 6891 or 5104 Toll Free USA: 1-800-387-0273 ext 6891 or 5104 Group Publisher Anthony Vaccaro 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 BIG L.P. Mining BIG is located at 38 Lesmill Rd., Unit 2. Toronto, ON, M3B 2T5. Phone (416) 510-6891.

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.

Subscriptions — Canada: $47.95 per year; $76.95 for two years. USA: US$60.95 per year. Foreign: US$72.95 per year. Single copies: Canada $10; USA and foreign: US$10. Canadian subscribers must add HST and Provincial tax where necessary. HST registration # 809744071RT001.

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 wish your contact information to be made available, please contact us via one of the following methods: Phone: 1-800-268-2742 x3544; Fax: 416-510-5138; E-mail: cholder@bizinfogroup.ca Mail to: Cindi Holder, BIG Mining LP, 38 Lesmill Rd, Unit 2, Toronto. ON, M3B 2T5 We acknowledge the financial support of the Government of Canada through the Canada Magazine Fund toward our editorial costs.

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“Keep frozen until ready to serve”

Good for food, bad for The North

By Russell Noble

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rime Minister Stephen Harper, NWT Premier Bob McLeod, Yukon’s Premier Darrel Pasloski, and Nunavut’s Premier Peter Tapuna; plus the $5.69 loaf of bread in Tapuna’s backyard, have all drawn attention to the far north in recent weeks.

The Prime Minister and the three premiers have all made headlines over travel expenses, or for the miserable prospects their jurisdictions offer the mining industry respectively, but the one item (the $5.69 loaf of bread) is what caught the nation’s attention when it made the nightly news from coast to coast.

People in the far north are outraged at the cost of living there and now the rest of country is fascinated by hearing that bread costs so much, and that butter to put on that bread goes for $7.49 a pound and to wash it down, a 3L jug of orange juice sells for $19.29 and a 2L jug of milk is $14.00.

Most people in Canada pay far, far less but in fairness to the suppliers and distributors of these products, most of their customers do not live where it takes an army of people and machines to deliver the goods.

Getting food and other supplies to many places north of the 60th parallel is not only a logistical nightmare, but it’s also extremely dangerous. So much so, in fact, that pilots and truckers are the true and unsung heroes when it comes to keeping the North alive.

I’ve said it here before and I’ll say it again, I admire the people who live in the far and often-frozen northern regions of Canada, but I also think the people who are trying to develop those regions into a viable and economically sustaining part of the country are doing more for its future than those who actually call it ‘home.’

Without the interest and investment by companies from the South, and increasingly from farther East and West, the development of Canada’s North, albeit too slow for my liking, would still be in the planning stages and out of sight and mind of the rest of the country.

I’m not saying that the exorbitant price of bread and other foods is a good thing, but it did grab the attention of the rest of Canada and made people realize that there is life North of the Tree Line, and that there’s actually something going on up there.

Like I said earlier, it’s a credit to the investors from elsewhere who look North and it’s time that the Prime Minister and the Premiers work as a team (not as individuals) to develop a theme that would bring more attention to the value and hidden resources contained within the largest part of Canada.

If the Toronto Raptors of the National Basketball League can adapt a “We The North” slogan that has brought attention to Toronto as being “The North,” surely the federal government, along with Yukon, NWT and Nunavut, can come up with something equally catchy that would bring the world’s attention to the lands North of 60.

The slogan “Land of Opportunity” has been coined around the world and there’s no question about what the message is, but I think that Canada needs something new and equally unquestionable in its message about its North lands and what they offer.

“Keep frozen until ready to serve” is something that Mother Nature has taken care of insofar as the “keep frozen” part is concerned, but now it’s the government(s) turn to spread the “ready to serve” message.

CMJ May 2015 • Canadian Mining Journal |

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First Nations

Chief Isadore Day, Wiindawtegowinini is the elected chief of Serpent River Anishinaabe First Nation and also holds the position of Lake Huron Regional Grand Chief. He is a direct descendant of Chief Shingwauk and Chief Wiindawtegiwinini, signatories to the Robinson Huron Treaty of 1850.

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Law

The Tech Advantage: Innovating efficiencies in uncertain times Crae Garrett is a partner in Norton Rose Fulbright’s Calgary Office.

By Crae Garrett

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onventional wisdom tells us that in a climate of volatile and declining commodity prices, where profit through revenue growth can by no means be assured, smart producers concentrate on driving production efficiencies in order to control costs. The competitive advantage that can be achieved by proprietary production processes has long been understood and appreciated by the extractive resources sector. However it is also recognized that those advantages tend to now arise from innovative technologies, rather than traditional economies of scale.

tion processes can create more opportunities. Once a producer protects its technology or process with a patent, it will enjoy a significant competitive advantage not only in achieving cost efficiencies, but more importantly by ensuring that its competitors are unable to reap the same benefits. Oil sands development is often discussed in these terms. Similar advantages are being realized in connection with diverse technologies such as remote mining, technologies that reduce energy consumption and innovative safety technologies to name a few.

Producers must innovate to stay profitable Small increments in technique can differentiate successful producers operating in a low-margin environment. At its most simplistic, innovation does not have be to more than the refinement of existing extractive techniques over time. However, such incremental improvements may not rise to the level of patentability, or justify the costs of patenting. The market tends to ensure these competitive advantages do not exist. As a result, producers who want to maintain a semblance of competitive cost efficiency to the point where it can impact comparative performance must continually strive for innovation. This is especially true in any large scale hydrocarbon mining operation, such as coal mining or oil sands development.

New technology as a value-added What is less evident, or at least less prominent in the financial planning of many operators, is the fact that increasingly, such technologies themselves represent significant value apart from the cost efficiencies and market protection generated by their deployment. In addition to ensuring any proprietary process is adequately protected as intellectual property, owners should strongly consider what other value add propositions might be available to strengthen their corporate balance sheets—and also ensure that the legal structure surrounding their intellectual property can accommodate a wider range of exploitation opportunities. The value proposition of innovative technologies is strengthened by investing in the right intellectual property protection strategies, and ensuring that ownership and exploitation rights are protected through agreements with any collaborators or suppliers involved in the development.

Inventing creates opportunities An entirely different level of opportunity exists for producers who create proprietary technologies or systems that can be protected as true inventions. A shining example of this is the oil sands industry, where more complex mining and extrac8 | Canadian Mining Journal • May 2015

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Monetizing technology When the benefits of enhanced cash flow outweigh the competitive advantage as a

result of a particular technology, one relatively simple manner in which to monetize that technology is to licence it to third parties. While extractive resources producers tend to be secretive about their processes, licensing and joint-venture arrangements with contractors and service providers do not necessarily attract a similar level of scepticism. From a legal structuring perspective, good strong patent protection, coupled with appropriate licensing, confidentiality and in apposite circumstances, joint-venture documentation is all that is needed to turn a difficult to value (and likely undervalued) line item in a balance sheet into an annuity style positive entry on an income statement.

The intrinsic value of proprietary technology should not be discounted as a basis on which to leverage potential financing options. With global financial markets currently exhibiting little certainty and even less liquidity, the dynamics of cash flow management and the cost of borrowing raise additional concerns for producers already dealing with flat commodity pricing and production cost challenges.

For producers with valuable rights in proprietary technology, the prospect of generating further benefits in addition to the direct cost efficiency benefit from the technology itself is compelling. Properly protected and licensed intellectual property can be securitized to provide access to financing at a cost point that would be otherwise unachievable, or in some cases not merited at all.

For relatively little incremental legal cost and effort, the opportunities offered by properly protected, documented and valued proprietary technologies go far beyond simply their usage in the production processes that create them.

CMJ www.canadianminingjournal.com

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CSR and Mining

CSR and Greenhouse Gases – Considerations for projects in Canada and abroad

Michael Torrance is a lawyer in Norton Rose Fulbright’s Toronto office.

By Michael Torrance

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hen it comes to management of greenhouse gases, Canadian mining companies are faced with a number of regulatory and legal requirements from host countries in which they operate. In addition to these requirements, key Corporate Social Responsibility (“CSR”) standards may also create additional requirements that go beyond law.

Companies should keep these standards in mind, particularly when preparing for financing activity or anticipating potential challenges to the project from external stakeholders.

CSR best practice is often encapsulated by international standards including those endorsed by the Government of Canada’s enhanced CSR Strategy for the Extractive Sector (the “CSR Strategy”). The CSR Strategy endorses the IFC Performance Standards on Environmental & Social Sustainability (the “IFC Performance Standards”), which provide a very detailed set of expectations for the management of environmental and social impacts. In the area of pollution prevention, as in other areas, the approach of the IFC Performance Standards is to first identify impacts and then apply a mitigation hierarchy to avoid, minimize or remediate unavoidable impacts. In the case of greenhouse gas emissions, this approach is applied in Performance Standard Three of the IFC Performance Standards (“PS 3”).

PS 3 requires that both direct and indirect emissions associated with the project will be quantified for projects expected to produce more than 25,000 tonnes of CO2 or equivalent annually. Direct emissions, also referred to as “scope 1” emissions, generally refer to emissions from facilities within the project boundary. “Scope 2” emissions involve indirect emissions asso10 | Canadian Mining Journal • May 2015

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ciated with the project’s use of energy, occurring outside of the project boundary. While not a direct requirement, the IFC Performance Standards also encourages disclosure of greenhouse gas emissions annually through corporate reports or other voluntary disclosure mechanisms. Along with quantification, the IFC Performance Standards require the consideration of alternatives and implement technically and financially feasible and cost-efficient options to reduce greenhouse gas emissions during the design and operation of the project.

“ CSR standards

may also create requirements that go beyond law.”

These expectations, endorsed in the CSR Strategy of the Canadian Government, have their counterpart in the environmental and social standards applied by 80 of the world’s most prominent financial institutions, set out in the Equator Principles (the “EP”). The third iteration of the EP, released in 2013, make reference to the IFC Performance Standards and adopt requirements that mirror the IFC Performance Standards in some respects. For example, the EP requires quantification of “scope 1” and “scope 2” emissions and provision of

evidence of “technically and financially feasible and cost-effective options” to reduce such emissions during the design, construction and operation of certain higher risk projects. There may also be requirements under the EP to report greenhouse gas emission levels during the operational phase for projects emitting over 100,000 tonnes of CO2 equivalent annually. Like the IFC Performance Standards, this requirement can be satisfied by regulatory requirements or voluntary reporting mechanisms like the Carbon Disclosure Project.

A key distinction from the IFC Performance Standards is that the EP requires project proponents to undertake an “alternatives assessment” wherever greenhouse gas emissions for such projects are anticipated to emit more than 100,000 tonnes of CO2 equivalent per annum (rather than 25,000 under the IFC Performance Standards). Unlike many of the requirements of the EP, this requirement for an alternatives analysis applies even in highly developed countries like Canada. In other words, where a financing in Canada is being undertaken by an EP financial institution, or Export Credit Agency subject to the OECD Common Approaches, alternatives analysis requirements may be a condition of financing.

It is important to note that these requirements may be satisfied by compliance with regulatory requirements addressing the same issues. However, where regulatory requirements fall below the standards set by the IFC Performance Standards or EP, the higher standard may need to be applied. This illustrates that CSR standards are not just relevant for operations in developing countries, but can also affect projects here at home. CMJ www.canadianminingjournal.com

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Handling a World of Materials

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| Coal in Canada

Aerial view of Cape Breton’s rugged coastline and the Donkin coal block and its proximity to the shipping lanes of the Atlantic Ocean.

o n It’s secret

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DONKIN COAL IS NEWSWORTHY...

AGAIN

By Eastern Correspondent D’Arcy Jenish

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A local coal miner looks deep into the darkness of one of the tunnels already built at the Donkin site.

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hris Cline is a publicity-shy billionaire who acquired his fortune operating coal mines in Appalachia and Illinois. He has, however, made headlines elsewhere recently in two very distant locales, and for two very different reasons; one in sunny Palm Beach, Florida, and of more interest to Canadians, in Cape Breton, Nova Scotia.

In Florida, Cline, a 57-year-old native of West Virginia, made the society pages of the Palm Beach Post when he began dating the woman who lives next door to his 34,000-square-foot mansion. Namely, 35-year-old Elin Nordegren, the Swedish beauty and ex-wife of golfer Tiger Woods.

In Canada, by stark contrast, Cline also made Page One of the Cape Breton Post last December when it was disclosed that one of his companies--Kameron Collieries-had finalized a deal with the Nova Scotia government to acquire the Donkin coal block, a vast and hitherto untapped reserve that stretches for dozens of miles beneath the Atlantic Ocean and was once seen as the future of mining on the island.

“It looks like Cape Breton is getting coal for Christmas,” the Post gleefully reported, and the deal was a rare bit of good news both for a region with a chronically sluggish economy and for the province itself.

“It’s been a priority of our government to get that mine into production,” Natural Resources Minister Zach Churchill told Canadian Mining Journal. “This will be an important economic generator for Cape Breton and for Nova Scotia. It will significantly increase our mining output.”

Nova Scotia mineral production suffered a grievous blow in May, 2001, when DEVCO, the federally owned Cape Breton Development Corporation, closed the last coal mine on the island, three centuries after islanders had first begun digging pits or tunneling underground to exploit a rich and valuable resource.

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| Coal in Canada

A closer look at the property showing road access to the site.

By the time it pulled the plug, DEVCO had already spent in the neighbourhood of $100 million exploring and developing the Donkin block. The company had commissioned offshore drilling to obtain core samples. It had also constructed two tunnels, each 7.5m in diameter and stretching some 3.5km from the tip of the Donkin Peninsula to the Harbour coal seam—one of several seams in the block.

Based on that work, DEVCO estimated that block spans 110km(2) and may contain over half a billion metric tonnes of high-grade metallurgical and thermal coal. But that wasn’t enough to convince the company to move from development to production--and labour troubles were part of the problem.

“You have to blame the federal government and the unions,” says Adrian White, who is now executive-director the Syndey and Area Chamber of Commerce, but was formerly DEVCO’s vice-president of international marketing.

“The unions knew how to push buttons and the government didn’t want any embarrassing strikes that might cost a local member his seat. The government continued to give the miners what they wanted until the Cape Breton mines were completely uncompetitive with third-world coal.”

Miners who had followed their fathers and grandfathers into the mines, and had worked alongside friends and neighbours, abruptly found themselves unemployed. Most had little or no 14 | Canadian Mining Journal • May 2015

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chance of landing work locally, and many headed west to Alberta’s booming oil sands.

Others hoped that someday the industry would be revived and they kept fingers cross when in December, 2004, the Nova Scotia government called for proposals to lease and develop the Donkin block.

Hopes soared one year later when the government announced that it had awarded a lease to a consortium of four companies led by the Anglo-Swiss mining giant Xstrata. Two members of the group eventually dropped out, but Xstrata and a local partner, Erdene Resource Development Corp., forged ahead.

They de-watered the DEVCO-constructed tunnels and collected bulk samples from the Harbour seam, as well as smaller samples through horizontal and directional drilling.They obtained environmental approvals and announced plans for a mine that would produce 2.75 million tonnes of high-grade metallurgical coal for export markets.

The project included construction of a third tunnel to provide ventilation, a washing plant to prepare the coal for shipment and an ocean-side barge-loading facility. The five-year development phase was expected to create nearly 8,500 person years of employment and the mine itself would employ about 200 people directly and create up to a 1,000 spin-off jobs.

But in April, 2012, the region received more disheartening www.canadianminingjournal.com

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news. Corporate priorities had changed at Xstrata headquarters in Switzerland and the company had decided to sell its 75 per cent stake in Donkin.

“The community was annoyed at Xstrata for holding on to the asset for so long,” says White. “At the end, people felt Xstrata was in the way. They weren’t helping to put the mine into production.”

The Nova Scotia Ministry of Natural Resources put the Donkin reserve back on the block and went looking for another lessee. Late last November, Minister Churchill announced that the U.S.-based Cline Group LLC had acquired 100 per cent of Donkin and the reaction in Cape Breton was hardly surprising.

People were jubilant.

“In many other places, opening a mine poses great challenges, often due to public opposition,” says Cecil Clarke, Mayor of the Regional Municipality of Cape Breton.

“Here, it’s being celebrated and eagerly anticipated. Because of our history, people see mining as a good thing and they’re embracing it.”

This time around, though, both the government and people of Cape Breton believe that they’ve landed the right buyer in Chris Cline.

“He’s a global leader in the coal mining sector and a leader when it comes to providing a safe working environment,” says Churchill. “We visited one of his mines in Illinois. It was a very impressive operation, very efficient.”

Furthermore, Cline may be worth an estimated $1.9 billion and rank 399th on the Forbes list of America’s richest. He may own that Palm Beach mansion, a private jet and a 164-foot luxury yacht called Mine Games, but he comes from the coal-mining country of West Virginia and both his father and grandfather were miners.

In 1980, at age 22, he dropped out of university and went to work underground for his father’s company.

According to a biography posted on the corporate website, (neither Cline nor his senior executives agreed to be interviewed) the company earned a reputation as a highly efficient, low-cost operator under his leadership.

In 1990, he formed the Cline Group and began acquiring mines and within 10 years, his company had become one of the top 20 coal producers in the U.S. with a capacity of 10 million tons per year.

Then in 2003, he sold his Appalachian properties and took a gamble few others were willing to take. He began buying mines in central and southern Illinois that produced high-sulfur coal that could not be burned in most U.S. power plants. But he guessed correctly that the Environmental Protection Agency would impose new regulations forcing power producers to install scrubbers and, with that, Cline’s Illinois coal increased exponentially in value.

Currently, the company operates four mines in Illinois through its Foresight Energy subsidiary. Their productive capacity totals 71.5 million tons annually and the Cline Group owns reserves estimated at 3 billion tons, enough to support 100 years of mining at the current rate of output.

To date, the company has been typically tight-lipped about its plans for Donkin, though Cape Breton residents are excited about what they’ve seen so far.

CMJ2015_May.indd 15

Dewatering is one of the first steps in getting the project back into production.

Kameron Collieries, the Cline Group subsidiary, has established a Halifax office, appointed an operations manager, Matt Fifield, and hired more than a dozen former miners to de-water the tunnels.

In an interview in mid-February, Fifield told the Cape Breton Post that the pumps had been installed 39 days ahead of schedule and de-watering was proceeding much more quickly than expected. As well, he said he was struck by the reception the company had received.

“It’s hard to describe the feeling of positive support that we get out of the community,” Fifield said. “It just knocked us over. It makes you really want to succeed because you can feel these people rooting for you.”

Between 60 and 70 per cent of the coal from the Harbour seam will be metallurgical grade while the balance will be thermal. The prospects for putting the mine into production will be greatly enhanced if the company can land a long-term contract to sell thermal coal to Nova Scotia Power.

Hopefully, that should be a proverbial slam-dunk. The utility relies on coal-fired plants for 60 per cent of its electrical output and the two largest plants in the province are located on Cape Breton, mere kilometres from Donkin.

Furthermore, N.S. Power currently imports most of its coal from Colombia and United States.

But there is one snag. Donkin coal contains too much sulfur and would have to be blended with lower-sulfur coal to ensure that emissions meet provincial environmental regulations.

Nevertheless, negotiations have begun, according to a spokesperson for the utility.

Naturally, neither party is saying anything yet, but the talks are expected to be protracted and complicated.

Meantime, Cape Breton residents are again keeping fingers crossed and hoping for the best.

CMJ May 2015 • Canadian Mining Journal |

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| Coal in Canada

PEERING PAST

theGLOOM

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Canada has a healthy supply of coal which helps make the country attractive to offshore customers.

CANADIAN EXPORTERS ARE NOT IMMUNE TO GLOBAL COAL CHALLENGES

By Joe Aldina

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he past several years have been very challenging for the global coal industry and Canadian coal exporters have not been immune.

Low commodity prices brought on by excessive global supply of both metallurgical and thermal coal and weaker demand from Asia, have resulted in reductions in Canada’s coal industry labour force, cut backs in production and idled mines, and it doesn’t look like the global coal markets are poised for a quick rebound either.

On the back of a strong U.S. dollar, lower diesel prices and depressed seaborne freight rates, delivered costs have fallen and 2015 appears to hold more of the same for global coal producers.

Yet the Canadian coal industry should be proud of its many positive attributes and should be optimistic for the future.

Canada has coal of world-class quality, is well positioned for shipments to Asian markets, it has available port capacity and reliable rail infrastructure, experienced producers, and an exchange rate to the U.S. dollar that has recently improved significantly, benefitting Canadian mines’ competitiveness in global markets.

These characteristics will help favourably position Canada’s export coal industry for the coming years as markets return to equilibrium.

Though metallurgical and thermal coal markets remain in oversupply, we believe that coal markets are cyclical and an eventual recovery in prices will materialize.

On the bright side for metallurgical coal, there remains considerable upside for demand in China and India as they seek to continue the industrialisation and urbanisation process.

As excess supply is reduced in the next several years, spurred by expected mine closures in jurisdictions such as the U.S. where margins have been under considerable pressure, global coal prices are expected to gradually rise.

A strong U.S. dollar has made the situation ever bleaker for U.S. coal miners and some of them will likely find survival difficult in 2015. Longer term, post 2021, new metallurgical coal projects will be required to meet demand, at the same time that some key mines deplete their reserves. We believe that the effect will be an appreciable uptick in metallurgical coal pricing.

Like metallurgical coal markets, global thermal coal markets are facing extraordinary challenges driven by weakening global economic growth, a substantial overhang in mine and export capacity, volatile currencies in key supplier countries, and tightening environmental policies around the world.

Coal remains a dominant fuel in Asia but will give ground to gas and renewables in much of the developed world. King coal still reigns in Asia, but even there, non-coal power generation capacity will overtake coal-fired capacity in 2017 and will maintain that lead through 2035. However, we believe that absolute coal demand will continue to grow to fulfill electrification potential in Asia. As a result, seaborne thermal coal demand will rise from roughly 940 Mt in 2014 to over 1,100 Mt in 2020 and prices will improve.

Investors see the long-term potential of Canadian coal Even in these depressed markets, Canadian coal continues to draw strong investment from abroad, as entrepreneurs and established companies alike recognize that Canada is well positioned for an eventual upturn in coal pricing. After setbacks at frontier coal projects in places like Mongolia and Mozambique, Canada’s established regulatory framework, fiscal regime and reliable infrastructure are particularly attractive to investors.

The headline deal of the last several years was U.S.-based Westmoreland’s acquisition of Sherritt’s coal mining operations in April 2014, but a number of smaller deals have also been announced. These include the recent acquisition of Alberta’s Coalspur and Nova Scotia’s Donkin project (featured on Pages 12-15 of this issue) by the U.S.’s Cline Group, and the purchase of Grande Cache Coal Company by UpEnergy Development Group. Resource Capital Funds and Macquarie Bank also recently provided funding for the development of Riversdale Resources’ coal properties in the Crowsnest Pass area of Alberta.

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| Coal in Canada Furthermore, we are tracking more than 25 Canadian coal projects, and though development activities have slowed because of weak market conditions, Canada remains one of the more active jurisdictions around the world for proposed coal projects. In fact, Riversdale has said that the company put its Canadian projects at the top of its development pipeline, above options in Australia and their Alaskan venture, the Chickaloon thermal coal project.

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Shipping coal to offshore markets is made easy thanks to a network of modern facilities.

Metallurgical coal Despite our projections that prices will undergo a tepid recovery in the near term, we retain a bullish long-term view for metallurgical coal prices. Low prices over the next few years will inhibit new capacity development, and this will ultimately lead to a tightening of the market.

Additionally, there remains consider-

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able upside for demand in China and India as they continue to urbanise. We still foresee China dominating growth though early next decade; after 2016, seaborne import demand in China will grow rapidly from 58 Mt in 2014. Beyond that, Chinese demand begins to decline as electricity-based steel production gains market share and blast furnace efficiencies increase. However, as Chinese demand declines, Indian demand keeps global seaborne metallurgical coal demand steady.

India remains the largest source of growth in import demand in the longterm, adding just over 50 Mt of annual demand growth by 2035. We expect Indian met coal imports to overtake Japan in 2025 and reach parity with China by 2035.

Whilst business and consumer confidence has increased since the new government took office earlier this year, the recent economic headwinds, plus the almost 40 per cent drop in iron ore production, will take a few years to dissipate. The steel project

Steady production of coal makes Canada a world leader in exports.

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| Coal in Canada pipeline is large, but Indian growth will take time to accelerate; we forecast an average annual growth in hot metal production of just under 3 Mtpa for most of the next decade, but more than double that growth rate in the following decade.

Since Canadian metallurgical exports equal roughly one-fifth of Australia’s total, metallurgical coals from Canada provide Asian steel producers with a reliable alternative to Australian production.

The importance of supplier diversity was underscored in 2011 when significant floods disrupted shipments from Queensland, forcing many coal buyers to seek new sourcing options. Indeed, many new relationships were established with North Asian buyers keen on the quality and security of supply of Canadian metallurgical coal. We believe that Asian buyers place tremendous value on such relationships.

Thermal coal Globally, seaborne thermal coal markets are swamped with overcapacity. With just modest mine production, rationalisation to date and new mines still entering production, we believe that overcapacity will actually swell in 2015 and rising demand is not expected to absorb the excess until early in the next decade. But renegotiation of the fixed cost elements of contracts and/or more substantial supply rationalisation could balance the market sooner than we are presently forecasting.

Demand has weakened recently in China, due to a plethora of coal-use policy initiatives including import restrictions and policies to address environmental

concerns, as well as the slowing of economic growth.

However, in contrast to China, we have lifted our 2015 demand forecast in India on expectations of economy-wide reform that should result in an increase in seaborne imports from 143 Mt in 2014 to more than triple that amount in 2035.

In Europe, we believe that coal will maintain a sizeable competitive advantage over gas through 2017, keeping import levels steady for the next couple of years.

Of interest to Canadian thermal coal exporters, we expect that coal-fired generation in Japan will increase over the long term as a reaction to offset high power tariffs imposed to accelerate investment in renewable technologies.

Early next decade, we expect stronger Asian demand will absorb the remaining thermal coal overcapacity, stimulate development of new coal supply and trigger price increases to reach levels required to incentivise new projects.

What to look forward to in 2015 While we believe that it’s going to be difficult to see much price appreciation in 2015 for Canada’s metallurgical and thermal coal exports, this year does promise many positive developments for Canada’s coal industry.

Nova Scotia’s Donkin project is off to a strong start on removing groundwater from the mine’s slopes and this dewatering is likely to be finished by this summer.

The Cline Group looks on track to close its acquisition of Coalspur Mines Ltd shortly and could begin construction on the Hinton, Alberta coal project this year.

Likewise, we expect regulators to approve the purchase of Grande Cache Coal Company by UpEnergy Development Group and we’re encouraged by the transaction as UpEnergy brings operating experience and financial wherewithal to Grande Cache.

With the falling Canadian dollar and significantly lower diesel prices this year, the recently closed metallurgical coal surface mines in the Peace River Valley are much closer to covering their operating costs and they could potentially reopen.

Even with the weakness in global coal markets, we believe that Westshore Terminals in Vancouver will reach a new record for coal shipments of 32 million tonnes in 2015, up from just over 31 million tonnes in 2014.

Finally, we expect stalwart Teck Coal to put in a solid year, likely increasing coal production slightly in the face of tough market conditions.

We’ll be watching to see if more global supply is rationalised this year, particularly from the U.S., and we’re optimistic about India’s demand for both thermal and metallurgical coal imports.

CMJ Joe Aldina is Principal Analyst, Americas and Europe, Coal Cost Research, Wood Mackenzie, New York. Mr Aldina is a regular speaker at the Coal Association of Canada’s Annual Meetings.

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Coal Association of Canada plays host to the world

With the coal industry facing some significant challenges in Canada and around the globe, many are wondering what the future holds for the industry?

To help answer some of those questions, the Coal Association of Canada will once again be holding its a Annual Conference at the Westin Bayshore Hotel Vancouver (September 16-18) to showcase and source market knowledge and insight into the future of coal in Canada.

Again this year, delegates from the broad spectrum of companies from Canada and around the world will gather in Vancouver to gain the latest information and perspectives about the Canadian and global coal industry from a variety of expert speakers and panel discussions.

“Over the course of the two days of sessions, participants will be treated to far-ranging and thought-provoking presentations and panel sessions on a wide variety of topics related to the global and Canadian metallurgical and thermal coal industry,” says CAC President Ann Marie Hann.

World-renowned coal expert and founder of the McCloskey Group, Gerard McCloskey, will once again be the Conference Moderator to lead and entertain delegates from the opening session on coal’s positioning in global energy markets, through in-depth presentations on what market analysts are saying about coal’s prospects.

The conference will also focus on production aspects with a number of international and Canadian coal producers and experts, and for the first time, the conference will have a Technical Program conference offering learning opportunities for personnel operating at a variety of levels in the industry.

Following CAC tradition, the Conference will also offer a number of social events, including a golf tournament, receptions and banquet, highlighted by the CAC Award of Distinction to an individual who has left an indelible mark on the Canadian coal industry.

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| Oil in Canada

Photo: Thinkstock.com

S

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SLIPPER Y

SLO PE

A CLOSE LOOK AT THE ECONOMIC IMPACT OF LOWER OIL PRICES

By Western Correspondent David Godkin

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| Oil in Canada

A

Modern facilities will continue to help make Canada’s oil production a viable commodity.

s surprises go, this one was huge: oil prices plummeting to $45 a barrel from more than $108 in June, oil infrastructure investments slashed to within an inch of their life, plunging Alberta home sales, and projected job losses of nearly 32,000.

A recession looming? Some economists say count on it.

But not Pierre Cléroux. “What we know,” says BDC’s Chief Economist, “is that slower investment in the oil industry will have a negative impact. But is it going to bring a recession?

I think it’s too early to say.”

For his part, RBC’s Senior Vice-president and Chief Economist Craig Williams agrees with the Alberta government’s expectations of 0.6 per cent GDP next year.

The Conference Board of Canada? It sees recession on the horizon and one that could persist.

“It’s our word versus theirs,” says Board Economist Mike Shaw, “but indications out of the oil patch are that there’s going to be enough investment pull out and enough effects on consumer confidence that will result in a recession.”

Business investment…

Conference Board forecasts for cuts in real business investment in energy infrastructure and exploration in Alberta are equally gloomy – a full 23 per cent in 2015. The evidence is everywhere: • Suncor reduces its 2015 capital expenditures by $1 billion, operating expenses by $800 million, and cuts a thousand jobs; • MEG Energy cuts three quarters of the $1.2 billion in spending it had planned for its Christina Lake in-situ oil sands operation in the south Athabasca; 24 | Canadian Mining Journal • May 2015

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• Royal Dutch Shell PLC kills plans for its long-delayed oil sands mine in Pierre River mine north of Fort McMurray and the 200,000/day it might have delivered.

Have crude oil producers panicked prematurely? Not at all, says Cléroux.

“No. I think they were prudent. They’re trying to strike a balance between slowing down investment and lowering costs while not killing the future. Because at some point, the price of oil is going to go back up and they want to be ready.”

Nor is it all about slowing investment and cutting costs. Some oil producers have offset reduced budgets by raising added capital to protect their balance sheets. A case in point: Cenovus, which cut 15 per cent of its workforce but also $1.5-billion to partially fund its two billion capital expenditure program.

“I was happy to see they were still able to raise money,” says Cléroux, “because in the current context you would think that investors would be a bit more cautious.”

The other good news, adds Chief Economist at BMO Financial Group Douglas J. Porter, is labour and equipment costs as industry investment pulls back. “It’s very likely we’re going to see cost increases slow very sharply and may even see costs go in reverse.”

Housing…

“The first casualty to date has been the housing market.” Craig Wright’s comment is supported by the Canadian Real Estate Association which in mid-February reported national home sales falling 3.1 percent from December to January – much of that because of falling sales in Edmonton and Calgary. House sales will likely continue to be weak, Wright adds, but pay attention to inmigration, too. During a news conference in late February, Finance Minister Robin Campbell said the province expects to see up to 70,000 people move to Alberta in 2015 – a drop from the 100,000 the province usually sees.

“In-migration usually favours Alberta. But as we go forward, if the market looks a little less encouraging in Alberta and a little more upbeat in other provinces, you may see those trends reverse which will have implications for the housing market .”

Suppliers…

Mike Shaw says it’s the direct suppliers who really get hit first by a slowdown in oil investment.

Drilling company Trinidad Drilling Ltd, for example, cut its spending plans from $350 million to

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| Oil in Canada $175 million and began cutting its payroll by 500 employees in mid-February, normally one of their busiest times. Also hit hard are environmental services companies such as Calgary-based Newalta Corp. which laid off approximately 180 workers or about 15 per cent of its workforce.

One of the biggest blows, says Shaw, was an announced 7 per cent cut of Haliburton’s labour force in late February.

But even that may be small compared to similar hits across the province. “The numbers are in the thousands, so that is going to hit Calgary and Alberta hard.” All of those people also spend money, Shaw hastens to add. Anything Albertans normally use on a regular basis they’ll cut back on.

Interestingly, one the province’s bigger employers, pipeline companies, should be buffered from the downturn in oil process. Like highways, pipeline companies have very long lead times and long-term deals to buffer them from dropping oil prices, Shaw explains. Consequently, their

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capital and operation costs don’t fluctuate as much. “So they’re not going to rush out just because oil prices have dropped and cut spending.”

Government spending…

Another surprise awaited Albertans in late February when Alberta Energy Minister Robin Campbell announced a budget surplus of $300 million. His sole cautionary: if oil revenues drop even lower than the 50 per cent drop already felt, “we could see that very small surplus disappear very rapidly.” Albertans had reminded him, he added, that “relying on volatile resource revenue to fund government programs and services is not prudent fiscal management…they want to see us to diversify the economy.”

Most economists agree, talk of a more diversified economy is no panacea for immediate hard times, requiring more long-term preparation than this government - until recently awash in royalty payments – was prepared to give it. Also unknown is the impact which a hike in taxes might have on the economy. A sales tax – the bane of many Albertans and something the Prentice government rejected in its late March budget – might actually have helped the economy long term, says Wright.

That longer term plan, he adds, would see deficits over the next year or two and include an effort “to get back to balance…to make the revenue more stable.”

Like Wright, Doug Porter thinks a sales tax would have made sense; the only question would have been the timing.

“Piling on with a sales tax at this point,” he said, “would be crushing.” It might be a good medium to long-term solution, however: “It would help stabilize government finances.”

As evinced by Alberta’s latest budget, both economists might have held their breath. Not only did Premier Jim Prentice ignore calls for a sales tax, he plainly had no appetite for former premier Ralph Klein’s strategy of cutting spending on school, hospital and road construction either. “No economist has advised us to do that,” Prentice told reporters in the days that followed, “and frankly, very few people that lived through the cut and the

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slashes that we made years ago are advocating we do that in the same way.”

Instead, Prentice chose to wrestle Alberta’s projected $5-billion deficit to the ground by upping gas and diesel provincial taxes by four cents to 13 cents per litre, raising user fee hikes and taxes on tobacco and liquor. The Conference Board’s Mike Shaw says this fits in with

the first stage of a two stage approach to managing Alberta’s economy, i.e. avoiding any negative impacts on the economy such as implementing draconian cuts to services. The second longer term stage is to “get your economic house in order,” something Alberta hopes to have achieved after three years of higher fees and taxes and mild belt tightening.

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May 2015 • Canadian Mining Journal |

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Canada’s road ahead…

All that remains to be seen is how the drop in oil prices will affect Canada’s economy overall. According to the Conference Board of Canada the federal government has lost $4.3 billion in revenue since the price of oil started dropping last summer. Things will likely get even worse, Bank of Canada Governor Stephen Poloz warned in March, predicting first-quarter numbers for Canada’s economy that will look “atrocious” as a result of low crude prices. But is it premature to be using the R word to describe all of Canada’s economy, as well as Alberta’s? Shaw believes so.

“We don’t expect it. It would take a pretty serious revision in outlooks for the global economy, particularly in the U.S., for that to result in a recession in Canada.”

Conversely, some believe the opposite may be true: that with the plunge oil prices and the lower Canadian dollar we can expect a major boom in Canada’s manufacturing sector, notably in southern Ontario’s Golden Triangle. But in fact Stats Canada reported a manufacturing output decline in January of 0.7 per cent after rising 2.1 per cent in December. If that seems counterintuitive, Shaw reminds us that “it takes time” for economies to respond to new market conditions.

As well as a low Canadian dollar, what’s needed for stronger GDP growth is increased manufacturing capacity. That means more investments in machinery and skills training. But according to Shaw, after a decade in which Canada has seen very little investment in manufacturing Canada’s capacity utilization rate is actually very high. In fact, he says Canadian manufacturers are “working at a pretty good clip.”

“Physically you need space to build. And Canada does not make a whole bunch of capital machinery. All of that is imported and has become way more expensive.”

Are there any bright spots in a country marked by lower oil prices and a lower Canadian dollar? Sure, says Shaw. But anyone who thinks Canada’s economy will return to the “hey day” of a 78 cent dollar riding on labour intensive industries such as textiles “is missing the point.” More likely to benefit is high tech manufacturing in areas Canada already has a competitive advantage in such as electronics and pharmaceuticals, “because of our very skilled labour force and good capital stocks.” CMJ 29

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| Site Structures

HOME AWAY

HOME

from

Portable housing makes remote site life a pleasure

By Russell Noble 30 | Canadian Mining Journal • May 2015

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Y

An early stage of construction shows portable housing units being placed on elevated supports.

Aerial view shows the vast area covered by portable housing units near Canada’s oil sands.

are replaced with rigid structures, and perhaps most important of all, personal conveniences are moved indoors.

Life in the field becomes almost city like, with facilities located at mines sites today rivaling many living conditions in urban centres. That’s fair to say when not every town has a golf simulator, indoor running track and squash courts.

And that’s the goal of Calgary-based ATCO Structures & Logistics, as it continues to follow a business plans that is based on “making workplace housing enjoyable.”

From its 275,000 square-foot manufacturing facilities in Calgary, the company has been custom building portable structures designed for the mining industry, as well as a host of other commercial and

W

orking at harsh and unforgiving remote mine sites used to mean living in equally nasty surroundings with few if any conveniences found in urban life.

Lean-tos, tents pitched on outcrops, or canvas-sided cabins built on wooden stilts are more the norm for many people living and working in the field during the early stages of mine development.

Fortunately, however, as the site develops, so too do many of the living conditions. Lean-tos, tents and elevated cabins

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| Site Structures industrial customers, since 1947 when the S.D. Southern & Son team expanded and started renting trailers with Alberta Trailer Hire to the mining and oil industries for use as housing and other storage facilities.

Since then, business has steadily increased, becoming today’s ATCO Structures & Logistics, part of the ATCO Group of Companies, with assets of about $18 billion, and employing more than 9,000 people worldwide.

The company continues to keep pace with industry demands by diversifying from housing and other accommodations to a more robust range of services.

It also provides solutions in structures and logistics to companies engaged in manufacturing, logistics and noise abatement, to providing facilities, operations and maintenance service to military installations.

From fire protection services at a NATO camp in Kosovo, to maintaining the Alaska Radar System, the once-a-trailer-only company is now a truly global operator with wide-ranging capabilities.

But it’s the “accommodations” that the father-and-son team started almost 50 years ago that remain as the company’s main focus and few of its projects serve as a better example of this dedication than the Barge Landing Lodge in Fort McKay, north of Fort McMurray, Alberta. The lodge is a poster child for Aboriginal business partnerships, owned and operated jointly with the local Fort McKay First Nation.

Designed to accommodate almost 1,500 workers from the nearby oil sands surrounding Fort McMurray, the 308,160-square-foot lodge is a massive complex that’s composed of individual dormitory units with Arctic corridors connecting all of the units with a grouping of centre-core buildings including a gourmet kitchen and dining room.

The lodge also features a 12,000-square-foot recreation The Barge Landing Lodge is centre that includes a reception ‘first-class’ in every way, from its desk, private offices, a conve- housing and recreational facilities nience store, security centre, a to its fine dining and banquets. fully equipped gym, and a private internet room.

But it’s far more than a well-equipped facility designed to house workers from the oil sands.

The fame of the lodge’s annual feasts stretches beyond the oil sands and its workers to other communities where residents often travel to the Barge Landing Lodge to celebrate Easter, Thanksgiving, Christmas, Canada Day and, of course, the lodge’s birthday with uniquely designed banquets.

CMJ

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| Crushers & Conveyors

MADE to MEASURE Digital designs help family owned company crush customers’ problems

By Russell Noble

34 | Canadian Mining Journal • May 2015

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A

ssembling complicated machinery and other heavy mining equipment requires an aptitude for following instructions to the ‘T.’ In fact, there’s no such thing as ending up with extra nuts and bolts when it comes to building the tools required to make today’s mines function properly and moreover, safely and profitably.

One company that thoroughly understands what it takes for machinery to perform properly is family owned MFE Manufacturing Inc, a New Brunswick company that specializes in the design, engineering, fabrication and installation of a wide variety of material processing and handling equipment for the aggregate and mining industries.

Founded in 1997, MFE Manufacturing is located in Miramichi, the largest city in northern New Brunswick with a population of just over 18,000 residents. It’s here, from a 25,000-sq-ft manufacturing facility, that the company custom builds everything from crushing plants, to cone to screening plants, to belt feeders and conveyor systems.

With as many as 30 welders and fitters on staff, the company is well equipped to fabricate what it designs at its Miramichi facility. In addition to its welders, fabricators and industrial mechanics working at 12 semi-automatic welding stations and a plasma cutting table, the facility also features overhead cranes ranging in capacities from three to 10 tons, a 200-ton press break, an 88-ton P2 Iron Worker, a 36-inch radial arm saw, and two industrial bandsaws.

As mentioned, the company designs and engineers material processing & handling equipment and through the use of 3D modeling, MFE is capable of producing realistic digital prototypes of all of its designs prior to ever cutting a piece of steel. This innovative approach to product development has facilitated customer input, improved quality assurance, and reduced manufacturing costs.

One of the keys to the company’s success has been in its complete turnkey services where it installs and commissions all of its processing and handling equipment onsite. From steel erection and on-site welding, to hydraulic plumbing, electrical wiring, belt tracking and screen cloth selection, to equipment training, the company assumes complete responsibility for getting projects up and running. www.canadianminingjournal.com

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One of its recent projects was the installation of a 1200-tonper-hour jaw crusher and surge tunnel at Atlantic Minerals’ Lower Cove quarry on the Port au Port peninsula in Newfoundland.

“As the general contractor,” MFE’s Engineering Manager Matt Esson says, “we supplied and installed all new equipment necessary to accept quarry rock from the Atlantic Minerals’ 100ton haul trucks and crush it to an eight-inch-minus product at a rate of 1200 tph.

“To accomplish this, we designed and fabricated a primary jaw crushing station that included a 150-ton live storage feed hopper, a Lippmann 62-inch by 28-foot vibrating grizzly feeder, a Lippmann 50-inch by 62-inch jaw crusher, a BTI NT24E-BX30 rockbreaker, and one 60-inch by 50-foot discharge conveyor.”

Esson further explained that the entire system is monitored and controlled from an adjacent 100-square-foot control cab tower that includes an integrated hydraulic power unit room, an electrical room, a spare parts room, and the potential for a partitioned lunch room/restroom divided between all four floors below the cab.

All crushed material is monitored from the tower as it is conveyed by a new 48-inch x 150-foot radial stacker that discharges over a new 12-foot x 13-foot x 330-foot long cast-inplace surge tunnel.

“The surge tunnel is equipped with three Syntron MF-400 54-inch by 84-inch electromechanical pan feeders mounted to the ceiling. Each feeder is capable of supplying up to 1000 tons-per hour of throughput down onto a new 48-inch by 475-foot collector belt. This collector conveyor is offset 36 inches from the centre line of tunnel to maximize maintenance access on the far side.

“The conveyor also includes a unique belt turnover system which effectively eliminates spillage from the dirty return side of the belt through the tunnel,” says Esson.

As mentioned at the outset, MFE’s engineers design systems specifically for the individual customers and in the case of Atlantic Minerals’ Lower Cove quarry, the tunnel and feeders were strategically located by design to not only accept surge material from the new 5062 jaw crushing station, but to also be accessible to the existing 4248 jaw plant.

“This new redundancy of crushing power along with the added value of a surge means a lot more capacity and far more uptime for the customer,” added Esson.

CMJ

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From crushers and conveyor designs, to on-site installations, MFE Manufacturing of Miramichi, N.B. handles it all as shown in these photos of work being done at Atlantic Minerals’ Lower Cove quarry on the Port au Port peninsula in Newfoundland.

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| Crushers & Conveyors Huge and elaborate bulk material handling equipment designed and manufactured by Industrial Equipment Manufacturing Ltd. (IEM) of Surrey, B.C. can be found around the world.

MOVING THE GOODS B.C. FIRM SPECIALIZES IN CONVEYING BULK MATERIALS

By Russell Noble 36 | Canadian Mining Journal • May 2015

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hen it comes to moving bulk material in and around mines and quarry operations, few companies have more experience, or a greater variety of conveyor equipment configurations, than Industrial Equipment Manufacturing Ltd. (IEM) of Surrey, B.C. From British Columbia to Mongolia, IEM’s engineers have designed bulk material handling equipment, as well as other specialized equipment for places like Canada’s oil sands operations, since 1953 when it initially specialized in selling industrial bearings.

The company continually grew to include 16 warehouses and supply divisions until 2003, when the supply divisions were sold to Applied Industrial Technologies, a major North American industrial product distributor.

As already mentioned, the majority of IEM’s business is manufacturing conveyors for use in mining and like the mines themselves, “Every project is a little bit different than the one before it and therefore, our design input is extremely important,” says President John Hards.

It’s because of these differences, says Hards, that the company offers such a wide variety of styles including belt conveyors, high-lift conveyors, chain conveyors and screw conveyors with other features that include transfer towers, load chutes, discharge chutes with belt cleaners, platforms and walkways.

Hards says the company’s main customer base for conveyors is often consulting engineers who run the large projects for the mining companies.

“We can build what they need, and are experienced at working within their required quality-control systems,” says Hards.

Other major products include heavy-duty apron feeders used to feed rock out from the bottom of large bins in order to metre the material to the next step in the process. Belt feeders are also a major product and they are often used much like apron feeders only for less severe applications.

In addition to mining equipment, Hards says the company also produces products for other industries.

For example, it designs and manufactures fabricated steel housings for large spherical roller bearings, as well as hydraulic nuts used with bearing adapter sleeves for mounting and dis-

Shiploading systems made and installed by IEM help keep goods moving at ports around the world.

mounting bearings. It also produces pulley cleaner and belt cleaner equipment used in the oil sands industry in the area of Fort McMurray, Alberta.

Hards explains that pulley cleaners are mounted at the back face of the large conveyor pulleys to prevent sand and bitumen build-up that could cause belts to come off their tracks. Belt cleaners are mounted at several places along the belt path to keep the belt clean. The devices remove loose material from the belts before the debris has an opportunity to build up and create problems.

When asked for specifics, Hards said IEM’s current projects include constructing belt conveyors for two mining projects in British Columbia, and apron feeders and belt feeders for a mine in Mongolia that was mentioned earlier.

“IEM also manufactured a 54·inch wide, 2,900-foot-long overland stacking conveyor designed for coarse ore handling, plus six 36-inch side pebble conveyors, a 6o-inch mill feed conveyor, and a 72-inch-wide belt feeder reclaim conveyor for the Copper Mountain Mine near Princeton, British Columbia,” said Hards.

IEM products are engineered and manufactured in-house in the company’s machine shop in Surrey, B.C. It is ISO 9001:2008 certified, and also adheres to welding standards set by the Canadian Welding Bureau.

“The main reason we get work is because we are both engineers and manufacturers and we also expand our horizons to be competitive far from home,” says Hards.

“There are lots of people who can build conveyors, but not as many who can design them too.”

CMJ

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38 | Canadian Mining Journal • May 2015

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50 YEARS OLD

and PROUD of THEM ALL

B

By Russell Noble

eing in business for 50 years is a milestone, regardless of what business it is.

In fact, surviving half a century in any walk of professional life is something to talk about and that’s why PR Engineering of Oshawa, Ontario, is extremely proud to spread the word about its 50th Anniversary.

Since its inception in 1965, PR has been providing complete service and repairs to most makes and models of mining and aggregate equipment, as well as remanufacturing jaw, cone and gyratory crushers.

Its current location at 249 Toronto Avenue, Oshawa, has been the hub of the manufacturing process since 1978 where most work is done in-house.

The company remains small in size, employing 45 personnel at its 45,000-square-foot factory, many of whom have been with the company for more than 10 years.

And it’s these veteran employees, says Company President Linda Grieco, who are the backbone of PR Engineering.

“With the experience and skill level that our people bring to the table, there aren’t too many jobs the company can’t handle,” says Grieco.

“We have a steady flow of repeat customers who look to us for not only routine service but also in times of major breakdowns. It’s our ability to mobilize our people at short notice that makes us stand out among our competitors. It’s this range of services and dedication to our customers that has kept us in business for so long and while some of the jobs are far from routine, we like solving problems for people who come to us for answers.”

Grieco says the company works on the business approach: “We do what needs to be done, when it needs to be done.” www.canadianminingjournal.com

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The industry has changed a lot in the last 50 years, but what never seems to change are the customers and while some mines close, quite often the personnel from those mines re-surface at another property and more often than not reconnect with PR Engineering.”

General Manager Gary Robinson says, “If you treat people well in this business, they will remain loyal to you.”

Robinson is one of those ‘veterans’ mentioned earlier who has more than 35 years employment with the company and has seen more than most.

“Probably the biggest change I’ve seen is in the equipment we service,” says Robinson. “When I first started, we manufactured and re-built jaw crushers exclusively but over the years we have branched out into cone and gyratory parts and service. We have now become a leader in cone repairs and will work on anything from the smallest HP machines to seven-inch Symons machines.

“Because of today’s production schedules and the demand for continuous performance from the equipment, there’s more stress on the various components to perform without failure and if a company invests in a repair, they want to know that it will be done right and for a fair price.”

And that, says Robinson, is why the customers keep coming back and why we get so many new customer referrals from them.

Despite the growth of their customer base, the company’s philosophy is still to treat the customer with respect and give them the best effort you possibly can. That philosophy, together with the dedicated employees and loyal customers, is why PR Engineering is proud of its past and is looking forward to a very bright future. CMJ

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May 2015 • Canadian Mining Journal |

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| Technology

Minerals from Newfoundland and Labrador are processed and shipped to markets around the world.

40 | Canadian Mining Journal • May 2015

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DETAILED DISPLAYS GEOSCIENCE DATA HELPS MINERS FIND THEIR NEXT PROJECTS STAFF REPORT*

N

ewfoundland and Labrador has an abundance of mineral wealth, including worldclass deposits of iron and nickel, and important current and past production of zinc, lead, copper, gold and silver.

Ongoing exploration projects boast substantial resources of these and other commodities, including uranium, antimony, rare earths, fluorite, molybdenum and tungsten. These resources reflect the considerable diversity of favourable metallogenic environments that formed in the province over a time span ranging from earliest Archean to latest Paleozoic.

However, much of the province remains under-explored relative to other mining jurisdictions, providing an opportunity for companies to explore for the next ‘elephant’ in a modern, stable, mining-friendly jurisdiction.

Last year marked the 150th anniversary of the Geological Survey of Newfoundland and Labrador, and of modern mining in the province. This period of history has yielded a huge collection of government and industry geoscience data in the form of geological reports and maps, geochemical and geophysical data, drilling and mining records, and much, much more.

This collection represents an immensely valuable resource for all geoscientists who work in the province, particularly for those in the minerals sector. The challenge has always been to preserve this important resource and make it publicly available in the most effective manner possible.

CMJ2015_May.indd 41

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| Technology

Baie Verte-Springdale area, northeast Newfoundland. a. Geology, mineral occurrences (red dots) and claims (black) b. Copper in lake sediments (image) with mineral occurrences c. Residual magnetics

The Geoscience Atlas A vital tool in the task of organizing this repository of data and making it widely accessible is the Geoscience Atlas. The Atlas provides state-of-the-art, web-based technology enabling the user to review, analyze, download and output this data at no cost. Users can easily access material to inform decision-making at a variety of stages, especially project-generation. The Atlas is also an important promotional tool to help demonstrate the province’s mineral

potential to domestic and foreign investors.

Some of the more useful databases which can be accessed via the Atlas include geology, geochemistry, geophysics and mineral land tenure. The Atlas displays data in layers, and enables the user to overlay various datasets such as geological contacts and faults, geochemical dot plots and geophysical images, making it possible to see relationships between them.

The Atlas is accessed by going through the Geoscience Online webpage (http://

CONVEYING PERFORMANCE

2

2 23 th 5 o bo 01 s in xpo 2 u t E i Vis CIM

gis.geosurv.gov.nl.ca). This gateway provides information on the latest developments in the Atlas, links to other data sites, the MIRIAD claim staking portal, and contact information.

Once the Atlas is loaded, the data layers can be accessed via the Contents panel. The primary Map Layer Group contains location data such as roads, place names and UTM and NTS grids. It also has useful technical data including mineral occurrences and drill hole locations.

The Bedrock Geology Group includes a 1:1,000,000 scale geology map of the entire province and more detailed geology for the Island of Newfoundland, with separate layers for faults and contacts. The Surficial Geology Group also provides maps at regional and detailed scales, and includes separate layers for landforms, aggregate resources and striations.

The Geochemistry Group includes lake sediment coverage for the entire province and detailed lake and till surveys in selected areas, for a total of more than

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The Geoscience Atlas enables users to click on Dot Plots to obtain the element values for the sample area.

60,000 samples. Each sample includes analyses of over 30 elements. Volcanic and plutonic rock geochemical data are also available. The Geophysics Group incorporates residual magnetic coverage for the entire province, as well as more detailed surveys in certain areas, with a total of almost 100 images.

A separate group provides indexes for bedrock geology maps, and geochemical and geophysical surveys. These indexes facilitate the identification of detailed data for a given area of interest.

For example, the Index of Airborne Geophysical Surveys contains more than 1,500 polygons delineating the boundaries of analog and digital geophysical surveys. Links are provided to individual (non-confidential) company survey specifications, digital reports and survey data (for more recent surveys). These can be viewed and downloaded separately.

The Mineral Lands Group has an upto-the-minute display of all current land holdings and links to detailed status reports on individual map-staked licences. A very useful recent addition to this group is the historical claims layer, which includes all ground- and map-staked claims, fee simple mining grants and concession lands that have been cancelled, or otherwise forfeited.

Both current and historic claims are linked to a collection of more than 10,700 (non-confidential) company assessment reports allowing the user to quickly find and research previous work on a property.

These can be downloaded in pdf format at no cost. Many recent reports include digital data which can be forwarded on request.

CMJ2015_May.indd 43

A separate Land Use Group incorporates important regional and local features such as Inuit Lands, municipal boundaries and public water supplies.

Most layers, with their associated point, line or polygon features, can be queried to provide more detailed information in a search result window. For example, a click on a lake sediment site opens a search results window with all the

element values for that sample, including base and precious metal values.

A variety of tools are available to enable customized searches of spatial data, and to perform other tasks such as measuring distances. All layers can be downloaded in a variety of digital formats for further interpretation or display by the user. A print function allows ready output of data in page-size format at a specified scale, and a draw tool enables the user to add simple graphics to enhance the image.

As with any tool, the value of the Atlas is evident by its usage, which includes governments, mining and exploration companies, educational institutions, environmental companies and the public, from more than 50 countries.

CMJ *Information for this article provided by Phil Saunders P.Geo., Mineral Exploration Consultant, and Pauline Honarvar, Project Geologist (GIS), Department of Natural Resources, Government of Newfoundland and Labrador.

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May 2015 • Canadian Mining Journal |

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In My Mine(d)

Mining for Talent: Connecting your reputation to recruitment

Carolyn Ray is Managing Director, Interbrand Canada, a brand consultancy with a network of 33 offices in 27 countries.

By Carolyn Ray

W

ith many economic indicators pointing to renewed momentum in the mining sector, the increased urgency to recruit and keep talent is being felt across the sector. From recent conversations at PDAC in Toronto, almost everyone emphasized talent as essential to operational productivity and the leadership pipeline.

Globally it’s estimated that over the next decade, at least one third of the current mining workforce will retire. This is particularly important in Canada, where mining represents 4.5 per cent of the GDP— and 23 per cent of Canadian exports.

New challenges require new strategies Historically, the industry has relied on high wages to attract talent. However, as we look into the future, it’s clear that we need to find new strategies to engage and appeal to a broader set of prospective employees. In addition to the milllennial challenge, diverse groups such as women, immigrants, and Aboriginal Peoples, remain under-represented in the industry. Women represent only 16 per cent of Canadian mining, falling short of other natural resources sectors such as manufacturing, energy, oil and gas, utilities, and forestry.

From our perspective, there are five ways mining companies can close the talent gap:

• Build reputation from the inside out: An organization’s reputation is essential to attracting and retaining a new generation of employee talent. Reputation starts with current employees. With 44 | Canadian Mining Journal • May 2015

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Gallup noting that employee engagement is at record lows (13 per cent globally), organizations should consider how their brand can be an accelerator, a filter to guide innovation and creativity, and a vehicle that inspires discretionary effort as a means to higher productivity, safety, and performance.

• Tell your story proactively—not reactively: Whether mining companies value it or not, reputation matters. With demographic shifts, millennials entering the workforce, and the game-changing

“ There are

five ways mining companies can close the talent gap.” impact of technology, the industry needs to do a much better job telling its story transparently and doing so through nontraditional methods, like social media.

While many companies engage public relations firms during a crisis, the real opportunity is for mining companies to go on the offensive. Mining companies have the opportunity to intentionally create, shape, develop, and manage their brand proactively, rather than let happen by accident.

• Focus on millennials: In their careers, members of the millennial generation expect rapid progression and exposure to different facets of an organization to remain stimulated and engaged.

Attracting and retaining millennials requires a different strategy, as they also place more emphasis on authenticity, purpose and meaning in their work than previous generations.

• Improve CEO visibility: With a new generation of CEOs leading mining companies, there is a tremendous opportunity for CEOs to be more visible and vocal, and articulate a clear sense of purpose that drives differentiation. More than ever before, mining companies have incredible potential to leverage brand as a means to align the interests of current and prospective employees with those of the organization. Since CEOs are the face of the brand to all stakeholders—and now that social media has dissolved the barriers between the inside and outside of an organization—authenticity is key to building trust in leadership.

• Engage current employees as your best brand ambassadors: An engaged employee is your best way to recruit new ones. Employee referrals have the highest applicant to hire conversion rate—only 7 per cent apply but this accounts for 40 per cent of all hires. In addition, referral hires have greater job satisfaction and stay longer at companies—46 per cent stay over one year, 45 per cent over two years and 47 per cent over three years. Consider this: the average employee has 150 contacts on social media networks—100 employees means around 15,000 contacts (and possible candidates).

CMJ www.canadianminingjournal.com

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ADVERTISERS INDEX

www.canadianminingjournal.com

ALLU Group 37 www.allu.net BBA Inc. 39 www.bba.ca Becker Varis 20 www.varismine.com Brandt Tractors 7 www.brandt.ca DMC Mining Services 32 www.dmcmining.com Doosan Portable Power 43 www.doosanportablepower.com GEA Westfalia 29 www.gea.com Grace Industries 28 www.graceindustries.com Grindex 42 www.grindex.com Hard-Line Solutions 47 www.hard-line.com Henkel 38 www.henkel.com/mining Hitachi Mining 48 www.hitachimining.com Mobil Industrial Lubricants 33 www.mobildelvac.ca Joy Global 4 www.joyglobal.com Kalenborn 21 www.abresistkalenborn.ca KSB Pumps 27 www.ksb.ca Luff Industries 42 www.luffindustries.com Montt CIA S.A. 45 www.monttgroup.com Norwest 26 www.norwestcorp.com Petro Canada Lubricants 2 www.lubricants.petro-canada.ca/mining Polydeck 18 www.polydeckscreen.com/mining Sellick Equipment 19 www.sellickequipment.com SRK Consulting 31 www.srk.com TerraSource 11 www.terrasource.com/cmj Xylem 9 www.xylemwatersolutions.com/ca

CMJ2015_May.indd 45

The 133 year old Canadian Mining Journal would like to congratulate The Northern Miner on joining the “Century Club”.

One hundred years of being “On The Level”! The diligence of your reporting has made you a valuable member of the mining, investing and journalism fraternities. Long may you continue to report with honesty and integrity.

PROFESSIONAL DIRECTORY MONTT GROUP SpA

Chilean Mining Attorneys Montt Group SpA offers a full array of legal and technical services, particularly creation of mining companies, filing for mining claims, easements, administrative permits, due diligence and legal surveillance Own Offices in Antofagasta and Copiapo and other cities Since 1974 serving clients in Chile and Latin American countries

www.monttgroup.com +562 2544 6800 monttcia@monttcia.cl May 2015 • Canadian Mining Journal |

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Unearthing Trends

Corporate transparency requirements: taking the clear path

Bruce Sprague is a Partner and EY’s Canadian Mining & Metals Leader.

He is based in Vancouver.

By Bruce Sprague

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orporate transparency and accountability have been hot topics in the public debate on corporate tax responsibility. Citing public interest on these issues, the global media has, for some time, questioned whether large corporate taxpayers are paying their fair share of tax. Many governments have responded, introducing public disclosure requirements around tax. These public disclosures are in addition to initiatives for greater (non-public) disclosures to tax authorities.

While these disclosures are aimed at encouraging openness and transparency, there’s a risk that publishing unexplained tax figures may result in misconceptions about a company’s tax profile – particularly around the reasons for low effective tax rates. It’s therefore necessary for corporate taxpayers to consider how to respond, both proactively and reactively.

The right strategies can clear the way for a variety of benefits – but companies must heed the risks along the way.

As different countries introduce transparency requirements, companies must evaluate the requirements in each country where they do business. There are a number of questions to be addressed internally to understand how to approach the requirements. Some questions to ask include: � Do the right people in your organization know and understand the details of the proposals and your tax numbers? � Are all your internal stakeholders on board?

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� How likely is this to attract attention from media, activists, employees, government and/or public? � Do you plan to take a proactive or reactive approach to any potential attention? � How does this fit into your broader investor relations, corporate communications and/or media strategy?

Canada, for one, tabled new legislation in the fall of 2014, the Extractive Sector Transparency Measures Act. The Act lays out the framework of new expectations for resource companies to publish annual reports outlining their tax and other payments made to both Canadian and foreign governments. Under these requirements, corporations must provide an annual report to the Canadian government detailing payments made to a Canadian or foreign body to develop oil, gas and minerals if the total payments made in that year are at least $100,000.

While payments to a public body include local, provincial and federal levels of government, the Act contains transitional provisions for disclosure of payments to First Nations, exempting these payments for the first two years before falling into line with the rest of the Act. In Canada, and elsewhere, corporations should evaluate their current tax profile, effective tax rate, and the potential impact that reputational damage arising from negative publicity on this issue may affect their business. Corporations that may have been the subject of recent public scrutiny or have a low effective tax rate or

low tax rate on income may wish to mitigate any reputational damage that may arise from this issue. For these corporations, it may be appropriate to take steps to anticipate and correct any misinterpretation that may arise from the publication of their tax information or the resulting public debate.

For example, in recent years some corporate taxpayers have been publishing a series of reports explaining the taxes paid by their company. This proactive approach to explaining their tax profile has garnered praise from the public and, in some instances, won awards from various bodies concerned with corporate transparency.

Unlike their competitors, these proactive companies have been spared from much of the negative publicity from the corporate transparency and tax debate.

Other corporations could do well to follow the example set by these companies in formulating and publishing their own explanation of taxes paid, together with an explanation of how they contribute to the economic wellbeing of the country as a whole.

A more transparent approach to corporate taxes can have multiple benefits, improving both internal and external relations. As new transparency requirements become the norm in many countries, mining and metals companies ought to be proactive about implementing processes and strategies that will allow them to go beyond the requirements with ease – staying on the clear road to success.

CMJ www.canadianminingjournal.com

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