Canadian Mining Journal June/July 2017

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June/July 2017

MINING IN THE PRAIRIES SPECIAL REPORT:

First Nation partnership with miner

MAKES HISTORY

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CANADIAN Mining Journal

JUNE/JULY 2017 VOL. 138, NO. 05

www.canadianminingjournal.com

FEATURES 22 CIM 2017

Plenary session addresses the future of mining.

MINING IN THE PRAIRIES 8 K+S’s new Bethune potash mine brightens Saskatchewan’s economic outlook.

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14 Hudbay Minerals looks to Lalor’s potential as its 777 mine winds down.

18 A historic deal ensures First Nations participation in a new on-reserve potash development.

26 How the new engine oils can help lower maintenance costs.

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29 Advice on extending tire life by measuring the right data.

DEPARTMENTS 5 EDITORIAL | Canada’s next 150 years.

6 FIRST NATIONS | AFN Ontario Chief Isadore Day finds a connection between First Nations participation in renewable energy development and Reconciliation.

7 LAW | Sander Grieve, a partner at Bennett Jones, explains why mining companies should pay closer attention to water issues.

36 CSR & MINING | Lawyer Michael Torrance outlines new guidance on resettlement of communities affected by resource development.

38 UNEARTHING TRENDS | EY’s Sean Gunton and Meghan Harris-Ngae discuss how reclaimed mines can be turned into renewable power sources.

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14 ABOUT THE COVER

This month’s cover provided by Nuna Logistics.

Coming in August Canadian Mining Journal ‘s annual Top 40 issue, our New Mining Technology supplement, and a special report on remote site structures.

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

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CANADIAN Mining Journal

FROM THE EDITOR

June/July 2017 Vol. 138 — No. 5

38 Lesmill Rd. Unit 2, Toronto, Ontario M3B 2T5 Tel. (416) 510-6789 Fax (416) 510-5138 www.canadianminingjournal.com Editor-in-chief Alisha Hiyate 416-510-6742 ahiyate@canadianminingjournal.com Twitter: @Cdn_Mining_Jrnl News Editor Marilyn Scales mscales@canadianminingjournal.com Production Manager Jessica Jubb jjubb@glacierbizinfo.com Manager of Product Distribution Jackie Dupuis 403-209-3507 jdupuis@jwnenergy.com Publisher & Sales Robert Seagraves 416-510-6891 rseagraves@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 Robert Seagraves at 416-510-6891.

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: 1-800-387-2446 ext 3505; Fax: 403-245-8666 ; E-mail: jdupuis@jwnenergy.com Mail to: Jackie Dupuis, 2nd Flr. 816–55th Ave. N.E. Calgary, Alberta T2E 6Y4.

We acknowledge the financial support of the Government of Canada.

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Mining’s role in Canada’s next 150 years Alisha Hiyate

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n July 1, Canada celebrates its 150th anniversary.

Of course, I would normally take this opportunity to recognize the mining sector’s contribution to Canada’s wealth and its importance in our history.

However, CMJ’s news editor Marilyn Scales did an excellent job tracing some of the industry’s history and accomplishments in her editorial in our February issue.

So rather than rehashing the sector’s contribution to Canada’s first 150 years, I’d like to take a moment to imagine what our industry could contribute to Canada’s future.

Most Canadians – even if they are aware of the vast amount of wealth mining has contributed to the nation and the role the sector played in establishing Toronto as a global mining finance centre – associate it with our past.

But the mining sector is in the midst of a seismic transformation.

Faced with multiple, complex and intertwining challenges – productivity, cost and social licence issues among the most urgent – the global mining industry is calling out for leadership. The industry is at a crossroads, and while we know technology and innovation will shape our future, the exact path forward is unclear.

What if Canada stepped up to fill this void and started offering solutions to these problems?

There is an incredible opportunity here to re-establish our expertise at finding, building and operating successful mining operations – but this time in a new technological era.

In this year’s budget, the federal government announced that it will be establishing five industry Superclusters. Part of its Innovation and Skills Plan, it will spend $950 million between 2017 and 2022 in a bid to “jumpstart innovation in high-growth sectors.”

This is about creating the jobs of the future, deepening Canadian expertise in strategic areas and realizing our potential as global leaders in innovation.

The government will choose the five industries through a two-phase application process.

The first stage involves a letter of intent from a consortium of companies, academic institutions and non-profit organizations from across a sector, due by July 21. A short list of applicants will be selected to submit a full application this fall. The chosen consortiums will be expected to match any funding requested under the initiative dollar for dollar.

While the federal government has put money into some mining R&D initiatives (including $49 million last year in Laurentian University’s Metal Earth project), we need an industry wide strategy to be most effective.

The government declined the chance to invest in the Canada Mining Innovation Council, which has such a plan, in its March 2017 budget. CMIC had asked for $50 million in funding.

With the Supercluster program, there is a huge opportunity for Canada to again be a leader in the mining industry globally.

Within Canada, the opportunity is not just to create jobs of the future, but to change the image of mining that so many Canadians have.

Mining can be a cutting-edge, high-tech sector that will create the skilled jobs of the future and will have a lower impact environmentally and a positive impact socially. It can be a big part of Canada’s future.

But first, the industry needs to make its voice heard and make sure that mining is chosen as a Supercluster industry.

CMJ Happy Canada Day. CANADIAN MINING JOURNAL

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FIRST NATIONS

The sustainable power of Reconciliation

By Isadore Day

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ntario First Nations live almost exclusively on the most vulnerable lands in the Far North, while 90% of the province’s population live on just 13% of the land in the south. Our Peoples – from the Great Lakes to James Bay – have been suffering from the effects of global warming and pollution for many years. Our communities have been most affected by floods, fires, contaminated water, and a loss of traditional foods. It’s in all of our interests for this to change for the better.

First Nations signed the treaties to equally share the lands and resources. This is where our nation-to-nation relationship began – through trade with the newcomers. When the newcomers arrived, we welcomed them with our hand in friendship. If it were not for the riches of our lands and waters, and the natural trade routes, Ontario, and Canada, may never have been established. There may never have been a 150th anniversary of Confederation.

Reconciliation means that we need to eliminate First Nation poverty and despair by working in partnership to ensure the lands and resources are shared for future generations. Last May, Ontario Premier Kathleen Wynne announced the Journey Together commitment, which is aimed at helping to close the poverty gap and remove the colonial barriers that have been in place since the residential school system. This includes working towards implementation of resource revenue sharing and benefits – an urgent priority in the coming year, and a major topic at the Ontario Natural Resources Forum, which took place in Toronto in April.

Last year, the province also pledged to include our Peoples in the new low-carbon economy, as well as provide funding to replace dirty diesel generation with green energy micro-grids.

First Nations must also continue to work with the province on major green energy projects that will supply power to all Ontarians. The Climate Change Mitigation and Green Energy and Economy Acts must be integrated as much as possible.

Our teachings have taught to us to be stewards of the land.

And with that, First Nations can be champions when it comes to clean and alternative energy moving forward. There is considerable potential for growth and partnership with First Nations in the development of sustainable energy.

First Nations want to work with both government and the energy industry to advance a sustainable future for Canada by providing our own expertise in our traditional lands. The health of our environment must be balanced against the economic need to ensure the prosperity of our future generations.

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The replacement of diesel generators with green energy micro-grids not only solves the problem of unreliable energy, it also eliminates the risk of diesel spills that contaminate the land and water and reduces the carbon emissions that pollute the air and contribute to climate change. Many First Nation communities in Ontario are involved in renewable development projects that span wind, water, solar and biomass production.

For example: Moose Cree First Nation has a 25% ownership in Ontario Power Generation’s new $2.5-billion project that will add 440 MW of generation on the Lower Mattagami River; The Chapleau Ojibwe First Nation has signed an interprovincial deal with HydroMega in Quebec to help build and maintain a 20-MW generator on the Kapuskasing River; and Henvey Inlet First Nation has signed the largest Indigenous Feed-InTariff contract with the Province of Ontario. Once completed, their $1-billion, 300-MW wind farm will supply energy to 70,000 homes.

These and other success stories present opportunities for First Nations to share best practices and lessons learned on how to gain access to the capital required for renewable development and green energy projects. Local ownership of renewable energy projects offers the opportunity to ensure energy security, energy independence, and energy democracy. This shift can enable our nations to reduce their dependence on southern imports, increasing self-sufficiency, and to give “power” (that is, “electricity”) to the people in our communities, across Ontario, and potentially as part of a North American energy grid.

While we are encouraged by the intentions of the federal and provincial governments to engage and collaborate with Indigenous Peoples in discussions on natural resources and clean technology, we must do more to turn good intentions into concrete actions and investments. With Chiefs, business and government in the same room, the Ontario Natural Resources Forum is one place where this engagement will take place.

Moving forward, any discussion pertaining to resource development or energy needs to be based on full respect for the constitutional, treaty and internationally recognized inherent rights that we have as Indigenous Peoples. The clock is ticking, and we are ready take our place at the table. The time is now to honour the treaties, and share the prosperity that built this country. This CMJ will be true economic Reconciliation in action.

ISADORE DAY, Wiindawtegowinini, is Assembly of First Nations Ontario Regional Chief.

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LAW

Water rising to the top of the mining agenda

By Sander Grieve

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n an era of social licence, business is driven to think and care about other factors along the way to the creation of value.

Mining has for years been increasingly focused on obtaining social licence through community development, impact benefits agreements, digging wells, and building clinics. While the industry has unquestionably improved with the essential communication of its successes, it needs to engage in water management with increasing vigor. Water is rising on the agenda of our opponents and in its importance to major projects.

A new agenda for engagement around water management is proposed by the International Council on Mining & Metals and the International Finance Corporation of the World Bank in a report published in March. The rising importance of water access and capital cost of water infrastructure is notable. Of the six largest mining companies, 70% of operations are in waterstressed jurisdictions. The cost of water infrastructure is rising to make up 10% of industry capital costs.

Water is also an increasing source of conflict over concerns real and perceived. Water was cited in 58% of mining-related complaints to the IFC ombudsman. Water also was cited by El Salvador in its recent decision to ban all mining. Importantly, on the subject of engagement, a closer look at El Salvador reveals that the ban is rooted, in fact, in the local perception that they lack the capacity to properly assess environmental impacts of development. Now that is something industry can help with!

IFC strongly, and in my mind correctly, proposes that industry meet the rising concern with engagement, disclosure, leadership and collaboration. Again, practices well learned in the era of social licence. Water presents unique opportunities to do this as: w Mining collocates with other industries and with the community, existing or created, that grows to serve the mine. This provides a natural opportunity to create new infrastructure in collaboration with residents to serve the mine and community. In many jurisdictions this allows industry the chance to be part of reliable, convenient fresh water and water treatment for the first time. The sewage plant may be less sexy than the clinic, but is at least as important! w Mining can build community trust and capacity at the same time. Those concerned about the quality of water can be educated by industry and engaged in monitoring and compliance.

What better way to help build trust than to invite people in to assist with activities industry will, in any event, have to conduct.

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w Confronting fake news with education. The internet is fun and, some argue, democratizing. It is also, however, a source for hysteria, fake news and junk science. Industry opponents abuse it. Mining companies need to use it, and fully leverage their unique advantages. When you are an anti-development activist at Berkeley you aren’t in South Gobi. In mining, industry and its employees are there, on the ground. The people who matter most in social licence are the residents, and our employees, living in the communities where industry operates and those who govern them. Industry must ensure it and its consultants are fully engaged to educate and involve those most directly interested in its success – those with something material and immediate to gain, and something to lose.

The IFC cited examples of project success in: w Peru, where the community was brought into the water users committee; w Australia’s Hunter Valley, where industry took the lead in engagement on environmental and social challenges facing the community; w Canada’s Athabasca, which saw companies and the community work together to empower community water testing and monitoring; w Mongolia’s South Gobi, where data is increasingly being shared and monitoring improved; and w South Africa, where a holistic approach to water management is being adopted through the Strategic Water Partnership Network.

These examples of collaboration should be required reading for the industry, its leadership, its partners and consultants before boots hit the ground.

None of what is recommended is easy. It is hard work. It requires early and long-term engagement to be successful.

However, as the mining industry has found in recent years, the route to the green isn’t just through quality exploration and disciplined development. It goes through the community and more and more will depend on proven shared interest in, and CMJ stewardship of, water resources.

SANDER GRIEVE is a partner, head of mining, and co-head of the corporate department at Bennett Jones LLP.

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MI N I N G I N T H E P RAI RI ES

Bethun

FEEDS THE FUTURE O NEW MULTI-BILLION DOLLAR POTASH MINE OPENS AFTER 5 YEARS OF CONSTRUCTION

By Alisha Hiyate

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n May 2, with 700 guests attending and not an empty seat in the house, K+S Potash Canada (KSPC) celebrated the official opening of its Bethune potash mine – the first greenfield potash mine built in Saskatchewan in more than 40 years.

Sam Farris, vice-president and manager of operations, says the unforgettable event was very impressive – especially considering it was held in the maintenance garage and shop area. “I was told it felt like the Oscars,” he told CMJ in an interview a week after the event.

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event signalled that the project was entering a new phase.

“It felt like we’re really going into operation, and the construction phase will finally come to an end,” Farris recalls.

Farris, who joined K+S in mid-2011 and has helped build K+S Potash Canada from the ground up says it was a proud moment.

Sam Farris “K+S Potash Canada was a greenfield company, it didn’t exist until this project was approved so we had to start from the ground up,” he says. “From the time we hired our first operator until now, the difference is unbelievable. I think that really came to surface during the openWWW.CANADIANMININGJOURNAL.COM

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une

E OF K+S

The Bethune mine site, in Saskatchewan. CREDIT: K+S AKTIENGESELLSCHAFT

ing – it was a proud moment.”

K+S Group, a major supplier of salt and potash based in Kassel, Germany, acquired the former owner of the Legacy project, Potash One, in 2011. The name change to Bethune was unveiled at the opening ceremony reflecting Saskatchewan’s long-standing tradition of naming mines for the nearest community), and it has now become K+S Group’s first operating potash mine outside of Europe.

By the end of June, Bethune expects to produce its first tonne of marketable potash, and by the end of 2017, production capacity is expected to reach 2 million tonnes per year.

The solution mine, which is located 70 km northwest of Regina, will create more than 400 permanent jobs and have a JUNE/JULY 2017

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mine life of more than 50 years.

“With our new location, we are taking a huge step forward in the internationalization of our potash business,” said Norbert Steiner, chairman of the board at K+S Aktiengesellschaft, in a release on May 2. “Bethune enables us to participate in future market growth, reduce our average production costs and strengthen our international competitiveness, which will benefit the entire K+S Group.”

Annual production will gradually grow from 2 million tonnes of potassium chloride (KCl) per year to 2.86 million tonnes per year by 2023. While potash prices have fallen, K+S – a company with a more than 125-year history – has a long term vision.

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MI N I N G I N T H E P RAI RI ES

Bethune enables us to participate in future market growth, reduce our average production costs and strengthen our international competitiveness, which will benefit the entire K+S Group.

– NORBERT STEINER, CHAIRMAN OF THE BOARD AT K+S AKTIENGESELLSCHAFT

Raising the roof Top: Norbert Steiner, CEO of K+S together with Brad Wall, Premier of Saskatchewan, cut the ribbon and officially open the Bethune mine.

Above: K+S CEO Norbert Steiner (centre), with Saskatchewan Premier Brad Wall (left) and Dr. Ralf Bethke (right), chairman of the board of K+S. CREDIT: K+S AKTIENGESELLSCHAFT

“You can’t build a potash mine for the near future – it’s not like the precious metals where you can mine a small deposit – get in, get out,” Farris says. “This is a long-term operation, we’re building it for at at least 50 years and the resource in Saskatchewan can easily support that. Long term, we’re very confident in the attractiveness of the potash market.”

Despite volatility in potash prices since about 2007, K+S expects the global potash market to continue to grow as the world population grows and people’s diets improve.

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As its design and project management partner at Bethune, K+S hired Amec Foster Wheeler to manage design and construction of the project. Managing such a large, complex project isn’t easy. At the peak of construction last year, Amec had about 3,000 people including sub-contractors working onsite and the company has put in more than 20 million hours of work.

“We have a fantastic safety record on this project, we went 10 million hours without a lost-time accident,” said Dave Lawson, Amec’s president, mining, in an interview in March.

Amec saved K+S time by embracing a modular approach to construction.

“We have been doing some pretty innovative things on the project with modularization – building things offsite and then shipping them to the site and installing them,” Lawson says. “By doing that, you save yourself a lot of time at site.”

In addition, Lawson notes that the company found ways to WWW.CANADIANMININGJOURNAL.COM

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reduce the footprint of the plant, which saved on material costs like concrete, pipes, and steel.

Because it was a greenfield site with no paved access road, with much of the construction taking place offsite then being shipped in, the site was largely open to the elements until 2015. While the project isn’t remote, it is about 20 km off of Highway 11.

“The weather is probably one of the biggest challenges on a project like this, until you’re closed in,” Farris says.

In 2013, the site had to deal with two “one in 100-year” rain events, Farris cites as one example.

“We had to shut the site down for two days – we didn’t even have a permanent drainage system in place at that time.”

Another setback came last July, when one of the process vessels in the processing plant fell, causing “consequential damage.”

Luckily, there were no significant injuries.

Labour market

In terms of labour, K+S benefited from good timing. When K+S’s supervisory board approved construction of the project in November 2011, there weren’t a lot of qualified people available on the operations side or the construction side.

But the downturn in oil and gas, and then in commodities opened up the labour market just in time. “Really if we had been even a year earlier we would have had a harder time finding construction labour for sure.”

Because it was a greenfield project, there wasn’t an opportuMIllLiners.qxp_Layout 1 5/18/17 4:40 PM Page 1 Farris says the nity to train new operators on existing equipment.

company did two things to get its operations labour force ready.

“First, we sent most of our process operators to Europe where they got exposure to some of our European mines that have similar technologies and processes,” he says. “And then we used a training simulator which really gave them hands-on experience with the PCS – the plant control system. It simulated a lot of the physics of the plant to give them a sense of how it would react control wise.”

The PCS allows operators to monitor and control all six main process areas of the mine, including the wellfield, the tank farm and utilities, the evaporation, wet end and dry end areas of the process plant and the storage and loadout area.

Solution mining

As a solution mine, the multi-billion dollar price tag to build Bethune was lower than it would have been for a conventional shaft mine. With the orebody located at 1,500 metres vertical depth, it’s also a quicker method to reach production.

Duane Gingrich, Amec’s president mining and metals Americas, notes that solution mines are pretty rare. “You need warmer temperatures to make it viable,” he says.

To develop production caverns, a number of wells are drilled from surface using directional drilling and spaced about 80 metres apart to a vertical depth of 1,500 metres and a casing is inserted.

Unheated water injected into the casings slowly dissolves salts (sodium chloride and potassium chloride) in a radial direction CONTINUED ON PAGE 12

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Cutline.

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MI N I N G I N T H E P RAI RI ES

Top left: Canadian Pacific Railway built a 30-km line to link the Bethune mine to its rail network. K+S Potash Canada also built a 14-km line linking the spur to a loop at the mine’s loading facilities. Right: Works in the well field on the Bethune construction site. Bottom left: Potash will be transported by freight train from the site to a new K+S port facility near Vancouver. CREDIT: K+S AKTIENGESELLSCHAFT

from each well until the two wells meet and become connected at depth. At that point, water can be injected into one well and brine returned from the other.

It takes about three years to develop a new cavern from the time it takes to build the drill pad site, drill the wells and extend infrastructure to the time the cavern is ready for production.

Once the cavern is ready for production, hot water is injected to dissolve potash and a KCl rich brine is returned to surface.

From there, the brine, which is near saturated in sodium chloride (the ore is roughly two-thirds sodium chloride and one-third potash) is brought up to full saturation and processed in the evaporation/crystallization plant.

The brine is heated and concentrated by evaporators, then cooled with vacuum crystallizers and solid potash crystallizes out of the solution.

From there, Farris says it’s like any other potash mine – the potash is debrined, dried and in some cases compacted to meet customer size specifications.

For the full production capacity of 2 million tonnes per year, which is what K+S is aiming for by year’s end, 50-54 caverns 12 |

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need to be developed, Farris says. Roughly 36 should be ready this summer.

Cavern life varies from 10 to 20 years, depending on the mining method.

One way that K+S is reducing operating costs is through secondary mining.

“Once we bring in secondary mining that significantly reduces our water and energy intensity,” Farris says.

While primary mining is more energy intensive and requires hot water to dissolve the ore, secondary mining utilizes a brine loop set up between the cooling pond and secondary mining caverns, where sodium chloride-saturated brine is injected into the ground, Farris says.

“When it comes into contact with a nice high-grade potash ore like we have, it dissolves potassium chloride and redeposits sodium chloride back underground. The brine that comes out goes through our cooling pond, and as it cools, potassium chloride crystallizes and we recover that with dredges back to our process plant.”

Farris adds: “It’s a similar principle but it’s a totally different WWW.CANADIANMININGJOURNAL.COM

2017-06-01 5:10 PM

technology to produce potash than the evaporation/crystallization plant – waste heat from the crystallization/evaporation plant is used to heat that brine so the two work together to minimize our overall energy intensity.”

Water for primary mining is heated via waste heat from the evaporation process and evaporated water is recycled and reused to dissolve ore.

“We did a lot of work in the design of our evaporation and crystallization plant to recover condensates –and the water and energy that represents. We reuse the water in our mining process.”

In addition to its very modern and advanced PCS, the company is doing a lot around a modern maintenance strategy to prevent more expensive equipment failures down the line.

“It’s not that other potash operations don’t use predictive maintenance, because they do, but I would say it’s at the core of our maintenance philosophy – it’s a reliability based maintenance system,” Farris says.

“Our use of automation and integration of systems is really unique,” he adds. “Most potash mines have distributed control systems, we have one system, one method that was used site wide and even most of the vendor packages were integrated into that.”

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Additional infrastructure

When you consider the infrastructure that had to be built at the greenfield site, it’s not surprising that development of the project took half a decade. Site infrastructure includes an administration building; an operations building that holds a central control room, process control infrastructure, process analytics lab and maintenance shop; a process plant and a brine pumping station.

The site also hosts two product storage warehouses – one that can hold 100,000 tonnes of fertilizer products and another that can hold 40,000 tonnes of industrial potash. The plant will produce two different fertilizer products, MOP (muriate of potash) dustfree and MOP granular, plus KCl 99 compacted, which is used in industrial applications.

It also has a rail loading facility and 14 km of industrial rail owned and operated by K+S. That infrastructure connects with 30 km of new Canadian Pacific rail that was put down through rural Saskatchewan to connect the mine to existing rail. Product from Bethune is shipped by rail to Pacific Coast Terminal’s bulk handling facility in Port Moody, B.C. which was upgraded by KSPC to handle high volumes of potash rail unloading and ship loading, and then shipped to customers mainly in South America and Asia.

Bright spot

Amid the oil and gas and mining downturns, Bethune is undoubtedly a bright spot for the Prairie economy.

Summing up the feelings of many Saskatchewan residents at the Bethune mine opening, Premier Brad Wall expressed enthusiasm over having a new, long-lived mine open in the province.

“We’re delighted to welcome a very good corporate citizen, K+S, back to Saskatchewan as it begins operations at a mine that will create more than 400 permanent jobs and generate taxes and royalties for years to come,” he said. “The Legacy project strengthens Saskatchewan’s position as the world’s leading potash producer and is another indicator the province’s diversified and resilient economy is weathering economic uncertainty.”

CMJ JUNE/JULY 2017

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Lalor KEEPS GIVING

AS 777 WINDS DOWN, HUDBAY LOOKS TO LALOR’S POTENTIAL

By D’Arcy Jenish

F

or nearly a century – 90 years in December, to be precise – Hudbay Minerals has been the cornerstone and lifeblood of the northern Manitoba community of Flin Flon. But change is coming to this quintessential one-industry, resource-based Canadian town.

In 2020, Hudbay is scheduled to close the 777 mine – its only remaining mining operation in the immediate vicinity of Flin Flon.

Meantime, the company is continuing to develop and expand its base and precious metal Lalor mine, which began producing in late 2014 and is located in Snow Lake, 215 km east of Flin Flon.

“We have undertaken a program of re-evaluating exploration opportunities with the Flin Flon area,” says Cashel Meagher, Hudbay’s senior vice-president and chief operating officer. “The obvious future in northern Manitoba will divert from Flin Flon to Lalor. We want to perpetuate the life of the Lalor mine.”

In fact, the potential at Lalor has continued to increase since Hudbay launched an aggressive exploration program in 2007. The company drilled 180 holes from surface and identified a sizeable deposit of ore-grade material – zinc on top, copper beneath it and a halo of contact gold beneath the copper.

Hudbay then built a 3-km-long ramp from the bottom of its Chisel North mine to the Lalor deposit and launched an underground exploration program from a depth of 1,025 metres below surface.

That led to the discovery of a non-contact gold zone large enough

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to support a small mine in itself. It also allowed the company to increase the estimated size of the deposit to 20 million tonnes of resources, inclusive of reserves.

Lalor currently has proven and probable reserves of 14.2 million tonnes grading 5.12% zinc, 0.69% copper, 2.61 g/t gold and 26.5 g/t silver.

“This is biggest deposit in the Snow Lake area and probably the second or third biggest in the Flin Flon camp itself,” Meagher says.

Maximizing production

The company’s key challenge now is to maximize production. The hoist at Lalor is capable of lifting 6,000 tonnes of ore per day to surface. Ideally, that would consist of 4,500 tonnes from the base metal CONTINUED ON PAGE 16

Left: The Lalor headframe during project construction. CREDIT: HUDBAY MINERALS Top: Aerial shot of Lalor. CREDIT: HUDBAY MINERALS Above: Ribbon cutting at Lalor. CREDIT: HUDBAY MINERALS

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A jumbo drill at the 777 mine in Flin Flon. CREDIT: HUDBAY MINERALS

zone and a separate stream of 1,500 tonnes of gold-bearing ore.

At the moment, however, production is averaging about 3,300 tonnes per day and is constrained by the processing capacity at surface. In 2014, Hudbay refurbished its Snow lake concentrator to handle Lalor ore. It was built to process ore from the now defunct Stall mine and was designed to handle 2,700 tonnes per day.

Meagher says the company has considered two options in order to boost production at Lalor – building a new concentrator or increasing the capacity of the Snow Lake facility. It has opted for the latter.

“We’re up to around 3,300 or 3,400 tonnes per day now and our goal this year is to increase the Stall concentrator’s capacity to 4,500 per day,” Meagher says. “We’re confident we can achieve

The potential at Lalor has continued to increase since HudBay launched an aggressive exploration program in 2007. that with some modifications to our flotation circuit, our filtration circuit and our conveyance and crushing circuits.”

Meantime, the company has continued to explore the non-contact gold zone and has extracted the equivalent of 37,000 tonnes in bulk samples. “The gold is rather deep and might not make it as

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Far Left: Bulkhead at the Lalor project in 2013.

Left: The crusher at Snow Lake.

CREDIT: HUDBAY MINERALS

Cutline.

a mine with its own infrastructure,” Cashel says. “But we believe it will make it by piggybacking on the base metal mine.”

New capacity

The company realized it would need milling capacity to handle ore from the gold zone and, again, faced a choice – build from scratch or acquire an existing facility. As it happened, the nearby New Britannia mill was available. Hudbay purchased it from the Toronto-based junior QMX Gold in May 2015 for $12.5 million cash and a $5-million contingency payment. Hudbay also got the mine itself, which has operated from 1949 to 1958 and again from 1995 to 2005, as well as 43 mineral claims totaling 48.4 sq. km.

For now, the company is immersed in engineering studies to

determine what it will take and how much it will cost to refurbish the mill, which was designed to handle 2,000 tonnes per day of ore. A decision is also pending on when and whether to begin producing the non-contact gold deposit.

Suffice to say, Lalor remains a work in progress, but it has already made a world of difference to the town of Snow Lake.

“The impact has been incredible,” says Gerard Lamontagne, co-owner of the Snow Lake Motor Inn and president of the local Chamber of Commerce. “It’s started to bring prosperity back to the region.”

Back in Flin Flon, where the boom began nearly a century ago, the outlook is less optimistic.

“Mining is who we are,” says Dianne Russell, general manager of radio station CFAR and president of the local Chamber of Commerce. “The impact of everything Hudbay does is huge in Flin Flon. No matter what they do in the future, it doesn’t feel as comfortable as it has in the past.”

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HISTORIC DEAL ENSURES FIRST NATIONS PARTICIPATION IN NEW POTASH MINE

By Marilyn Scales

T

hree levels of government, a mining company and a First Nation have come together in a historic agreement to develop a new potash mine in Saskatchewan.

The joint venture between Encanto Potash Corp. and the Muskowekwan First Nation is truly unique. Together they plan to develop a solution mine near the town of Lestock on property within the Muskowekwan reserve.

The Muskowekwan are joining the project as full participants, with all the economic and revenue opportunities that entails. And the community is enthusiastic about the prospects.

Over the long life of a Saskatchewan potash mine, this could be worth billions to the First Nation, as chief Reg Bellerose told CMJ. There are about 2,000 members of the Muskowekwan First Nation, but only about 700 or 800 live on the reserves because the economic opportunities lie elsewhere.

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becoming economic contributors, with the new mine only one of several revenue streams for the First Nation.

A government first

The mineral lease and regulations for Muskowekwan required the co-operation of three levels of government – federal, provincial and First Nations.

Negotiations involved the federal departments of Justice and of Indigenous and Indian Affairs, the Province of Saskatchewan, and the Council of the Muskowekwan First Nations.

This is the first ever lease issued under the Indian Mining Regulations, and Muskowekwan Resources, a joint venture of the First Nation and Encanto Potash, will be the lessee of 248.5 sq. km of land on the reserve.

The initial step was for the First Nation to request the federal government to develop regulations applying to a specific project on its reserve. That was done under the First Nations Commercial WWW.CANADIANMININGJOURNAL.COM

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and Industrial Development Act. The act essentially reproduced the provincial rules and regulations that apply to similar largescale commercial projects off-reserve.

The Muskowekwan First Nation drew up its Solution Potash Mining Regulations that will govern the venture. The regulations have the force of law, and will be administered and enforced by the Province of Saskatchewan.

The First Nation’s relationship with Encanto Potash goes back several years. The two had exploration agreements in place before Encanto began drilling. Bellerose says Encanto has brought a desire to learn about the First Nation’s culture and patience to their interactions, and that makes the partnership one of equals.

Going forward, the Muskowekwan First Nation is putting emphasis on training and employment for its members. In that way they will have skills that lead to well-paid jobs anywhere they want to live.

To advise them, the Muskowekwan First Nation has asked Amec Foster Wheeler to lend their expertise. Not only can Amec advise on technical and engineering topics, the company has helped the First Nation create its partnership with Encanto. The company has its own culture of shared benefits, capacity building and a holistic viewpoint.

“It has been a privilege and enlightening to work with the Muskowekwan First Nation,” said Amec’s senior vice-president for North America Duane Gingrich. In the future he hopes his company’s relationship with all concerned will lead to engineering and construction contracts.

Plans for the mine

The preliminary feasibility study for the mine was drawn up in 2013, and the bankable feasibility study is due soon. This is what Encanto has in mind, subject, of course, to de-risking and the BFS. According to the preliminary feasibility study, the Muskowekwan potash project will have a 58-year life as a solution mine with a before tax net present value of $4.1 billion and an internal rate of return of 20%. After taxes, the NPV becomes $2.8 billion and the IRR 18%.

The preproduction capital requirement is $2.9 billion for the initial phase, plus $130 million for deferred capital associated with secondary mining as well as production of a

The Muskowekwan project relative to other Saskatchewan potash mines. CREDIT: ENCANTO POTASH

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This is the first ever lease issued under the Indian Mining Regulations, and Muskowekwan Resources, a joint venture of the First Nation and Encanto Potash, will be the lessee of 248.5 sq. km of land on the reserve.

granular type of potash. There will be a brine field, tank farm crystallization pond, evaporation and crystallization plant, drying and compacting plant, load-out facility plus salt storage, infrastructure and utilities. At full production, the project will produce 2.8 million t/y of potassium oxide.

Operating costs per tonne will be $54.32 at the plant site, with rail and port costs of $50/tonne and sustaining capital of $32.21/tonne.

The mine is estimated to contain proven reserves of 34.2 million tonnes of potassium chloride or 43.9 million tonnes of product containing 62% potassium oxide. There is also a probable reserve of 127.7 million tonnes of KCl or 130.3 million tonnes of 62% K2O. The reserves lie in the Patience Lake and Belle Plaine members, and a 15% cut-off was applied.

Encanto has arranged a takeoff contract with India’s ministry of fertilizer agreeing to purchase 2 million t/y of product from the mine for 20 years. The ministry has the option to buy potash directly through Encanto now (Encanto would secure the potash from third parties) and also secure worldwide distribution rights when the mine begins production. A large farmer’s co-operative has agreed to take another 5 million t/y for the same term.

Indeed the Muskowekwan potash mine is going to be a winner – for Encanto, for the First Nation, and for the provincial and Canadian economies.

CMJ

Schematic showing six of seven injection wells on the Muskowekwan reserve. CREDIT: ENCANTO POTASH

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C IM 2 0 1 7

IDEAS AT

‘The next challenge is to truly make innovation and technology part of the DNA’

CIM PLENARY

By Alisha Hiyate

ALL PHOTOS: LUIGI D’ASTOLFO

A

t this year’s plenary session at the CIM Convention in Montreal, many of the challenges that have produced so much hand-wringing in the mining industry over the past several years were discussed.

Challenges such as lower-grade deposits, declining productivity, volatile commodity prices, an aging workforce, and resource nationalism are well-worn themes familiar to everyone in the industry.

But if the mining sector doesn’t make serious strides in addressing these issues through innovation and technology, the five panellists also touched on possibilities that may be less obvious – including the potential existential threat of new, techsavvy competition.

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upon us by non-traditional competitors that may be superior in technology and data analysis and talent management,” said Daniella Dimitrov, an executive and corporate director with Excellon Resources.

“And they may look at the extractive industry as a secondary industry.”

Gerald Sanders, an aerospace engineer with the NASA Johnson Space Center, cited the example of Google’s intrusion into the automotive industry with its pioneering work on the self-driving car.

“Google is working on self-driving cars, not the automotive companies – they’re working to catch up,” he said. “It’s going to happen, it’s just who is going to be the winner vs. the failure.”

There’s no reason why that can’t happen in the mining industry.

“Mining’s going to occur,” Sanders said. ”Somebody’s going to do the job and somebody’s going to innovate whether it’s the current industry that’s doing it or a new player.”

Over the last 20 years, the mining sector has made huge advances in safety, environmental practices, engaging communities and improving mining processes, noted Renaud Adams, president and CEO of Richmont Mines.

However, there’s a lot more left to do, because in spite of the progress the mining industry has made, grades and productivity have both decreased.

“As we advance, I think the next level of challenge is to truly make innovation and technology part of the DNA – not as a nice thing to do, but a must-do,” Adams said.

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People often say, ‘We tried that 20 years ago and it didn’t work.’

But think about your phone even two years ago.

– MICHELLE ASH, CHIEF INNOVATION OFFICER WITH BARRICK GOLD

The panellists from left to right: Renaud Adams, Michelle Ash, Gerald Sanders, and Pierre Lapointe.

Far Left: The Plenary session at the CIM Convention, which took place Apr. 30May 3 in Montreal.

“We are the generation that’s going to set the tone for the next ones to come.”

Accelerating rate of change

Michelle Ash, chief innovation officer with Barrick Gold, noted that we are living in a time of an accelerated rate of change – more so than at any other time in history outside of two times: when the zero was invented, resulting in an explosion of mathematics, and during the Renaissance.

“That’s why it’s both exciting and terrifying,” she said. “As leaders, we have to prepare ourselves and our people for change.” Ash cited the way that technology will change the way we think about ourselves. Before the Industrial Revolution, we thought of ourselves as part of a community. Since the Industrial Revolution JUNE/JULY 2017

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we’ve thought about ourselves in terms of our jobs. That’s about to be upended with the proliferation of robots and artificial intelligence (AI), Ash noted.

Another sign of the fast pace of change has been the disappearance of 52% of companies that were Fortune 500 companies in 2000. “Either they’ve been acquired, merged or gone bankrupt,” Ash said, and the list has been taken over by five tech companies.

Technology adoption

In this environment, mining companies have no choice but to adopt new technology at a faster pace, especially as it becomes cheaper.

Ash noted that the biggest obstacle to the adoption of new technology isn’t cost, it’s mindset.

Whereas it used to cost $5,000 for a ruggedized screen to go in a jumbo, an iPad with ruggedized case now only costs $500 or so.

“We have to stop thinking of ourselves as special and start adopting retail products,” she said.

The sector should also re-examine technologies as they become more sophisticated.

“People often say, ‘We tried that 20 years ago and it didn’t work.’ But think about your phone even two years ago,” Ash said.

Ash noted that solar power now can cost as little as 6¢/kW hour, vs. $7/kW hour years ago.

“That’s an amazing change, and now it’s really making us have to wonder why we continue using diesel, especially when you CONTINUED ON PAGE 24

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C IM 20 1 7 add in automation where we can now have much smaller equipment,” she said, adding battery power has also become more viable.

At the same time, Pierre Lapointe president and CEO of ArcelorMittal Mining Canada noted that the industry must make better use of the technology already at its fingertips, particularly data from operations.

“We’re overwhelmed by data – it’s incredible the amount of data we could have right now to manage a mine,” Lapointe said. “But at the end of the day, the people on the floor that make it happen need clarity and simplicity, so how do we get the tremendous amount of data and bring that to the floor so it will be beneficial for our processes?”

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Above, from left to right: Panel moderator Carol Plummer, VP project development, southern business for Agnico Eagle Mines; Michelle Ash, chief innovation officer at Barrick Gold; Pierre Lapointe, president and CEO of ArcelorMittal Mining Canada; Daniella Dimitrov, corporate director, Excellon Resources; Renaud Adams, president and CEO of Richmont Mines; and Gerald Sanders, an aerospace engineer in the Engineering Directorate of the NASA Johnson Space Center.

A “VUCA” world

The future of mining

Some of the comments that resonated most deeply with the audience came from Dimitrov, who said we live in a “VUCA” world. Coined by the U.S. military in the 1990s to describe a post-Cold War world, the acronym stands for volatile, uncertain, complex and ambiguous.

Since then, the word (which fittingly enough means “wake up” in the Zulu language), has been applied by business leaders to describe turbulent and rapidly changing business environments.

“Some of you may have heard that these changes have happened in other industries and they’ve been transformative, but they will not happen in our industry because we’re different,” Dimitrov said.

“Well, we are a labour-intensive, highcapital business with challenged decision making processes culminated by manual data collection and analysis in a time of growing resource nationalism and trade friction.”

Dmitrov continued to say that the sector’s margins have declined, it has experienced years of losses and writedowns, and it has created low value outside of times when commodity prices are very high. “This really means we are an industry primed for transformation because these are not passing challenges. As we’ve heard, this is the new reality and this is the new normal.”

So what are the solutions?

Dimitrov called for companies to go beyond a one-off investment in technology: “Make it a priority to build a focused strategy and incorporate it in your business,” she said.

In addition, the entire panel agreed on the importance of talent, specifically the need to bring in people who may be quite different from the talent the industry has hired in the past. That may include people from outside the industry who are ready to challenge existing ways of thinking and the perception that mining is special.

Unfortunately, the technology and innovation revolution that is coming will create new challenges, such as reducing the number of jobs in mining, thereby challenging an important strategy mining companies have typically used to obtain a social licence.

“I think we need to turn the conversation with communities and First Nations to how do we create wealth and how do we support wealth creation, especially now a lot of these technologies make remote education very feasible very cheaply,” Ash said.

The conversation about the future of mining is only just beginning, but what is already clear is that the future of mining will look radically different.

CMJ WWW.CANADIANMININGJOURNAL.COM

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KEEPING MACHINES WORKING 25_CMJ JuneJuly2017_EMR Cover.indd 25

A LOOK AT THE NEW HEAVY-DUTY ENGINE OILS EXTENDING TIRE LIFE BY MEASURING THE RIGHT DATA

2017-06-01 5:21 PM

engine o A REVOLUTION IN HEAVY DUTY

HOW THE NEW ENGINE OILS CAN HELP LOWER MAINTENANCE COSTS

By Brian Humphrey

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I

n December 2016, the North American heavy duty lubricant market witnessed its biggest specification overhaul in history with the launch of two new API heavy duty diesel engine oil categories: CK-4 and FA-4.

Formerly known as Proposed Category 11 (PC-11), the introduction of API CK-4 and FA-4 engine oils was designed to address North American greenhouse gas emissions legislation, drive improvements in fuel economy and deliver greater engine protection and performance.

At Petro-Canada Lubricants, we believe these new oil categories present an opportunity to improve the carbon footprint of mining businesses, reduce equipment downtime, deliver savings through lower maintenance costs and increase the productivity and profitability of mining operations.

As with all business decisions, clear understanding and early adoption could result in a genuine competitive edge.

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e oil

EQUIPMENT MAINTENANCE & REPAIR S PECIA L R EPO RT *

What is different about the new oils?

The heavy loads experienced by mining equipment on a daily basis put engines under strains that can stress conventional lubricants; leading not only to engine wear, but even failure. In any mining operation, downtime costs are destructive so using a quality lubricant to protect your engines is crucial.

Compared to their predecssors, API CK-4 oils are more robust and resistant to oxidation. This has become necessary in recent years as newer engines are designed to run at higher temperatures in order to improve operating efficiency. However, higher temperatures accelerate the rate of oxidation and oil thickening.

This increases oil viscosity and can lead to deposit formation. The result is that the oil degrades and its ability to flow is reduced, thus decreasing engine protection and negatively impacting engine fuel efficiency.

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Petro-Canada Lubricants’ Duron product line is designed to provide ultimate protection and fuel efficiency for mining fleets.

Of particular relevance to mining fleet operators, the new oils are also designed to improve resistance to aeration and provide increased shear stability. Improving aeration control (i.e. resistance to foaming) is important for off-road engines where, in some cases, more air than usual could become entrained in the engine oil. A high level of air entrainment is dangerous, particularly at the bearings where maintaining a suitable oil film is critical to protect them.

Taken together, these design improvements provide enhanced

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The new oils provide extended drain capabilities even better than their API CJ-4 predecessors. However, actual oil drain intervals will depend on the severity of service and type of application.

With proper used oil analysis, drains can be extended within certain limits, minimizing costly downtime.

As best practice, end users should refer to their engine owner’s manual and utilize oil sample analysis data when exploring whether and how far to extend drains for their operations.

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performance, greater hardware protection, and may reduce vehicle downtime – a major source of financial drain for operators. However, it is crucial that mining fleet operators understand which sub-category is most suitable for their vehicles.

API CK-4 licensed oils are fully backwards compatible allowing for their use in the vast majority of older diesel engine vehicles that ran previous oil categories (CJ-4, CI-4 Plus, CI-4, etc.). Moreover, users can benefit from the increased robustness of CK-4 oils over the previous CJ-4 oils, enabling increased performance and protection gains.

Meanwhile, API FA-4 oils have a considerably lower viscosity (specifically lower high temperature high shear – HTHS – viscosity), meaning less friction and less viscous drag in the engine.

This enables a reduction in fuel consumption, all while continuing to offer increased levels of wear protection. These oils have been specifically designed for use in select high-speed four-stroke diesel engines designed to meet 2017 model year on-highway greenhouse gas (GHG) emission standards. As such, FA-4 oils are not expected to have an immediate impact on mining fleets and many of the North American off-road original equipment manufacturers (OEMs) have stated their intention to continue utilizing engine oils with traditional viscosity characteristics. This means API CK-4 is the oil category of choice for mining fleets.

At Petro-Canada Lubricants, we see the new era of API CK-4 engine oils as not only an opportunity to improve the efficiency and carbon footprint of mining fleets, but also a chance to recognize the potential to cut costs and increase profitability.

Formulated using leading-edge lubricant technology to combine the best additives with some of the purest base oils, Petro-Canada Lubricants’ Duron Next Generation has been engineered to meet and exceed the advanced OEM engine performance requirements for ultimate protection and fuel efficiency.

We have introduced a clearly differentiated product line to help our customers choose the product best suited to their particular needs. For more information, please visit: www.Duronthetougherthebetter.com.

CMJ Brian Humphrey is OEM technical liaison at Petro-Canada Lubricants.

WWW.CANADIANMININGJOURNAL.COM

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EQUIPMENT MAINTENANCE & REPAIR S PECIA L R EPO RT *

information

OVERLOAD AFTER THE DATA REVOLUTION, WHAT YOU CHOOSE TO MEASURE MATTERS MOST

By Devon Wells

M

Photo: J2R , iStockimages.com

ine maintenance is different in the 21st Century.

The explosion of data technology means that technicians can monitor virtually any aspect of their equipment. Speed and engine hours came first, but now mines are measuring everything – from fuel depletion levels to individual OEM sensor data.

It’s no longer a question of tracking or not tracking. It’s a question of what to track.

Take tires, for instance. Mines pay a lot of attention to the condition of their tire stock – for good reason. Along with fuel and labour, tires are among a mine’s biggest expenses.

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Technicians have long known that when tires get hot, they start to break down. Plies can separate, making them more prone to blowout. So, mines take great pains to track tire work rates in order to keep each $50,000 investment lasting as long as possible.

Different operations handle tire monitoring in different ways.

Some analyze tire data from OEM systems whenever trucks go in for maintenance. This approach may prove better than nothing, but it doesn’t give the real-time feedback necessary for technicians to intervene before tires start to break down.

More advanced operations use a tire management system, such as Wenco’s TireMax. These systems can calculate tire TKPH/TMPH (tonne kilometre or mile per hour) and let mines compare it against manufacturer’s recommendations. This method works much better, giving immediate indication should tires start to exceed their work rates. But, in the current era, even TKPH/TMPH doesn’t give the most accurate reflection of real tire condition.

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Photo: JoLin, igorwheeler, iStockimages.com

Technicians have long known that when tires get hot, they start to break down. Plies can separate, making them more prone to blowout.

So, mines take great pains to track tire work rates in order to keep each $50,000 investment lasting along as possible.

for tire condition. By equipping trucks with tire pressure monitoring systems (TPMS), they get a precise assessment of the environment inside each tire. Technicians can use this information to step in when those conditions could cause undue wear and tear on the tire.

But what if tracking temperature isn’t accurate enough?

That’s what tire specialist Adam Gosling thinks. He represents TyreSafe Australia, a consulting firm that works to help clients maximize the value of their tire stock. “(Temperature) is a bit vague, really,” he says. “What’s the actual temperature you’re talking about? At the tread? The sideWWW.CANADIANMININGJOURNAL.COM

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wall? The air inside? It’s quite nebulous.”

According to Gosling, internal sensors only measure the temperature and pressure inside the tire’s air chamber. Due to their large size, those measurements aren’t consistent throughout the tire.

“Some of those tires are 14 feet high,” he says. “Through convection, the air at the bottom will be cooler than the air at the top.”

Gosling also notes that movement of air within a tire can cause temperature distortions. As tires travel through a mine, bumps create vortexes and eddies of air at different temperatures. Depending on the location of the TPMS sensor, it could produce inconsistent temperature readings.

Even the equations mines use for their tire work thresholds are problematic, says Gosling. Many mines rely on the ideal gas equation – a law of physics that describes the relationship between pressure and temperature in a rigid container.

“That’s not like a tire,” he says. “(Tires are) flexible, so the volume changes.” Each bump along a haul road can cause tires to deform. Different parts of each tire respond to these changes differently.

“Therefore, the calculations involved in determining that equation are horrendous,” says Gosling. His research shows that temperature measurements can prove highly inaccurate, leading a tire to exceed its approved threshold too often.

“Tire design has a safety margin built in. But when people try

to use temperature as the metric, it comes undone because of the huge variances.”

Rather, Gosling advocates mines use the pressure at the valve stem as their measurement for determining real tire condition.

“The temperature changes, but pressure is more consistent – especially pressure at the valve stem, where the air is trying to escape,” he says. Even though pressure also varies, he says readings from the valve stem prove much more regular than temperature readings over a significant period.

Yet, tires are simply one component of an increasingly complex set of mining equipment. Every machine part involves parameters that maintenance can check to judge performance. Should mines track oil temperature to assess engine condition? Or air temperature? Or coolant flow? Or another metric altogether?

The beauty of the data revolution is that mines can now gather information about so many elements of their operation long hidden from view. Now, the challenge lies in sorting through that information to make better decisions for better outcomes. In many cases, it starts with knowing the values that make a real difference to bottom lines and those that prove only a distraction.

CMJ Devon Wells is the technical content writer for Wenco International Mining Systems. A subsidiary of Hitachi Construction Machinery, Wenco empowers data to make mining simpler, smarter, and safer. For more information, please visit www.wencomine.com.

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2017-05-25 12:01 PM

2017-06-05 11:03 AM

ADVERTORIAL

BEL-RAY ANNOUNCES MOLYLUBE OPEN GEAR AND ROPE LUBRICANT FOR VARIOUS MINING APPLICATIONS. Farmingdale, N.J. (May 16, 2017) – Total

performance lubricant manufacturer, Bel-Ray, today announced the release of its latest mining product, Molylube Open Gear and Rope Lubricant. The newest mining lubricant can be used in general industrial open gears, pins and bushings, chains, wire ropes, cables, drive chains and sliding surfaces.

Molylube Open Gear and Rope Lubricant has been specifically formulated for open gears, girth gears and rack and pinions which are found in all types of equipment such as draglines, shovels, mills, kilns and stationary and mobile cranes.

The Molylube Open Gear and Rope Lubricant is a highly tenacious lubricant that ensures adherence to the gear teeth creating excellent resistance to throw-off and slinging.

said Bret Jenkins, Director of Mining Sales.

“Now, the same protection is available in a convenient aerosol version, virtually eliminating wear in open gears in draglines, shovels, cranes and stationary rotary equipment.”

Molylube Open Gear and Rope Lubricant is a versatile, heavy-duty multi-service aerosol spray lubricant developed for easily lubrication of hard to reach open gears, chains and wire ropes. Its unique formulation provides excellent lubrication under extreme pressure conditions. In addition the new aerosol lubricant provides anti-wear, water resistance and rust and corrosion protection associated with demanding mining and heavy industry equipment applications. n For more information about the extensive

“Bel-Ray’s Molylube SF100 is the leader in open gear lubrication for the world’s largest and most demanding mining equipment,”

Bel-Ray Mining lubricant product line, please contact Bret Jenkins at bjenkins@belray.com, visit http://www.belray.com or call (732) 938-2421.

About Bel-Ray Company, LLC Bel-Ray Company, LLC. was founded in 1946 and serves the lubrication needs of powersports, industrial and mining customers worldwide. “Flex Your Engine” with Bel-Ray’s superior powersports line that delivers top quality Made-in-the-USA lubricants and service products to motorcycle and recreational vehicle enthusiasts around the world. Bel-Ray products are available at powersports dealers worldwide. Visit BelRay.com for a complete dealer listing. Find the right lubricant for your equipment with Bel-Ray’s Lubricant Advisor.

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For more information, contact tsq@belray.com BELRAY.COM

FLEX YOUR OPERATION

2017-06-01 10:01 AM

FAST NEWS

Updates from across the mining ecosytem

• Guidelines |

Battery electric vehicle guide published

I

n May, a best practices guide for battery-powered electric vehicles in underground mining was published by the Global Mining Standards and Guidelines Group (GMSG) and the Canada Mining Innovation Council (CMIC).

The guide is meant to serve as a blueprint for original equipment manufacturers (OEMs) to move forward in research and development, and references existing standards and guidelines related to battery electric vehicles (BEVs). This is the first document to be published specifically related to BEVs in an underground mining environment.

More than 100 authors from 61 contributing organizations took part in creating the document, Recommended Practices for Battery Electric Vehicles in Underground

• Spinout |

Sandvik’s DD422iE twin-boom uses battery power for tramming.

CREDIT: SANDVIK

Mining Guideline, completing a year’s worth of work in only six months.

“This guideline is a great example of innovation through collaboration,” said David Sanguinetti, president, Sanguinetti Engineering, leader of Undergrounding Mining at CMIC, and the project manager for this guideline development. “Neither CMIC nor GMSG could have pulled this off in the timeframe that we did on our own. The only way it happened was with the two groups working together.”

“We are fortunate to have a number of collaborative partnerships with leading

industry organizations like CMIC,” said GMSG Managing Director Heather Ednie.

“It helps reduce redundancy of efforts across the industry and encourages swifter innovation through the pooling of expertise and resources.”

An introductory workshop on the details of the guideline held at the CIM Convention in Montreal, was sold out, with high levels of interest from OEMs, mining companies, consulting companies and others.

The guide is available for download in the GMSG library at www.globalminingstandards.org.

Atlas Copco to spin out mining business as Epiroc

A

tlas Copco, a leading provider of sustainable productivity solutions, has decided that Epiroc will be the name of the company that the group will dividend out in 2018 provided shareholder approval.

On Jan. 16, Atlas Copco’s board of directors announced that it plans to split the group into two companies; Atlas Copco, focused on industrial customers, and Epiroc, focused on mining and civil engineering customers. The plan is to have both companies listed on the Nasdaq Stockholm stock exchange.

Epiroc was selected out of almost 1,000 names evaluated. Epi is a prefix meaning “on” or “at” in Latin and Greek. Roc signals stability and durability, and rock is one of the most important materials that the company works with.

Atlas Copco rock drills.

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CREDIT: ATLAS COPCO

WWW.CANADIANMININGJOURNAL.COM

2017-06-01 5:19 PM

• Profits |

OEMs bouncing back?

F

irst-quarter figures for several of the big mining OEMs indicate that cost-cutting efforts combined with an improving market for their equipment is starting to boost profits.

At US$3.75 per share, Caterpillar’s firstquarter earnings beat its previous forecast of US$2.90.

“For the first time in almost two years, same quarter sales and revenues increased,” said CEO Jim Umpleby.

Sales and revenues for the quarter reached US$9.8 billion, up from US$9.5 billion in last year’s first quarter.

Sandvik’s profit from continuing operations for the quarter was up 57% to 2.28 billion SEK (US$261 million) on revenue growth of 5% to 21.8 billion SEK (US$2.5 billion).

“Growth was particularly strong in Sandvik Mining and Rock Technology, driven primarily by equipment replacement orders,” said president and CEO Bjorn Rosengren.

Order growth in the group was up by 30%.

Both companies’ shares were boosted by their financial results. However, Caterpillar continued to be cautious, citing continued uncertainty and potential for more volatility in commodity prices.

• Partnership |

Cementation partners with Nortech to create Inuit firm

C

ementation Canada has registered ‘Nortech-Cementation Canada Labrador LP’, a limited partnership between Nortech Holdings of Happy Valley Goose Bay and Cementation, as an Inuit business with the Nunatsiavut government.

Nortech-Cementation is a majority Inuit-owned limited partnership focused on underground development opportunities in Newfoundland and Labrador, within the Nunatsiavut region.

“Being officially registered with the Nunatsiavut government as an Inuit business opens the partnership to possible business opportunities, both as a nominated company for the Voisey’s Bay mine expansion as well as other business opportunities throughout Newfoundland and Labrador,” says Eric Kohtakangas, VP operations at Cementation Canada.

“We are excited about our latest partnership with Cementation and combined we feel the groups can bring value to future mining projects here in Labrador and Newfoundland” says Sharon Langdon, president of Nortech.

The Nunatsiavut region is located in northern Labrador and is part of Newfoundland and Labrador. The Nunatsiavut government is a self-governing Inuit regional government that has authority over many central governance areas.

Cementation is well known to the mining community as a mine and facilities contracting and engineering company.

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Caterpillar had a better-than-forecast first quarter.

CREDIT: CATERPILLAR

• Consolidation |

Post-merger, Joy Global renamed Komatsu Mining

I

n May, Joy Global was relaunched as Komatsu Mining Corp., following a US$3.7-billion takeover by Japan’s Komatsu Ltd. The merger combines the former Joy Global’s expertise in underground mining equipment with Komatsu’s specialty in surface mining equipment.

Tetsuji Ohashi, president and CEO of Komatsu said the combination will allow the new company, which has a total of 57,000 employees worldwide, to offer a complete range of mining solutions to its customers.

“We plan to build on the strength of our shared cultures, including our unwavering belief in safety first and our passion for providing innovative solutions, to become an unrivaled mining solutions and services provider,” Ohashi said.

The new Komatsu Mining Corp. will retain its headquarters in Milwaukee and will be led by Jeffrey Dawes, formerly the leader of Komatsu Latin America.

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2017-06-01 5:19 PM

CSR & MINING

New resettlement guidance and good practice guide released

By Michael Torrance

T

he European Bank for Reconstruction and Development (EBRD) has issued new guidance on resettlement best practices, including as applicable in the mining sector.

The guide sets out the process by which clients of the EBRD can fulfil their obligations under Performance Requirement 5 (PR5) of the EBRD’s Environmental and Social Policy when projects involve resettlement. PR5 is based on the Involuntary Resettlement Performance Standard of the IFC Performance Standards, which itself has been endorsed by the government of Canada as a best practice for Canadian extractives companies operating outside of Canada. These same standards are used by Equator Principles banks in financing decisions where the IFC Performance Standards apply. As such, the EBRD guidance is relevant for mining companies that may seek financing even where the EBRD will not be involved.

The EBRD guide provides an overview of resettlement processes, discussing planning techniques and identifying major challenges. The guide explains the roles played by each of the parties in the resettlement process – the project proponent, the affected people and the key stakeholders (such as government entities and essential services providers). The guide recommends: w Retaining specialists, particularly for clients who have not previously carried out resettlement efforts; w Forming a settlement team or resettlement committee to oversee and carry out the resettlement process; and w Identifying vulnerable groups within the affected people early on, with particular attention to how gender may affect participation.

The guide highlights common challenges faced in the process and provides good practice advice to overcome those difficulties.

These include: w Legislative Review: Local and national laws should be identified and adhered to, recognizing that they may provide insufficient protection for the most vulnerable groups, such as people lacking legal title to land. Companies must therefore also identify the areas in which local laws fail to meet the applicable standard (IFC Performance Standards, etc.) and attempt to “fill in the gaps.” To accomplish this, companies should retain experienced counsel including local practitioners where possible. w The Census: To identify which individuals and households qualify for resettlement benefits, companies must undertake a census of affected persons. The process for giving notice to residents of an upcoming census requires careful timing.

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repeated steps as the residents and economic prospects of a region change over time. Conducting a census too late may result in opportunistic individuals moving onto the land in order to obtain resettlement benefits. w The Socio-Economic Survey: Due to the uniqueness of each project and each group of affected people, no two socio-economic surveys will be exactly alike. The guide strongly recommends seeking the advice of experts, such as statisticians and accountants in preparing this document. Experts should be independent of stakeholders and, if possible, locals. w Asset Inventory and Valuation: Valuing affected peoples’ assets is one of the most difficult, yet most important steps in the resettlement process. Assets such as informal housing will be difficult to value using traditional calculations. The guide recommends clients consider using alternative valuation methods, like the cost of replacing the building materials and allow affected people to select their own valuators where practical.

Companies should rigorously document the land, including by way of aerial photography, to avoid attempts by opportunistic individuals to artificially increase their potential benefits. w Livelihood Restoration: One of the final steps in complying with good practice is to establish that the livelihoods of affected people have been restored post-resettlement. This is a very difficult and nuanced concept, but the guide suggests that it can be achieved through a combination of providing options to affected people at each step of the process and careful documentation of the client’s efforts and results. It is important to note that the concept of livelihood restoration encompasses more than mere economic restoration and must account for cultural and familial considerations.

Underlying each section of the guide is the importance of consultation with and respect for affected people. A number case studies included in the guide provide examples of projects where a lack of openness and consultation with affected people resulted in consequences for all parties. Major impediments to project completion and damage to the livelihoods of affected people can be avoided simply by obtaining the opinion of affected people and allowing them to take an active role in shaping their own resettlement process. The guide asserts that companies focusing on consultation and inclusion will find it much easier to satisfy good practice expectations and improve the chances that their resettlement effort will be successful.

CMJ MICHAEL TORRANCE is a lawyer with Norton Rose Fulbright, Toronto.

WWW.CANADIANMININGJOURNAL.COM

2017-06-01 5:19 PM

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2017-06-01 10:06 AM

UNEARTHING TRENDS

Turning reclaimed mines into renewable power sources

By Sean Gunton and Meghan Harris-Ngae

A

t the end of a mine’s operational life, mining companies face the challenge and cost of reclaiming the site. But unused sites don’t have to be a cost centre. In fact, there is opportunity to elevate a mine’s environmental status and generate revenue from old mines by using them for renewable energy generation.

Elevating your environmental reputation In addition to the cost and efficiency aspects of transforming reclaimed mines into power generators, being an innovation leader can give mining companies an advantage when it comes to knowledge and best practices during the construction of future projects. These types of projects can lead to an elevated environmental status for companies, and improved reputation can further the mining sector’s social licence to operate and reinforce public acceptance, helping to position miners as leaders in addressing energy issues.

Companies in energy intensive sectors are under pressure to prove they are taking steps to reduce their greenhouse gas emis38 |

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As mining projects move further into frontier markets, off-grid energy in close proximity to where it will be used typically means higher energy and cost efficiencies.

sions as the movement towards energy diversification increases.

Social pressure coupled with increased regulations at both the provincial and federal level mean tougher and more costly reclamation challenges.

There are many social and community benefits to these projects as well, such as jobs for local workers from construction to the operation and maintenance stages. For trade-exposed energy-producing communities who have felt the impact of low commodity prices and the closure of some types of mines, the opportunity represents a sustainable future as we look towards a lowercarbon energy future.

Converting a challenge into an opportunity By taking a strategic approach, mining companies can get the most out of old and reclaimed mine sites. From lowering operational costs, to improved reputational excellence, companies stand to benefit from generating renewable energy. Setting themselves apart from competitors and creating green solutions can lead the way to a sustainable and lower-cost mining future. CMJ SEAN GUNTON is a partner with EY Canada’s Transaction Advisory Services, MEGHAN HARRIS-NGAE is EY Canada’s Climate Change and Sustainability Services energy market leader.

Photos: shansekala, iStockimages.com

Turning costs into profits In Canada and the United States we have seen examples of closed and reclaimed mines transformed into solar and wind farms. They can feed power back into the grid, or even generate power for existing mining operations. Building solar farms on reclaimed mines in North America has shown signs of success, with operating and maintenance costs lower than expected.

Producing energy close to where it is consumed means less is lost through transmission. As mining projects move further into frontier markets, off-grid energy in close proximity to where it will be used typically means higher energy and cost efficiencies. Meanwhile, costs associated with some renewable energy sources have dropped dramatically in recent years, while reliability and effectiveness has increased. This makes renewables a perfect partner for traditional forms of energy and a lower-emission alternative.

Since not all geographies have weather conditions suitable for solar, the concept of exploring closed and reclaimed mine sites has been applied to other forms of energy conducive to the surrounding environment, such as wind.

Traditionally the costs of remediation are borne by the mining operator, but by turning that remediating space into a place where power generation can occur, operators can reduce the ongoing costs and even shift the reclaimed site to a profit centre.

WWW.CANADIANMININGJOURNAL.COM

2017-06-05 10:52 AM

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