Canadian Mining Journal April 2016

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April 2016

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CANADIAN Mining Journal

APRIL 2016 VOL. 137, NO. 3

www.canadianminingjournal.com

FEATURES TRANSPORTATION & LOGISTICS

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10 TRANSIT TUNNEL Fleet of boring machines tunnel through mineral-rich soils in downtown Toronto.

16 OCEAN TRANSPORT Huge pieces of mining equipment shipped across the ocean to seafloor mining site.

COAL IN CANADA 20 COAL ASSOCIATION OUTLOOK Coal Association of Canada’s new President Robin Campbell takes a look at the coal mining industry’s future.

22 INNOVATION

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Two entrepreneurial Calgary companies use byproducts from coal and oil to provide products for agricultural purposes.

24 TRANSPORTING COAL A look at how transporting coal residues using pipe conveyors offers cost-saving solutions.

DEPARTMENTS 5 EDITORIAL This month Editor Russell Noble suggests that employees lower their salary expectations when looking for new work after being let go from their previous six-figure jobs.

6 FIRST NATIONS A regular column by First Nations.

7 LAW A column by Mark Sajewycz, a Partner, Lawyer, Patent Agent, and Trade-mark Agent, at Norton Rose Fulbright.

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

34 UNEARTHING TRENDS

By Michael Kennedy, Infrastructure Advisory Partner, EY.

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April 2016

Canada Post Canadian Publications Mail Sales Product Agreement No. 40069240

MOVING MATERIAL plus COAL in CANDADA

ABOUT THE COVER

This month’s cover photo provided

by Petro-Canada Lubricants.

Coming in May Canadian Mining Journal features Underground Autonomous Mining and Safety.

For More Information

24 FEBRUARY/MARCH 2016

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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

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CANADIAN Mining Journal

EDITORIAL

April 2016 Vol. 137 — No. 3 38 Lesmill Rd. Unit 2, Toronto, Ontario M3B 2T5 Tel. (416) 510-6789 Fax (416) 447-7658 www.canadianminingjournal.com

Editor Russell B. Noble 416-510-6742 rnoble@canadianminingjournal.com Field Editor Marilyn Scales 613-270-0213 mscales@canadianminingjournal.com Production Manager Jessica Jubb Circulation Manager Cindi Holder 416-510-6789, ext. 43544 cholder@glacierbizinfo.com 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 & U.S.A.: 1-888-502-3456 ext 2 or 43734 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: $51.95 per year; $81.50 for two years.

USA: US$64.95 per year. Foreign: US$77.95 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: 1-888-502-3456 ext 2; Fax: 416-447-7658; E-mail: cholder@glacierbizinfo.com 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.

APRIL 2016

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By Russell Noble

It’s time to get out of bed for less than $100,000.00

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’ve met a number of people recently who have told me about losing the jobs they thought they’d have for life; jobs they believed were ‘guaranteed’ because of the number of years they had loyally given to their employer. They were, so they thought, in positions that were safe and secure because of their devotion to the company.

But, as we’ve all witnessed, there’s no such thing of being ‘guaranteed’ of anything in today’s uncertain and tear-down world of employment, particularly in mining.

Companies simply can’t afford to employ people forever. In fact, that’s why we’re in a ‘contract’ world right now where, like it or not, the days of being a full-time, ‘corporate guy’ are becoming extinct.

We’re in an “as needed” work environment where jobs will only last until the work is done. The days of keeping people on the payroll until new work comes along are gone.

And, from an employer’s perspective, it makes sense because it costs a small fortune in benefits alone to keep people on staff, not to mention the salaries some people are demanding these days.

When I started working, my gauge for success in the workplace (based on my dad’s WWII philosophy) was to earn at least $1,000.00 a year for each year of my life. So, at 21 when I started working full time, my goal was to earn $21,000.00 a year (by the way, I fell short of that mark by about 10 grand) and so on, and so on, until I retired at 65 and was earning $65,000.00 a year.

Fortunately, my personal gauge for success was achieved and exceeded in most years, but by today’s standards, I hear some people say they wouldn’t get out of bed for less than $100,000.00 a year.

Good for them, but I’m afraid that unless they lower their standards (or are still working when they’re 100 years old, based on my gauge for success), then the world is going to be filled with a bunch of “Rip Van Winkles” because they’ll never get out of bed.

The fact is, the high-paying jobs just aren’t out there anymore, and as those high earners who have recently lost their jobs are finding out, ‘contract’ jobs rarely pay six figures, and they don’t pay benefits either.

Mining, like all other professions, is just a business. Sure it has characteristics that are unique and somewhat exciting, but the bottom line is just that; a bottom line that must be filled with black numbers in order to survive.

Even the seemingly ‘bullet-proof ’ giants in the industry like Barrick, Vale SA, FreeportMcMoRan Inc., and Anglo America PLC , are in the process of trying to unload many of their mines to help pay down their staggering debts.

In fact, it’s a fire sale that’s burning up far more than property titles as companies continue to pull out all stops to bolster their financial positions.

And, like I said earlier, it’s unfortunate that a lot of employee positions are also going up in flames as desperation continues to grow and businesses struggle to survive.

These are desperate and certainly depressing times to say the least, and I think it’s only going to get worse, especially for those now-unemployed ‘corporate guys’ with six-figure expectations who won’t get out of bed for less. CMJ

CANADIAN MINING JOURNAL

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FIRST NATIONS

Regional Chief Shane Gottfriedson

Strong partnerships lead to good business A totem pole on display at the Vancouver Convention Centre during the Mineral Exploration Roundup 2016 convention in January. Photo: AME BC

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ritish Columbia Regional Chief Shane Gottfriedson told delegates at the recent Mineral Exploration Roundup convention in Vancouver that the resource industry could be a game changer for First Nations in the province, but a higher level of consent and respect will be needed before the industry is embraced by local First Nation groups.

As an advocate for good business practices, Chief Gottfriedson said First Nations can use economic development to become more independent, and “protect what’s ours.”

He said that “as we look at the changing landscape of how we interact in the 21st century, we need to take advantage of the opportunities before us in the resource sector, and the social sector as well. Unfortunately we’ve seen many fights with the industry and old-school thinking, but we’ve got new companies coming in that want to partner with us, and the ones that do are having much more success from a public perception, and it’s also good corporate business.”

Chief Gottfriedson described First Nation communities in the province as the “poorest of the poor” and among the most disadvantaged, but under a new federal government led by Prime Minister Trudeau, he says the future looks brighter.

“I really like Trudeau’s way forward on including us, and looking at how we can play a major role in the future,” he said.

“We can and we will, but we also need industry to partner with us, be respectful and work with us to get that quality of life.

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managing wealth as well.”

But social change is also necessary, he said, and First Nations must “break down barriers,” think strategically and seek out partnerships.

“The way the world economy is, we need to look at creating a culture of greatness for our people,” he continued. “Violence and learned behaviours are things of old, and we need to look at how the business world is growing all around us … our need for social change has never been more important.”

Before serving as Regional Chief for the province, Chief Gottfriedson spent 12 years as Chief of Kamloops, and during this time he says he learned how important it is for groups to collaborate.

“Some of the most successful organizations create a culture of greatness by giving its people skills, training and tools. I’m an ironworker by trade, so if I need to pound nails, I’m going to need a hammer … it’s the same position I take as Regional Chief, and in working with the industry and the different councils,” he said.

“Wouldn’t it be awesome if this province and all the First Nation groups got together and developed strategies around how we can benefit? If we create our own source of revenue, we create our own independence.” CMJ Information for this First Nations column provided by LESLEY STOKES, a staff writer with The Northern Miner, a sister publication of Canadian Mining Journal.

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IN MY MINE(D)

Time for a Mining Rant

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By Rob McEwen, Chair & Chief Owner of McEwen Mining Inc.

t’s time for a mining rant! Our most important audience, our shareowners, need to be given more respect. We, the management of the mining industry, have allowed the securities regulators, stock exchanges, lawyers, accountants and governments to confuse, abuse and excessively tax us and in turn our shareowners. We produce financial statements, information circulars and other impenetrable documents that I am certain very few shareowners read due to the massive size and mind numbing narrative of these documents.

Think back to a time when you can remember a prospectus that had a one-page summary, or a one-page discussion of risk factors.

Let me tell you, it was a very long time ago!

Our shareowners have a right to understand every document that we give them. It should be clear, concise, in plain language and that can be quickly comprehended. For that matter, management also needs to understand the materials we are sending our shareowners, which frequently doesn’t appear to be the case. For example, do you understand fully the 16-page letter of representations and warranties that your auditor drafts and demands that you sign before giving you an unqualified audit opinion on your annual financials?

Do you think your shareowners have a chance in hell of following all the notes to your financials that might run 25-50 pages long?

Why have we let our financials reports become so obtuse?

We need to take back the ground we have lost to these pencil pushers and insist on getting value for the great and growing expense that accounting has become. Internal auditors, external auditors, tax auditors and consulting auditors have become a common feature

and a plague. Have you ever looked at the size of the Securities Acts that dictate the behaviour of public company management?

These documents have grown tremendously in size and scope.

They have been drafted by a myriad of lawyers with the stated objective of protecting the public, but the unstated objective appears to be business development for the legal community. The beadyeyed lawyers who work for a few years at the security regulators, long enough to author a new regulation that they become an expert in and then return to their law firm in order to advise clients, public companies, on their brilliant bit of confusion.

There are so many security rules and regulations that no one in the world has the mental capacity or capability to know and understand all these rules.

As a result, our regulators have inadvertently created an environment that is the opposite of what they say they are doing. The multitude of rules has produced a playground for the criminally inspired and inclined, because there is no common knowledge of all the rules.

As a result, the thieves are free to steal with virtual impunity and the crimes keep growing in size. Think of Madoff, Enron, Northern Telecom, BreX and the many other thefts of shareowners’ wealth.

How many more rules, regulations and defrauding of the public has to occur before we scream stop this nonsense? We should be pushing for much, much fewer securities regulations so that everyone has a chance to know all the rules and would be able can spot and stop a criminal instantly!

Let’s use Moses as a good example and give everyone the 10 commandments of securities law. Many of us have used the unfortunate phrase “a mining friendly jurisdiction” to describe the location of our property, but experience has demonstrated that this statement is at best a short-lived fantasy! We need to aggressively demand stronger protections for our shareowners’ capital from the avarice and capricious nature of governments!

Get battle ready! It’s time to go on the offensive! Let’s show our shareowners’ that we are serious about protecting their capital! CMJ

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MINED WITH

PEOPLE IN MIND BORING MACHINES MAKE TOUGH TORONTO TUNNEL JOB EASIER

Photos: Metrolinx

By Eastern Correspondent D’Arcy Jenish

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CANADIAN MINING JOURNAL

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2016-03-18 10:00 AM

TRANSPORTATION & LOGISTICS

Moving one of the four massive boring machines required an equally large flat-bed truck to handle the extreme load.

APRIL 2016

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➼ Read on

CANADIAN MINING JOURNAL

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TRANSPORTATION & LOGISTICS

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A below-grade look at one of the tunnel liners with excavating equipment ready to move deep into the tunnel.

arrell Liebno calls Atlanta, Georgia, home, but the civil engineer hasn’t been there much for the past three years. He’s been in Toronto managing one of the larger underground infrastructure projects in the country--twin tunnels, 6.5-km long in the western portion of what will form part of the city’s 19-km Eglinton Crosstown light rapid transit line (LRT).

Two west-end tunnel-boring machines--nicknamed Dennis and Lea--have been burrowing away night and day, seven days a week, to create the future east-and-westbound lanes. They have been advancing side-by-side at a rate of 10 to 15m a day, through layers of sand, silt and clay deposited tens of thousands of years ago by retreating glaciers.

It’s soft rock, nothing like the granite that forms the Canadian Shield, but it does hosts some very rich mineral deposits. Regardless, that doesn’t mean the Eglinton job is simple, and it’s certainly not easy. And, it’s not a mining project, per se, but it requires the same skills and understanding of underground work as most mine construction.

“I’ve spent 25 years in the tunneling business and worked on subways, as well as water and sewage treatment tunnels, across North America,” says Liebno, a project manager with Obayashi Canada, one of four companies handling the Crosstown underground work. “Nothing we do is small or quiet, or light.

Community and public safety are huge issues when you’re working in dense urban environments.”

Eglinton Avenue is a major, four-lane, east-west artery in midtown Toronto. Hundreds of small retail businesses line both sides of the thoroughfare. Thousands of people live in apartments above shops, or in apartment and condo towers.

High-rise commercial buildings soar above the intersection of Yonge Street and Eglinton. Furthermore, two north-south subway lines cross Eglinton. Yet, there have been so few street-level disruptions that most residents, retailers, office workers and subway riders are scarcely aware of the tunnels being excavated 16 to 20m below ground.

The $5.3-billion Eglinton Crosstown is part of 25-year, $50-billion transit and transportation plan designed to boost capacity and reduce congestion throughout the Greater Toronto and Hamilton Area.

Construction of the Crosstown LRT began in 2011, and is happening in three segments, with completion set for 2021.

Obayashi and its partners, Technicore Underground, Kenny Construction and Kenaiden Contracting, started near the intersection of Keele Street and Eglinton in June, 2013 and have been burrowing east toward Yonge Street.

In September, 2015, another consortium of contractors started work on twin tunnels at Laird Drive and have been proceeding west to Yonge--a distance of 3.km. A third consortium is responsible for the entire 19-km of 25 stations, tracks and signals, the maintenance and storage facility and a 30-year maintenance contract.

All told, then, four tunnel boaring machines (TBMs) are currently operating on the Eglinton Cross Town; each being a slow-moving giant.

The whole contract is $54 million. They were built in Toronto by Caterpillar Canada and assembled on site. The TBMs are 10-m long and weigh 430 tonnes. The rotating cutter-heads carve tunnels that are 5.75-m in diameter.

Aside from the size of the machines, they are also technical marvels as they move muck from the excavation into a screw conveyor which moves the material through the TBM and drops it on a conveyor belt. From there, it falls into rail cars that move it to the entrance shaft. It is lifted to surface and hauled by trucks to temporary a disposal site outside Toronto.

According to Metrolinx, the provincial transportation agency responsible for planning and commissioning the project, the earth removed to the create the tunnels would fill an NHL-size ice surface A nighttime view showing a boring machine, a crawler crane and crews of workers involved with the move.

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TRANSPORTATION & LOGISTICS Concrete liners are positioned and ready to be installed.

“One of the big issues when you’re working in urban environments is surface settlement,” says Liebno. “It is possible to over excavate and thus cause settlement that damages utilities, buildings or other structures.”

The solution lies in maintaining earth-pressure balance, and TBMs are designed and operated to do that. Essentially, the outward pressure generated by the machine must be equivalent to the inward pressure of the surrounding rock. to a height of 1,800 feet, or about as high as Toronto’s CN Tower.

“We know how much material is displaced as the machine The TBMs advance in 1.5-m stages and then stop. Crews work- moves forward,” Liebno explains. “We balance the inward and ing within the tailcan at the rear of the machine install pre-cast outward pressures by ensuring that the volume of the machine concrete rings, which arrive by rail car in six pieces. They must be matches the amount of material we’re taking out.” bolted together, then grout is pumped in behind them to fill the When the project was in the design phase, officials with space between the excavation and the exterior surface of the ring.

Metrolinx, and the Toronto Transit Commission, deterOnce the installation of the ring is complete, the cutter head mined that tunneling under the Eglinton West subway stabegins rotating and excavation resumes. The TBMs have 16 tion would pose unnecessary risks to the station and its hydraulic rams, or thrust cylinders, at the rear end, which extend utilities. Therefore, the contractors had to stop tunneling outward and push against the pre-cast concrete rings to keep the about 100m west of the station and resume their work the same distance to the east. machine advancing.

That required the construction of extraction and entrance Nine to 10 operators work within the TBM to keep it moving forward. Two or three installers, working within the tail can, erect shafts. The TBMs had to be lifted and moved a little more than the pre-cast concreate rings. Other team members operate the rail 200m and then lowered to resume tunneling. The whole operacars, move the muck to the surface and install utilities and track tion, excluding construction of the shafts, took place in the space of a single weekend in mid-April 2015. as the TBM advances.

The Eglinton Avenue and Allen Expressway interchange was closed from CIM Friday midnight until Sunday afternoon, but Exp Come otherwise the disruption to the neighbouro 2 see hood was kept to a minimum.

01 6 - us at Mammoet Canada Eastern of Guelph, Bo oth Ont., a company that specializes in heavy lifts, 13 handled the job. Mammoet used 250-ton gan09 try cranes to lift the TBMs one at a time and in one piece, rather than dissembling them.

The first machine to come out was placed on a flatbed trailer with 13 axles and six wheels per axle. It was moved along Eglinton to the entrance shaft, and a second crane lowed it into place. Then the whole process was repeated.

“By Sunday afternoon we had everything out of the way and the road opened A good investment is not determined by the price, but by the cost and nobody even knew we were there,” says of ownership. That’s why we make pumps designed for the things Liebno.

He and his team should reach Yonge Street, that really matter: long operating time, less need for supervision the terminus of their mining operation, by late and low costs for maintenance and spare parts. spring while the other tunneling should get to Because quality pays in the long run.

Yonge by early fall.

Service is scheduled to begin five years from now. The LRT will be able to move 15,000 passengers per hour at peak times, www.grindex.com • info.us@grindex.com which will be a welcome addition to the city’s congested transit system. CMJ

A good investment shows in the long run.

That’s what our pumps are all about.

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TRANSPORTATION & LOGISTICS

The appropriately named “BigLift” ocean carrier is loaded with custom-made deep sea mining equipment en route to Papua New Guinea.

DEEP WATER

DISCOVERY Seafloor mining takes a unique set of skills

W

Staff Report

hen it comes to shipping heavy equipment to a mining location, few companies know more about the challenges of getting machinery to a site than Nautilus Minerals Inc., of Toronto.

In fact, it’s safe to say that Nautilus Minerals is a leader in this category when you take into consideration that it is reportedly the first company to commercially explore the seafloor for massive sulphide systems, a potential source of high-grade copper, gold, zinc and silver.

Nautilus is developing a production system using existing technologies adapted from the offshore oil and gas industry, dredging, and mining industries to enable the extraction of these high-grade Seafloor Massive Sulphide (“SMS”) systems on a commercial scale.

Nautilus’ copper-gold project, Solwara 1, is under development in the territorial waters of Papua New Guinea. The company has been granted the Environment Permit and Mining Lease required for resource development at this site.

With that secured, Nautilus now plans to extend its tenement holdings in the exclusive economic zones and territorial waters of Papua New Guinea, Fiji, Tonga, the Solomon Islands, Vanuatu and New Zealand as well as other areas outside the Western Pacific.

Papua New Guinea

In 1985, SMS and hydrothermal sulphide systems were discovered in the territorial waters of Papua New Guinea (PNG) by the 16 |

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research vessel the RV Moana Wave at a site that later became known as the Solwara 2 Prospect.

The late 1980s and 1990s saw numerous research projects undertaken. PNG was the first country in the world to grant commercial exploration licenses for such SMS systems when, in 1997, Nautilus’s first tenement, EL1196, was granted.

In March 2007, it launched the world’s largest commercial exploration program for high-grade SMS systems. This program included extensive environmental studies, resource definition drilling, sampling and related metallurgical and production development studies on Solwara 1.

A successful exploration year culminated with the release of a NI 43-101 resource estimate for a portion of Solwara 1.

Following several more exploration and drilling campaigns, the initial resource estimate was updated in 2011 with the addition of a maiden resource estimate for nearby Solwara 2.

Solwara 1

The Solwara 1 Field was first identified by Australia’s Commonwealth Scientific and Industrial Research Organisation (CSIRO) in 1996.

Extensive research campaigns between 1993 and 1997 formed the base line knowledge for what would become more intensive commercial development activities. Solwara, means “salt water” in Tok Pisin.

Since 2006, Nautilus has used the term ‘Solwara’ to describe its PNG exploration projects and prospects during its reconnaissance and drilling campaigns.

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Nautilus was granted its first Mining Lease in January 2011 for Solwara 1, and the Environmental Permit for Solwara 1 was awarded in December 2009.

The Solwara 1 deposit, which sits on the seafloor at a water depth of some 1600 metres, contains a copper grade of approximately 7%. That compares with land-based copper mines, where the copper grade today averages 0.6%.

In addition, gold grades of well over 20 g/tonne have been recorded in some intercepts at Solwara 1 and the average grade is approximately 6 g/tonne.

Technology Overview

Nautilus Minerals is utilising proven technologies from the offshore oil and gas industries, dredging and onshore mining industries to realise the new deep seafloor resource production industry. The result is a system which has three main components: the Seafloor Production Tools (SPTs) the Riser and Lifting System (RALS) and the Production Support Vessel (PSV).

The excavation and collection has been split into three individual tasks which will each be carried out by a different vehicle. The Auxiliary Cutter is designed as the pioneering machine which prepares the rugged sea bed for the more powerful Bulk Cutter(BC).

These two machines gather the excavated material; the third vehicle, the Collecting Machine will collect the cut material by drawing it in as seawater slurry with internal pumps and pushing it through a flexible pipe to the subsea pump and on to the PSV via a riser system.

On deck of the Production Support Vessel (PSV), the slurry is dewatered.

The dewatered solid material is stored temporarily in the PSV’s hull, and then discharged to a transportation vessel moored alongside. Filtered seawater is pumped back to the seafloor through the riser pipes and provides hydraulic power to operate the RALS pump.

Following dewatering of the material on the vessel, a cargo-handling system will be used to load the dewatered material into four storage holds. It will then APRIL 2016

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An artist’s rendering shows the seafloor production system.

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recover the material from the storage holds and transfer it directly to a handymax vessel for shipment of the material to China.

University, ContiTech Oil & Marine Corp and Paterson & Cooke Consulting.

Seafloor Production Tools

Riser and Lifting System

There are three Seafloor Production Tools (SPTs), the Auxiliary Cutter (AC), the Bulk Cutter (BC) and the Collecting Machine (CM). Nautilus’ Seafloor Production tools combine existing technology from the offshore oil and gas sector with rock cutting technologies used in land-based operations. The SPTs were designed and built at Soil Machine Dynamic’s facility in Newcastle Upon Tyne, UK. The SPT design is an extension of existing subsea trenching equipment combining hard rock mining technology with that of subsea remote system technology. The SPTs will be deployed from the Production Support Vessel (PSV) using a lifting frame and operated via a power and control umbilical.

Many world-class companies have been involved in the design of the seafloor equipment. The cutting drum of the BC was designed and built by Sandvik (Austria), a world leader in hard-rock mechanized mining and rock cutting equipment.

The designs are based on similar designs used on large continuous miner machines used in underground mining and construction. The track sets for all three SPTs have been designed and built by Caterpillar, based on an existing Caterpillar excavator track design. Modification to the track set for subsea operation and required cutting duty was completed by SMD in consultation with Caterpillar and Sandvik.

The dredge pumps for all three SPTs have been supplied by Damen. The hydraulic equipment for all three SPTs is based on existing off-the-shelf Bosch Rexroth hydraulic equipment, with adaptations by SMD. The flexible hoses for all three SPTs have been designed and supplied by ContiTech AG (Germany), and are very similar to the rubber hoses used in the dredging industry. Companies and institutions involved in the simulations and test work of the BC include CSIRO, Cellula Robotics, Deltares, Istanbul Technical

The Riser and Lifting System (RALS) is designed to lift the mineralised material to the Production Support Vessel (PSV) using a Subsea Slurry Lift Pump (SSLP) and a vertical riser system. The seawater/rock is delivered into the SSLP at the base of the riser, where it is pumped to the surface via a gravity tensioned riser suspended from the PSV. It comprises a large pump and rigid riser pipe hanging from a vessel which delivers the slurry to the surface. The proposed positive displacement pump is designed and built by GE Hydril (Houston, TX). The SSLP hangs from a solid vertical (riser) pipe suspended beneath the support vessel. The pipe is deployed to the seabed by a derrick and draw works system on board the vessel.

GE Oil and Gas have been involved in the development of the Subsea Slurry & Lift Pump and the riser has been designed

by Nautilus’ RALS main contractor, Technip USA, and built by subcontractor General Marine Contractors .

Production Support Vessel

The Production Support Vessel (PSV) provides a stable platform for operations using world-class dynamic positioning technologies to ensure it stays on location at Solwara 1 irrespective of wind and wave conditions. The PSV will be designed for use in offshore construction and seafloor mining The PSV will be equipped with a moonpool through which the Subsea Slurry and Lift Pump (SSLP) and riser system can be deployed. On deck of the PSV, the slurry is dewatered. The dewatered solid material is stored temporarily in the PSV’s hull, and then discharged to a transportation vessel moored alongside the PSV about every five to seven days. Filtered seawater is pumped back to the seafloor through the riser pipes and provides hydraulic power to operate the SSLP. Discharge of the return water at the seafloor from where it

Heavy equipment being hoisted from the dock and into the hull of the ship.

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came eliminates mixing of the water column, and minimizes the environmental impact of the operation.

When completed, the PSV will measure 227m in length and 40m in width with accommodation for up to 180 people and generate approximately 31MW of power. All of the below-deck mining equipment will be installed on the PSV during the build process to minimize the equipment integration to be completed following delivery of the PSV. The Company has entered into an agreement for the charter of the PSV with Marine Assets Corporation (MAC), a marine solutions company based in Dubai which specialises in the delivery of new build support vessels for the offshore industry.

MAC will own and provide the marine management of the PSV. The PSV will be chartered to Nautilus for a minimum period of five years at a rate of US$199,910 per day, with options to either extend the charter or purchase the PSV at the end of the five year period.

Under the terms of the arrangement, MAC had to enter into a contract with Fujian Mawei Shipbuilding Ltd., based in Fujian province in south-eastern China, to design and construct the PSV in accordance with Nautilus’ specifications. The PSV is expected to be delivered by the end of 2017.

Status of the Equipment

In January 2016, the company took delivery of the three Seafloor Production Tools (SPTs) from SMD. The SPTs have since been shipped to Oman where they are scheduled to undergo extensive wet testing at Duqm Port (Q2 2016) which is designed to provide a submerged demonstration of the fully assembled SPTs and will involve submerged testing of:

s Control systems operations and feedback s Hydraulic functions s Collection system functions s Survey and visualization systems United Engineering Services LLC (UES) will provide the

support services associated with wet testing the equipment and storing the equipment as it is delivered from various suppliers prior to integration onto the Production Support Vessel (PSV) which is expected to occur in 2017.

The three umbilical winches that store and manage the power and control umbilicals were designed, procured and assembled at SMD. In March 2015 the Company announced that the umbilical winches for the three SPTs had successfully completed testing. The umbilical cables have since been installed onto the umbilical winches and shipped to the shipyard for integration on to the vessel.

Launch and Recovery System (LARS)

The Launch and Recovery System (LARS) which will be used to lift the tools in and out of the water, is comprised of A frames, lift winches, hydraulic power units, electric power units and deck control cabins.

Riser and Lifting System (RALS)

GE Oil and Gas, the primary contractor for the Riser and Lifting System manufacture, has begun retrieval and inspection of the components that were previously in storage or in mid assembly when the contracts were terminated in 2012. The manufacture of components such as the derrick and riser handling systems, surface seawater pumps, pull in skids, riser transfer hoses and other ancillary equipment is to be resumed with delivery dates dictated by the shipyard requirements for the PSV. These components are to be integrated onto the PSV during vessel manufacture.

The Subsea Slurry Lift Pump (SSLP) recommenced assembly in Q3, 2015 and in February 2015 commenced Factory Acceptance Testing.

Production Support Vessel (PSV)

Fujian Mawei Shipbuilding Ltd. (FMSL), based in Fujian province in south-eastern China, has been contracted by MAC to design and construct the PSV in accordance with Nautilus’ specifications.

In September 2015, the first steel for the PSV was cut. CMJ

The three seafloor production tools arrive safely overseas in preparation for extensive wet testing.

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Photo: Thinkstock.com

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COAL in CANADA

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DESPITE BOOMS AND BUSTS, THE COAL INDUSTRY STILL HAS DECADES OF WORK AHEAD

he Canadian coal mining industry is in a huge state of flux right now, to say the very least. Policy changes at all levels of government, in addition to a slump in coal prices makes, the coal industry a very challenging place to be right now. While the media decries the “demise of King Coal,” we know differently within the industry.

The Canadian coal industry is not only comprised of mining companies, but of the tens of thousands of miners that live and work in the areas they mine. As I have visited different corners of the country, I am reminded of the deep respect miners have for the places they work and the importance they put on the land.

I can’t say with any certainty when prices will rebound, or what government policy will be moving forward, but it would be short-sighted to think that it will be “business as usual.” As an industry, we must continue to innovate, demonstrating on a near constant basis how invested the coal mining industry is in improving environmental outcomes and reaching (or exceeding) emissions targets. We must also work with our partners in industry and government to ensure that any policy put forward takes into account the full scope of impact on communities.

The coal mining industry has a lot to offer the mining community globally. The industrial advancements made here can provide a significant economic and environmental benefit overseas to industrializing nations. From mining through to energy production, there continues to be a place for coal in our economy at home and abroad. Canadian coal is among the best thermal and met coal produced in the world, and it is produced ethically in Canada, under strict environmental and labour regulations.

The coal mining industry has provided an excellent living for thousands of Canadian families, including my own. I am optimistic that the industry has decades of work ahead, but it’s going to need persistence and innovation (two things we have in abundant supply in this field) to keep it relevant in the changing energy economy. There will be booms and there will be busts, but the need for a safe, reliable, affordable and locally produced energy source will always be there. How our industry chooses to meet that challenge will be one of the most interesting things to watch. CMJ

By Robin Campbell

Robin Campbell is President of the Coal Association of Canada.

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COAL TOCROPS TWO ALBERTA COMPANIES USE BY-PRODUCTS IN UNIQUE WAYS

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By Russell Noble

oal, the other “black gold,” is one of the more abundant yet least popular rocks on the planet. It’s not only one of the dirtier components within the earth’s make-up to mine, but it’s also one of the more potentially dangerous sources of toxins when it’s burned to produce power.

But, like almost all things on earth, it has its good side too, and that’s exactly what Black Earth Humic LP of Ryley, Alberta, has discovered by using humalite (a weathered type of sub-bituminous coal found only in Alberta) as a fertilizing agent in its agricultural products.

As Black Earth’s Sales and Marketing Manager Brett Halliday explains,” “Humalite has an unparalleled power to improve soil conditions and promote growth in plants. It can 22 |

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also be used to remediate soil from hydrocarbon and salt contamination.

“The remediation action comes largely from humalite’s ability to add available carbon and therefore, improve soil texture and water retention, and enhances growth and metabolism in soil microorganisms.”

Of particular interest to the mining industry, Halliday says that due to humalite’s ability to chelate metals, humic substances can also help reduce the toxicity of mine tailing and improve their soil texture. In waste, they help reduce odour and enhance the digestion of sludge.

When added to groundwater, Halliday says humic substances help flush out hydrocarbons in fractured rocks, and when combined with ammonia and certain minerals, will help compact and stabilize soil.

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COAL in CANADA (Far Page) MiniBulk’s heavy-duty 1000-kg polypropylene bags containing Black Earth’s humalite-based fertilizer are stockpiled and ready for shipment to more than 30 countries around the world.

(Adjacent, top to bottom) A stack of humalite provides Black Earth Huminc with a steady supply of a basic ingredient for its fertilizing agent.

An inside look at the manufacturing and assembly of MiniBulk’s various bulk bags. Below those photos is a look at the filling of the bags with humalite, followed by a crop of healthy plants.

Adding carbon to the soil not only improves the soil texture and water retention capabilities, but Halliday says, most importantly, it’s environmentally safe and it won’t harm any living organisms.

Understandably, the exact recipe for using humalite in the production of Black Earth’s liquid and granular agricultural products is confidential, but regardless of its state, getting the products to market must be containerized and in the case of the solid matter, it’s shipped in bulk bags for the majority of sales. They get loaded onto flat-bed trucks, covered with a tarp, plus in vans and also into ocean containers. Products are sold and shipped in bags to more than 30 countries around the world so that regional farmers can experience the benefits.

And that’s where another Alberta company, MiniBulk of Calgary, comes in with its FIBC’s (Flexible Intermediate Bulk Containers) or, bulk bags, that are designed to handle average loads up to 1000kg of Black Earth’s humalite; a soft, brown coallike material.

Marty Dilworth, MiniBulk’s Business Development Manager, says the bags his company manufacturers are well suited for the humalite because of their strength, plus they’re flexible and make shipping and storage easier and safer because the soft sides help prevent any damage to trucks or other containers.

As for the structural makeup of the bags, Dilworth says, “The material used is polypropylene, a by-product that comes from oil refineries. The polypropylene is extruded into tapes that are woven together into a very strong fabric. Once the fabric is made, it gets cut into sections that are sewn together to make a proper bag.”

The average bulk bag, as mentioned earlier, is designed to hold 1000kg, however, Dilworth says with stronger and thicker fabric, custom designs can hold a lot more.

“We carry a stock bag that has a SWL (Safe Working Load) of 1850kg. The industry standard of the Safety Ratio is 5:1. That is, a 1000kg bulk bag has to pass a load test of 5000kg before failure. The 1850 SWL load bag has to stay together until at least 9250kg of pressure has been exerted.”

Dilworth says that testing methods vary, but the most common way to establish the 5:1 Safety Ratio is to hang the bag by four loops on a testing rig. The bag is then filled with a medium, and a large steel plate is pushed down into the bag.

He says the bags must carry five-times their SWL to pass inspection.

Obviously, the combination of two by-products from two of Alberta’s primary industries (coal and oil) is working well for Black Earth Humic LP and MiniBulk, and both companies are to be congratulated for their imagination and innovation. CMJ APRIL 2016

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Covered pipe conveyors not only provide a safer alternative to shipping coal by trucks, but they can also cover greater distances along a shorter route.

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ransporting coal or any other material that has the potential to emit dust or other residules is a huge environmental responsibility that calls for safety measures from all parties involved within the moving operation.

Coal Combustion Residues (CCR), such as fly ash, for example, are one material that is calling for many projects to consider the design of CCR handling systems to relieve pressure on existing ash ponds. For each of these projects, one critical aspect of the feasibility is to determine how to store the CCR at the point of production, and how to transport it to a new location.

Transport Options to the Landfill

There are generally three different transport options for long distances to new landfills: trucking, curved-trough conveyor and pipe conveyor. Trucking offers benefits like high capacity and no installation cost, but has issues including a high transport cost per ton. There’s also no enclosure of the material and it frequently requires maintenance. A curved-trough conveyor is advantageous because of its simple installation, low power requirements, unlimited capacity and partial enclosure of the material; however, this solution does not totally enclose the material and cannot navigate sharp curves.

For most applications, the pipe conveyor provides a better option than either trucking or a curved-trough conveyor. The pipe conveyor can negotiate shorter vertical and horizontal curves and it encloses the material in both directions of travel.

Additionally, the dirty side of the belt always faces inward, and contents are always fully enclosed. This feature means pipe conveyors and their contents pose no risk to the environment by means of spillage. This ensures that pipe conveyors are environmentally safe and compliant with current and proposed regulations. All of these properties make the pipe conveyor a preferred choice for most long routes to new landfills.

The pipe conveyor offers:

TRANSPORTING COAL RESIDUES USING PIPE CONVEYORS OFFERS COST-SAVING SOLUTIONS

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s Simple installation, hugs the grade s Capacity up to 1,500 tons per hour (TPH) s Total enclosure of the material, and protection from spillage s Shorter curve radii, and the ability to move over horizontal and vertical curves s Cost-saving opportunities s EPA regulation compliance The economic incentive to install conveying is very high if sufficient CCR volume exists. There is no hard-and-fast rule to dictate when pipe conveying is best, because there are too many variables such as trucking distance, infrastructure costs and conveyor operating and maintenance costs.

But pipe conveying does offer huge savings opportunities.

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A covered conveyor delivers materials to a plant without endangering any worker with potentially harmful dust or other residue.

low – about 10 cents – compared to a range of $2.25 to more than $4.00, all in costs to truck the same amount of CCR across the same distance.

Economic Analysis of Conveying versus Trucking

When it comes to transporting CCR, the key variable is tons per year that need to be transported to the landfill. Volumes range tremendously from several hundred thousand tons per year to more than 3,000,000 tons per year.

For higher volume plants, where the landfill is a substantial distance from the plant, conveying makes more sense because the power cost to convey one ton of material by conveyor is very low compared to what it costs to transport the material by truck, typically a $3.00 per ton difference.

The economic incentive to install conveying is even more valuable if sufficient volume exists. The very important question is what kind of capital investment for the installation of the conveyor system can be justified by the cost differential?

System Design Overview for Utility Company

For example, a utility company recently finished its CCR dewatering, storage and transportation system for its power station, choosing a pipe conveyor because of many of the stated benefits.

The plant houses systems for gypsum dewatering and storage, fly ash storage and conditioning, and bottom ash collection and dewatering areas. After each waste product is readied for transport, the material is put on conventional conveyors to move it to the tail end of the overland pipe conveyor for comingled transport to the landfill.

The footprint required for this type of system is quite large because the gypsum must be dewatered in a dewatering building and then transported to a separate storage building housing an overhead stacking system and a portal reclaimer.

The fly ash is stored in two concrete silos with conditioners located under each silo. The footprint of these silos is relatively small compared to the gypsum handling facilities. The bottom ash design has a separate building housing the submerged flight conTwo configurations of covered pipes shows them in a tandem, stacked formation and as a single unit crossing rolling terrain.

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Photo clearly shows the flexibility of a covered conveyor as it crosses steep and treacherous hillsides.

veyors which feed another enclosed area where the bottom ash is placed on concrete pads for further dewatering. The plant is designed with plenty of contingency storage room for each material, with a system capacity of 1,200 short tons per hour (stph).

The fly ash and bottom ash are moved to the loading end of the pipe conveyor on the same conveyors. The gypsum is moved to the loading end of the pipe conveyor on a separate reclaim conveyor. The system also has an emergency truck load out building and another truck unloading feeder to move trucked material onto the pipe conveyor.

The actual route has steep inclines and many curves. Any future project will want to achieve a low cost per ton to transport the waste and build sufficient backup or storage volume to assure reliable operation and a system with enough capacity to assure that all waste can be moved during daylight hours.

The pipe conveyor moves the waste to the discharge tower located on the edge of the landfill. It can move each of the three waste streams independently or comingled. The conveyor runs approximately 7,800 ft. – about 1.5 miles – and the final elevation of the discharge is approximately 400 ft. higher in elevation than the loading zone. The grade is undulating and some areas are very steep. The pipe conveyor was able to follow the grade in many cases, which reduced civil works and bent heights.

Overall, the pipe conveyor is working well and serves as a good option for any company transporting CCR to landfills.

Pipe conveyors are an efficient and cost-effective method of transporting CCR across a long distance from storage facilities to new landfills. While trucking remains an option, the economic payback to invest the capital in a conveying system can return millions of dollars in savings.

Pipe conveyors can negotiate shorter vertical and horizontal curves and it encloses the material in both directions of travel To justify the capital cost of installing a conveyor system, determine what kind of capital investment the cost differential can justify. CMJ Information for this Special Report provided by The BEUMER Group, an international manufacturer of intralogistics for conveying, loading, palletizing, packaging, sortation and distribution technology.

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RELIABILITY

HYDRAULIC OIL

EXPECT TO REALIZE MORE WITH HYDREX XV TM

Your hydraulic system is exposed to a wide range of temperatures and conditions. HYDREX is the one brand of hydraulic oil you can always count on for up to 2x better wear protection*. With HYDREX XV, you can also expect reliable, all-season protection across the toughest environments.

Factor that year-round reliability across your mining operation and you’ll realize operational efficiencies that save you time and money.

Help your business realize more. Visit TryHYDREX.com *Measured against leading North American hydraulic oil brands.

TM

Petro-Canada is a Suncor business

Trademark of Suncor Energy Inc. Used under licence.

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Rely on the right hydraulic fluid to realize more The advanced formulation of HYDREX™ XV delivers the highest levels of all-season performance and productivity.

If you’re like most operations or maintenance managers, you don’t spend a lot of time thinking about your hydraulic fluid purchase. There are many decisions to be made at the mine site, and deciding what type of lubricant to use in your hydraulic systems doesn’t usually top the list. But what if the hydraulic fluid you chose allowed your equipment to be more efficient – driving your costs down and productivity up?

“The right hydraulic fluid contributes directly to operational productivity,” explains Robert Farthing, Category Manager for Petro-Canada Lubricants Inc. “We understand that managers are under pressure to protect and improve equipment performance and life. In this business environment, they are looking for new ways to reduce operating costs, while ensuring maximum productivity and equipment performance. They don’t often factor hydraulic fluid into this equation.”

Farthing points to HYDREX XV as an example of an all-season, semi-synthetic hydraulic fluid that can make a real difference in boosting equipment efficiency to maximize productivity.

One change that really pays off “Our customers tell us that sometimes it’s a small change that can have a greater effect in the long term,” says Farthing. “Treating hydraulic fluid as a strategic purchase, for example, can significantly increase overall productivity at their site.”

HYDREX XV has been a leading choice for maintenance managers and reliability engineers for over a decade. With its new advanced formulation, this industry leader continues to be a product from which customers can expect more, including wide-temperature performance, wear protection, fuel efficiency and superior durability.

Year-round performance Using semi-synthetic base oil technology and carefully selected additives, HYDREX XV is specifically designed to operate across a wide temperature range.

The temperature fluctuations experienced at a mine site require a hydraulic fluid such as HYDREX XV with a high Viscosity Index (VI) and low Pour Point. This allows the system to be well protected while it’s being more productive, as equipment can start at temperatures as low as -34°C/-29°F, and run as high as 90°C/194°F. This enables a shorter warm-up time in cold climates as well as a faster and smoother response from the hydraulic system, which is ideal for the stop and start nature of the work. “We have dramatically increased the shear stability of HYDREX XV, so even after months of operation, it retains its VI better than other multigrade hydraulic fluids to deliver all-season performance you can depend on,” says Farthing.

Fuel savings With commodity prices under pressure, there is increased focus on lowering operating costs and increasing production economies.

HYDREX XV can help to drive costs down with its increased fuel and energy efficiencies.

By pairing excellent shear stability with a high VI, HYDREX XV maintains optimal fluid viscosity across a wide range of operating temperatures. Because it is better able to respond to fluctuations in operating conditions, this results in hydraulic pump and system efficiencies, lower diesel fuel consumption and reduced carbon dioxide emissions – delivering up to 5% fuel savings.†

The advanced formulation of HYDREX XV, with a high Viscosity Index and low Pour Point, delivers performance across wide temperature ranges.

Better wear protection, longer oil life Maintaining and replacing equipment is costly compared to the cost of lubricants. The hydraulic fluid plays an important role in protecting equipment and extending its life – even in harsh environments. HYDREX XV is proven to provide significantly better wear protection. This exceptional protection reduces the chances of unplanned downtime due to maintenance and mechanical failure, avoiding added costs for both the repair and for taking equipment offline.

HYDREX XV also contributes to more uptime as it relates to oil change-outs. Its resistance to oxidation minimizes sludge and leads to a significantly longer oil life than leading global competitors. In competitive testing, HYDREX XV demonstrated the longest oil life of all fluids evaluated – recording 10,000 hours before reaching condemning limits (ASTM D943). This longer oil life helps to extend drain intervals, resulting in less time and money spent on change-outs.

One product for the job Inventory consolidation is another area of savings in both time and money. The year-round performance of HYDREX XV means you can consolidate inventory to just one fluid. As such, seasonal change-outs and inventories are reduced. Risk is also minimized; because only one product is needed during the year, there is no chance of damage due to missed seasonal oil changes.

“I encourage maintenance managers to think about their hydraulic fluid and consider the benefits of expecting more,” says Farthing. When you look at the larger picture and consider the harsh conditions, wear protection, fuel efficiency and durability needs on your overall operation, you’ll see how one small decision can make a significant difference.

HYDREX XV compared against leading North American monograde hydraulic fluids.

†

FILE NAME: 12861-PCL-028-2016-E-DPS-Min

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LAW

A look at the oil industry

By Mark Sajewycz

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he downturn in oil prices has made it more challenging for producers of unconventional resources, as well as service companies who assist such producers, to enable oil production from their reserves. This is because producers face greater costs when producing from unconventional resources, thereby making it more difficult to compete with traditional producers.

Perhaps not surprisingly, this is driving innovation, as the industry looks to develop new technologies to reduce production costs and remain competitive and relevant. In parallel, innovators are becoming ever more proprietary over their developed technology and more reluctant to freely share, typically choosing to file for patent protection to crystallize intellectual property rights.

There is already an uptick in patent litigation between service companies, and it is only a matter of time until similar behaviour will be adopted by the producers.

THERE IS ALREADY AN UPTICK IN PATENT LITIGATION BETWEEN SERVICE COMPANIES, AND IT IS ONLY A MATTER OF TIME UNTIL SIMILAR BEHAVIOUR WILL BE ADOPTED BY THE PRODUCERS. Unconventional oil resources include oil sands and shale oil.

Historically, there has been a reluctance to develop these resources, owing to the costs of harvesting this oil. Unlike conventional fields, such as those in the Gulf states, simply sticking a straw in the ground will not miraculously lift oil to the surface.

With tight oil resources, oil is trapped within rock and release of such oil is typically stimulated using hydraulic fracturing technology. With oil sands resources, the resident bitumen is highly viscous and co-mingled with sand. For deeper oil sands reserves, there are challenges to transporting bitumen to the surface, and this has resulted in the development of steam-based technologies (in particular, steam-assisted gravity drainage or “SAGD�), designed to heat the bitumen and lower its viscosity so as to render it more flowable. For shallower oil sands reserves that can be APRIL 2016

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surface-mined, technology solutions are directed towards separating the sands from the oil, while, in parallel, grappling with the challenges of processing viscous bitumen. To further complicate matters, whether unearthed from shallow or deep reserves, produced bitumen, as opposed to lighter crude derived from conventional resources, requires upgrading prior to refining, thereby creating a further cost component.

With the spike in oil prices a few years ago, unconventional resources became more economical to produce, resulting in significant investment in developing these resources, including technologies to improve production efficiency. With the collapse in oil prices, oil companies, unwilling to simply abandon capital investments, buoyed by the recent technology leaps, and optimistic of continued innovation, continue to develop technologies to reduce costs for oil production from unconventional resources. In complementary fashion, faced with a more challenging environment, there is greater willingness within the unconventional oil industry to adopt new technologies, with a view to finding a cure to its competitive malaise.

With respect to oil sands resources, SAGD enhancements and alternatives are being pursued. Solvents are being co-injected to aid SAGD and are also being considered for replacing steam as a bitumen-mobilizing agent. Residual bitumen remaining within the reservoir at the end of a SAGD project’s operating life is not being neglected, and strategies are being developed to recover this leftover bitumen. Concerning tight oil resources, downhole tools are being developed to enable fracking over an increased number of stages, while overcoming the challenges of operating at significant depths.

The overwhelming tendency is to maintain a proprietary position over these technologies, and this often manifests in patent protection filings. Service companies, such as those developing completion technologies, are certainly not shy about filing for patent protection and asserting consequential patent rights. To date, oil sands producers have been relatively more collaborative than their service company partners, sometimes forming consortiums or alliances to share technology development. Having said that, producer patent filings are increasing, and there are signs the collaborative environment is splintering. This will likely only accelerate if low oil prices become the new norm. CMJ MARK SAJEWYCZ is a Partner, Lawyer, Patent Agent, and Trade-mark Agent,at Norton Rose Fulbright.

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2016-03-18 10:17 AM

CSR MINING IN MY& MINE(D)

New guidance on land acquisition and resettlement

By Michael Torrance

T

he International Council on Mining & Metals (“ICMM”) has released new guidance on land acquisition and resettlement for the mining sector, capturing practical insights and lessons learned.

The guidance builds on international standards such as International Finance Corporation (IFC) Performance Standard on Environmental and Social Sustainability (“IFC Performance Standards”) Five, “Land Acquisition and Involuntary Resettlement”. Notably for the Canadian mining sector, IFC Performance Standard Five has been endorsed as a best practice by the Government of Canada, under the Federal Corporate Social Responsibility (CSR) Strategy for the Extractive Sector (“CSR Strategy”). The renewed 2015 CSR Strategy contemplates possible withdrawal of Canadian Government support for companies that are found to deviate unacceptably from such endorsed standards.

By consequence, the ICMM’s guidance should be quite relevant for any Canadian mining companies engaged in international operations facing resettlement issues.

BENEFIT SHARING STRATEGIES CAN ALSO BE INTEGRATED WITH RESETTLEMENT PLANNING. IFC Performance Standard Five applies a mitigation hierarchy to the impacts of potential resettlement. The hierarchy requires consideration of ways to avoid resettlement. Where avoidance is not possible, it requires minimization of displacement and exploration of alternatives in project designs. Where not possible, displacement impacts should be addressed through compensation where appropriate, information and consultation (with the potential for free prior and informed consent to apply where indigenous rights are affected). Resettlement may also include improving living conditions among physically displaced persons through the provision of adequate housing with security of tenure at resettlement sites. The standard also sets out a process and best practice for identifying who will be displaced and development of a resettlement action plan, which may exceed legal requirements to meet international best practice. This could involve land-based compensation, or monetary compensation for loss of assets, or programs to improve or restore standard of living.

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A key initial step is to assemble a team composed of social, environmental and project planning experts. Legal considerations are also relevant, as a first step will be to conduct gap analysis with legal requirements and international standards. Gaps in which host country laws provide less protections than contemplated by international standards, will encourage adoption of the international best practice to manage risk. Cooperation with local governments to develop legislative frameworks may be part of the process.

In identifying impacts and planning, baseline data collection is identified by the ICMM as critical. The effect of sociocultural factors and communal resources should also be studied in the impact assessment phase.

Stakeholder engagement should be part of the impacts assessment and planning process, as well as part of the development of resettlement plans, physical resettlement and livelihood restoration. Early and continued engagement and management of expectations are identified as key lessons for the stakeholder engagement process. The establishment of grievance mechanisms to allow for concerns to be raised in a manner consistent with cultural characteristics will also be critical.

The ICMM recommends, consistent with the mitigation hierarchy approach of the IFC Performance Standards, that in preparing resettlement packages should focus on land-based rather than monetary compensation. Key considerations include eligibility requirements, choice of resettlement site and provision of housing and facilities. While cash compensation should be avoided, as it is the least adequate type of mitigation, where it is provided, valuations should be open and transparent. Sustainable livelihood restoration can be complex and require ongoing engagement and planning. Employment opportunities associated with the mining project can be part of this. Throughout the process the needs and interests of vulnerable groups should be closely considered.

Benefit sharing strategies can also be integrated with resettlement planning. This would include negotiated impact benefit agreements, or strategies of shared value. Monitoring, evaluating and ongoing reporting of resettlement plans is recommended as part of the management process.

The ICMM’s report is a useful source of insights on the practical implementation of international standards, and those endorsed by the Government of Canada, on the complex topic of resettlement and worth a look. CMJ MICHAEL TORRANCE is a lawyer in Northern Rose Fulbright’s Toronto office.

WWW.CANADIANMININGJOURNAL.COM

2016-03-18 10:18 AM

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2016-03-18 10:18 AM

UNEARTHING TRENDS

Infrastructure projects during a downturn

By Michael Kennedy

L

istening to the rhetoric, many may think now is the time to build infrastructure. It’s a common belief that when the economy is in a downturn, most elements of a project are less expensive. But that’s simply not true. And because income streams are shallow right now due to low commodity prices, capital projects must be executed very carefully.

While things like material and labour typically have a set price tag, the biggest determinant of the overall cost of an infrastructure project can often be time. Time can be harder to quantify and is difficult to constrain if – or, in many cases, when – the unexpected happens. Time is, and should be, a constant concern from the beginning of planning until project completion. In order to mitigate time-related costs, you need to start with a good business case, and translate that into a development plan.

Once that’s established, project management must then be as efficient as possible. When you introduce delays, that will be the biggest driver of increasing costs.

IN CANADA, THE TIME REQUIRED TO BUILD NEW PROJECTS IS GETTING LONGER. PROJECTS MUST NOW COMPLETE EXTENSIVE ENVIRONMENTAL ASSESSMENTS AND GO THROUGH A LENGTHY REGULATORY APPROVAL PROCESS. In Canada, the time required to build new projects is getting longer. Projects must now complete extensive environmental assessments and go through a lengthy regulatory approval process. They also need to ensure a social license from the public. All of this takes time, which, ultimately, equals money.

During this downturn, we’re seeing many junior miners holding off on capital projects because they simply don’t have the money. But bigger companies who can take a longer-term view 34 |

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may have the luxury of time to start these processes for a project that will have a lifespan of 30-40 years.

Savings versus increased costs

There is reason for the common belief that there are savings to be had in a downturn. Some costs are less expensive: Commodities. Producers have more inventory which they sell for less.

Rates of escalation. Runaway pricing is less likely to be a worry in the current market, which can stabilize budgets.

Construction bidding. An advantage right now is construction companies are bidding more aggressively, since they don’t have as much on their books.

However, on the flip side, some budget items cost more: Equipment. With the weaker Canadian dollar, equipment costs can be much higher, since often these items come from the US. Labour costs. Infrastructure projects are always constrained by the quality of the people you can attract. For mining projects in remote areas, this can add expense.

Despite all this, savings are still possible. But those who expect 20-30% savings will be disappointed. No matter what the economic environment, project managers must be diligent and careful to weigh all costs before committing to a project – or risk any potential savings going down the drain.

The makings of a successful project

Regardless of when a project begins there are some key factors that increase the chances of success. First, you need a well thought out and solid business case, and then once that’s established, you need strong leadership. People who are committed to a long term implementation of capital will help keep the project on track and closer to budget. Those who can see beyond the short term know that commodity fluctuations don’t matter if the other elements of the project aren’t in place.

The middle of a downturn can, indeed, be a good time to start new projects, including environmental processes and upfront planning work. But before you break out the shovels, make sure the due diligence is done in all areas of the project – or your potential savings could turn into losses. CMJ Michael Kennedy, is Infrastructure Advisory Partner with EY. WWW.CANADIANMININGJOURNAL.COM

2016-03-18 10:19 AM

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