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CONTENTS|CONTENU CIM MAGAZINE | SEPTEMBER/OCTOBER 2011 | SEPTEMBRE/OCTOBRE 2011

NEWS 14 16 18

Strength in numbers BC mining suppliers aim to take advantage of global economy by C. Crawshaw Not all are going with the flow Keystone XL and Enbridge pipelines spark controversy by V. Heffernan A metamorphosis for Caterpillar Caterpillar’s acquisition of Bucyrus International gives it the broadest product line in the industry by V. Heffernan

A helping hand The Red Cross thanks minerals

Number crunching the “soft” stuff New tool

industry leaders for their gift to Haiti by G. MacDonald brings financial language into community relations work by H. Ednie

A holistic approach to mining’s critical issues Doug Morrison has big hopes for modest funding by P. Braul

14 UPFRONT 26

Managing the work flow Calgary software firm helps oil companies manage time and costs

Social media and the extractive sector

by R. Andrews

Managing the risk and opportunity of online communications by C. Horvath

Truer grit The emerging market for faux moon dust blasts off by G. Lanktree

Deep freeze AMC is back, working on one of the most complex shaft-sinking projects in the world

The secret to longevity Manganese removal

by D. Zlotnikov

process extends the life of Scully Mine

by A. Lopez-

Pacheco

The earth moves for Caterpillar A Q&A with Caterpillar Global Mining Division’s vice-president of sales and marketing by R. Andrews

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4 | CIM Magazine | Vol. 6, No. 6

100

COLUMNS

42 FEATURE | ARTICLE VEDETTE

68 70 72 74 76 77 78 80 83 85 88 114

Supply Side by J. Baird MAC Economic Commentary by P. Stothart Standards by D. Elliott Metals Monitor by the staff of Metals Economics Group Eye on Business by J. Lewis Innovation by T. Hynes HR Outlook by L. Forcellini Safety by D. Laplonge Aboriginal Perspectives by A. Lopez-Pacheco Student Life by M. Tuters Mining Lore by C. Baldwin Voices from Industry by B. Anderson

CIM NEWS

ENERGY & INDUSTRY PLUGGING IN ÉNERGIE ET INDUSTRIE ÉTRE AU COURANT

The next big steps Industry leader Pat Dillon talks

Élever le M4S à un niveau supérieur M4S

Striving for balance Pierre Lassonde takes home

about upcoming “retirement” by H. B. George cible des groupes sous représentés dans l’industrie

The energy exchange How will Canadian energy producers transport resources to the

51 52 54 56

global marketplace? by D. Zlotnikov A question of balance Oil sands miners seek solid footing in a time of change by E. Moore Eyes on the oil sands The integrated environment monitoring plan by E. Moore The HR question New supply of workers needed to meet growing demands by P. Caulfield Industrial strength Metallurgical coal is gaining strength coast to coast by A. Lopez-Pacheco

Le marché de l’énergie Comment les producteurs canadiens d’énergie transporteront-ils

Une question d’équilibre Les exploitants des sables bitumineux cherchent à s’établir de

Qualité industrielle Entrepreneurs et exploitants de charbon métallurgique ciblent la

les ressources vers les marchés mondiaux?

95 96 97 98

CIM award for visionary efforts by H. Ednie Taking M4S to the next level CIM reaches out to industry by M. Eisner Invaluable experiences A once-in-a lifetime field trip inspires life path for young geologist by H. Ednie Bonds beyond borders CIM collaborates with international sister societies by N. Stubina The age-old debate A Q& A with Klaus Kacy on modern hoisting techniques by A. Lopez-Pacheco

pied ferme en ces temps changeants croissance

106 109

COMMODITY FOCUS 66

HISTORY

Burning ambition Natural gas has found a new life in the 21st century

The foundations of modern economic geology (Part 6) by R.J. Cathro Gold in Siberia: a historical essay by F. Habashi

IN EVERY ISSUE

by P. Braul

8 10 12 91 97 105 112

Editor’s message President’s notes / Mot du president LinkedIn comments Obituaries Calendar Welcoming new members Professional directory

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editor’s letter Hardwired to be plugged in he extent of our dependence on energy is most apparent when we are forced to do without it. All of us have attempted to turn on the lights in the depths of a power outage, admonished ourselves, then repeated the steps a short while later. Ironically, this energy-themed issue was laid out during a massive power outage, compliments of Hurricane Irene. A perpetually tight production schedule, summer holidays and the Labour Day long weekend left a very narrow window for producing the issue, so the folks at our terrific production company, Clò Communications, hooked up a gas-powered generator to help us make our deadlines. We were, of course, fortunate to have access to a “Plan B” — a luxury that may be harder to come by for many as the ravenous global appetite for energy resources becomes more and more difficult to satisfy. In what is surely CIM Magazine’s most expansive look at the Canadian energy resource sector to date, our feature, “Plugging in,” is comprised of three complete articles. In “The energy exchange,” Dan Zlotnikov takes a broad look at the logistical challenges faced by the energy sector as it attempts to effectively move enormous amounts of material every day to hungry markets south of the border and overseas. In “A question of balance,” Eavan Moore provides us with an overview of the economic, social and regulatory backdrop against which Canada’s oil sands producers are attempting to develop and expand their operations. Finally, the metallurgical coal sector’s attempt to keep pace with a global infrastructure boom and its enormous demand for steel is front and centre in Alexandra Lopez-Pacheco’s article, “Industrial strength.” On the heels of Caterpillar’s US$8.8 billion acquisition of Bucyrus International, the timing was ideal to chat with Christopher Curfman, Caterpillar Inc.’s vicepresident of sales and marketing, Global Mining Division, for our Q&A on page 40. Curfman discusses how this global leader is expanding its capacity to keep pace with the growing worldwide marketplace. This issue also contains vital details about a number of important conferences being hosted and co-hosted by CIM. The preliminary program for the Symposium 2011 on Mines and the Environment, to be held from November 6 to 9 in Rouyn-Noranda, Quebec, can be found on page 100. The list of plenary speakers and their topics for the joint CIM/SME Safety and Reliability Conference, to be held from October 11 to 13 in Calgary, Alberta, are available on page 75. Finally, be sure not to miss CIM president Chuck Edwards’ exciting announcement about a significant development for one of the Institute’s societies in the “President’s notes” on page 10. In closing, just a reminder that the suggestions and feedback we receive from you are an important fuel that powers CIM Magazine, so keep the emails coming!

Angela Hamlyn, Editor-in-chief

Keep the mail coming! editor 8 | CIM Magazine | Vol. 6, No. 6

@cim.org

Editor-in-chief Angela Hamlyn, editor@cim.org Section Editors News, Upfront and Features:

Ryan Bergen, rbergen@cim.org Columns, CIM News, Histories and Technical Section:

Andrea Nichiporuk, anichiporuk@cim.org Technical Editor Joan Tomiuk, jtomiuk@cim.org Publisher CIM Contributors Brad Anderson, Richard Andrews, Jon Baird, Correy Baldwin, Louise Blais-Leroux, Peter Braul, Hartley Butler George, R. J. Cathro, Peter Caulfield, Caitlin Crawshaw, Heather Ednie, Marlene Eisner, Dave Elliot, Lindsay Forcellini, Fathi Habashi, Virginia Heffernan, Tom Hynes, Celesa Horvath, Michel Laliberté, Graham Lanktree, Dean Laplonge, Josh Lewis, Alexandra Lopez-Pacheco, Greg McDonald, Eavan Moore, Staff of Metals Economics Group, Paul Stothart, Nathan Stubina, Michael Tuters, Dan Zlotnikov Published 8 times a year by CIM 1250 – 3500 de Maisonneuve Blvd. West Westmount, QC, H3Z 3C1 Tel.: 514.939.2710; Fax: 514.939.2714 www.cim.org; Email: magazine@cim.org Subscriptions Included in CIM membership ($150.00); Non-members (Canada), $168.00/yr (GST included; Quebec residents add $12.60 PST; NB, NF and NS residents add $20.80 HST); U.S. and other countries, US$180.00/yr; Single copies, $25.00. Advertising Sales Dovetail Communications Inc. 30 East Beaver Creek Rd., Ste. 202 Richmond Hill, Ontario L4B 1J2 Tel.: 905.886.6640; Fax: 905.886.6615 www.dvtail.com National Account Executives 905.886.6641 Janet Jeffery, jjeffery@dvtail.com, ext. 329 Neal Young, nyoung@dvtail.com, ext. 325

This month’s cover Operations at Cenovus’s Christina Lake project Courtesy of Cenovus Energy Layout and design by Clò Communications. www.clocommunications.com Copyright©2011. All rights reserved. ISSN 1718-4177. Publications Mail No. 09786. Postage paid at CPA Saint-Laurent, QC. Dépôt légal: Bibliothèque nationale du Québec. The Institute, as a body, is not responsible for statements made or opinions advanced either in articles or in any discussion appearing in its publications.

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president’s notes Repositioning CIM’s Environmental Society The Environmental Society of CIM was founded in 1998 to provide a forum for the exchange of knowledge and skills between environmental professionals in the mining, metallurgical and petroleum industries. In 2010, the CIM Council noted that the activities of this key society were waning and we decided to reinvigorate and revitalize it with an added focus on social responsibility. To accomplish this, a group of dedicated volunteers collaborated to complete a SWOT (strength, weakness, opportunities and threats) analysis and drafted a charter to better define the role and mandate of the society. At the CIM Council meeting held this past August, the establishment of the Environment and Social Responsibility Society (ESRS) was officially approved. The main objectives of the ESRS are: to improve the global relevance and presence of CIM in environmental management and social responsibility aspects related to mining; to encourage increased membership and participation in CIM activities; to inspire, encourage

and coordinate environmental and social responsibility activities within CIM and its societies; and to promote and disseminate environmental and social responsibility best practices. The ultimate goal is to position CIM as the national and international facilitator and “go-to” association for environmental management and social responsibility for the mining, metallurgy, materials and petroleum industries. The role of the expanded Society will include the facilitation of best management practices across the spectrum of CIM members’ environmental activities and social interactions – from a scientific and technological focus, through to that of social impact issues, social responsibility and Aboriginal/indigenous affairs. The latter will complement work being done at the Centre for Excellence in Corporate Social Responsibility, for which CIM serves as Secretariat. The ESRS will also encourage and facilitate communication between individuals and committees associated with other CIM societies, support the organization of appropriate technical sessions, and provide an interface for the exchange of ideas and cooperation in joint meetings and other ventures. This is a wonderful step ahead for CIM. I urge you to become an active member of the ESRS and contribute to the growth of our newest technical society. CIM Magazine will provide regular ESRS updates in future issues.

Chuck Edwards CIM President

Repositionnement de la Société de l’environnement de l’ICM La Société de l’environnement de l’ICM a été fondée en 1998 pour servir de cadre d’échange de connaissances et de compétences entre les professionnels de l’environnement des industries minière, métallurgique et pétrolière. En 2010, le conseil de l’ICM a noté que les activités de cette société de première importance étaient en déclin. Voilà pourquoi nous avons décidé de lui insuffler de la vigueur et du dynamisme en mettant davantage l’accent sur la responsabilité sociale. Dans ce but, un groupe de bénévoles dévoués a collaboré en vue de réaliser une analyse FFPM (forces, faiblesses, possibilités et menaces) et d’élaborer une charte visant à mieux définir le rôle et le mandat de la Société. Lors de la réunion du conseil de l’ICM tenue en août dernier, l’établissement de l’Environment and Social Responsibility Society (ESRS) (Société de l’environnement et de la responsabilité sociale (SERS)) a été officiellement approuvé. Les principaux objectifs de la SERS sont : accroître la pertinence et la présence de l’ICM à l’échelle mondiale en ce qui concerne la gestion environnementale et la responsabilité sociale dans le secteur minier; augmenter le nombre d’adhésions et encourager une participation accrue aux activités de l’ICM; inspirer, encourager et coordonner des activités axées sur l’environnement et la responsabilité sociale au sein de l’ICM et de ses sociétés; et promouvoir et transmettre des pratiques exemplaires en matière d’environnement et de responsabilité sociale. L’objectif ultime est de faire de l’ICM le facilitateur

10 | CIM Magazine | Vol. 6, No. 6

national et international et l’association par excellence en matière de gestion de l’environnement et de responsabilité sociale des industries des mines, des métaux, des matériaux et du pétrole. Le rôle de la Société élargie englobera la facilitation de pratiques de gestion exemplaires dans l’ensemble des activités environnementales et interactions sociales des membres de l’ICM – des points de vue scientifique et technologique, en passant par les enjeux liés aux effets sociaux, la responsabilité sociale et les questions autochtones. Ce dernier point viendra appuyer le travail accompli au Centre d’excellence de la responsabilité sociale des entreprises, pour lequel l’ICM sert de secrétariat. La SERS encouragera et facilitera également la communication entre les personnes et les comités associés à d’autres sociétés de l’ICM, appuiera l’organisation de séances spécialisées pertinentes et fournira une interface pour l’échange d’idées et la collaboration dans le cadre de réunions conjointes et d’autres initiatives. Il s’agit d’un formidable pas en avant pour l’ICM. Je vous encourage vivement à devenir un membre actif de la SERS et ainsi prendre part à la croissance de notre plus jeune société technique. Des nouvelles concernant la SERS seront régulièrement publiées dans les futurs numéros de CIM Magazine. Chuck Edwards Président de l’ICM

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CIM’s LinkedIn group provides enlightening feedback CIM currently boasts over 2,000 members on LinkedIn. Join us today and get involved in the compelling dialogue. Below are a few of the myriad LinkedIn comments received daily in response to CIM Magazine’s editorial topics.

When things go wrong, how can mining companies make it right? Grievance mechanism key to building good minecommunity relations: June/July 2011, Vol. 6, No. 4, p. 22 I think it’s very important to start your community consultations as early as possible, even before you start exploration in the area. The mines that are the most successful are ones that start with a sustainability plan from day one and consider the mine’s impact socially, environmentally and financially ... This process must start very early, as in some cultures, it can take years to build relationships with the local stakeholders. I’ve seen too many companies hold a series of meetings with the local community over three months and think, “That’s it – community consultations done ... next!” That just doesn’t work ... you need to invest a lot of time and have continuity in relationships. In many cases, a new mine in a region will radically change the lives of the stakeholders, so you need to spend the time upfront making the case for a net benefit to the local people. Otherwise, they will see it as a big company coming in, sucking the resources dry and making lots of money while the locals suffer. Zachary Brown, hsE Manager, BhP Billiton, London, united kingdom

Putting it in the context of Africa, where more often than not there is a wide disconnect between officialdom and the local communities, licenses are granted normally without the knowledge of the communities (these are mostly highly deprived of basic social amenities like access to roads, health, water, etc). This lack of provisions generates negative sentiments within the population and tends to be directed towards the mining company ... For the mining company thus to succeed, it has to work hard to erode the perception of being in bed with the government to deprive them of their livelihood and rather [strive to be seen as] an agent of change. This is where most mining companies get it wrong. Cultural diversity and mutual respect should substitute legality and logic. Each geographical location has its own risks and opportunities, and the one who commits effort in working on social license becomes the winner. Alex Hagan, Geology Manager, Avocet Mining Pty (sMB), Burkina Faso, Africa

I like Alex’s comment on companies being agents of change and I would go even further to have them understand they can be agents of preservation as well ... Companies need to understand a commu-

nity also wants to preserve its identity and way of life and must see how mining can help or prevent this goal ... As well, it is important to first understand who you are dealing with: what is their history, their relation to the land, their fears, but also their hopes and aspirations. I have sat on both sides (First Nations and industry) in mining projects and so often find that companies rely on third parties (legal counsel, etc.) rather than making the effort to know communities. It is first and foremost a trust issue...when problems arise, the chances of people working to solve them together increases. If not, then the blame game starts and it’s a tiring and long-term effort to rebuild trust ... We should never underestimate the need for a community to properly understand our actions. The worst thing we can do is be dismissive about concerns and tell them there is no risk. Communities have often been dealing with the negative effects of “no risks” for generations and still associate today’s actions with yesterday’s legacies ... I don’t think there is a unique recipe but there are key ingredients, namely, respect, patience, transparency and acceptance. I have found too often, sustainable development [companies] come in thinking they know what a community needs. That is the biggest mistake you can start off with. Andy Baribeau, Management Consultant, Aboriginal Affairs, Quebec

What to do when a workplace injury occurs? What to do when a workplace injury occurs: June/July 2011, Vol. 6, No. 4, p. 52 I agree that the goal of any investigation should be to determine the root cause of the accident and determine if there are reasonable ways to prevent a reoccurrence. I believe in the philosophy of zero harm but don’t believe it is possible [to achieve] over a long period of time. All activities have risk. It’s our job to reduce that level of risk and exposure to risk as much as is reasonably possible. I’ve seen many knee jerk reactions to accidents, such as someone gets hurt using a pry bar, so the solution is to ban pry bars. The tool used is not necessarily the root cause, perhaps proper training is needed or engineering controls to eliminate the situation that necessitated using the tool? Without true root cause analysis, the same situation will very likely reoccur. Dave Felsher, Chief Mineral Processing Engineer, Lakeshore Gold, Ontario

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news Strength in numbers BC mining suppliers aim to take advantage of global economy

With British Columbia’s forestry industry waning, many are looking to the mining sector to fill in the economic gaps. Fortunately, global trends favour a major comeback in the mining industry, particularly the high price of gold and Asia’s growing appetite for fossil fuels. In the last few years, a handful of new mines have opened in BC and some decommissioned mines have been revitalized. “I would call it the early tremblings of a boom,” said Kevin McCormack, BC mining product manager at A.J. Forsyth. The 102-year-old company, a Canadian subsidiary of Russel Metals Inc., is banking on a mining resurgence. Based in Prince George, British Columbia, the company makes metal products for manufacturers of heavy equipment. Five years ago, management opted to move away from forestry and towards mining. “Being in BC, the forest industry was everything for years and years,” explained McCormack. “We could see the forestry industry slowing down,

14 | CIM Magazine | Vol. 6, No. 6

Courtesy of SMS Equipment Inc.

By Caitlin Crawshaw

Patty Moore, chair of MSABC, hopes that new mining operations in BC such as the Copper Mountain Mine (above) will be catalysts for growth in the mining supply sector, and inspire its members to become more active in promoting the minerals industry.

and at the same time, we saw that mining was having a resurgence.” To connect with the industry and help with efforts to open more mines in the province, in 2006, A.J. Forsyth

joined the Mining Suppliers Association of British Columbia (MSABC). Formed in 1986, MSABC is a non-profit association affiliated with the Mining Association of British Columbia

news (MABC) comprised of suppliers, contractors and consultants that endeavor to raise the profile of the mining industry and promote the development of a sustainable mining industry in BC. To that end, it frequently partners with MABC to lobby government for the creation of new mines and to change public perceptions through initiatives like BC Mining Week and Mining for Miracles, a fundraising effort for BC Children’s Hospital. Even though a few new mines have opened in recent years, MSABC chair Patty Moore noted that there are plenty of barriers standing in the way of industry growth, including the public’s perception of mining. “We have to convince the public at large of the importance of mining for them to understand and perhaps not be so judgmental,” she said. “Mining today is a whole different ball game than it was 100 years ago. Companies take sustainability and the environment very seriously.” She pointed out that both MSABC and MABC are involved with the Mining Association of Canada’s Toward Sustainable Mining initiative, which works to promote more sustainable practices in the mining and mineral processing industry. Moore feels that collaboration is crucial to strengthening MABC and the industry as a whole. “My vision is to continue to work closely with MABC and other associations such as AME BC [Association of Mineral Exploration BC] to further advance this vital industry,” she said. “To that end, I would like to see our membership at least double in the next few years. Through our close to 200 member companies, we already represent about 25,000 employees throughout the province, which is a significant supporting voice for our industry. You can just imagine the impact we would have if we could double that amount. The potential is definitely there to do so.” The strength that comes from a unified vision will be vital, as Canadian suppliers increasingly look outside our borders for new and

developing markets. A case in point is Knelson, based in Langley, British Columbia, which manufacturers equipment for mines around the world. Currently, its biggest and fastest growing market is Russia, but China and other Asian countries are also buying the company’s products. British Columbia represents only five to 10 per cent of Knelson’s equipment sales, and Canada represents about 15 to 20 per cent, explained Doug Corsan, the company’s vicepresident, international sales. Of course, this could change. “We’ve seen a real surge of the number of exploration projects that have been active,” he said. Unfortunately, the soaring Canadian dollar and high cost of manufacturing in BC have proven challenging. Government regulations have also created barriers for growth. “I’m not saying it’s necessarily wrong that we have these regulations, but an investment dollar will go where it thinks it can get the best return,” said

Corsan. He noted that it can be hard to attract investors to mining projects that can take 10 years to come to fruition. Miscommunication between government departments can sometimes further slow down the process. “You’ve got four or five government bodies that are involved at various stages of development and they don’t seem coordinated,” Corson said. McCormack agrees that the processes can be slow, but he is optimistic this will change. “I know the MSABC is working hard with the government to come up with ideas to streamline the process,” he said. For all the challenges ahead, McCormack is convinced that BC’s mining industry is on the verge of a major growth period. “I think the demand is going to stay strong in Asia and as long as that happens, you’re going to see new mines in BC,” he explained. “The conditions are right for new mines – we just have to get through the processes.” CIM

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September/October 2011 | 15

news Not all are going with the flow Update on Keystone XL and Northern Gateway pipelines By Virginia Heffernan

Courtesy of TransCanada Corp.

The controversy over transporting crude from Alberta’s oil sands is becoming increasingly complex as awareness of the potential environmental, political and safety consequences of building new pipelines grows. In the United States, the spotlight rests on TransCanada Corp.’s Keystone XL, a $7 billion pipeline that would carry up to 900,000 barrels of crude per day from Alberta to refineries on the Gulf Coast of Texas. The U.S. State Department will decide whether or not it will approve the project in November, after issuing a final environmental impact statement. In Canada, Enbridge plans to build a dual pipeline running The Keystone XL pipeline would significantly expand the capacity of the existing Keystone system which carries nearly half a million barrels per day of Canadian crude oil to refineries in the central United States. from the oil sands to the coast at Kitimat, British Columbia, that would carry crude oil westbound for XL proposal has sparked “a massive Keystone XL), there is increasing export to China and California, and debate” in the United States on concern about spills and accidents on natural gas condensate eastbound. The whether the country should increase both sides of the border, particularly 1,170-kilometer, $5.5 billion Northern its dependency on oil, particularly oil because the crude from the oil sands Gateway pipeline proposal is undergothat is a major source of carbon emisis inherently more corrosive than ing a lengthy public regulatory sions. In Canada, the strongest other types of crude. “The pipeline process. resistance is coming from First safety concern is a new and emerging Although each would create thouNations groups because Northern issue that started in the U.S.,” said sands of jobs, millions of dollars in tax Gateway would cross much of their Droitsch, “and I'm sure you’ll start to revenues and billions of dollars of ecotraditional land and threatens to dishear similar concerns around the nomic stimulus, both pipelines face rupt wildlife habitats. Gateway pipeline.” strong opposition. According to After a few significant spills from Both TransCanada and Enbridge Danielle Droitsch, director of U.S. polpipelines over the past year (includ- say that they have taken extensive icy, Pembina Institute, the Keystone ing from Keystone, the precursor to measures to minimize the risk of spills and mitigate potential impacts. They emphasize the benefits of their projects, including reduced dependency PIPELINE KEYSTONE XL NORTHERN GATEWAY on politically unstable countries in the Owner TransCanada Corp. Enbridge Inc. Middle East. “Keystone will create 20,000 jobs in Destination Gulf of Mexico BC Coast the U.S. and Canada, but mostly in the Length (km) 2,673 1,172 U.S., and inject $20 billion into the Capacity (bpd) 900,000 525,000 U.S. economy,” said Terry Cunha, team leader of TransCanada’s commuCost (C$ bn) 7 5.5 nications and media relations Decision to proceed November 2011 Mid-to-late 2013 department. “It will reduce the import of crude from Libya and the rest of the 16 | CIM Magazine | Vol. 6, No. 6

news Middle East by 40 per cent.” And the U.S. may need the supply. The Supplemental Draft of the Environmental Impact Statement (SDEIS) said that without Keystone XL, Gulf of Mexico refineries will face a shortage of crude in both the short- and long-term, as supply from traditional sources in Mexico and Venezuela dwindles – a gap that would otherwise be filled with oil from the Middle East. Other critics argue that TransCanada has disregarded environmental concerns by choosing the shortest route, one that would take the pipeline through a large wetland ecosystem in the Sandhills in Nebraska and through the Ogallala Aquifer, a significant freshwater reserve. “The route we’re taking is the shortest, but it also has the least amount of impact when it comes to the number of landowners, wildlife and the number of water bodies, plus a variety of other environmental considerations,” said Cunha. Whereas TransCanada is wrapping up the regulatory review of Keystone XL, Enbridge is at a relatively early stage in the process, with a Joint Review Panel decision at least two years away. Meanwhile, several environmental and First Nations groups are voicing their opposition to Northern Gateway, most recently, 35 Dene chiefs from Alberta and Canada’s North. “But they are far from a majority of stakeholders along the proposed right of way,” claimed Paul Stanway, communications manager, Enbridge Northern Gateway Pipelines. The company has promised to support Aboriginal businesses in the regions affected by the pipeline, hire Aboriginal workers and give First Nations groups a 10 per cent equity stake in the pipeline, but only a few groups have accepted the benefits package so far. “First Nation’s opposition to Gateway could potentially create a barrier to the development of this pipeline – enough to stop it,” said Droitsch. “That’s because the First Nations have a considerable amount of power, especially in BC, where they have not yet resolved their land claims.” CIM

Team effort on northern pipelines By Virginia Heffernan The federal government is teaming up with Alberta’s two main universities to research emerging technologies in pipeline materials science, particularly for pipelines that will pass through northern Canada. The research agreement between CANMET, the University of Calgary and the University of Alberta will give professors of materials science adjunct scientist status at CANMET’s new Materials Technology Laboratory (MTL) in Hamilton, while CANMET scientists will have reciprocal professor status at the two western campuses. “The goal is to strengthen the working relationship between CANMET-MTL staff and researchers at both the University of Calgary and the University of Alberta,” said Ron Hugo, head of the department of mechanical and manufacturing engineering, Schulich School of Engineering, University of Calgary. “The projects will be of a nature that will assist Canada's industry with the design, construction and operation of pipelines within Canada,” he explained. The researchers will focus on pipelines proposed for the North where more extreme environmental conditions exist, such as the proposed Mackenzie Valley pipeline that would transport natural gas from the Beaufort Sea through the Northwest Territories to hook up with gas pipelines in northern Alberta. Although the scientists are still developing their research questions under the collaboration, Hugo said they will be looking at some of the challenges of building and maintaining northern pipelines. This includes factors such as the temperature effects caused by thermal expansion, or pipeline settling in areas where warmer fluids in the pipeline can thaw the permafrost. Potential research areas could include studying the impacts of thermal expansion or variable settling on the operating characteristics of the pipeline, including the behaviour of welds, the performance of external protective liners and the amount of bending strain in the pipeline.

September/October 2011 | 17

news A metamorphosis for Caterpillar Acquisition of Bucyrus one element of a larger aggressive growth strategy By Virginia Heffernan

Courtesy of Caterpillar

Growing demand for commodities has convinced Caterpillar to sink several billion dollars into the mining industry to secure its place as the supplier of choice to mines around the world. The company’s recently completed US$8.8 billion acquisition of Milwaukee-based Bucyrus International gives Caterpillar Global Mining the broadest product line in the industry; it will invest another $5 billion to upgrade plants and develop products to cover the gamut of underground and surface equipment, including drills, trucks, drag lines and haulers. “We’ve been trying to get to this point for the past five years, but we were a big fish in a little pond,” vice-president of sales and support Chris Curfman told members of the global mining press A dragline under construction at Caterpillar’s Milwaukee facility, one of the many assets the company acquired with its purchase of Bucyrus. gathered at Caterpillar’s new division headquarters in Milwaukee in August. Before the Bucyrus mining equipment, and leveraging its Australia. The same markets may also acquisition, Caterpillar products repreputation for exceptional product be receptive to Caterpillar’s highwall resented just 23 per cent of the mining support. “It was our mining cusminers that have the ability to link surequipment field. Now mining operatomers that asked us to do this,” said face and underground operations, but tions will become “a sea of yellow,” Steven Wunning, president of the are currently used almost exclusively global mining division. “They want at operations in the U.S. he said. fewer larger suppliers to share in the Perhaps the biggest challenge for Initially, Caterpillar planned a slow Caterpillar will be to build market integration of the Bucyrus brand with business risk.” The hardest nut to crack will be the share in hard rock mining systems Caterpillar over a three-year period, but several customers requested an underground mining market, where that require LHD vehicles and jumbo instant rebrand. So from now on, all Joy Global and Sandvik dominate. In drills, not traditional strengths for a supplier dominant in the coal sector. this sector, Caterpillar sees opportuBucyrus equipment will sport Caterpillar’s distinctive yellow paint and nity in where the government is “Hard rock is an area that both Cat aiming to consolidate about 25,000 and Bucyrus have played with but Cat logo. It is too early to judge how the smaller mines into 4,000 much larger now, with all of our different products, our dealers and our financial Bucyrus acquisition will affect other operations by 2013. strength, we will be investing in this Currently, Caterpillar’s room-andmine suppliers such as Atlas Copco, area and we will be a much stronger pillar mining systems are used by Joy Global and Komatsu, but Caterpilplayer in the next few years,” said lar is aiming to at least double its seven of the top 10 coal producers in Luis de Leon, vice-president of the market share over the next few years the United States, but the company mining products division. by providing a one-stop shop for all sees future growth in India, Russia and 18 | CIM Magazine | Vol. 6, No. 6

news The company is already making improvements to the AD55 ore haul-out vehicle and the R1600 underground mining loader, and plans to launch a new underground loader in the fourth quarter of 2012. Another new underground product designed to provide automated continuous flow at block caving operations, resulting in lower costs and reduced need for diesel engines, will have its commercial debut at a copper mine in Chile in 2013. An indication of Caterpillar’s strength in surface mining is its fleet of 10,000 mining trucks, a milestone reached just this year. And unless there is a major correction in the world economy, that number could reach 15,000 in the next few years as Caterpillar taps into unrealized potential outside of its traditional markets in North America and Australia and spends $600 million on plant expansions.

Executives from four separate dealers, including Caterpillar Finning Canada, were on hand in Milwaukee to comment on the Bucyrus acquisition and explain what it will mean for their businesses. “This is a huge win for us,” said Dave Parker, president of Finning Canada. “It instantly gives us a new line of products that we’ve been missing.” Finning is a major supplier to

companies mining the oil sands in Alberta, where Bucyrus has facilities in Edmonton and Fort McMurray. Carter Machinery CEO Jim Parker called the deal a “game changer” for his company, which supplies coal operations in Virginia. “A lot of our companies are moving underground because of permitting challenges and they are looking for product support,” he said. “The Cat system will provide it.” CIM

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September/October 2011 | 19

A helping hand By Greg MacDonald

Making your world secure

Courtesy of the PDAC

Draw on our expertise Scattered on the table before Saley Lawton and Ed Thompson are the hundreds of business cards that attendees used to write their pledges of support to the Red Cross.

Contact me for more information: Cy King Email: cking@garda.ca T: 780.791.7087

20 | CIM Magazine | Vol. 6, No. 6

Top Canadian Red Cross officials gathered in Toronto on August 19, 2011, to thank leaders of the Canadian minerals industry for giving almost $1 million to support relief efforts in Haiti. “I have often said one person can make a difference” said Ron Kalusky, director general of the Canadian Red Cross. “We’re here today to celebrate what a group of people can do. Thank you for making a difference in Haiti.” In January 2010, leaders of the mining industry opened their wallets at the Canadian Mining Hall of Fame (CMHF) Induction Banquet – the day after the devastating earthquake hit Haiti – to support Red Cross relief efforts in that country. The catastrophic earthquake killed an estimated 220,000 people and left more than a million people homeless. The CMHF dinner was the single largest fundraising event for Haiti in Ontario. The Red Cross gave distinct recognition to Saley Lawton, former director of communications with the Prospectors & Developers Association of Canada (PDAC), and Ed Thompson, treasurer of the Canadian Mining Hall of Fame and PDAC awards committee chair, for spearheading the fundraising effort. Both received the Red Cross’s distinguished Partners in Humanity award. “I’ve worked in the mining industry for 25 years and I’ve seen first-hand how willing mining people are to help,” said Lawton, who retired from PDAC in June. Thompson agreed with Lawton’s assessment. “We [miners] endeavour to improve the lives of those who live close to our operations the same way the Red Cross does,” he said. Lawton said that she and Thompson made their fundraising appeal “the simple way.” They asked master of ceremonies Pierre Lassonde to rally the crowd to help Haiti and then received 200 business cards with pledges written on the back. Lawton then followed up and said “everyone came through.” “Sometime between the soup and dessert we raised $900,000,” said Thompson. CIM

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news Number crunching the “soft” stuff Tool means greater rigour for sustainability investment planning By Heather Ednie The integration of community relations and sustainability initiatives into the development plans of mining operations has become nearly standard industry practice. Although few can doubt the positive social and environmental impact of these programs, determining the return on these investments has remained largely elusive. A new tool developed for mining, oil and gas operations aims to change that. The Financial Valuation Tool for Sustainability Investments (FV Tool) was developed to measure the financial contribution – positive or negative – of a sustainability/community initiative to the value of an extractive project. “We always have to put forward a budget

for community or sustainability investments, but often, it’s virtually pulled out of the hat,” said Claude Perras, director of community relations in global practice at Rio Tinto. “There’s a lack of proper rigour to the process. This tool brings that rigour. By bringing financial language into community relations work, we’re equipped to defend the budget rationale, demonstrating the value of our investments.” The tool is the result of the collaborative efforts of the International Finance Corporation (IFC), Rio Tinto and Deloitte, with support from IFC’s Oil, Gas and Mining Sustainable Community Development Fund (CommDev), the Multilateral Invest-

Simple messaging solution By Heather Ednie Cairn Energy piloted the FV Tool in 2010 at its Rajasthan project in India, which features a 670-kilometre-long export pipeline that is set to become the world’s longest continuously heated and insulated pipeline. The tool successfully demonstrated the positive return of various sustainability investments at the project. The Cairn Farmer SMS Program, in partnership with Reuters, involved equipping 10,000 farming families along the pipeline with SMS chips for their mobile phones. Farmers were able to access information about market prices, weather conditions, etc. that would enable them to increase productivity and income. Farmers, inspired by good relations with the company, informed them about any issues involving the pipeline, such as leaks or sabotage. As a result, Cairn could react immediately and avoid major damage and repairs, saving costs to the company. Additionally, the phones could be used for direct communications with the farmers via text messaging to help resolve complicated logistical challenges faced in widespread rural regions. Cairn’s FV Tool pilot demonstrated that the sustainability investments offered not only value creation for the farmers – as they were able to make more informed decisions – but also a number of indirect value protection elements for the company as well. For example, five cases of pipeline security issues were reported by farmers, enabling Cairn to respond early and avoid damages that could stop crude flow. In one such case, a one-day shutdown that would have cost the company millions was avoided.

22 | CIM Magazine | Vol. 6, No. 6

ment Guarantee Agency of the World Bank Group (MIGA) and the Norwegian Ministry of Foreign Affairs. As well, Newmont Mining and Cairn Energy have participated in testing the tool. “Using this tool helps internal stakeholders within companies prioritize what they are funding and why,” said Veronica Nyhan Jones, social development specialist in the Sustainable Business Advisory of IFC. “The process helps build relationships across an operation and ensures that community perceptions of benefit are factored into decision-making, which only strengthens relationships with external stakeholders.” The FV Tool helps decision-makers choose the best portfolio of sustainability investments and gives them a clearer idea of how much of a return those investments will bring. The desktop software quantifies two dimensions of the financial value of an initiative: value creation, also known as the traditional cost and benefit analysis, and value protection, the amount of sustainability-related operational risk (e.g. delays in construction, disruption in production, etc.) that is mitigated by the sustainability/community initiative. “The quality of the results is of course highly dependent on the quality of the input data,” explained Vincent Blais, manager of global commodity transacting and risk management at Deloitte. “Some of the input information is based on the consensus of working groups. It is therefore important that experts on the ground across different functions are involved in this process. Given their deep knowledge of the project, their contribution to defining and refining the cost, benefit and risk estimates is expected to be significant.”

news According to Blais, to generate a valuation of sustainability investments, the user needs to go through the following steps: • Gather relevant project data and information. Examples would include projected revenues and cost over the life of the project, and the start and end of project phases (construction, production, etc). • Identify sustainability/community operational risks that could potentially impact the financial value of the project. These risks need to be modelled, and the user will be asked to enter the likelihood (annualized rate of occurrence) and magnitude (one time or recurring costs, lost revenues) estimates. • Design sustainability/community interventions to mitigate some of these risks. The direct costs and benefits of these interventions need to be entered in the FV Tool. • Interpret and understand the Monte Carlo simulation results. The FV Tool generates a cost and benefit analysis of the sustainability/community portfolio and an NPV report enabling the users to understand which risk impacts projected project cash flows, when and by how much. The application provides a smart platform for entering all pertinent information into the equation. However, the process of generating the necessary data is significant, requiring a third party-moderated exercise. Aside from Deloitte, IFC will be training implementers and a small group of consultants that will be able to offer instruction to companies and organizations that want to apply the tool. At Newmont, the experience of utilizing the tool at its operations in Ghana has been so positive that the company is planning a major training program to equip facilitators and engrain the process throughout its Ghanaian operations – and potentially across Newmont operations worldwide.

“The FV tool helps establish an understandable business case and a common business language around community investment,” said Nicholas Cotts, regional vice-president and director of environment and social responsibility with Newmont Ghana. “Integrating the use of the tool into the business planning process will require a shift in culture within the overall business. Not only will the social responsibility team need to understand how selected community investments link to managing business risk or creating business value, but the operations and finance teams will need to understand those linkages as well. This is a step change in the business – a change that will help bring down the silos and facilitate cross-functional engagement.” Currently, a more formal process for utilizing the FV Tool is under development, aimed at easing the

learning curve for companies beginning to employ the tool and process at their sites. Meanwhile, the tool is available online, having gone through formal quality assurance testing by Deloitte and the other partners. IFC and Deloitte are presently helping to apply it at Rio Tinto’s Oyu Tolgoi project in Mongolia. “The pilots have demonstrated that the whole process of getting to the end results, which includes data acquisition and internal discussions, is as valuable as the actual valuation results,” said Isabelle Gagnon, manager of the Sustainability and Climate Change Group at Deloitte. “It was designed to facilitate decision-making and to be used in a dynamic manner” she explained. “It helps you test different possible impacts of risk on your projects, to trigger interesting discussions. It’s a decision-making support tool, not a magic number.” CIM

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September/October 2011 | 23

news A holistic approach to mining’s critical issues Mining research chair takes aim at the future By Peter Braul

Courtesy of CEMI

What would you do with $823,000? In the mining world, that is not generally considered a lot of money, but Doug Morrison has big hopes for the funding he will receive as the new research chair for holistic mining practices at the Centre for Excellence in Mining Innovation (CEMI) in Sudbury. Holistic mining practices, said Morrison, are those that pay Doug Morrison attention to “small projects that will all link together to make a much more sustainable solution possible.” He hopes that the research chair will “act as an incubator” that provides a bit of seed funding to determine if an under-researched area could become a major project a few years down the road. Sudbury MPP Rick Bartolucci announced in July that the provincial government would provide the funding to CEMI in hopes of finding new ways to “capitalize on our mining knowledge,” and to foster innovation in the long term. The

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24 | CIM Magazine | Vol. 6, No. 6

funding was provided through the Northern Ontario Heritage Fund Corporation, under its Emerging Technology program. Morrison has already begun collaborating with researchers at universities across Canada and around the world, and climate change has emerged as one of the most important focal points. “Once the mines recognize that there is a critical issue, we need to be coming up with solutions relatively quickly,” said Morrison. There is much work to do, as climate change-related issues have already begun affecting mines worldwide. For example, in Northern Ontario, there has not been enough snowmelt this year to suppress the dust in the tailings areas. Conversely, unprecedented flooding is affecting other mining regions accustomed to drought. The research chair will be re-evaluated in five years, and Morrison hopes to know by then if his approach yields results. He admits not all of the projects are expected to have dramatic impact. “If it’s a research project, in some cases we’re going to invest in [something] that doesn’t turn out to be a success,” he said. On the other hand, if just one mine’s problems are solved in advance, a little foresight could prove invaluable. CIM

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Uniting technology, products, services

upfront TECHNOLOGY by Richard Andrews

Managing the workflow Calgary software firm helps oil companies cut time and costs

Courtesy of Resource Energy Solutions

manage data for the entire life cycle of a well – from its geology, construction and drilling through to completion and land reclamation. Wellman was developed more than 15 years ago in response to an industry demand for a more efficient, cost-effective solution to store and synchronize data. “Wellman was designed to do something about the frustration in the marketplace over reporting systems that lacked ease, integration, quality and consistency,” says Marx. “Our software is now used to track and manage thousands of field reports each month from supervisors managing projects worth hundreds of millions of dollars.” According to Marx, Wellman has turned out to be “the right product at the right time” and it works with other RES products specially designed for the extraction industries. These Resource Energy Solutions software allows field supervisors to provide up-to-date accurate information products include Authorization for Expendithat can be readily accessed by management at the head office. ture (AFE), which complements Wellman’s functions with budgeting and internal controls perators cannot afford to let delays and missed dead- over capital spending. lines slow production down. However, keeping a dynamic project with countless interconnected ele- Keeping an eye on the bottom line ments moving forward is a complex challenge. It is AFE was designed to increase efficiency and accountabilone that Resource Energy Solutions (RES) has taken on, and ity by enabling managers to track, document, approve and the Calgary-based IT/software company is intent on chang- compare every budgeted, estimated and actual project ing the face of financial and project management for the oil, expense. “One big advantage of the system is that it autogas and mining industries. matically alerts decision-makers to the status of any outSince buying the small company in 2006, president and standing authorizations for expenditures and identifies the CEO Trent Marx has been selling his suite of software prod- location of any holdups or bottlenecks,” says Marx. “You ucts to some of the world’s leading mining and energy can’t do that with spreadsheets.” groups. Clients include BHP Billiton, Potash Corporation, So, how does AFE work in practical terms? At the end of K+S Aktiengesellschaft, Oilsands Quest, PetroBakken the shift, field supervisors send the daily project details back Energy, TransCanada, Pace Oil & Gas and Tundra Oil & to the central office, which immediately sees the reports. Gas. They are all using RES software to track project activi- The daily report populates a weekly report, showing project ties, monitor costs and improve field reporting, while progress, commentary and accumulated costs, day by day enhancing accountability and workflow. and week by week. Most recently, the company was awarded a large contract Documents from the field or those stored in the organizawith BPMIGAS, Indonesia’s state-controlled oil and gas com- tion’s shared network drive can be aggregated with the pany. RES is developing a customized workflow, budgeting, reports, providing decision-makers with one centralized planning and financial reporting system to help the nation location for all project information. The system electronitrack one of its primary revenue sources. cally forwards the relevant documents, data and estimates through the authorization hierarchy for final approval. Right place, right time “Our software also provides better fiscal accountability The company’s flagship product, Wellman, began as a and tremendous savings in audit costs,” says Marx. “One simple field reporting tool used by a few small companies. client told me Wellman had saved him a million dollars in It has since evolved into a comprehensive system that compliance fees, because he could quickly access all the relenables field workers and office staff to track costs and evant documents in one central location.”

26 | CIM Magazine | Vol. 6, No. 6

upfront TECHNOLOGY

Drilling data at your fingertips Other clients also report that RES products have saved time and money. For example, Oilsands Quest has used Wellman for three years to standardize drilling data from the field. â&#x20AC;&#x153;We have multiple rigs east of Fort McMurray, each with a supervisor filing a daily report,â&#x20AC;? says Simon Raven, vice-president of exploration and development at Oilsands Quest. â&#x20AC;&#x153;When you have lots of people involved in fairly complicated projects and different services, anything you can do to streamline that information flow definitely makes life easier.â&#x20AC;? The Alberta-based company hires a variety of drilling consultants for different projects and found that it needed greater consistency and continuity of different data. â&#x20AC;&#x153;If I have hundreds of thousands of records and I want to query later how many wells were drilled between this date and that date, how many wells reported drilling problems and what they were, you canâ&#x20AC;&#x2122;t do that on Excel,â&#x20AC;? says Raven. Time savings and the ability to recognize trends in performance also attracted Tundra Oil & Gas to Wellman. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re a growing organization, and Wellman gives us a userfriendly tool to compile information across any number of projects and to identify opportunities for improvement much quicker than in the past,â&#x20AC;? says Eric Bjornsson, manager of drilling and completions, Tundra Oil & Gas. â&#x20AC;&#x153;We have very active field development going on with six drilling rigs and nine service rigs in southwest Manitoba, all

of which have to fill out a report every day,â&#x20AC;? explains Bjornsson. â&#x20AC;&#x153;With Wellman, those reports are distributed electronically throughout our offices and it saves just a ton of time trying to access all this information.â&#x20AC;? The visual format of RES software is also important to companies such as Tundra. â&#x20AC;&#x153;What the guys see on their screen is the same form that someone else is going to see,â&#x20AC;? says Bjornsson. â&#x20AC;&#x153;You donâ&#x20AC;&#x2122;t have to go into a cryptic database and input information in one area and then flip back and forth between multiple screens to see what thatâ&#x20AC;&#x2122;s going to look like in a report. What you see is what you get.â&#x20AC;?

Untapped potential Marx contends that any oil, gas or mining company that spends over $20 to $30 million a year in drilling and other operations should adopt RES software to help manage their operations. He believes those levels of financial activity can no longer be tracked with spreadsheets because the industry has become too complex and the stakes are too high. Marx cites a recent study from the Canadian Energy Research Institute that estimates that $2.077 trillion will be invested in the oil sands over the next 25 years.â&#x20AC;&#x153;New information, development and production technologies will be vital to manage this spending,â&#x20AC;? he explains. â&#x20AC;&#x153;We intend to become a global leader in those technologies.â&#x20AC;? CIM

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September/October 2011 | 27

upfront S U S TA I N A B I L I T Y by C e l e s a H o r va th

Social media and the extractive sector The changing currency of a modern license to operate landscape with disproportionate credibility and trust, due in part to their perceived authenticity. Social networks are typically constructed around existing trust relationships. Moreover, social media allows users to self-organize quickly into communities with shared interests. Trust, which usually takes a great deal of time to build in a traditional engagement, can also be generated very quickly within that online community. That trust creates potential for collaboration and action much more quickly than would be possible among strangers or through a traditional engagement. At the same time, there is very low tolerance among social media users for inauthentic behaviour, whether it comprises inappropriate data mining, breach of privacy or attempts at “Companies that do not engage in dialogue in social media are increasingly conspicuous in their absence.” message control. Unlike traditional media, a company no longer dominates the messaging around its brand on social media. The vast majority of social anadian mining companies generally have a lot of media content is user-generated, and any attempt to censor or experience in stakeholder engagement, but for some stifle user content is likely to be met with distrust and suspireason – perhaps fear of losing control of the message cion, at best, and a significant backlash, at worst. or concern about getting offside securities regulaThe scope and norms of the social web that I have tions – their use of social media to complement traditional described – openness, trust, authenticity – are causing a shift engagement methods has, by and large, lagged behind. This in the way in which we build and maintain social capital: the gap threatens to undermine the credibility of corporate currency of a modern licence to operate. Stakeholders now stakeholder engagement efforts, as stakeholder expectations increasingly expect corporations not only to communicate increasingly shift away from company-controlled communication towards balanced, two-way dialogue in which stake- their corporate responsibility (CR) initiatives, but also to holders themselves have the opportunity to define both the engage in on-line dialogue about environmental, social and scope of exchange and the terms by which it is conducted. governance issues. Rapid globalization of trade and communications and Industry may be tempted to regard these characteristics of increasing awareness of humanity’s impact on the Earth are social media as risks, and indeed it is easy to take a wrong driving a demand for greater transparency, and that is why step. However, the difference between risk and opportunity social media is a game-changer, particularly for the extrac- is largely one of perception and strategy. One of the great tive industry. Mobile technologies make it much easier for opportunities that social media offers is collaboration. Being stakeholders to quickly access information about companies a constructive and contributing member of the social web and their behaviour, and social media makes it much easier not only builds social capital, but also allows a company to for stakeholders to share information and their opinions – engage broad and diverse talent towards the achievement of favourable or not – with their networks. What used to take shared goals. weeks, or even months, of research and correspondence can Consider how Goldcorp and its troubled Red Lake propnow be accomplished in a fraction of the time – the blink of erty in northern Ontario were transformed by then-CEO Rob an eye in the timeframe of corporate reputations. Just as McEwen’s open-source challenge to find new targets and news of the Japan earthquake can be tweeted around the reserve estimates1. Inspired by how Linus Torvalds had shared world in seconds, so too can any instance of real or per- his code with software developers to develop the world-class ceived corporate wrongdoing. Linux operating system, McEwen broke industry convention and posted Goldcorp’s proprietary geological data on the comBalancing risk and opportunity pany’s website, offering more than $500,000 in prize money Social media gives an immediate voice to previously isolated for the best ideas about how much gold was at Red Lake and or remote stakeholders, who often come to the social media where to find it. The contest not only led to the discovery of

28 | CIM Magazine | Vol. 6, No. 6

upfront S U S TA I N A B I L I T Y

substantial quantities of gold (some eight million ounces, worth over $3 billion), it also exposed the company to new exploration technologies and methods that enabled the company to significantly increase production while lowering costs. Ultimately, tapping into the social web allowed McEwen to transform both the Red Lake property and Goldcorp itself into models of innovation and profitability. Social media tools make it possible like never before to collaborate with stakeholders throughout the value chain to identify challenges, innovate solutions and achieve sustainability goals. However, to step into this space requires not only the enabling technologies and networks, but a new organizational mindset as well â&#x20AC;&#x201C; there needs to be a culture of openness and collaboration that enables a company to look outside of itself for ideas.

Communicating the sustainability message While social media use by corporations is becoming commonplace, its use for communicating around sustainability and Corporate Responsibility (CR) issues is lagging. The 2010 Social Media Sustainability Index2 (SMI) found that about 85 per cent of almost 300 companies in North America and Europe listed on the Dow Jones Sustainability Index were using social media, but less than half use social media

for any sustainability or CR communications, and less than a quarter of them have a dedicated social media channel for sustainability and CR. While mining was not one of the ten sectors examined by SMI, its extractive sector cousin â&#x20AC;&#x201C; the oil and gas sector â&#x20AC;&#x201C; lagged all sectors in social media use for sustainability communications. Nevertheless, SMIâ&#x20AC;&#x2122;s findings seem to be consistent with the Canadian extractive sector landscape. While many companies have a social media presence, only a few of them â&#x20AC;&#x201C; typically well-known senior mining companies, such as Barrick, Rio Tinto Alcan and Kinross, but also a handful of juniors, including TVI Pacific â&#x20AC;&#x201C; are using these channels regularly to communicate information about their sustainability and CR initiatives. Even so, much of the sustainability content from mining companies tends to focus on community investment programs, without much space given to communicating performance, for better or worse, in other areas. In the oil sands, the social media landscape again is dominated by the majors, whose content is a mix of investor

This information was summarized from the description provided in Wikinomics, by Don Tapscott and Anthony D. Williams, published by the Penguin Group, 2006.

Social Media Influence, www.socialmediainfluence.com

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upfront S U S TA I N A B I L I T Y

relations, project updates and community investment news, while the myriad trusts and income funds are next to invisible (indeed, more than one company Twitter feed is entirely blank). One notable exception is Suncor, whose multi-channel presence includes some in-depth sustainability and CR content. Through their Oil Sands Question and Response blog, for example, Suncor is enabling two-way dialogue with stakeholders around some tough issues, such as energy demand, water use and tailings pond reclamation. By focusing on science-based data and expanding the conversation to tackle oil sands issues in a broader societal context, Suncor has created a safe and respectful ground for engagement. Companies that ignore this opportunity and do not engage in dialogue in social media are increasingly conspicuous in

Going where the conversations are Suncor’s social media experience by Celesa Horvath

AUTHOR

Celesa Horvath has 20 years of experience providing strategic consulting services to clients in the energy, mining, infrastructure, transportation and government sectors. She blogs regularly at www.makingsenseofresponsibility.com and on Twitter at http://twitter.com/celesahorvath.

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30 | CIM Magazine | Vol. 6, No. 6

their absence. They are likely to experience declining levels of trust and respect from stakeholders, who are already complementing their own learning, networking and activity with social media tools. In contrast, companies that are actively engaging with stakeholders through social media are building social capital and relationships that facilitate the licence to operate. CIM

Back in 2006, Petro-Canada employees were fielding a lot of questions about gas pricing. “We learned from listening that there is an appetite for dialogue,” recalls Lucy Payette, Suncor’s Senior Advisor of e-Communications. In response, the PumpTalk blog was created to provide a venue for talking about gas prices, fuel efficiency, and how the industry works. “The blog was the tool of choice at the time,” notes Payette. “It offered a good way to participate in dialogue, using technology that was mainstream.” Suncor inherited that experience when it merged with Petro-Canada in 2009. More recently, the company launched another blog, Oil Sands Question and Response (OSQAR). At Suncor, “we wanted to begin a dialogue, and find a way to have greater transparency about our company and about the oil sands in particular,” explains Rebecca Sullivan, director of communications services. The company also wanted to foster a better understanding of the industry, so much of its content draws on its technical expertise and offers Suncor’s point of view, while still allowing readers to express their own opinions. “Our approach has been to go where the conversations are,” adds Payette. And indeed, Suncor has. From Suncor’s main website, you can connect to their social media hub, which provides links to the company’s blogs, Facebook page, LinkedIn profile, and YouTube and Flickr channels (as well as their social media policies). These social media tools allow Suncor to curate existing content, like the annual report on sustainability, making it easy for audiences to find information of interest to them. Suncor has grown its social media resources and presence to ensure the company can sustain its participation and maintain credibility by having the right people providing thoughtful, timely commentary. Payette acknowledges the resourcing requirements for a comprehensive social media presence can be high, but the return on this investment has been an improved ability to connect with and learn from the company’s stakeholders. Moreover, over time, Suncor has seen a shift in customer opinion, fuelled by a greater understanding of issues informed by online dialogue. Suncor’s advice for social media wallflowers? Listen first; understand where the stakeholders are; begin slowly. But do begin. “If we’re not participating, that says a lot too,” cautions Sullivan. osqar.suncor.com; pumptalk.ca

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upfront NEW FRONTIERS by Graham Lanktree

Truer grit

Courtesy of Electric Vehicle Controllers Ltd.

The new and emerging market for faux Moon dust When frequent micrometeorite bombardments hit the Moon, agglutinates form after an impact superheats the dust particles into molten glass and ejects the globules into the surrounding regolith. Rolling with unheated moon dust, this globule creates a jagged, dirty glass that is nearly unheard of here on Earth. Yet agglutinates are a big part of what NASA calls “high-fidelity” simulants. “To produce agglutinates on a large scale is very difficult and expensive,” says Jim Richard, president of Electric Vehicle Controllers Ltd., which partnered with NORCAT on the development of the mock Moon dust. “So our approach in creating CHENOBI has been to add more abrasive glass to our recipe to replace the agglutiJagged, glassy lunar regolith can be very hard on equipment. The Sudbury-produced CHENOBI lunar nates.” If test machines work with a higher soil stimulant helps give earth-based engineers a feel for the challenging extra-terrestrial material. content of glass, he reasons, they should work with the real thing. n 2004, President Bush kicked off a space race at NASA In the end, NORCAT used anorthosite that had been subwhen he announced that the U.S. was going back to the jected to a plasma arc process and then crushed and mixed Moon by 2020. With the funds to design multiple new with the original material of OB-1, an older simulant, to cretechnologies, hundreds of scientists and engineers set to ate CHENOBI. “They changed their source of glass and got work. a simulant that was much better,” says Doug Rickman, projTo test their inventions, however, they needed one elu- ect scientist, NASA’s simulant development program. sive material – Moon dust – and lots of it. They required upwards of 450 tonnes, yet the space agency’s 383 kilograms False starts of authentic lunar rock is carefully rationed out to only the Last year, President Bush’s Moon mission was quashed most developed and essential projects. So NASA encouraged just as NORCAT’s lunar simulant was about to become comSudbury mining technology developer NORCAT to improve mercially available. Nevertheless, demand for simulants and mass produce a top-of-the-line mechanical lunar soil shows signs of re-emerging as the commercial space indussimulant called CHENOBI, which it had created to test drills try and nations such as China begin stepping up their own it built for the space agency. lunar missions. “Right now, everyone is sitting and wondering where we An unusual substance go from here,” says Richard. “We’re in a really good position Even though it looks like a fine grey powder in photo- to get out of the gate when things come back around, since graphs, lunar regolith is granular, extremely abrasive and there’s a shortage of high-quality simulants. The momentum cohesive. Without air or water on the Moon, there is little to just needs to build back up to a point where the people who smooth the rock particles with time. “The behaviour of this control the money want to get back to doing these things.” material is not what you’d expect,” says Rob Mueller, a lunar That time may come sooner than expected: by the end of destination co-lead at NASA’s Kennedy Space Center. “Lunar July – with $30 million in prize money in their sights – 29 regolith doesn’t act like sand or anything that occurs natu- teams signed up for a shot at the Google Lunar X Prize, a comrally here on Earth.” petition to become the first private venture to land on the During the Apollo 11 mission, lunar soil ground into the Moon by 2015. One of these teams, Moon Express, says it will joints of the astronauts’ space suits, clogging their gear and spend $70 million to $100 million in its effort to win, but lodging in their lungs after they tracked it into the lander. could recoup the costs by selling sponsorships for its rocket. And efforts to test mining equipment in regolith simulant The bulk of the prize money will go to the first team to show that the dust can easily disable equipment prototypes. land a craft on the Moon and explore 500 metres of its surface. A chief reason for the rugged quality of lunar soil is par- To do this, the teams will need to rigorously test their rovers ticles called agglutinates that speckle the lunar landscape. and rockets to withstand the rugged lunar environment.

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upfront NEW FRONTIERS

Uncertain markets

Japan, China and South Korea are all working on projects that A tonne of CHENOBI costs $44,000, and even higher require lunar simulants, and Google’s Lunar X Prize is rallying grade simulants can reach $1,000 to $5,000 per kilogram. commercial players to the industry’s growing opportunities. But it is worth it, says Rickman. “For the commercial space “We’ve pioneered a lot of this work and we’re hopeful industry, the more demanding what they try to do on the that there’s a path forward,” says Richard. “At NORCAT, we surface is, the more they will need to test their equipment in proved things with those simulants that we wouldn’t have the best regolith simulant they can find,” he explains. been able to using a lesser substance.” CIM If companies find that a part breaks because they have not tested their equipment in accurate conditions, it is a long way back to Earth. Richard says that some researchers who used NORCAT’s simulants to test wheel designs, flow dynamics in zero gravity and other properties were surprised to find that the high-fidelity simulant gave them different results. “This caused them to drop back and look at the other simulants they were using,” he adds. Still, the nascent commercial aerospace industry may find high-quality simulants in short supply. “The availability of high-fidelity simulants is an issue,” says NASA’s Rob Mueller, “since they’re commercially available from only two companies: Orbitec and NORCAT.” With the downward trend in the market, neither company has stored Roll Crusher large quantities of their products. “I’m High Capacity for Potash • Adjustable Size Control enough of a businessman that I’m not going to stockpile this material,” says Richard. “Researchers have inquired When precise product size with fewer fines and maximized yield about our simulants, but I don’t have is important, Gundlach Roll Crushers get it right. Every time. Every any orders in-hand at the moment.” day. Day after day. And with its Adjustment System, Gundlach Roll Crushers even let you produce different sized, precisely sized With the market’s current inconsisproduct on-the-fly. tency, it is possible these manufacturers Find out why Gundlach Roll Crushers and CAGE-PAKTOR® cage may have to sit on their product for a mills are the preferred crushing solutions for potash (ore through while before they can sell it. “There flake sizing), coal, salts and lime. will, however, be a time when we need Learn more at lots of simulants again,” says Rickman. www.GundlachCrushers.com/cim But long-term, the market appears to or from PEACOCK, our have powerful potential. Right now,

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MOVING ON UP Clariant Mining Solutions has appointed Jesus Gutierrez as head of the company’s recently opened mining laboratory at its headquarters in Texas. Gutierrez will oversee processing of ore samples from customers in the United States and Canada.

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September/October 2011 | 33

upfront ENGINEERING EXCHANGE by Dan Zlotnikov

Deep freeze Growth in potash sector revives shaft-sinking specialist

Courtesy of AMC Mining

Deilmann-Haniel/Redpath Group, with the express purpose of providing shaft-sinking services to the operations under construction in the first wave of potash development in the province. Once the work was completed, AMC was taken over by Thyssen Schachtbau and renamed Thyssen Mining Construction of Canada Ltd. However in 2008, AMC president Roy Durr, together with Thyssen Mining and Redpath Mining, saw the emerging opportunity in the current wave of potash expansion projects and AMC was reborn. “Both parent companies saw the demand that would be coming for new shafts to be sunk for potash, because all the existing shafts are about 40 years old, and all the development that’s been done from them is now too far from the shafts to be effective,” says Durr. “They saw the potential with PotashCorp, with Mosaic, with Agrium – and we’re working with all of them.”

Workers pour concrete at the Scissors Creek site. The six-metre-wide shaft at PotashCorp’s Rocanville Mine is scheduled to go into service in 2013.

familiar name is back on the job in Saskatchewan: Associated Mining Construction (AMC) is once again at work in the heart of potash country after a decades-long hiatus. In what is being described as one of the most complex shaft-sinking projects in the world, the company is working on the first potash shaft to be sunk in Saskatchewan since 1979. AMC was originally formed in 1960 as a joint venture that included Thyssen, Schachtbau and predecessors of the current

Digging in at Scissors Creek Since its revival, AMC has been hard at work on Potash Corporation of Saskatchewan’s (PCS) Scissors Creek project, part of its Rocanville Mine expansion near the border with Manitoba. When completed in 2013, the new, six-metrediameter shaft will descend 1,123 metres and serve to deliver personnel and supplies to the production zone. Shawn Munroe, PotashCorp’s mine project coordinator for the Rocanville expansion, says that the existing service shaft

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34 | CIM Magazine | Vol. 6, No. 6

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will be converted to a second production shaft, increasing the amount of ore that can be brought up to the surface. All told, the Rocanville expansion is expected to raise annual operational capability to 5.79 million tonnes, at a total cost of $2.8 billion. While there are many challenges to the project, what makes Scissors Creek noteworthy is Saskatchewan’s geology. “As you’re sinking from surface all the way down to 900 metres, you encounter water,” Durr explains. “What you’re doing is designing a shaft lining to support and sustain 900 metres of water pressure. That’s tremendous pressure that normally you won’t see anywhere else. Plus, there’s a zone that’s called the Blairmore – between 425 and 600 metres – that is saturated quicksand, which you can’t do anything with. If you try to go through it and don’t freeze it, you can’t do it – it collapses on you.” Durr points out that of the 17 shafts sunk for the Saskatchewan potash industry since the 1950s, five had major water inflow problems and one even had to be abandoned during the sinking process. To address the water challenge, the operation uses a technique called “ground freezing.” The process involves drilling a very precisely positioned circle of holes around the planned shaft, inserting freeze pipes into these, and then pumping chilled brine down the holes. Despite the calcium chloride brine circulating at temperatures of minus 20 and minus 35 degrees Celsius, the freezing stage requires significant time. According to Munroe, drilling of the freeze holes was completed in May 2009 but for various reasons, the shaft pre-sink did not start until June 2010.

Advancing on the critical path It is important to note that AMC is not working in isolation. “We get the best of both worlds: all the technology and knowledge that exist with the parent companies are available to us, but we’re an independent company,” says Durr. In fact, says Kevin Melong, senior manager, shaft projects at Redpath, AMC hired the Redpath engineering group to essentially serve as a subcontractor and provide most of the engineering on the shaft portion of the project. “They treated our engineering group as a subcontractor to the overall project, not as the owner through that process,” he explains. “It was a unique experience, and it still is today, but we had a scope of work, defined schedules and budgets, and they [AMC & PotashCorp] held us to them.” Melong also highlights the expertise each party brought into the process – and this includes the client company itself. “Redpath did the sinking plant designs, Thyssen the freezing and AMC, in collaboration with PCS, did the liner designs,” he says. In addition to their past experience, the team also had the advantage of technological advances made in the last 40 years. Durr says that improvements in high-strength concrete technology and better castings for tubbing have allowed for an improved design of the shaft liner.

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upfront ENGINEERING EXCHANGE

Courtesy of AMC Mining

PotashCorp’s decision to construct the permanent headframe from the outset also condensed the production schedule, says Melong. Traditionally, he explains, the project would require constructing a temporary headframe over the shaft. Then, once the shaft sinking was complete and the

Courtesy of AMC Mining

A galloway is lowered into the mouth of the shaft at Scissors Creek.

ground thawed, this headframe would have to be replaced with the permanent structure. This was the reason why temporary headframes were used in the past, and the driver for the concept of spanning the freeze ring alleviated this challenge. Melong says that the challenge with this approach is that the ground will settle unevenly during the thaw, destabilizing the headframe – an unwelcome scenario for a structure raising a lift full of people from more than a kilometre underground. PotashCorp drove the concept of bridging the freeze ring. The design required a system of piles and pile caps outside the diameter of the freeze ring on which massive concrete beams were poured to support the permanent concrete headworks above. “PotashCorp was instrumental in saying, ‘guys, we don’t want to do that; we want to sink with the permanent headframe,’” says Durr. “And they actually drove the concept where we drilled piles out past the freeze ring. The total construction schedule to final commissioning was improved using this sequence and design,” he adds. The time savings had vast benefits says Munroe. “The Scissors Creek service shaft is on the critical path for the Rocanville West expansion project so any advantage in shortening the schedule is important to the overall project,” he explains. AMC’s involvement with all three of Saskatchewan’s major producers will give the miners access to a wealth of AMC’s parent companies’ broad expertise and the particular know-how of the builder of Saskatchewan’s newest potash shaft. CIM

MOVING ON UP Huakan International Mining Inc. has appointed Kunpeng Li as president and CEO and Wenhong (Wilson) Jin as vicepresident acquisitions. Li, who has worked with the company since 1999, brings experience in mining project management, markets and international trade. Jin has 18 years of field exploration for base and precious metals behind him. Deli Tian, who has been acting president and CEO, will remain as a director and chairman of the board. *** Aurizon Mines Ltd. has appointed George N. Paspalas as its new president and CEO and a member of the company’s board of directors. Paspalas’ experience includes 14 years in senior management positions, most recently as the COO at Silver Standard Resources Inc.

The outer layer of the shaft is made of watertight welded steel and concrete. The inner shaft is a bolted steel composite. 36 | CIM Magazine | Vol. 6, No. 6

David Hall, who has retired from his positions as president and CEO, a position he has held since 1991, will continue to serve as chairman of the board. Hall has been with Aurizon since it was formed in 1988.

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upfront PROCESSING by Alexandra Lopez-Pacheco

The secret to longevity Manganese removal process extends life of Labrador iron mine 890 people working at Wabush Mines, which at full capacity can produce up to six million tonnes of iron ore pellets per year, as well as for the mine’s owners and investors, the extension is cause for celebration. “With a production of six million tonnes and iron ore running over US$100 per tonne these days, the return on investment of just one year of additional mine life has incredible value,” says Belley. It is also incredible value from the perspective of the workers and the community who have relied on the mine since 1965.

Courtesy of BBA

Rare earth magnetic separators The search for this solution began in the early 1990s, when it became obvious that the mine would face problems down the road as its mining plan moved into areas with high levels of manganese in hematite. These high levels of manganese in the final hematite concentrate resulted in the need for selective mining, which significantly reduced the mine life of the deposit, says Dan Norrgran, manager, mineral processing at Eriez, the U.S.-based manufacturer of the equipment, whose rare earth magnetic separators were key to the project’s success. Norrgran has been personally involved in the project since the first tests in 1990. It was during that decade of testing various processes that a dry process using high-intensity magnetic separators, which collected the hematite while rejecting the silica and manA three-stage magnetic separation process at the Wabush plant removes the manganese from the hematite concentrate. ganese, was identified as the most promising. This led to a feasibility study in 2005. BBA, a here’s a lot of excitement these days at the Scully Canadian independent consulting engineering firm that speMine in Labrador. After two decades of research and cializes in the mining and energy sectors, was brought in. “The results of the feasibility study were promising,” says tests to reduce high levels of manganese, a practicable BBA’ s Charles Boulais, who took on the role of project mansolution is now in place. One of the production lines ager. “Cliffs decided to go with the full scale of the protoin the concentrator of the mine, which is operated by type line, based on the results of the feasibility study. BBA Wabush Mines, Canada’s third largest iron ore mine, and was involved in the detail engineering and construction managed by Cliffs Natural Resources, has already been consupervision team. We went through a testing phase with that verted with cutting-edge technology that removes 45 per cent or more of manganese from the hematite concentrate. prototype line and operated it for several months. That A second line is close to being fully installed, and the allowed us to validate and make sure the process, controls remaining six lines are scheduled to be converted to the new and equipment were according to expectation.” technology by 2013. Boulais worked with Eriez’s Norrgran on improving the “The mine life was expected to go until 2024, but now equipment used in the prototype. “One of the technical chalwith this process, we can extend the life beyond 2030,” says lenges was the heat,” says Norrgran. “The material comes Robin Belley, area manager, process, quality and engineer- out of the dryer so it’s hot. All permanent magnets lose ing, Cliffs Natural Resources, Scully Mine Division. For the strength when they are heated so we had come up with a

38 | CIM Magazine | Vol. 6, No. 6

upfront PROCESSING

special temperature-resistant magnet that would operate under those temperatures.” Antoine Berton, a metallurgist with Soutex, one of Canada’s largest firms specializing in metallurgy and process engineering, was also brought into the project to assess processes and controls. The prototype, he says, had numerous improvement possibilities that needed to be worked out. “You couldn’t operate the line continuously because it was plugging,” says Berton. “We managed to test at least the metallurgical performances. We added a lot of new sampling points, pierced some holes in the pipes in order to be able to take more samples from more places, and with this, it was possible to analyze information,” he explains. With Wabush Mines, Eriez, Soutex and BBA working together, the prototype underwent design changes and evaluation throughout 2007 and part of 2008. “We added a vibrating feeder on the first unit, which gave us much more control on the flow rate of the material that goes through the unit,” says Boulais. “With the prototype, the amount of material processed was determined by the drum speed, which is not the optimal way to control it because it also affects separation.” In late summer 2008, the new design was approved and the first production line ordered. Then the international financial crisis and recession hit. The project was put on hold as the world held its breath at the unknown length of the turbulent economic times ahead. However, the engineering to convert the full plant was pursued to have everything ready in hand when the conditions would be favourable.

Construction on the second line began on June 27 and it should be completed by the end of September. “So we have cut the construction time by one month compared to the first line,” says Boulais. “We’re doubling the efforts to have this line installed and have found different means to avoid delays and shutdowns.” In fact, through each phase, the team continues to look for opportunities to improve and optimize, something which, says Boulais, is largely possible because all the same people who were involved in the feasibility study phase are still working on the project today. “We don’t have to catch up on the history of the project,” he says. “It’s very efficient.” And, Boulais adds, the degree of collaboration with all involved, including the people at Cliffs and Wabush Mines – right down to the workers on the ground – could not have been higher. “It’s a true partnership,” he says. “We all worked for results with the belief that if one succeeds, we all succeed. I felt everyone involved was thinking this way.” “Manganese – which has always been the nemesis of this mine – is about to be seen very differently,” says Belley. “With the concentrator’s newly acquired ability to remove or even to sell a manganese concentrate, we take the future into our own hands and look with excitement into the next 20 years.” CIM

Adding value to the process By January 2010, however, the project was back in action, with the first full-scale production line under construction. It only took four months to build. The new line incorporates a three-stage magnetic separation process, including a scavenging system that maximizes and optimizes the collection of ore. The first stage uses a low-intensity rare earth magnet enclosed within a drum. It has two discharge chutes, one for the concentrate and the other for the tailings. The second stage consists of a double drum unit with two high-intensity rare earth magnets and has three discharge chutes, two for concentrate and one for tailings. And finally, the third stage, the scavenger, has a high-intensity, rare-earth magnet as well that is enclosed within the drum and two pipe-style discharge chutes: concentrate and tailings. By the time the ore has passed through the last stage, more than 45 per cent of the manganese, as well as 40 per cent of the silica, has been removed, while more than 90 per cent of the iron has been recovered – all this by integrating new technology into a 46-year-old plant. “You don’t have to build a new building,” says Belley, “you simply replace the equipment in the same space.” In addition, there is ongoing research looking into the potential of turning the recovered manganese into revenues. “It’s possible we can enrich this to 35 per cent manganese and 35 per cent iron for a manganese product that could be marketable,” says Berton. September/October 2011 | 39

upfront Q&A by Richard Andrews

The earth moves for Caterpillar Cat Global Mining's Chris Curfman talks growth emerging economies such as India, Russia, China and parts of South America. As cities get bigger and modernize, demand grows for appliances, plumbing, roads and houses. That directly impacts mining and, in turn, Caterpillar.

Normand Huberdeau/NH Photographes Ltée

CIM: Your CEO, Doug Oberhelman, has expressed concern about the slow progress in free trade agreements with some of these countries. Is this a cloud on the horizon? Curfman: Like many other companies, we’ve always been pro-free trade. It’s probably one of our highest corporate priorities. Doug’s been meeting with a lot of people to try to show them that free trade is the best way to go for everyone.

rowing markets, customer focus, new technology and the willingness to adapt to a changing world. These are the driving forces behind the confident growth of Caterpillar Inc., the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and dieselelectric locomotives. Despite global financial uncertainty, 2010 sales and revenues increased 30 per cent to more than US$42.5 billion. Sharing the company’s confidence in continued success is Christopher C. Curfman, Caterpillar’s vice-president of sales and marketing, Global Mining Division, who oversees the development, manufacture and international sales of extraction equipment and vehicles. Educated in the United States, Curfman joined Caterpillar in 1994 and since that time has worked in various divisions around the world. CIM Magazine spoke to him about how the growing enterprise is going to keep pace with the equally growth-oriented extractive sector.

CIM: How do you explain last year’s surge in Caterpillar sales and revenues? Curfman: It’s largely the result of worldwide urbanization and the move to build metropolitan infrastructure, primarily in 40 | CIM Magazine | Vol. 6, No. 6

CIM: In response to the growth in demand, Cat is expanding manufacturing capacity in Illinois and India, while establishing a new facility in Thailand. Will this be enough capacity to cut long lead times or is it a matter of simply keeping up? Curfman: We’re increasing capacity everywhere as fast as we can, even in Russia, to keep up with the demand from mining. That demand will increase as we see a lot more project-funded greenfield mines open up in the next three to five years. We’ve doubled capacity with portions of our product line but are still running a little behind in some areas. We’re certainly seeing a lot of strain on our external supply chain providers, but that’s inevitable. When we double our business, many suppliers have to quadruple their output. Their ability to stay with us and grow will be critical. We’re providing support in many ways, such as Six Sigma efficiency training. We also have our people stationed in all the key supply chain factories around the world. CIM: Are you also changing your own production methods? Curfman: We’ve been doing that for a number of years with what we call CPS, or the Cat Production System. CPS is based on our priorities of quality, safety and velocity, and it’s starting to pay off. For example, one of our factories was maxed out at 150 units per year in 2007. By eliminating waste and inefficiencies, it’s now running 416 units with no extra bricks and mortar. CIM: What about the development of the products themselves? Mining equipment is being used in increasingly diverse and challenging settings. How do you adapt a haul truck, for example, that could be used in the Andes, the desert or the Arctic? Curfman: Our product line is now broader than it’s ever been. We have a truck for every application, terrain and condition, mechanical drive or electric drive. We offer a wide range of different bodies, tire options and application packages. For example, we’ve sold hundreds of our 793 trucks with a high

upfront Q&A

altitude package, to operate at 12,000 feet or above. Similarly, we sent extra quiet 793s to Australia and Canada for mine operations near communities. Our dealers are set up to provide options and support, whatever the conditions. That’s what the customers expect.

mines around the world. We personally know who’s doing what in each one of them. However, the world is changing and our customers want us to take a greater leadership role. Our communications plans call for using a whole new range of social media.

CIM: How important an issue has safety become? Curfman: I’d say safety awareness and training in mining and oil and gas has increased tenfold in the past five years. It’s now the way of doing business. Safety is the first consideration in the design of all the trucks we’ve been talking about. We’re the only manufacturer offering object detection as a standard feature. We’re also in the lead with braking, rollover protection and other safety features.

CIM: What is the significance of the second five-year agreement Caterpillar signed last October with the Rio Tinto mining group. How does this collaboration improve machine and mine site performance? Curfman: The alliance agreement with Rio has been very successful in terms of our ability to deliver millions of dollars in savings for their continuous improvement projects, their mines, their maintenance practices and their haul roads. Renewal of the agreement means more business, more market share and better relationships. The charter of Global Mining 10 years ago was to develop such alliances. We’ve now established different levels of agreements with all customers and it’s been a real winner.

CIM: How have rising oil prices affected your machinery design? Curfman: The cost of petroleum is driving a lot of R&D into improved fuel consumption, alternative fuels and electricpowered vehicles. Caterpillar has spent more than a billion dollars on clean diesel technology. We’re looking at better weight ratios, fewer but larger trucks with improved fuel efficiency and greater productivity. A good example is the C175 diesel engine used in the large F-Series trucks. We also provide multiple horsepower settings to avoid unnecessary fuel usage and offer the option of electric drive alongside mechanical drive in our trucks. CIM: A social media consultant has noted that Cat is a good example of a company effectively using social media, with bulletin boards and discussion topics. However, unlike many other divisions, mining does not have its own established online community hosted by Cat. Do you expect to develop this in the future? Curfman: We already communicate a lot online with our customers and have close relationships with about 1,500

CIM: It looks like another real winner is Caterpillar’s US$8.8 billion acquisition of mining equipment giant Bucyrus International, based in Milwaukee. What’s the significance of that acquisition? Curfman: It expands our product offering to cover about 85 per cent of the mining equipment industry, whereas today we’re less than 25 per cent. The acquisition is based on Caterpillar’s goal to be a world leader in providing solutions to the mining industry. Our customers are very enthusiastic about the deal. They’ll have more product offerings and a reduced need to deal with different suppliers. We’re excited by the thought that soon you’ll be able to look at a mine and almost 90 per cent of its equipment will be Cat yellow. CIM

Thank you! It is with great pleasure that we at Indotech would like to kindly thank the mining industry for the unwavering trust it puts in our products, with a special mention to six mines that have shown unparalleled support for our team and our Tech Roll roll-up rubber garage doors. Thank you, and see you soon!

Our Tech roll of honor: Notre tableau d’honneur : Mine A : Mine E : Mine B : Mine F : Mine D : Mine C :

48 Tech-Roll Ultra 49 Tech-Roll Pro 17 Tech-Roll Mega 14 Tech-Roll Ultra 12 Tech-Roll Pro 12 Tech-Roll

Merci ! C’est avec grand plaisir que nous aimerions chez Indotech prendre le temps de remercier l’industrie minière pour sa confiance continue dans nos produits, avec une mention spéciale pour six mines qui ont montré un support inégalé pour notre équipe et nos portes de garage à enroulement en caoutchouc Tech Roll. Merci, et à très bientôt!

Industrial doors - Portes industrielles 259, Chemin D’Alençon, Boucherville (Qc) J4B 0G9 1-866-835-TECH(8324) www.indotech.ca

September/October 2011 | 41

Courtesy of Cenovus Energy

Photo: The Christina Lake operation of Cenovus Energy.

Plugging in

Connecting Canadian resources to the global marketplace

energy & industry

Whether it is thermal coal for electricity, metallurgical coal for steel or petroleum for fuel, Canada has the promise to both help build the global industrial powerhouse and keep it energized well into the future. The potential return is enormous â&#x20AC;&#x201C; as long as those looking to complete the connection can navigate the many political, economic and geographical risks that threaten such an ambitious endeavour.

energy & industry

The energy exchange The global marketplace is full of promise for Canadian energy producers – the challenge is getting there By Dan Zlotnikov

anada, blessed with vast deposits of coal, uranium, natural gas and crude oil, has the resources to help meet the world’s energy needs. The country’s energy exports in 2010, including electricity, amounted to $90.7 billion in revenues, nearly a fifth of all our exports. Most of the cash came from the sale of oil, and virtually all of it came from the United States, which buys some 97 per cent of Canada’s energy products. With such strong, longstanding trade ties and advantages of geography, one might expect Canada’s energy sector to have a shining, trouble-free future, but few things in life are so simple – and virtually nothing is simple when it involves moving hundreds of thousands of tonnes of material every day. Consider oil. As Canada’s oil sands production continues to grow, operators are struggling to get it to the customers, and existing pipeline capacity to the Gulf Coast is simply not enough. According to Esther Mui, an independent industry analyst and a former senior vice-president of oil and gas with credit rating agency DBRS, Canadian producers are already seeing the negative effects of capacity shortages. “There is a $10 to $20 difference between the price of WTI (West Texas Intermediate crude) and London’s Brent 44 | CIM Magazine | Vol. 6, No. 6

crude, Mui explains. “It used to be $1 or $2; however, now we have substantial bottlenecks at Cushing, Oklahoma. A lot of Canadian heavy oil is not getting to the refineries in the Gulf where this can be processed.” Two pipeline projects are trying to address the bottleneck issue. The first is the Keystone XL expansion proposal by TransCanada Corporation. Previous stages of the Keystone project saw TransCanada link its Hardisty, Alberta, facility to Patoka, Illinois, and then to the Cushing hub. The $7 billion Keystone XL project will extend both the pipeline’s reach and capacity. All told, the project is slated to add another 500,000 barrels per day (bpd) of transport capacity, for a total of 1.1 Mbpd.

Building capacity Considering that in 2010 Canada exported over 925 million barrels of oil to the United States, producers are eager to see the project completed. Not only is over 80 per cent of Keystone XL’s capacity already under long-term contract, but Mui says that the future shippers have signed cost-sharing agreements with TransCanada. “If there are some costs overruns, whether because of delays or acceleration of the

Courtesy of Cenovus Energy

The Christina Lake operation of Cenovus Energy

energy & industry construction, the shippers will share at 75 per cent of the Pacific Rim, where population and income levels are growoverruns,â&#x20AC;? she explains. ing and demand for petroleum products is rising, and For oil sands producers like Cenovus, much rides on expected to keep doing so. Enbridge originally planned for commercial operation in Keystone XL. According to Jessica Wilkinson, the companyâ&#x20AC;&#x2122;s spokesperson, Cenovus is confident that the early 2017, but the project has encountered opposition Keystone expansion will go forward. The companyâ&#x20AC;&#x2122;s 10- from First Nations, whose territory it was going to cross, as year strategic plan, announced in 2010, was to more than well as from local environmental groups. In recognition of quadruple its current production, reaching 500,000 bpd by the level of public attention, regulators have extended the the end of 2021. Wilkinson says the new plan has the review process, which is now not expected to be comcompany increasing production sooner. â&#x20AC;&#x153;What weâ&#x20AC;&#x2122;re doing pleted until mid- to late 2013. is increasing total production capacity at Foster Creek [Alberta] to 270,000 to 290,000 bpd gross by increasing capacity at future phases and drilling some strategic wells,â&#x20AC;? she says. The company has also completed its latest expansion, the 40,000 bpd Phase D at its Christina Lake operation in northeast Alberta in early August, six months ahead of the original schedule. With such aggressive expansion plans, new transport capacity is of major importance to Cenovus. That said, Wilkinson adds that the company is also looking at alternatives to raw pipeline capacity: â&#x20AC;&#x153;long-term supply agreements with our current pipeline partners, financial hedges, working with existing refineries to see if they can process more heavy oil, and new technology that partially upgrades the oil, potentially increasing refinery ownership,â&#x20AC;? she explains. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re prepared +GLC ?LB NPMACQQ P?U K?RCPG?JQ KMPC CDj AGCLRJW to evaluate a number of options.â&#x20AC;?

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Gateway to Asia But while the focus of the Keystone project is better supplying the U.S. market, the push to do so is not without its own concerns. In 2010, exports to the U.S. accounted for over 2.5 Mbpd of Canadaâ&#x20AC;&#x2122;s 2.8 Mbpd of oil production â&#x20AC;&#x201C; a whopping 89 per cent. Fluctuations in U.S. demand, much like ones seen during 2008 and 2009, pose a serious risk to the oil sands producers, limited as they are by geography and pipeline infrastructure. The answer is another pipeline proposal â&#x20AC;&#x201C; Enbridgeâ&#x20AC;&#x2122;s $5.5 billion, 1,177-kilometre Northern Gateway link between Bruderheim, Alberta, and a new ocean terminal that would be built in Kitimat, British Columbia. The 525,000 bpd pipeline would allow Canadaâ&#x20AC;&#x2122;s oil to reach markets in the

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energy & industry Exploring new markets Access to overseas markets is equally vital for Canada’s thermal coal exporters. Most of Canada’s exported coal has historically been the more lucrative metallurgical variety used in steelmaking, but things may be starting to shift. Allen Wright, president of the Coal Association of Canada, points to the Vista project being developed by Coalspur Mines Limited in western Alberta. According to the prefeasibility study, Vista would yield nine million tonnes of thermal coal annually for power generation once it is completed in 2014, with 90 per cent of the production destined for export. The added tonnage would more than double Canada’s thermal coal exports, which last year totalled 5.6 million tonnes, mostly going to Asian customers. Chris Borowski, manager, investor relations at Coalspur, adds that the bankable feasibility study currently underway on Vista, is looking at increasing annual output to over 10 million tonnes. “With the increased prices for thermal coal, even companies operating out of the Powder River Basin have begun to search for ports to export their coal to international markets,” he says. “In our prefeasibility study on Vista, we planned to sell a portion of our lower grade coal domestically because at the time we didn’t believe there was an appetite for it internationally. This lower grade coal is actually higher quality than the coal planned to be

46 | CIM Magazine | Vol. 6, No. 6

shipped from the Powder River Basin, which has increased the likelihood that our lower grade coal will reach international markets.” The advantages of directing as much product as possible to international markets are clear, says Borowski. As part of the prefeasibility study on Vista, Coalspur commissioned Wood Mackenzie to complete studies on the marketability of its higher quality export coal. He says that according to these studies, the potential coal quality from Vista will attract benchmark Newcastle thermal coal pricing with a discount of approximately six to eight per cent due to its slightly lower calorific value, which is still far ahead of domestic prices. Of course, as Ernie Lalonde, senior vice-president of mining at DBRS, points out, to enter the more lucrative global market, Canada’s coal exporters must first reach the sea ports. “They have to go 1,200 kilometers to the coast, whereas Indonesia and Australia and lots of other places have coal along the coast and hence are quite competitive,” he explains. The Vista prefeasibility study, according to Borowski, estimated operating costs of $60 per tonne for the life of the mine, which includes rail and port fees. But unlike oil, coal producers do not really have the option to turn to our southern neighbour in search of clients.

“If you head directly south of Alberta and Saskatchewan, you end up in the Powder River Basin, which is one of the lowest cost, most massive coal-producing areas,” Lalonde continues. “So you’re literally talking about selling coal to Newcastle here.” In fact, Peabody Energy, the world’s largest private-sector coal producer, recently announced plans to export thermal coal from its Powder River Basin Mine – 24 million tonnes of it. The destination? The Pacific Rim, of course. Lalonde highlights the case of Indonesia, a country that has traditionally been a coal exporter with little coal-based power generation domestically. That balance, Lalonde says, may be about to change. “It needs the coal for power consumption domestically because the Indonesian population is large and growing and needs more energy,” he explains. “There’s an expectation that at some point their exports in the thermal coal market will be capped, and maybe even reversed by domestic demand.” Another significant market is India, which last year had the world’s fastest GDP growth rate at 10.4 per cent. India’s government has embarked on an ambitious program of electrification, with plans to add 17,600 MW of new generating capacity in the current fiscal year. However, a recent article by the Press Trust of India reported that Coal India Limited would fall 41 million tonnes short of its original 360 million tonne target, dimin-

Courtesy of Coalspur Mines Ltd.

energy & industry

A crew drills at the Vista thermal coal project of Coalspur Mines Ltd. in western Alberta.

ishing the country’s power generation capacity by 15,000 MW. If anyone needs coal in a hurry, it is India. What’s more, given that India’s Power Ministry is planning to add more than 80,000 MW between 2012 and 2017, coal suppliers are going to be a welcome sight in the Pacific Rim for many years to come. Borowski says Coalspur does not view India as a likely buyer due to shipping distances, but welcomes Indian

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September/October 2011 | 47

energy & industry demand as it will compete for coal volumes with Coalspur’s probable customers – China, Japan and Korea. “There are projected increases in the shortfall of higher quality thermal coal, and Vista is positioned to benefit from that dynamic,” he says. “If India has a supply shortfall, it will have to source coal from somewhere else, which may be Indonesia or Australia, but as long as it is creating tension in the markets that we are looking to serve, that’s great for us,” he says. “China and India are undergoing massive industrial revolutions and they need power to fuel their growth. As long as coal is the cheapest form of generating electricity and as long as those economies continue to grow, increased coal consumption will be the result,” adds Borowski.

Changing domestic climate In contrast, Canada’s coal may soon be facing a colder reception back home, or so it appears at first glance. New regulations have tightened emissions limits for coal power plants. Wright also says that the regulations state these targets cannot be met by buying offsets or carbon credits, but only through “real” reductions. While the full implications of this requirement are not yet clear, everyone agrees on one point: coal power is going to become more expensive as a result. Ontario has gone a step further, promising to end its reliance on coal power completely.

Overall, domestically “the trend is not an uptrend; the best case is flat, in my mind,” says Lalonde. “What it will take to change this is a technological fix of the CO2 issue; hence, you have people with large coal resources that are not really export-friendly because they’re low-calorific, looking at ways to fix the CO2 problem, to advance carbon capture and other projects,” he concludes. Much like Lalonde, Wright has high hopes for technological advances. But he also emphasizes that coal is too significant a resource to ignore, and one not easily replaced. He cites a recent study by the Energy Information Agency, forecasting that even by 2035, 44 per cent of electricity in the United States would come from coal. “You need a balanced mix, and quite frankly, I don’t think you’re going to get rid of coal power plants,” he says. “Governments need to step in and provide support in all energy producing industries, not just coal, until the technology advances to a stage where it becomes competitive.” Making more efficient, less carbon-intensive use of Canada’s oil and coal is sure to be a lengthy, challenging process. Whether the technology delivers as much as Lalonde and Wright hope remains to be seen. But one thing is certain: Canada’s resources guarantee its status as an energy powerhouse. CIM

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10 ANNÉES DE RECHERCHE ET D’INNOVATION 10 YEARS OF RESEARCH AND INNOVATION Des solutions pratiques et applicables à travers un partenariat Gouvernement, Université et Industrie Practical solutions through a partnership between the government, the university and the industry

Les partenaires de la Chaire industrielle CRSNG Polytechnique-UQAT en environnement et gestion des rejets miniers sont heureux de souligner ses 10 années de contribution à l’industrie minière et au développement durable par leurs travaux de recherche et la formation de professionnels spécialisés. The partners of the Industrial NSERC Polytechnique-UQAT Chair on Environment and Mine Wastes Management are pleased to celebrate its 10 years of contribution to the mining industry and sustainable development by their research works and training of specialized professionals.

energy & industry

Courtesy of Suncor Energy Inc.

The coker towers at Suncor’s operation north of Fort McMurray, Alberta

A question of balance Oil sands miners seeking solid footing during a time of economic, social and regulatory change by Eavan Moore

o find a growth powerhouse, one only has to look at the Alberta oil sands. Since 2005, mined production of synthetic crude oil and bitumen from the oil sands has expanded almost 40 per cent. The oil sands’ expansion will undoubtedly continue for years to come: with overseas oil supplies seemingly uncertain, the United States has an interest in maintaining its own fuel sources, and oil sands operators are betting on that market need. “The vast majority of new oil supplies in Canada are forecast to come from the oil sands,” says Greg Stringham, vice-president, oil sands, Canadian Association of Petroleum Producers (CAPP). By 2025, CAPP predicts that oil sands production will grow to 3.7 million barrels of oil equivalent per day, up from 1.5 million in 2010. About one-third of that estimated growth will come from surface mining, although the major producers’ experiences show that building and expanding bitumen mines on time and within budget is no easy task. Fluctuating oil prices, high costs and environmental concerns have stretched out the timelines of the construction projects currently underway. But their operators are confident that their plans will reach fruition.

New reclamation rules As the oil sands operations grow, increased public scrutiny has added new layers of work to site plans, as well

as external relations and legal departments. The large, long-lasting tailings ponds created by mining operations are particularly visible targets. In response to concerns about their impact, Alberta’s Energy Resources and Conservation Board issued a directive in 2009 requiring all mineable oil sands operations to reduce their fluid tailings. Dry “dedicated disposal areas” must compose half of total tailings by 2013, and the disposal areas must be reclamation-ready five years after deposition has ended. Oil sands companies had already been working on researching and developing tailings management technologies, but the existence of specific goals and timelines has accelerated and redirected their research efforts. Syncrude Canada Ltd., which had already been using composite tailings and researching water capping solutions, began to study centrifuging technology in response to the directive. “It’s a faster way to get the water out of your tailings as opposed to the other technologies,” explains Cheryl Robb, media relations adviser at Syncrude. Barry Palmer, general manager of heavy construction and mining at North American Construction Group (NACG), reports that new tailings requirements make more work for contractors as companies seek to test out technologies without initially investing in their own equipment. “We’ve been actively engaged in construction of some of their tailings mud drying cells,” he says. September/October 2011 | 51

energy & industry

Eyes on the oil sands The integrated oil sands environment monitoring plan By Eavan Moore Arguing back and forth about the effects of oil sands production is, without credible data, unproductive. Last year, a federal panel determined that monitoring activities in the lower Athabasca River system fell short of what was needed to assess the oil sands’ environmental impact. In response, Environment Canada enlisted scores of scientists to develop a plan for thorough and transparent monitoring of the air, water and terrestrial ecosystems around oil sands operations and released the final results in July as the Integrated Oil Sands Environment Monitoring Plan. The plan’s authors identify some key improvements on the monitoring already taking place. The plan emphasizes cumulative regional effects, compares the levels of contaminants in sites affected by the oil sands with those that are unaffected, co-locates sampling sites for water, biodiversity and air, and archives all data in accessible formats. The plan’s reach extends from northern Alberta into Saskatchewan, Northwest Territories and Manitoba. Peter Kent, Minister of the Environment, said in a press conference that the plan provided both industry and government “with the hard science to prove to the world that this great resource is being developed in a responsible and a sustainable and constantly improving way.” Industry groups have met the plan with cautious approval: Transparency works in their favor, but there is concern that this new initiative could duplicate the extensive monitoring work they already do internally and for the province. “It would 52 | CIM Magazine | Vol. 6, No. 6

At the working face of Syncrude’s North Mine

Courtesy of Syncrude Canada Ltd.

For Imperial Oil, the regulation meant a redesign and reapproval of its Kearl mining project, initially approved in 2009. The company is still researching tailings technologies that will pass muster, but the Energy Resources and Conservation Board (ERCB) allowed it to delay meeting the requirements until 2018 on the condition that it would thereafter exceed them. The first phase of production at Kearl is scheduled to commence in late 2012. That was not the only motivation for the redesign, says Imperial spokesman Pius Rolheiser. The company decided to cut three construction phases down to two, limiting the amount of infrastructure it needed to build and minimizing the site’s footprint. The operation will initially produce 110,000 barrels per day, rising to 170,000 after a debottlenecking period. The resulting bitumen, processed using paraffinic froth treatment, will be ready to ship to refineries without further upgrading. The second phase will expand production up to 345,000 barrels per day (bpd). The decision also pushed the price of the first phase higher, resulting in a steep cost increase from $8 billion in 2009 to $10.9 billion in 2011. Observers interpreted it as a striking example of industry-wide budget swelling, but

be a real missed opportunity if the federal government isn’t able to coordinate their monitoring plans with what’s already happening from a provincial perspective.” says Alan Fair, executive director of the Oil Sands Tailings Consortium. “That would just lead to wasted effort and a delay in getting us all to the right place on monitoring.” Alberta Environment spokeswoman Jessica Potter would like to assuage those concerns. “Alberta Environment’s intention is to avoid any duplication,” she says. “All the work from our provincial panel and the work from the federal government is going to be used to create the new system. Basically the plan is to evolve the system to be better integrated.” After setting out the framework for monitoring, the key parties are now working on an implementation plan. Funding for this project will be tricky. The plan will cost an estimated yearly $50 million in the early years, and government and industry have not yet agreed on where that will come from. Environment Canada expects the industry to pay for the monitoring. As Kent put it: “They recognize $50 million to most of us represents a very large amount of money, but against an industry that’s expected to generate $80 billion next year, it is a very small price to pay for social licence.” Members of industry may not be on the same page. Alan Fair believes oil sands companies will be reluctant to shell out for increased monitoring. “I can’t necessarily speak for the individual companies,” he says, “but the feds should be looking to fund what they see as a need for additional monitoring. To the degree that it can utilize existing infrastructure on company leases and adjacent areas, the industry has always been willing and able to provide that type of in-kind support.” CIM

energy & industry Rolheiser has a different explanation: the company is simply doing more in the first phase than originally planned. Meanwhile, the original estimated total cost of $5 per barrel has not changed. Kearl avoided major cost inflation by locking in its construction contracts in 2009, when the market was less competitive. It also ordered prefabricated facilities to be assembled on site. Those prefab facilities proved more expensive than initially expected when Imperial’s plan to ship a fraction of the prefab modules on U.S. highways through Idaho and Montana met opposition on environmental grounds. After a months-long legal process, the company took steps to cut the modules down to a size suitable for less contentious interstate roads, while continuing to pursue permits for the original paths. The majority of the modules have had no transport problems.

Cautious expansion What Kearl escaped by contracting in 2009 was a hot construction market that has driven up producers’ capital costs. Strong oil prices draw investment to the oil sands, but also feed into basic inputs like steel and cement. This is already a high-cost, low-margin industry. Too much cost inflation and producers will either back off or face major budget overruns. Meanwhile, any increase in activity adds to the already tight competition for labour. That means that positions take longer to fill and require more perks, says Palmer of NACG. “But at the end of it, you still have to be profitable,” he points out. “If you’re just doing it to attract people and there’s no money in it, then obviously that’s not the answer either.” One operator explicitly declines to pay too high a price for labour. Canadian Natural Resources Limited (CNRL), learning from the expensive first phase of its Horizon mining and upgrading project, took steps to limit how far the balloon stretches in its upcoming round of expansions.

The company broke up its remaining work into 46 individual projects and will start or stop construction in response to market conditions, not undertaking any expansions unless it is confident of a return on capital and not setting any target dates. CNRL also established spending guidelines, capping its construction labour force at 5,500 and its yearly expenditures at $2 billion to $2.5 billion. Abandoning strict schedules seems to have been a wise decision, since the Horizon project has continued to see significant delays. The project originally commenced production of synthetic crude oil in early 2009, seven months late and 46 per cent over budget. CNRL assigned much of the blame then to cold weather and the high costs of steel, fuel and labour. But after a successful first run, with production averaging 90,900 bpd in 2010, a fire in the coker unit of its primary upgrader stopped production in January 2011. The fire began when the top unheading valve on an active coke drum was opened, releasing hot hydrocarbons that ignited and lit the surrounding building on fire. Exceptionally cold weather in January and February delayed the repair process, as did a May forest fire that did not damage facilities but took personnel away from the repair effort. After a tough beginning of the year, CNRL is back on track. In mid-August its upgrader once again began producing crude oil with shipment of synthetic crude resuming shortly after. At some point, CNRL expects to expand to 250,000, and the ultimate capacity, after further expansion, could be up to 500,000 bpd.

Out of the mothballs Suncor Energy Inc. has been able to report positive news on its own oil sands construction. The Voyageur project, a major element in Suncor’s growth strategy that was shelved in 2008 in response to the financial crisis, is back in business after Total E&P acquired a 49 per cent

Oil Sands

& Heavy Oil

September/October 2011 | 53

energy & industry work. The mine complex facility serving the Millennium Mine was expanded to allow rebuilds and other shop work for North Steepbank equipment. By the end of 2011, more work will be completed. Toutant says this includes commissioning of the NSE power substation, installation of the pit powerline, and construction of field maintenance facilities for minor repairs and services. Overburden pre-strip of the phase 1 pit will

The HR question By Peter Caulfield

Courtesy of Women Building Futures

stake. The project has a capital budget of $260 million for 2011 and a targeted startup of 2016. At a planned capacity of approximately 200,000 bpd, it will support expanded production from in situ projects and from the future Fort Hills and Joslyn mines. “We are still in the very early stages of planning,” says Dany Laferrière, media relations manager at Suncor. “We expect to progress with engineering and site preparation work for both the Fort Hills and Voyageur projects during the rest of this year.” In the meantime, Suncor has advanced development of its North Steepbank extension (NSE). This operation will extend the life of Suncor’s Millennium and Steepbank mines and cut their operating expenditures by shortening hauls and lightening traffic congestion. Anne Marie Toutant, vice-president of mining operations, says the outcome may be positive for the environment as well. “These efficiencies and resulting reduced truck gross operating hours provide environmental benefits through reduced energy intensity, nitrogen oxide and sulphur dioxide emissions during the 10-year life of the North Steepbank extension,” she explains. At the start of this year, 60 per cent of the project cost had been executed, according to Toutant. That included significant reclamation work – tree clearing, muskeg drainage and stockpiling – as well as pit pre-development

Training programs such as Women Building Futures are generating a new supply of workers to the construction, and oil and gas industry, sectors struggling to meet their growing HR demands.

There were an estimated 12,269 employees in the oil sands sector in 2009, according to the Calgary-based Petroleum Human Resources Council of Canada. If development in the oil sands creeps along, the Council foresees net hiring requirements of 9,073 in 2020 – an increase of 74 per cent. However, if oil prices rise and stay high, that estimate jumps to 14,948 – an increase of 122 per cent. To fill these positions HR managers are taking their cue from the sector and focusing on exploration and development. Vermax Group Inc., a Calgary-based immigration consultant company, specializes in bringing in field construction workers from outside Canada for the oil and gas industry. Between 2005 and 2008, Vermax matched more than 1,000 temporary foreign workers with jobs. “There will be more in the future,” says president Peter Veress. Vermax recently set up a training centre in Mexico where pipe-fitters and welders learn safety and language skills before going to Alberta. Temporary foreign workers are not a quick fix: hiring can be expensive, as paperwork, training and travel can add up to as much as $10,000 per worker, and workers in certified trades have a year to pass qualifying exams in their area of specialty. 54 | CIM Magazine | Vol. 6, No. 6

energy & industry have been completed, the phase 2 pit will be opened, and the primary haul road will be constructed.

A resilient industry Project suspensions like those at Suncor illustrate the knife-edge nature of oil sands profitability. Lean too far in one direction and synthetic crude oil is not earning enough to compete with conventional; lean too far in the other

Calgary-based Flint Energy Services Ltd., which provides construction management, planning and field labour to the oil sands, is already experiencing a labour shortage. â&#x20AC;&#x153;As we approach peak demand for labour in 2013 and 2014, 49 per cent [of total requirements] will need to be recruited from other industries or international sources,â&#x20AC;? says spokesman Guy Cocquyt. To address the upcoming demand, Flint has an apprenticeship program with almost 1,500 trainees. â&#x20AC;&#x153;We see the trend increasing, as industry can match two apprentices for every journeyman,â&#x20AC;? says Cocquyt. The company is also investigating ways to bring Aboriginal peoples, women, immigrants and temporary foreign workers on board. The oil sands are also looking to hire from another source of labour: women in the trades. Kiann McNeill, spokeswoman for Edmonton-based Women Building Futures, says some of the organizationâ&#x20AC;&#x2122;s non-profit construction training graduates work for companies active in the oil sands, including Suncor Energy, Bantrel, PCL Intracon Power Inc., Ledcor, JV Driver Projects Inc., Mammoet and Fuller Austin Insulation Inc. McNeill says WBF has received a lot of positive feedback about its graduates. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve heard from their employers that women are more careful than men and that theyâ&#x20AC;&#x2122;re easier on equipment,â&#x20AC;? she says, â&#x20AC;&#x153;Women also solve problems differently. Theyâ&#x20AC;&#x2122;re less likely to â&#x20AC;&#x2DC;hit it with a hammerâ&#x20AC;&#x2122; when they run into a problem, and they change the work environment, making it safer.â&#x20AC;? Suncor Energy Inc. has hired WBF graduates and is seeking to expand the program to include the journeywoman START program that WBF has developed with the provincial government to help more women establish themselves in the contruction, oil and gas sectors as well. â&#x20AC;&#x153;Attracting and retaining sources of talent that have previously been under-represented in the trades sector is critical to ensure the necessary people and skills are available to Suncor in the short and longer term,â&#x20AC;? says Dany LaferriĂ¨re, manager of corporate communications at Suncor. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s no magic bullet to ensure we have the talent in place when labour shortages heat up again,â&#x20AC;? adds LaferriĂ¨re, â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re pulling every lever that weâ&#x20AC;&#x2122;ve got, but itâ&#x20AC;&#x2122;s not just a numbers game. Whatâ&#x20AC;&#x2122;s the same for us this time around is that itâ&#x20AC;&#x2122;s about hiring quality people with the right attitude and values, one at a time.â&#x20AC;? CIM

direction and the industry enters an expensive boom cycle, falling victim to its own success. While strategies like prefabrication and flexible construction plans aid with cost control, the basic difficulties seem likely to remain. Tight margins have been a feature of the industry since its inception. Concerns about its environmental impacts are growing, not receding, and if those concerns result in further regulatory measures, the workload for operators will only increase. On the other hand, a number of stakeholders are determined to make this resource work for them. It has become a critical part of Albertaâ&#x20AC;&#x2122;s economy, accounting for a significant portion of business investment and supplying more than $3 billion to provincial coffers in fiscal year 2009-2010. The Harper government supports the oil sands industry and has lobbied on its behalf. Above all, the worldâ&#x20AC;&#x2122;s insatiable desire for oil ensures there are good prospects for any feasible means of producing it. Bitumen mining has had its booms and busts in the past; it recovered from slumps in the 1980s, the 1990s, and as recently as 2009. History shows that challenges in mining bitumen do not stop projects from getting built â&#x20AC;&#x201C; they just take a little longer and cost a little more. There is too much potential wealth in the oil sands to let any of it go to waste. CIM

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September/October 2011 | 55

energy & industry

Industrial strength Metallurgical coal operators and developers focused on growth By Alexandra Lopez-Pacheco

he infrastructure boom is here. According to CIBC World Markets Inc., it will be worth an estimated $25 to $30 trillion of new infrastructure investment in the next 20 years. In part, the boom is due to world governments, including Canada’s, responding to the 2008 global financial meltdown and the first international recession by pledging trillions to infrastructure spending in order to create jobs and stimulate economies. But also, developed nations have aging infrastructures, and emerging nations need to expand and build new infrastructure to keep up with growth and demands. One way or another, the infrastructure will be built. And where there is infrastructure being built, there is a need for high-quality coals, which, along with iron ore, are the key ingredients needed to make steel. In fact, according to the World Coal Association, more than 60 per cent of total global steel production is dependent on metallurgical coal. From the perspective of steel manufacturers and their customers, there is a huge problem. “There is not enough metallurgical coal production in the world to satisfy the growth in demand,” says Robin Goad, president and CEO of London, Ontario-based Fortune Minerals Limited, whose Mount Klappan project in northwest British Columbia contains 56 | CIM Magazine | Vol. 6, No. 6

2.8 billion tonnes of anthracite coal, valuable as a pulverized coal injection (PCI) coal in blast furnaces because of its low volatility and high energy content. “There are large deposits in Mongolia and also in southern Africa, but Indian crude steel production is anticipated to quadruple in the next decade,” Goad says. “Brazilian crude steel production is anticipated to quadruple over the next 20 years. In Japan and South Korea, growth in the demand for coal is increasing at about three per cent per year and some of the traditional suppliers are no longer supplying.”

Where will it come from? Until just a couple of years ago, China was the world’s largest producer of anthracite coal, but in 2009, the country announced it would no longer export its premium PCI coal. Last year, according to the World Coal Association, China imported an estimated 48 million tonnes of coking coal. The world’s second largest producer of anthracite coal, Vietnam, announced earlier this year that it was raising tax on coal exports to 20 per cent from 15 per cent. As well, it would gradually cut coal exports to three million tonnes per year by 2015 from 16.5 million tonnes this year, while raising imports to six million tonnes of coal per year by 2015.

Courtesy of Walter Energy Ltd.

Barges loaded with metallurgical coal head towards the Port of Mobile, Alabama, where it will be loaded onto ocean-going vessels bound for ports in some of the world’s fastest growing steel-producing nations.

energy & industry the U.S. to central Canada are relatively lower compared to transporting coal from western Canada.” Last year, U.S.-based Walter Energy, Inc. acquired Vancouver-based metallurgical coal producer Western Coal Corp., which has mines in northeast British Columbia, West Virginia, U.S., and in South Wales in the U.K. “We liked [Western Coal’s] growth story and its plans to increase coking coal production volumes 133 per cent by 2013,” said representatives for Walter Energy at the time. Teck Resources Limited, the world’s second largest exporter of seaborne metallurgical coal, with five mines in British Columbia and one in Alberta, has said it is taking steps to increase its production levels, as has Alberta-based Grande Cache Coal Corporation, which holds coal leases covering over 22,000 hectares in the Smoky River Coalfield in west-central Alberta. In July, Grand Cache got approval to proceed with the development of a new underground operation. Other new projects include the Raven underground coal mine on Vancouver Island, being developed by an alliance between Compliance Energy Corporation, Itochu Corp. of Courtesy of Fortune Minerals Limited

In the last decade, the price of metallurgical coal has risen, on average, from US$40 per tonne to close to US$230 per tonne in 2011. According to The AME Group, a global firm of economists in the metal and mineral industries, for the more than 20 metallurgical coal mines in Canada – both in operation and in development – that is good news. The combined products of those mines in production make Canada the second largest exporter of metallurgical coal – at least that is until last year, when it was bumped down to third place by the U.S. “Traditionally, the U.S. is a large metallurgical coal producer, but we call them a swing producer,” says Kevin Stone, senior commodity analyst, Natural Resources Canada. “When the market is good, they export more. When it’s not so good, they export less. Right now, the market is good.” In 2010, Canadian companies exported 8.6 million tonnes of metallurgical coal to Japan, 5.3 million tonnes to South Korea, 4.3 million tonnes to China, 1.6 million tonnes to Brazil, 1.4 million tonnes to the U.S., 1.3 million tones to Germany and one million tonnes to Italy, as well smaller amounts to 13 other countries. And metallurgical coal comprised 83 per cent of all Canadian coal exports. Australia is the world leader in metallurgical coal production and exports, and everyone else, says Stone, is way behind the top three exporters. “And I don’t see that changing, at least in the next three to five years,” he says.

www.klohn.com

Growth from coast to coast So the country’s largest reserves, which are in Western Canada, are in high demand. Not surprisingly, there has been a flurry of activity in the sector in recent years. In August, Fortune Minerals announced it had finalized a partnership for its Mount Klappan project with South Korea’s POSCO, the world’s third largest steel producer. In the same month, Xstrata Coal announced it had purchased a metallurgical coal mining company in British Columbia, First Coal Corporation, for C$147 million. The acquisition provides Xstrata Coal with access to coking coal exploration leases in BC. But it is not Xstrata’s first metallurgical coal mining project in Canada. Since 2006, the company has been working on Cape Breton, Nova Scotia’s Donkin coal project, which is expected to produce approximately 2.75 million tonnes per annum of washed export grade metallurgical coal when it is operational. That project could add an interesting twist to the story of metallurgical coal in Canada, since almost all metallurgical coal projects in the country – both operational and in development – are in British Columbia and Alberta. “The country exports almost all its metallurgical coal,” says Stone. “We imported 3.1 million tonnes of metallurgical coal from the U.S. in 2010 to be used in the Canadian steel industry, primarily in central and eastern Canada. The reason why it was imported is essentially geography. Transportation costs from

Down to Earth. Up to the Challenge.

Formed in 1951, Klohn Crippen Berger (KCB) has a long history ŽĨ ƉĂƌƟĐŝƉĂƟŽŶ ŝŶ ƐŽŵĞ ŽĨ ƚŚĞ ůĂƌŐĞƐƚ ĂŶĚ ŵŽƐƚ ĐŚĂůůĞŶŐŝŶŐ engineering projects in the world. Our commitment to excellence is the driving force behind ĞǀĞƌǇƚŚŝŶŐ ǁĞ ĚŽ͘ /Ŷ ĨĂĐƚ͕ ŽƵƌ ƉƌŽũĞĐƚƐ ĐŽŶƟŶƵĞ ƚŽ ƐƚĂŶĚ ƚŚĞ ƚĞƐƚ ŽĨ ƟŵĞ ĂŶĚ͕ ƚŽĚĂǇ͕ ǁĞ ǁŽƌŬ ŽŶ ŵĂŶǇ ƐŝƚĞƐ ƚŚĂƚ ǁĞ ŚĞůƉĞĚ ĚĞǀĞůŽƉ decades ago. tĞ ĂƌĞ ƉƌŽƵĚ ŽĨ ŽƵƌ ůĞŐĂĐǇ ĂŶĚ ǁŝůů ĐŽŶƟŶƵĞ ƚŽ ďƵŝůĚ Ă ďĞƩĞƌ ǁŽƌůĚ ƚŚƌŽƵŐŚ ĞǆĐĞůůĞŶĐĞ͕ ŝŶŶŽǀĂƟŽŶ ĂŶĚ ƚĞĂŵǁŽƌŬ͘

September/October 2011 | 57

energy & industry

Source: WCA, IEA, WSA

TOP MET COAL EXPORTERS 2010 est. (millions of tonnes) Australia United States Canada Russia Mongolia

155 51 27 14 11

TOP MET COAL IMPORTERS 2010 est. (millions of tonnes) Japan China India Korea Brazil

58 48 30 28 12

Japan, and LG International Corp. of Korea. It will, if it proceeds, produce metallurgical coal for export.

At the mercy of Mother Nature For all the opportunities, the sector also has its challenges. â&#x20AC;&#x153;It takes so long for the industry to build the capacity,â&#x20AC;? says Stone. â&#x20AC;&#x153;However, it is influenced by shortterm fluctuations in the global market, because Canadaâ&#x20AC;&#x2122;s metallurgical coal producers depend on foreign orders. The industry is a captive producer and the sector really has to deal with the fluctuations in global demands,â&#x20AC;? he explains. In fact, Canadaâ&#x20AC;&#x2122;s metallurgical coal production declined by almost eight per cent in 2009 due to the global recession. Another significant challenge to metallurgical mining is nature. Take Australia metallurgical coal production, for example. This countryâ&#x20AC;&#x2122;s production was temporarily devastated as a result of the floods that ravaged the eastern part of the country, although, as Stone points out, production and exports are almost back to normal. The reason the metallurgical coal sector can be so susceptible to the forces of nature is primarily because, more often than not, the coal needs to be hauled from remote and underdeveloped regions to large ocean bulk terminal ports for export within established seaborne trade routes.

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â&#x20AC;&#x153;Most of Canadian coking coal has very good quality characteristics,â&#x20AC;? says Gordon Gormley, who has developed a number of Canadian and international coking coal properties and is now acting as a private consultant. â&#x20AC;&#x153;The problem is that most of it is in the mountains in very rugged terrain, having extreme temperatures, and needs big equipment and big plants. Most of the coal requires wash plants, and that requires infrastructure, power and tailings ponds. You need rail and you need a town thatâ&#x20AC;&#x2122;s close enough to drive to it.â&#x20AC;? â&#x20AC;&#x153;Port capacity to handle new coking coal and the environmental assessment process by federal, provincial, Aboriginal and occasionally U.S. federal and state agencies also pose significant challenges for future developers,â&#x20AC;? says Gormley. â&#x20AC;&#x153;We need facilities that can handle shipments of up to 150,000 tonnes, such as Westshore coal export terminal south of Vancouver, but it took a lot of time and money to build that. Fortunately, in northeast British Columbia, the Ridley Terminal has some excess capacity, which a lot of people plan on using, but thereâ&#x20AC;&#x2122;s still a limited port bottleneck issue if Canada is to develop all the coking coal it could. The U.S. has commenced using Westshore Terminals for its coal exports as that country now faces similar port capacity shortages as it tries to expand its own coal sales to Asian markets.â&#x20AC;? Meanwhile, resource nationalism is spreading to many parts of the world and that, says Goad, is an issue the mining sector in general is facing. â&#x20AC;&#x153;This is particularly the case in metallurgical coal,â&#x20AC;? he says. But in Canada, resource nationalism in other countries has a silver lining when it comes to metallurgical coal â&#x20AC;&#x201C; as long as Canadian governments are not hit by the fever and start wanting a bigger piece of the pie through higher taxes and royalties, as it will only increase world demand. Overall, these are indeed exciting times for the worldâ&#x20AC;&#x2122;s third â&#x20AC;&#x201C; sometimes second â&#x20AC;&#x201C; largest producer of metallurgical coal. CIM

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58 | CIM Magazine | Vol. 6, No. 6

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énergie et industrie

Le marché de l’énergie Le marché mondial est très prometteur pour les producteurs d’énergie canadiens; toutefois, il faut être en mesure de le percer

e Canada, qui est doté de vastes gisements de charbon, d’uranium, de gaz naturel et de pétrole brut, a les ressources nécessaires pour contribuer aux besoins énergétiques de la planète. En 2010, les exportations d’énergie du pays, y compris l’électricité, ont rapporté 90,7 milliards de dollars, ce qui représente près du cinquième de nos exportations globales. Presque la totalité de ces revenus, dont la majeure partie découlait des ventes de pétrole, provenait des États-Unis, qui achètent environ 97 pour cent des produits énergétiques du Canada. Compte tenu de la solidité, de la durabilité et des avantages géographiques de ces liens commerciaux, on pourrait s’attendre à ce que l’avenir du secteur énergétique canadien soit radieux, sans une ombre au tableau. Or, la réalité n’est jamais aussi simple, et pratiquement rien n’est simple lorsqu’il est question d’acheminer des centaines de milliers de tonnes de matières premières chaque jour. Prenons l’exemple du pétrole : bien que la production canadienne de sables bitumineux ne cesse de prendre de l’ampleur, les exploitants ont du mal à l’acheminer jusqu’au consommateur la capacité pipelinière vers la côte du golfe du Mexique ne suffit tout simplement pas. Selon Esther Mui, analyste sectorielle indépendante et ancienne vice-présidente principale, Pétrole et gaz, à l’agence de notation DBRS, les producteurs canadiens subissent déjà les effets négatifs du manque de capacité. « Une grande partie du pétrole brut lourd canadien ne se rend pas jusqu’aux raffineries du golfe du Mexique », affirme Mme Mui. 60 | CIM Magazine | Vol. 6, No. 6

Deux projets de pipeline sont prévus pour briser le goulot d’étranglement. Le premier est une proposition d’agrandissement de l’oléoduc Keystone XL par TransCanada Corporation. Le projet Keystone XL, de 7 milliards de dollars, permettra d’augmenter à la fois la portée et la capacité du pipeline en vue d’acheminer du pétrole lourd du Canada vers des raffineries aux États-Unis. En résumé, le projet devrait permettre d’ajouter 500 000 barils par jour additionnels de capacité de transport, portant le total à 1,1 million de b/j. Les exploitants de sables bitumineux, tel Cenovus, fondent de grands espoirs sur Keystone XL. Selon Jessica Wilkinson, porte-parole de la société, Cenovus croit fermement que le projet d’agrandissement de Keystone ira de l’avant. Le plan stratégique établi sur 10 ans, annoncé par la société en 2010, visait au bas mot à quadrupler la production actuelle, la portant à 500 000 b/j d’ici la fin de 2021. Mme Wilkinson affirme que ce nouveau plan prévoit l’accroissement anticipé de la production de la société. « Nous augmentons la capacité de production totale à Foster Creek de 270 000 à 290 000 b/j bruts, en augmentant la capacité des phases futures et en forant certains puits stratégiques », a-t-elle expliqué. La société a également terminé son dernier agrandissement, la phase D de 40 000 b/j à son exploitation de Christina Lake, au début d’août, soit six mois avant la date prévue. Bien que la priorité du projet Keystone soit d’approvisionner le marché des États-Unis plus efficacement, les initiatives en ce sens ne se font pas sans problème. En

Courtoisie de Cenovus

L’établissement de Cenovus Energy au lac Christina

énergie et industrie 2010, le Canada a exporté plus de 2,5 millions de b/j sur sa production pétrolière de 2,8 millions de b/j – soit pas moins de 89 pour cent – vers les États-Unis. Les fluctuations de la demande des États-Unis, tout comme celles observées en 2008 et 2009, constituent un sérieux risque pour les exploitants de sables bitumineux, qui doivent composer avec les contraintes liées à la géographie et aux infrastructures pipelinières. Pour remédier à cette situation, un autre projet de pipeline est proposé : le projet Enbridge Northern Gateway, de 5,5 milliards de dollars et de 1 177 km de long, reliant Bruderheim, en Alberta, à un nouveau terminal portuaire qui serait construit à Kitimat, en Colombie-Britannique. Le pipeline de 525 000 b/j permettrait au pétrole canadien d’être acheminé jusqu’aux marchés du littoral du Pacifique, où les niveaux de population et de revenu augmentent et où la demande de produits pétroliers progresse et devrait continuer à croître.

Explorer de nouveaux marchés L’accès aux marchés étrangers est également vital pour les exportateurs de charbon thermique du Canada. Par le passé, la plus grande partie du charbon exporté par le Canada était le charbon de qualité métallurgique, plus lucratif, utilisé pour la fabrication de l’acier, mais la situation pourrait être en train de changer. Allen Wright, président de l’Association charbonnière canadienne, attire l’attention sur le projet Vista que met au point Coalspur Mines Limited dans l’ouest de l’Alberta. D’après l’étude de préfaisabilité, une fois le projet achevé en 2014, Vista pourrait produire neuf millions de tonnes de charbon thermique aux fins de production d’énergie électrique, 90 pour cent de la production étant destinée à l’exportation. Le tonnage additionnel ferait plus que doubler les exportations de charbon thermique du Canada, lesquelles ont, l’an dernier, totalisé 5,6 millions de tonnes, la plupart destinées à des clients asiatiques. Chris Borowski, responsable des relations avec les investisseurs à Coalspur, ajoute que l’étude de faisabilité actuellement en cours pour Vista vise à la fois à rehausser la production annuelle de façon à la porter à 10 millions de tonnes, et à accroître la proportion de charbon destiné à l’exportation. « Aux États-Unis, Arch Coal a signé une entente en vue d’exporter son charbon du Powder River Basin à l’échelle mondiale. Le charbon que nous croyions devoir vendre à l’échelle nationale est en fait de meilleure qualité que celuilà. Nous avions initialement prévu le vendre uniquement au pays parce que jamais ce type de charbon n’avait été vendu à l’échelle mondiale auparavant », a-t-il expliqué. Ernie Lalonde, vice-président principal, Exploitation minière, à DBRS, souligne que, naturellement, pour s’implanter sur le marché mondial, plus lucratif, les exportateurs de charbon canadiens doivent d’abord avoir accès aux ports maritimes. « Ils doivent parcourir 1 200 km jusqu’à la côte, alors que l’Indonésie et l’Australie et une foule d’autres pays exploitent du charbon le long de la côte et sont, par

conséquent, plutôt compétitifs », explique-t-il. Coalspur, qui, selon M. Borowski, s’attend à ce que ses coûts d’exploitation s’établissent à 51,30 $/tonne, devra débourser 25,50 $/tonne de plus en frais ferroviaires et portuaires. Toutefois, contrairement aux producteurs pétroliers, les producteurs de charbon ne peuvent pas vraiment se tourner vers nos voisins du sud pour trouver des clients. Le littoral du Pacifique est le marché le plus probable. M. Lalonde cite l’exemple de l’Indonésie : « Ce pays a besoin de charbon pour répondre aux besoins d’énergie à l’échelle locale, parce que la population indonésienne est importante et en pleine croissance et qu’elle requiert plus d’énergie. On s’attend à ce que tôt ou tard, ses exportations vers le marché du charbon thermique plafonnent, voire même soient inversées par la demande intérieure. » Un autre marché important est l’Inde, qui l’an dernier affichait le taux de croissance du PIB le plus élevé au monde, soit 10,4 pour cent. Le gouvernement indien s’est engagé dans un ambitieux programme d’électrification et prévoit ajouter plus de 80 000 MW entre 2012 et 2017. Les fournisseurs de charbon seront donc les bienvenus dans la région du littoral du Pacifique pendant de nombreuses années à venir.

Changer les mentalités au pays Le charbon canadien pourrait bientôt, du moins à première vue, recevoir un accueil moins enthousiaste au pays. Une nouvelle réglementation prévoit des limites d’émission plus sévères en ce qui a trait aux centrales au charbon. « Il faudra une solution technologique pour corriger le problème des émissions de gaz carbonique », estime Ernie Lalonde. « Ainsi, des gens se retrouvent avec de vastes ressources de charbon impropres à l’exportation et cherchent des façons de remédier au problème des émissions de CO2 et de faire avancer des initiatives axées sur le captage de carbone, entre autres », conclut-il. Comme M. Lalonde, Allen Wright a grandement confiance dans les percées technologiques. Mais il insiste également sur le fait que le charbon est une ressource trop importante pour être négligée. Il cite une récente étude menée par l’Energy Information Agency qui prévoit que même en 2035, pas moins de 44 pour cent de l’électricité des États-Unis proviendra du charbon. « Je ne crois pas que les centrales au charbon pourront disparaître. Les gouvernements doivent faire leur part et offrir leur soutien à tous les secteurs énergétiques, pas seulement le charbon, jusqu’à ce que la technologie confère un avantage concurrentiel », dit-il. L’utilisation plus efficiente et à plus faible intensité en carbone du pétrole et du charbon du Canada sera sûrement un processus long et exigeant. Reste à voir si la technologie sera aussi fructueuse que l’espèrent MM. Lalonde et Wright. Cependant, une chose est sûre : grâce à ses ressources, le Canada est un chef de file en matière de production énergétique. ICM September/October 2011 | 61

énergie et industrie

Une question d’équilibre Les exploitants de sables bitumineux cherchent à consolider leur assise pendant une période de changements économiques, sociaux et réglementaires

our un exemple de dynamisme économique, on n’a qu’à regarder du côté de l’industrie des sables bitumineux de l’Alberta. Depuis 2005, la production de pétrole brut synthétique et de bitume extraits des sables bitumineux a cru de presque 40 pour cent. L’expansion de cette industrie se poursuivra certainement au cours des années à venir; dans le contexte de l’incertitude apparente concernant les approvisionnements en pétrole provenant d’autres continents, les États-Unis ont intérêt à maintenir leurs propres ressources pétrolières à leur disposition, et l’industrie des sables bitumineux mise sur les besoins de ce marché. « On prévoit que la vaste majorité des nouveaux approvisionnements en pétrole du Canada proviendront des sables bitumineux », déclare Greg Stringham, vice-président à l’exploitation des sables bitumineux de l’Association canadienne des producteurs pétroliers (ACPP). Cet organisme prévoit que, vers 2025, la production des exploitations de sables bitumineux augmentera à 3,7 millions de barils équivalents de pétrole par jour, par rapport à 1,5 million en 2010. Environ un tiers de la croissance estimée proviendra de l’exploitation à ciel ouvert, bien que, sur la base de leur expérience, les principaux producteurs soient d’avis que le développement et l’expansion des gisements en temps opportun et dans les limites budgétaires prévues ne sont pas des tâches faciles. Les fluctuations du prix du pétrole, les coûts élevés et les préoccupations environnementales ont étalé les 62 | CIM Magazine | Vol. 6, No. 6

calendriers des projets de construction en cours. Toutefois, les exploitants sont sûrs que leurs plans seront réalisés.

Nouveaux règlements pour la remise en état des sites Les entreprises d’extraction de sables bitumineux effectuent des travaux de recherche et de développement sur les technologies de gestion des stériles, mais l’établissement d’objectifs et d’échéanciers spécifiques par l’Office de conservation des ressources énergétiques (ERCB) de l’Alberta a accéléré et réorienté leurs efforts de recherche. Syncrude Canada Ltd, qui utilisait déjà des stériles composites et étudiait des solutions pour limiter l’utilisation d’eau, a entrepris l’étude d’une technologie de centrifugation en réponse aux nouvelles directives. « Cette technique d’assèchement des stériles est plus rapide que les autres technologies », explique Cheryl Robb, conseillère en relations avec les médias chez Syncrude. Pour la Compagnie Pétrolière Impériale ltée, ces règlements nécessitent la révision de son projet d’exploitation minière de Kearl et une nouvelle demande d’approbation pour celui-ci, qui avait reçu une première approbation en 2009. Cette entreprise, qui est toujours à la recherche de technologies acceptables de traitement des stériles, a obtenu de l’ERCB un délai supplémentaire pour se conformer aux exigences, jusqu’en 2018, à la condition de les dépasser par la suite. La première phase de production de Kearl doit commencer vers la fin de 2012.

Courtoisie de Syncrude

La canalisation d’hydrotransport mène au séparateur primaire d’Aurora.

énergie et industrie Ce n’était pas le seul incitant pour la révision du projet, déclare Pius Rolheiser, porte-parole de l’Impériale. Il leur faut diminuer de trois à deux le nombre des étapes de la construction, ce qui permettra de limiter les infrastructures requises pour la construction et de réduire au minimum l’empreinte environnementale du site. Cette exploitation devra produire initialement 110 000 barils par jour, pour passer à 170 000 après la période de rodage. Le bitume obtenu, purifié par un traitement à la mousse paraffinique, pourra ensuite être expédié directement aux raffineries sans autre traitement. Au cours de la phase 2, il leur faudra accroître la production jusqu’à 345 000 barils par jour.

Une expansion prudente Parce que les contrats de Kearl ont été conclus en 2009, l’entreprise a évité une période de surchauffe du marché de la construction qui a fait augmenter les coûts d’investissements des producteurs. En plus d’attirer des investissements dans les entreprises d’exploitation des sables bitumineux, des prix élevés du pétrole se répercutent sur la demande de base de produits comme l’acier et le béton. Comme il s’agit d’une industrie à coûts élevés et à faible marge de profit, s’il y a trop de coûts liés à l’inflation, les producteurs doivent renoncer à leurs projets ou faire face à d’importants dépassements budgétaires. La Canadian Natural Resources Limited (CNRL), tirant des leçons des coûts élevés de la phase 1 de son projet d’extraction et de développement minier d’Horizon, a pris des mesures afin de limiter la croissance des coûts pour les prochaines étapes de développement. Après avoir subdivisé les travaux qui restent à faire en 46 projets distincts, elle entreprendra ou suspendra les travaux de construction en fonction des conditions du marché et n’entreprendra de nouveaux développements que s’il y a de bonnes raisons d’en attendre un rendement du capital positif, et sans établir d’échéances. La CNRL a aussi établi des lignes directrices limitant la main-d’œuvre pour la construction à 5 500 personnes et ses dépenses annuelles à 2,0-2,5 milliards de dollars. Après un démarrage difficile au début de l’année, notamment à cause d’un incendie sur le site, la CNRL a retrouvé son rythme de croisière. Vers la mi-août, son usine de traitement de pétrole brut a été remise en production et a repris ses livraisons de brut synthétique peu après. Ultérieurement, la CNRL devrait augmenter sa production à 250 000 barils par jour, et sa capacité finale, après d’autres travaux de développement, pourrait atteindre les 500 000 barils par jour.

Sortie du cocon Suncor Energy Inc. annonce des progrès pour la construction de ses installations de traitement des sables bitumineux. Dans la foulée de l’acquisition d’une participation de 49 pour cent par Total E & P, elle a réactivé le projet Voyageur, un élément majeur de sa stratégie de croissance, dont l’exécution avait été suspendue en 2008 à cause de la crise financière. Ce projet a un budget d’équipement de

260 millions de dollars pour 2011 et l’entrée en production est prévue pour 2016. Avec une capacité prévue d’environ 200 000 barils par jour, ce projet rendra possible un accroissement de la production de projets in situ et aux futures exploitations de Fort Hills et de Joslyn. « Nous en sommes encore aux étapes préliminaires de la planification », déclare Dany Laferrière, directeur des relations avec les médias chez Suncor. « Les travaux d’ingénierie et de préparation des sites des projets Fort Hills et Voyageur devraient aller de l’avant jusqu’à la fin de cette année. » Entretemps, Suncor poursuit le projet de développement de la North Steepbank (North Steepbank Extension - NSE), qui doit prolonger la vie active de ses exploitations de Millennium et de Steepbank, et diminuer les frais d’exploitation en réduisant les parcours et les bouchons de circulation. Anne Marie Toutant, vice-présidente à l’exploitation minière, dit en attendre également des effets positifs pour l’environnement : « L’augmentation de l’efficacité et la diminution des temps de camionnage bruts qui en résultent sont bénéfiques pour l’environnement grâce à une réduction de la consommation d’énergie et des émissions d’oxydes d’azote et de dioxyde de soufre pendant les dix années de la durée de vie du NSE. » Vers la fin de 2011, d’autres travaux seront achevés. Selon Mme Toutant, ce sont notamment la mise en service de la centrale électrique de la NSE, la mise en place de ligne électrique de la fosse et la construction d’installations d’entretien sur place pour les petits travaux de réparation et les services. L’enlèvement du mort-terrain de la fosse de la phase 1 sera alors terminé, la fosse de la phase 2 sera creusée et la principale voie de transport sera construite.

Une industrie résiliente Bien que les stratégies favorisent les techniques de préfabrication et des plans de construction flexibles prévoyant des mesures de limitation des coûts, il est probable que les difficultés fondamentales ne disparaîtront pas, car depuis ses débuts, cette industrie a été caractérisée par des marges étroites. Au lieu de s’atténuer, les préoccupations relatives à l’environnement devraient augmenter, et si elles entraînent encore d’autres mesures réglementaires, les responsabilités des exploitants ne peuvent que s’accroître. Par ailleurs, un certain nombre d’intervenants sont déterminés à surmonter ces obstacles pour tirer parti de cette grande ressource. Celle-ci représente maintenant une part importante de l’économie de l’Alberta et une portion significative des investissements d’affaires, ayant rapporté plus de 3 milliards de dollars à cette province pour l’année financière 2009-2010. De plus, le gouvernement Harper soutient l’industrie des sables bitumineux et fait du lobbying en faveur de celle-ci. Enfin, l’insatiable appétit du monde entier pour le pétrole assure des perspectives intéressantes pour toutes les entreprises qui mettent en œuvre des moyens réalisables pour sa production, quels qu’ils soient. ICM September/October 2011 | 63

énergie et industrie

Courtoisie de Fortune Minerals

Mont Klappan, la propriété de Fortune Minerals.

Qualité industrielle Entrepreneurs et exploitants de charbon métallurgique ciblent la croissance

e boom d’infrastructures est arrivé. Selon les Marchés mondiaux CIBC inc., ce boom engendrera de 25 à 30 billions de dollars en investissements pour de nouvelles infrastructures au cours des 20 prochaines années. Ce boom est en partie une réaction des gouvernements mondiaux, incluant le Canada, à la crise financière de 2008 et à la première récession internationale; ces gouvernements ont promis des billions de dollars en dépenses pour les infrastructures afin de créer des emplois et de stimuler l’économie. Les pays développés possèdent des infrastructures, cependant celles-ci sont vieillissantes; quant aux pays émergeants, ils doivent se développer et construire de nouvelles infrastructures afin de répondre à la croissance et à la demande. D’une manière ou d’une autre, donc, des infrastructures seront construites. Là où il y a construction d’infrastructures, il y a un besoin pour des charbons de grande qualité, lesquels, avec le minerai de fer, constituent les ingrédients clés requis pour fabriquer du métal. En effet, selon la World Coal Association, plus de 60 pour cent de la production mondiale totale d’acier dépend du charbon métallurgique. Du point de vue des aciéristes et de leurs clients, il s’agit là d’un énorme problème. « Il n’y a pas assez de production de charbon métallurgique à travers le monde pour répondre 64 | CIM Magazine | Vol. 6, No. 6

à la croissance de la demande », dit Robin Goad, présidentdirecteur général de Fortune Minerals Limited, une entreprise basée à London, Ontario, dont le projet Mount Klappan dans le nord-ouest de la Colombie-Britannique contient 2,8 milliards de tonnes de charbon anthraciteux qui sera mis en valeur, lorsque pulvérisé pour être injecté dans des hauts fourneaux, en raison de sa faible volatilité et de son contenu énergétique élevé. « La Mongolie et l’Afrique du Sud possèdent de vastes gisements, mais la production indienne d’acier brut devrait quadrupler au cours de la prochaine décennie », dit-il. « La production brésilienne d’acier brut devrait aussi quadrupler au cours des 20 prochaines années. Au Japon et en Corée du Sud, la croissance de la demande de charbon augmente d’environ trois pour cent par année et quelques fournisseurs traditionnels ne vendent plus. »

Les trois grands Durant la dernière décennie, le prix du charbon métallurgique a augmenté considérablement; d’environ 40 dollars la tonne, il est passé à près de 230 dollars la tonne cette année. Selon le Groupe AME, une entreprise mondiale d’économistes dans les industries des métaux et des minéraux, c’est une bonne nouvelle pour les quelque 20 mines de charbon métallurgique au Canada — en exploitation et en

énergie et industrie développement. Les produits combinés des mines en production font du Canada le deuxième plus important exportateur de charbon métallurgique au monde. Du moins était-ce le cas jusqu’à l’an dernier, lorsqu’il a pris le troisième rang, derrière les États-Unis. « Traditionnellement, les États-Unis constituent un important producteur de charbon métallurgique, mais nous les considérons comme un producteur d’appoint », dit Kevin Stone, analyste principal des produits minéraux pour Ressources naturelles Canada. « Lorsque le marché est bon, les États-Unis exportent plus, et ils exportent moins lorsque le marché est moins bon. Pour le moment, le marché est bon. » En 2010, les compagnies canadiennes ont exporté 8,6 millions de tonnes de charbon métallurgique au Japon, 5,3 millions de tonnes en Corée du Sud, 4,3 millions de tonnes en Chine, 1,6 million de tonnes au Brésil, 1,4 million de tonnes aux États-Unis, 1,3 million de tonnes en Allemagne et un million de tonnes en Italie, en plus de quantités moindres dans 13 autres pays. Le charbon métallurgique constituait 83 pour cent de toutes les exportations canadiennes de charbon. L’Australie est le leader mondial en production et en exportation de charbon métallurgique et tous les autres sont loin derrière les trois principaux exportateurs. « Je ne prévois pas de changement dans ce classement, du moins pas au cours des prochains trois à cinq ans », dit M. Stone.

Croissance d’un océan à l’autre Les réserves les plus importantes du pays, dans l’Ouest canadien, sont en grande demande. Ce secteur a donc connu beaucoup d’activité au cours des dernières années. En août dernier, la compagnie Fortune Minerals annonçait qu’elle avait formé, pour son projet Mount Klappan, un partenariat avec la firme sud-coréenne POSCO, le troisième plus grand producteur d’acier au monde. Au cours du même mois, Xstrata Coal annonçait l’achat d’une compagnie d’extraction de charbon métallurgique en C.B., la First Coal Corporation, pour la somme de 147 millions de dollars (canadiens). Cette acquisition lui donne accès aux baux d’exploration pour le charbon à coke en C.-B. Cependant, il ne s’agit pas du premier projet de mine de charbon métallurgique d’Xstrata au Canada. Depuis 2006, la compagnie travaille au projet Donkin Coal sur l’île du Cap-Breton, en Nouvelle-Écosse; lorsque la mine sera en production, on prévoit produire environ 2,75 millions de tonnes de charbon à coke lavé de grade exportation par année. L’an dernier, la compagnie américaine Walter Energy Inc. a acquis le producteur de charbon métallurgique Western Coal Corp., qui est basé à Vancouver et possède des mines dans le nord-ouest de la C.-B., en Virginie de l’Ouest, aux États-Unis, et dans les Galles du Sud, au Royaume-Uni. « Nous aimons l’historique de croissance de Western Coal et ses plans d’accroître le volume de production de charbon à coke de 133 pour cent d’ici 2013 », avait alors dit Walter Energy.

Teck Resources Limited, qui possède cinq mines en C.-B., une en Alberta et est le deuxième plus important exportateur maritime mondial de charbon métallurgique, a annoncé que la compagnie entreprenait des démarches pour augmenter ses niveaux de production, tout comme l’albertaine Grande Cache Coal Corporation, qui détient des baux miniers sur le charbon couvrant plus de 22 000 hectares dans le champ houiller Smoky River du centre ouest de l’Alberta et qui a obtenu l’approbation de commencer le développement d’une nouvelle mine souterraine en juillet. D’autres projets concernent la mine souterraine de charbon Raven sur l’île de Vancouver; cette dernière est actuellement en voie d’être développée par une alliance entre la Compliance Energy Corporation, Itochu Corp., du Japon, et LG International Corp., de la Corée; si elle démarre, elle produira du charbon métallurgique pour l’exportation.

À la merci de Dame Nature La récession mondiale a grandement touché les producteurs de charbon, mais la nature a constitué un autre défi significatif pour l’exploitation du charbon. En Australie, la production a été compromise par les inondations qui ont ravagé la partie est du pays plus tôt cette année, mais heureusement , comme le souligne M. Stone, la production et les exportations sont presque revenues à la normale. La raison pour laquelle le secteur du charbon métallurgique est à ce point soumis aux forces de la nature est surtout que pour être exporté, plus souvent qu’autrement, le charbon doit être acheminé d’endroits éloignés, non développés, vers des ports. « Le charbon à coke canadien est en général de très bonne qualité », dit Gordon Gormley, qui a développé de nombreuses propriétés canadiennes et internationales et travaille maintenant comme consultant privé. « Le problème est qu’il se trouve en montagne, sur un terrain très accidenté, où il fait très froid et, pour l’extraire, il faut beaucoup d’équipement et de grandes usines. La plupart du temps, le charbon doit aussi être lavé, cela nécessite donc certaines infrastructures, des centrales et des bassins de résidus. Vous devez aussi avoir un chemin de fer et une ville assez proche pour qu’on puisse accéder au site en voiture. » « La capacité portuaire pour manutentionner le charbon représente aussi un défi important pour les développements futurs », ajoute M. Gormley. « Nous avons besoin d’installations qui peuvent manutentionner des chargements atteignant 150 000 tonnes. Il s’agit de grosses installations et le terminal d’exportation de charbon Westshore en est un exemple typique, mais il a été long et coûteux à construire. Heureusement, dans le nord-ouest de la Colombie-Britannique, le terminal construit dans les années 1980 a encore de la capacité excédentaire et plusieurs planifient l’utiliser; cependant le Canada aura encore un problème de congestion portuaire s’il doit produire plus de charbon à coke, ce qu’il devrait par ailleurs faire. » ICM September/October 2011 | 65

commodity focus natural gas

BURNING AMBITION by PETER BRAUL

“George Mitchell is regarded as kind of the father of this [unconventional] technology,” says Dan Cohn, a senior research scientist at MIT and executive director of the school’s natural gas study. Cohn says Mitchell, the founder of Mitchell Energy & Development Corp., pioneered the combination of hydraulic fracturing and horizontal drilling for commercial production in the 1980s and 1990s; in 2001, he sold the company to Devon Energy for $3.5 billion.

nce burned off as a byproduct of oil production, natural gas has found new life in the 21st century, and the industry has its sights set high. Thanks to technological innovations, there is more of it available than ever, a fact that is ushering in a paradigm shift in global energy supply. With uses from electricity to public transportation to fertilizer for crops, natural gas is clean burning, efficient, abundant and well-positioned to gain prominence.

Unconventional beauty Conventional gas wells are drilled vertically and access pockets of gas trapped in porous sedimentary rock. In contrast, unconventional wells are drilled horizontally and are aimed at coalbeds, shales and tight sands, which are non-porous and need to be fractured before they release their gas. While conventional resources are still the baseline for the industry (the majority of the natural gas consumed in the world is still derived from conventional wells), that is already changing. The U.S. Energy Information Administration (EIA) estimates there are over 6,000 trillion cubic feet (TCF) of proven natural gas reserves globally. But the U.S. National Petroleum Council gauges global unconventional gas-inplace to be at 33,000 TCF – over 6,000 TCF are technically recoverable with today’s technology, although mostly unproven. These would all make use of unconventional drilling techniques – combined with hydraulic fracturing – which are now capable of efficiently extracting resources in areas that were never previously considered economical. 66 | CIM Magazine | Vol. 6, No. 6

Today, hydraulic fracturing and horizontal drilling accounts for 30 per cent of Canadian production and 40 per cent of production in the United States. With unconventional gas producers like Mitchell and XTO Energy being purchased by major corporations (Devon is one of the largest independent oil and gas producers in the U.S., and XTO was bought by Exxon for $41 billion in 2009), the term unconventional is becoming a misnomer. In 2009, global natural gas consumption was around 107 TCF per year, according to estimates from the EIA; projections to 2020 foresee consumption increasing by 1.8 per cent per year, tapering to a 0.9 per cent increase from 2020 through to 2035. Unconventional techniques will figure most prominently in North America’s future, where the U.S. is expected to account for over 85 per cent of global production growth to 2035. “Predictions are that by 2030, tight gas and shale gas could be 70 to 80 per cent of North America’s natural gas supply,” NATURAL GAS PRODUCTION IN CANADA - 2010 Nova Scotia

100 367*

New Brunswick

5,797

Ontario

5,596

Saskatchewan Alberta British Columbia NWT/Yukon Total * thousands of cubic metres/day

170,912 3,687,744 982,872 6,754 4,960,043

Source: NEB

Courtesy of the Center for Liquified Natural Gas

Natural gas liquifaction facility

commodity focus natural gas says Michael Binnion, president and CEO of Questerre Energy. “We’re really entering into a major paradigm shift, not just in energy markets, but for society too.”

Resistance to change The response to unconventional drilling has been a mix of excitement and skepticism. Opponents of horizontal drilling and hydraulic fracturing have been vocal about their fear over ecological consequences, despite 30 years of commercial production experience and commitment from industry leaders to maintain best practices. The largest controversy in North America is occurring in areas that have traditionally been importers of oil and gas and are heavily populated, such as the St. Lawrence lowlands in Quebec and the Marcellus Shale in the Appalachian Basin of the northeastern United States. In May, the Quebec government announced that exploration will be put on hold for 30 months while environmental impacts are assessed. This is a setback for Binnion, and Questerre, which has over one million prospective gross acres in the province’s shale gas plays. “Quebec currently imports all of its natural gas from Alberta and British Columbia,” says Binnion, who points out that a significant amount of shale gas is already consumed by Quebecers. “If you really care about the environment, you should produce your energy locally because then [the province] can know, control and trust how its energy is produced,” he adds.

Regional pricing, global supply There are 48 known shale basins in 32 different countries, and there is still considerable uncertainty about the price and quantity of gas that will be produced from them. As a result, making predictions about the shape of markets and the relationships between them has become increasingly difficult. “There are three liquid natural gas import terminals in Canada alone that were cancelled because of shale gas,” recalls Binnion. Cohn and his colleagues at MIT found that there are three separate regional natural gas markets in the world, North America, Europe and Asia, each with unique supply and transport options. “In Asia, [the price of] natural gas, on an energy basis, has been coupled relatively closely to that of oil; in Europe, it’s kind of in between; and in the United States, there has been a significant decoupling,” he explains. This makes natural gas significantly cheaper in North America than elsewhere, for the time being. As North America is set to become a net exporter of natural gas for the first time in history, all eyes are on Asia and, in particular, Japan to receive the North American supply. Japan’s imports alone account for 10 per cent of the global total, and all of it arrives as liquid natural gas (LNG). There are 25 import terminals operating there, with six in construction

or planned. Close to half of the world’s LNG exports are used to fuel Japan’s energy sector, a statistic that is predicted to increase due to the recent nuclear crisis in that country. Binnion believes that an export infrastructure fits well with further shale gas development in North America and that it would have a levelling effect on the global prices.

Not a pipe dream anymore Liquefying natural gas adds an extra $4 per million BTU to the cost, according to Cohn, due to the energy required to cryogenically treat and transport the gas. But over time, that figure is becoming workable, and plans to build an LNG export facility on the Pacific Coast are going ahead smoothly. Kitimat LNG, a project based in Kitimat, British Columbia, is owned by a partnership between Apache Canada, EOG Resources Canada and Encana Corporation. Between them, they also own the Pacific Trail Pipeline Limited Partnership, which is developing the transmission system that will eventually link the partnership’s 19 TCF in resources from the Western Canadian Sedimentary Basin to the Kitimat facility. The Kitimat LNG project will have an initial capacity of five million tonnes per year of LNG output, with the potential to double that figure. The target for the first shipment is 2015, and last July, the company announced that it had entered into an agreement to purchase an industrial site in Kitimat, where they hope to stage a work camp, lay-down and storage area as development moves ahead. CIM • MINING • MINERALS • METALS • MATERIALS mining foR sociETy

M4S

The nitrogen fixation fix Early in the 20th century, farms around the globe had trouble underfoot – literally. With populations growing, fixing nitrogen for crops by traditional means was limiting production. Thankfully, in 1909, German chemist Fritz Haber developed a way to produce ammonia from nitrogen and methane gasses. His technique, known as the Haber Process, won him the Nobel Prize in 1918, and is now responsible for producing 500 million tonnes of nitrogen fertilizer every year. Nearly all of the methane used in the Haber Process currently comes from natural gas, and accounts for about three to five percent of global consumption. That is energy well spent – enough fertilizer is now made using the Haber Process to sustain a third of the earth’s population.

September/October 2011 | 67

COLUMNS

| supply side

Canada’s trade pattern is diversifying Mining can lead the way A page for and about the supply side of the Canadian mining industry

Jon Baird The June 1, 2011 issue of The Globe and Mail carried part 1 of a 12 part series on export trade and emerging markets. An article based on the views of Peter Hall, Export Development Canada’s (EDC’s) chief economist, reveals some interesting new trends in Canada’s export trade. Based on an extrapolation of recent data, the percentage of our trade with emerging markets could easily approach 35 per cent, or more, by 2020. Given the poor performance of the economies in our traditional markets, this is a good thing indeed. Our favourite trade partner has been the United States, which absorbed as much as 85 per cent of Canada’s exports. This has now fallen to 75 per cent. From 2003 to 2007, our dollar rose by eight to nine per cent annually over the US dollar and our total trade activity grew very slowly, by 2.1 per cent annually, on average. While export activity in traditional markets has grown by 1.3 per cent annually since 2008, the growth of exports to emerging markets has grown by 12.3 per cent annually. Through extrapolation, Hall arrives at a 35 per cent growth rate of exports to emerging markets in the next nine years; however, he believes that “with concerted effort Canadian businesses could accelerate this growth by an additional three per cent annually.” At 15.3 per cent growth “it would take non-traditional trade to half of Canada’s global trade by 2025.” Hall believes that awareness is the key. “A large share of Canadian firms believe their opportunities in emerging markets are limited,” he says. “If even a fraction of these companies venture into the broader world beyond their traditional markets, imagine the impact.”

68 | CIM Magazine | Vol. 6, No. 6

The more than 300 CAMESE memWhat is missing is federal governber firms are well aware of the internament leadership to organize a national tional opportunities available in the effort to brand Canadian exports secmining sector. They know that of the tor by sector. While the government is 10,000 Canadian exploration projects doing its job in negotiating free trade and mining operations, globally, half and foreign investment protection are outside of Canada, in more than agreements, we are falling behind in 100 countries. They also know that if the collective aspects of export market their products and technologies satisfy promotion. our domestic market, they are highly Individual companies have to do competitive elsewhere. their own marketing and certainly the CAMESE members are increasing selling; however, our brand needs their interest in foreign markets, riding something that is more than the “sum a rising tide of exploration and mining of the parts.” Only leadership from activity in the world. For example, our Ottawa and collective action can bring space in Canada pavilions at this year’s this about. mining exhibitions in Argentina, The point is made in another artiChile, Australia, Peru, Brazil and Mexcle in the The Globe and Mail series. ico is up 35 per cent from previous levStefan Lupke, executive vice-presiels at the same shows. dent of Corma, an Ontario exporter Within the Canadian supply sector, of corrugated plastic pipe manufacthere may be 1,000 companies offering turing machinery, refers to the need specialized mining goods and services to brand Canada as a “mechanical that have the latent capabilities of and technical” leader. “Many of our increasing their export performance. major projects provide water infraHow do we switch on this potential? structure, for which demand continEDC is doing its part. Comments ues to grow in India, Africa, China like Hall’s in the The Globe and Mail and Central and South America,” article and the support of EDC on the Lupke says. “But our major competiCanada pavilions organized by tors are German companies, so CAMESE at international mining exhiwe’re always fighting that ‘Made in bitions prove this. Hall cites the CanaGermany’ brand, which is very dian Trade Commissioner Service as strong.” CIM an important partner, as it surely is; however, it is currently understaffed and underfunded. Hall also cites the role of Jon Baird, managing international trade associadirector of CAMESE tions. Indeed, 95 per cent of and the immediate CAMESE’s effort is directed at past president of helping member firms market PDAC, is interested to the mining world. Howin collective ever, unlike in other develapproaches to oped nations, there are few enhancing the other sectoral associations in Canadian brand in this country that are so dedithe world of mining. cated to export trade.

author

COLUMNS

| MAC economic commentary

Tax and royalty revenues to governments A benefit of the return-to-resources trend in Canada Paul Stothart With the strength of mineral and oil prices over the past decade, much attention has been paid to the returnto-resources trend within the Canadian economy. Many factors have driven this development. The decline of the Canadian manufacturing sector has certainly contributed – the manufacturing share of the economy has declined from around 21 per cent in the 1980s to 13 per cent today. Within this sphere, auto manufacturing levels have fallen significantly. The collapse of the information and communications technology (ICT) investment cycle in the 1990s and subsequent declines or takeovers of major Canadian ICT players further reinforced this shift. On the positive side of the ledger, the staggering development of the Chinese manufacturing economy, among others, has driven a major global effort to find, develop, produce and transport natural resources to meet global demand – with Canada being a major beneficiary. The acceptance of the return-toresources phenomena within Canada has been grudging in some circles. There remains a sense in academic and policy spheres that Canada is returning to its economic origins as hewers of wood and drawers of water. The relative merits of the resource development arguments make for interesting debate, although it should be said that the high technological sophistication of Canada’s resource development cluster has never been adequately recognized by debaters. The return-to-resources reality within Canada has brought with it an array of economic benefits and spinoffs, many of which have been highlighted in my past columns in CIM Magazine. For example, the Canadian mining industry accounted for 21 per cent of Canada’s merchandise exports in 2010, with multi-billion dollar export 70 | CIM Magazine | Vol. 6, No. 6

revenues associated with many separate commodities. The resulting benefit to suppliers – railway companies, engineering firms, equipment companies and so forth – are also significant. A second noteworthy benefit, among others, is the fact that the mining sector constitutes the largest private employer of Aboriginal Canadians, with associated benefits in jobs, training and community development. Significant mutual potential and benefit also lies ahead in this aspect of the industry. The Mining Association of Canada (MAC) recently released its annual study of the level of payments made by the mining industry to Canadian governments. The report, prepared for MAC by ENTRANS Policy Research Group, details the direct revenues that accrue to government from the industry in the form of corporate taxes, royalties and employee income taxes. The study is available at: www.mining.ca. Among the report highlights, the Canadian mining industry paid $8.4 billion to Canada’s federal, provincial and territorial governments in 2010. While this level is lower than the $10 billion figures of 2007 and 2008, it has increased dramatically (65 per cent) from the $5.1 billion level of 2009. In fact, the figures generally illustrate that the tax and royalty system in Canada works relatively well – generating lower revenues from the industry during economically turbulent years such as 2009 and stronger levels in growth years such as 2010. The ENTRANS data does not include revenues associated with the fabricated metal products sector, although the federal government definition of the “mining and mineral manufacturing” industry does include this fourth segment. MAC’s view is

that most activities within this segment are not closely connected to the mineral extraction or processing spheres. Nonetheless, it is worth noting that businesses in this segment generated an additional amount of $1.8 billion in revenues to governments in 2010. The ENTRANS data also does not reflect the indirect revenues that would be associated with mineral financing, exploration, development, extraction, processing and transportation in Canada. While further study and analysis is needed in this respect, there are rough estimates suggesting that a multiplier for these indirect benefits would fall in the 2.0 to 2.5 range, which could suggest a further $20 billion in government revenues being associated with the Canadian mining cluster. The ENTRANS report provides a measure of the royalties and similar payments accruing to each province and territory. From this data, it is evident that revenue flows are particularly important to Newfoundland and Labrador, Saskatchewan, Alberta, British Columbia and the Northwest Territories. Large mining sectors and impressive future investment plans are also seen in Ontario and Quebec. Indeed MAC has estimated that some $110 billion in mining-related projects have been proposed in Canada for development over the coming years. This sense of economic confidence augers well for Canadian governments, given the future revenue flows that would be associated with these proposed projects. CIM

author

Paul Stothart is vicepresident, economic affairs, at the Mining Association of Canada. He is responsible for advancing the industry’s interests regarding federal tax, trade, investment, transport and energy issues.

COLUMNS

| standards

Oil and gas disclosure requirements and new issues NI 51-101 sets standards David Elliott National Instrument 51-101 (NI 51-101), which governs the disclosure of oil and gas activities for securities regulatory purposes in Canada, was implemented in 2003, with additional guidance provided in a Companion Policy and in Canadian Securities Administrators (CSA) staff notices. Amendments to NI 51-101 were made in 2003, 2007 and 2010 and, as a result of the ongoing significant changes in the oil and gas industry, further amendments are under consideration, possibly for the end of 2012.

Oil and gas resource classification Oil and gas resource classes that may be disclosed are: • Reserves, which are discovered and commercially viable to produce. • Contingent resources, which are discovered but cannot be produced because of one or more contingent factors, such as economic or legal factors or lack of access to markets. • Prospective resources, which are not yet discovered but are an estimate of what might be recovered if a discovery is made. The uncertainty in each of these resource classes is captured by categorizing the estimates as low, best and high, where P90 indicates that there is at least a 90 per cent probability of recovering more than the estimated volume (e.g., of Proved reserves); P50 indicates that there is a 50 per cent probability of recovering more (or less), etc.

CATEGORY OF ESTIMATE

REPORTING CRITERION

RESOURCE CLASS Reserves Contingent Prospective

Low Best

P90 P50 + Probable P10 Probable + Possible

P1 Proved P2 Proved

C1 C2

Low Best

P3 Proved +

High

• F2, on which the independent qualified reserves evaluator or auditor signs off on the work that they have carried out. • F3, which is signed by two directors and two officers of the company to indicate that they have carried out due diligence on the preparation of the filing. • F4, which is required only if any of the information required in the F1, F2, and/or F3 forms has been included in a company’s annual information form instead of being filed separately. It replaces the previous requirement to file a news release to this effect. The Alberta Securities Commission (ASC) Petroleum Department has an active oil and gas disclosure review program that includes prospectuses, annual filings and also the technical reports on which these are based. The results of these reviews can be found in the ASC Annual Oil and Gas Report on the ASC website.

New developments National Instrument 51-101 NI 51-101 covers all public disclosure on oil and gas activities, including news releases and corporate presentations, with requirements: • To use the technical standards for evaluations provided by the Canadian Oil and Gas Evaluation Handbook (COGEH). • For annual filings based on evaluations or audits by independent qualified reserves evaluators or auditors (of at least 75 per cent of the 10 per cent discounted net present value of the Proved and Probable reserves) with mandatory disclosure of Proved and Probable reserves evaluated using forecast prices and costs. Optional disclosure may be made of evaluations using constant prices and costs, and of other resource classes. The annual filings consist of the following forms: • F1, which contains details of reserves and resources and considerable additional information on a company’s activities. References: http://albertasecurities.com/Companies/Pages/OilGas.aspx; Canadian Oil and Gas Evaluation Handbook (COGEH), Volumes 1, 2 and 3, available from http://www.spe.org/canada/pages/general/canadian_pubs.php 72 | CIM Magazine | Vol. 6, No. 6

There have been significant developments in the oil and gas industry in recent years, with greatly increased activity on so-called “unconventional” resources: coal bed methane, bitumen, shale gas and some initial signs of activity on shale oil. The technology that has led to the increased activity on shale gas, long horizontal wells and multi-stage fracturing is now also being applied to poor quality “conventional” oil and gas reservoirs. The ASC continues to review the oil and gas disclosure requirements in light of these changes and to work with industry on the development of the technical guidelines for their evaluation. CIM The views expressed in this article are those of the author and do not necessarily represent the views of the ASC.

author

David Elliott is the chief petroleum advisor in the Corporate Finance Division of the Alberta Securities Commission. He recently stepped down as manager of the Petroleum Department and is now working part time in an advisory role.

NEW — Certification Ore Reserve Risk and Upcoming 2011inSeminars Mine Planning Optimization (in collaboration with AusIMM) Spread over a period of four months, this four-week course is designed for busy mining professionals who wish to update their skills and knowledge base in modern modelling techniques for ore bodies and new risk-based optimization methodologies for strategic mine planning. Gain practical experience by applying the following hands-on concepts and technical methods: methods for modelling ore bodies; stochastic simulations, case studies and models of geological uncertainty; and demand-driven production scheduling and geological risk. Instructor: Roussos Dimitrakopoulos, McGill University, Canada • Dates: Week 1 – August 22-26, 2011; Week 2 – September 26-30, 2011; Week 3 – October 17-21, 2011; Week 4 – November 7-10, 2011 • City: Week 1 – Perth, Australia; Week 2-4 – Remote • Info: www.mcgill.ca/conted/prodep/ore

Strategic Risk Management in Mine Design: From Life-of-Mine to Global Optimization Learn how you can have a significant, positive impact on your company’s bottom line by utilizing strategic mine planning methodologies and software; improve your understanding of strategic mine planning and life-of-mine optimization concepts, as well as your understanding of the relationship of uncertainty and risk, and how to exploit uncertainty in order to maximize profitability. Note: The strategic mine planning software used is Whittle; an optional half-day skills refresher workshop on Whittle may be available. Instructors: Gelson Batista, MPX, Brazil, and Roussos Dimitrakopoulos, McGill University, Canada • Date: September 21-23, 2011 • City: Toronto

An Introduction to Cutoff Grade Estimation: Theory and Practice in Open Pit and Underground Mines Cutoff grades are essential in determining the economic feasibility and mine life of a project. Learn

how to solve most cutoff grade estimation problems by developing techniques and graphical analytical methods, about the relationship between cutoff grades and the design of pushbacks in open pit mines, and the optimization of block sizes in caving methods. Instructor: Jean-Michel Rendu, Executive Consultant, Snowden, Australia • Date: September 7-9, 2011 • City: Montreal

Geostatistical Mineral Resource/ Ore Reserve Estimation and Meeting the New Regulatory Environment: Step by Step from Sampling to Grade Control Learn about the latest regulations on public reporting of resources/reserves through state-of-the-art statistical and geostatistical techniques, how to apply geostatistics to predict dilution and adapt reserve estimates to that predicted dilution, how geostatistics can help you categorize your resources in an objective manner, and how to understand principles of NI 43-101 and the SME Guide. Instructors: Marcelo Godoy, Golder Associates, Chile, JeanMichel Rendu, Executive Consultant, Snowden, Australia, and Roussos Dimitrakopoulos, McGill University, Canada • Date: September 12-16, 2011 • City: Montreal

Mineral Project Evaluation Techniques and Applications: From Conventional Methods to Real Options Learn the basics of economic/financial evaluation techniques, as well as the practical implementation of these techniques to mineral project assessments, how to gain a practical understanding of economic/ financial evaluation principles, and how to develop the skills necessary to apply these to support mineral project decisions. Instructor: Michel Bilodeau, McGill University, Canada • Date: October 24-27, 2011 • City: Montreal

COLUMNS

| metals monitor

Record drilling activity helps MEG Pipeline Activity Index rebound The staff of Metals Economics Group again in June to $2.32 trillion. This is the first time since May-June 2010 that market caps decreased for two consecutive months. The number of significant drill results spiked considerably, as May and June both easily surpassed the previous one-month highs. North America and Latin America continued to be the top regions for successful drilling, accounting for more than 60 per cent of the combined bimonthly total. Latin America alone accounted for almost half of the significant base metals results. The number and in situ value of initial resource announcements in May-June was down very slightly from March-April, but was still the second-highest bimonthly total in the past two years. In terms of in situ value, gold and base metals were both dominated by single projects: Levon Resources’s bulk-tonnage Cordero project in Mexico – with 451 million ounces of silver, 3.4 million metric tonnes of zinc, 2.8 million metric tonnes of lead, and 1.1 million ounces of gold – accounts for about 75 per cent of the base metals total and is easily the largest announcement of the period; and East Asia Minerals’s initial estimate of 3.14 million ounces of gold and 8.95 million ounces of silver for its Miwah epithermal gold project in Indonesia accounted for more than 60 per cent of the total value of initial gold resources announced in the period. The amount raised in significant financings Source: MEG Industry Monitor; MineSearch; Exploration Activity Services. (US$2 million minimum) completed in MayJune was unchanged from March-April, mainly due to the increased number of financings closed in May, the fourth time in the last eight months that more than 100 financings closed in a single month. Unfavourable markets subsequently affected June financings, as a number of companies elected to cancel, delay, renegotiate or reduce their fundraising plans. CIM © Copyright 2011 Metals Economics Group

The Metals Economics Group Pipeline Activity Index (PAI) rebounded in May, from a dismal April, reaching its second-highest level in 2011 before dipping slightly again in June. A sharp increase in drill results coupled with a strong number of financings in May helped push up the PAI; however, a record number of significant drill results in June was not enough to offset a lack of projects advancing and a lower number of financings. The industry’s aggregate market cap slipped to $2.38 trillion in May, from $2.42 trillion in April 2011, before slipping

MEG Pipeline Activity Index (PAI), July 2011.

Significant drill results announced. 74 | CIM Magazine | Vol. 6, No. 6

Source: MEG Industry Monitor; Exploration Activity Services.

For more information on the PAI, visit the MEG website at www.metalseconomics.com.

author

Metals Economics Group is a trusted source of global mining information and analysis, drawing on three decades of comprehensive information and analysis, with an unsurpassed level of experience and historical data.

COLUMNS

| eye on business

A stream runs through it Fishing for funding Josh Lewis A mineral royalty has traditionally provided a method for an owner of a prospective mineral property to retain a share in the upside potential of that property by reserving, at the time the property is sold or optioned off, a legal right to a share of the minerals that may be produced from the property. A royalty can also provide a method for a mineral property owner to partially monetize its resource, for example, to fund exploration and development, through granting and selling a royalty. The purchaser of the royalty will assess the potential and risk of whether the property will ever achieve production or, in the case of a producing property, of the anticipated life of mine and value of the production over that period. Due to the complex economic modelling required to make such an assessment, these “created royalties” are generally structured and purchased by companies whose businesses are purchasing and holding a portfolio of royalties. Over the past decade’s bull run in mineral prices, a new approach has arisen – the streaming agreement. A streaming agreement is similar to a created royalty in that a sum of money is paid to the property owner in consideration for a stream of mineral product. However, there are a number of commercial, legal and tax distinctions between a streaming agreement and a royalty. In a royalty, the property owner receives the royalty purchase price

and is obliged to deliver to the royalty holder, for no further payment, a share of production or payment of its market cash equivalent. In a streaming agreement, the owner receives an upfront payment and, after a period of mineral product delivery from which the streamer achieves a deemed recovery of such upfront payment, additional payments based on the mineral product delivered, at a price that may be significantly discounted to market. The streamer receives the stream of mineral product from the owner, usually for the life of the mine. As in the case of created royalties, the sophisticated analysis required to accurately assess the value of a mineral stream results in stream creation and purchase being generally the preserve of companies that specialize in creating, purchasing and holding a portfolio of streams. Initially, streaming was used to monetize a mineral byproduct. For example, an owner of a producing gold mine that produced silver as a byproduct would sell a stream based on some or all of that mine’s produced silver. It did not take long for the streaming model to evolve and be applied to the primary product from a producing mine. However, the next evolution was more significant, when a streaming agreement was adapted to fund the development of a new mine. Streaming now provides owners of mineral properties under development with a new source of development

MOVING ON UP Atna Resources Ltd. has appointed Douglas E. Stewart as the COO of its management team. Stewart is an experienced senior mining executive with over 35 years of experience in the industry. He will supervise operations at Atna’s Briggs Mine and play a crucial role in the development of the Pinson and Reward gold projects.

76 | CIM Magazine | Vol. 6, No. 6

funds in addition to the conventional sources of equity, debt and created royalties. Novel uses of streaming will continue to evolve (a stream was recently used to partially fund a corporate takeover). Streamers require some form of registered security for delivery of the minerals. This is often an area of contention between the miner and the streamer, as it might appear that the streamer is seeking all the advantages that accrue to both lender and equity participants. However, streamers are advancing large amounts of money and security is part of the overall package that is expected. The security taken can look remarkably like debt security, hence the necessity for comprehensive inter-creditor coordination to be negotiated with any project lender who may also be funding the development of a mine. Admittedly, such coordination is challenging, though by no means insurmountable. Streaming agreements initially were made in respect of precious metals. However, in principle, there is nothing to so restrict their application (there have been recent reports of coal streaming). While it might seem to be a large jump from silver to coal, there is one legal aspect of security registration that may, in some cases, make coal streaming attractive to a streamer. The ideal security that a streamer prefers is a legally enforceable charge only charging the specific streamed mineral in the ground. In many jurisdictions mineral rights are general, meaning that an owner has a right in respect of all minerals in the ground. An owner who enters into a silver stream agreement in respect of a project that primarily produces copper, but also gold and silver, may not wish to also grant the streamer a charge in all the copper and gold in the ground. In some jurisdictions, however, coal

innovation | COLUMNS rights have a separate form of tenure from mineral rights and this may enable the streamer to take security specifically in the coal rights. Streaming agreements are extremely complicated arrangements in respect of financial modelling, value assessment, legal drafting and security arrangements, and not least of all in respect of tax planning. Many precious metals streaming agreements do not call upon the miner to deliver a portion of the mine’s metal production to the streamer; instead, what is delivered is an amount of metal, from sources other than the mine, equal to the value of the applicable portion of metal production. At least one reason for this distinction is that it may be desirable to structure the transaction such that the miner is not making a capital disposition of a portion of the mineral resource, as such a disposition could have substantial adverse tax consequences to the miner. Metal assayed to a certain purity from one specific mine, is essentially no different from such metal from any other source. On the other hand, coal from one mine is almost impossible to be duplicated from another source. As a result, it is improbable that a streaming agreement could provide for delivery of coal equivalent to that produced from the mine that is the subject of the stream. Accordingly, there may be an impulse for the owner to agree to deliver to the streamer a share of the coal produced from the mine. The tax consequences of this must be carefully canvassed and assessed and this is but one example of why it is imperative that parties receive rigorous legal and tax advice in respect of any proposed streaming agreement. CIM

author Josh Lewis is a commercial mining partner with Fasken Martineau, Vancouver.

Pinpointing industry’s key innovations CMIC launches informal survey to narrow down the list Tom Hynes During recent discussions with colleagues about the key innovations that have been implemented in the mining sector in recent years, a problem became apparent: for a great number of people, their knowledge of the industry is limited to their specific field. So how does one create a “short list” of successes when answers vary depending on the respondents’ backgrounds? Learning from our past “hits and misses” can aid us in making the right investment choices. CMIC, along with the mining sector as a whole, makes large investments in the future of our industry. CMIC is thus taking on the challenge and launching an informal survey to zero in on what those key innovations have been. In the absence of this industry-wide knowledge, coming to an agreement on what our most significant innovations have been is going to be a challenge. Although a consensus is unnecessary, knowing which ones, and thus which of our past investments in R&D, have been the most effective is valuable information. I invite you all to take our survey. Together, we can shape the future of this industry. CIM

author Tom Hynes has worked in the uranium and base metals industries, and has been a provincial regulator and a federal government research manager. He is the executive director of the Canada Mining Innovation Council.

CMIC Innovation Survey Help broaden the scope of knowledge on the different aspects of research and innovation by answering the following questions: • What is your area(s) of expertise? • Which innovations have been the most significant in your area(s) of expertise? Why? • Which innovations are most needed in your area(s) of expertise? Why? • Which researchers or research groups have been most important to the development of technology in your area(s) of expertise? • Which researchers or researcher groups do you believe will be the most critical to address future needs in your area(s) of expertise?

Send replies to

t.hynes@cmic-ccim.org September/October 2011 | 77

COLUMNS

| HR outlook

Investing in training and safety Quinsam Coal’s approach to meeting labour challenges Lindsay Forcellini

Courtesy of MiHR

The impending skills shortage continues to be the subject of many discussions in the mining industry. Online networks and communities of practice, such as the Canadian Mining HR Professionals Group on LinkedIn, created by the Mining Industry Human Resources Council (MiHR), help bring companies together to develop new solutions to bolster the attraction of skilled workers. MiHR has been showcasing innovative practices in this column in the last few issues of CIM Magazine. The following practice, submitted to MiHR Innovate by Quinsam Coal Corporation, illustrates one company’s approach to meeting the labour challenges faced across the mining industry.

A strong commitment to training and development

Quinsam encourages ethnic and gender diversity, collaborating with First Nations communities to communicate employment opportunities.

With 2011 marking its 24th year in business and with approximately 150 people on its payroll, Quinsam Coal Corporation is a key employer in Campbell River, British Columbia, and one of only two underground coal mines in Canada. While the company is not currently undertaking a specific, large-scale HR initiative, it has continually strived to apply best practices in areas such as hiring, training, safety and diversity – practices that over the years have helped equip them with the human resources needed to meet the challenges of an aging workforce and senior-level attrition.

Quinsam invests heavily in training. Its intensive program begins with two weeks of classroom instruction that focuses on mine rescue and maintaining personal and team safety, followed by four to six weeks of underground and on-the-job training. After approximately six months, trainees become general miners, but the training does not stop there. Employees head back to the classroom to receive instruction on gases and ventilation, firefighting and general life-saving. This is followed by more on-the-job training and another day in

MOVING ON UP Great Western Minerals has appointed Brent Jellicoe as director of international exploration. Jellicoe will chiefly manage Great Western’s exploration program at the Steenkampskraal rare earth project located in South Africa. In addition, he will find and assess new rare earth projects on a global basis.

78 | CIM Magazine | Vol. 6, No. 6

the classroom, this time with Quinsam’s geologist, who provides instruction in areas related to ground control, room and pillar and how to identify and mine faults. While learning is ongoing, the majority of formal training is considered complete at about one year, at which time a general miner becomes a face miner. If the face miner expresses interest and is deemed a suitable candidate, he or she may then decide to train to become a continuous miner operator. As the training illustrates, safety is a number-one priority for Quinsam. In fact, the company is planning to revamp its current safety program by adopting “Courageous Safety Leadership,” an industry-recognized set of best practices that advocates individual ownership of safety. In addition to its thorough training program, Quinsam also has in place a four-year trades apprentice program.

Custom Dewatering There are usually four apprentices (two electricians and two millwrights or heavy-duty mechanics) in the program. Ethnic and gender diversity are also encouraged. The company collaborates with First Nations communities to communicate employment opportunities, and employs two female tradespeople – a welder and a heavy duty mechanic. Quinsam recognizes the importance of providing young people opportunities for professional development and advancement. They focus on hiring locally wherever possible and, as indicated by the aforementioned training and apprenticeship programs, endeavour to develop and promote talent from within. Overall, the company works to foster a culture of social responsibility. “We take the time to teach young people not only to become skilled workers, but also to be responsible employees,” says Marilyn Klotz, manager of human resources. Quinsam’s investment in its people has paid off in a low turnover rate. With regard to apprentices, for example, the company has lost only one, who left to work elsewhere. Finally, by focusing on training and promoting within, rather than hiring outside expertise, the company now sees itself as better positioned to meet the labour challenges faced across the mining industry. They have made a significant number of new hires in recent years, and now those same new hires have become highly trained employees who have the skills and knowledge to help ensure the company’s continued well-being. CIM For more information, visit www.mihrinnovate.ca.

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Worth the debate Getting serious about the connection between gender and safety Dean Laplonge

Courtesy of Resources Safety Division, Department of Mines and Petroleum (Western Australia)

Discussions on gender in the mining industry are generally limited to the under-representation of women in the workforce and the â&#x20AC;&#x153;glass ceilingâ&#x20AC;? they encounter. There seems to be an assumption that safety has nothing to do with gender: we are not taking gender seriously. However, I believe we do so at our own peril. Many different research methods have been used to investigate the relationship between gender and risk, and the conclusions are always the same: men take more risks than women.

The skewed notion of a â&#x20AC;&#x153;real manâ&#x20AC;? Despite the rise in popularity over the past decade of the groomed-toperfection so-called â&#x20AC;&#x153;metrosexual,â&#x20AC;? the Rambo culture of invincibility and destruction remains strong. From an early age, boys continue to learn that displays of strength will help them avoid ridicule and that they will be more accepted if they have big muscles, can cope with pain, compete and

Seeking input from mining employees about their experiences of dealing with â&#x20AC;&#x153;toughnessâ&#x20AC;? in the workplace.

win. This machismo does not always end when he exits the playground, as â&#x20AC;&#x153;real menâ&#x20AC;? tend to search for occupations where the work, location, pay

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80 | CIM Magazine | Vol. 6, No. 6

and industry reputation can feed their desire to appear masculine â&#x20AC;&#x201C; and I believe that mining is one such industry. Although women have been working in the sector for centuries, mining is still largely seen as a manâ&#x20AC;&#x2122;s world. Within that world, the man who wants to appear the most masculine may be inclined to take risks, as requests for assistance or displays of fear can be perceived as a sign of weakness. The problem is that this â&#x20AC;&#x153;real manâ&#x20AC;? version of masculinity is not agreeable with the safety standards demanded by todayâ&#x20AC;&#x2122;s mining culture.

Tackling sensitive issues In social contexts where masculinity can potentially promote at-risk behaviours, we have witnessed the development of targeted solutions. For example, in the area of road safety, there are advertisements aimed specifically at young men, utilizing

images and language that resonate with them. In sports – where we regularly hear of disrespectful behaviour by players off the field being exhibited towards women – peer-mentoring programs are being used to change how men respond to each other’s behaviours. In the mining industry, however, my experience has been that training programs generally only make vague references to discrimination and workplace sexual harassment. We isolate our discussions about gender to concerns about women, making little attempt to address how otherwise socially accepted masculine behaviours may be putting people at risk. Whenever you investigate gender, you must be prepared to tackle sensitive issues relating to bodies, power, equality and sexuality. The companies most likely to see an impact on their safety culture are those that will avoid quick-fix solutions, not opting for a two-hour training session or pop-psychological responses. I am consistently asked to deliver this kind of training and I always refuse. You cannot put a group of men in a room for a few hours and expect they will emerge behaving differently. The resource industry needs to pay attention to how their business systems and processes, recruitment strategies, internal communication methods, and even the physical design of their mine sites contribute to the development of a gendered culture in which not all seemingly “normal” masculine behaviours are considered safe.

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An issue to be taken seriously In 2008, I launched the “Mining for a safer masculinity” project. In our research and site-based work, we have been able to test some innovative solutions to gender issues facing the mining industry. Although the solutions have not always been perfect, one fact consistently emerges: companies are not taking the issue of gender seriously. Many companies have a vision that makes some reference to diversity, but few appear to have a plan in place that ensures this vision becomes reality. They lack awareness of how to integrate gender diversity throughout their operations, as they do not understand the importance of “mainstreaming” gender to ensure it is not just a sideline cultural topic of little relevance to the workplace. In my experience, the strategies for dealing with gender equality are rarely planned, and the result is that little gets done. I have witnessed gender-related issues being handed over to a summer student who uses Google as her only aid to learn about gender in the workplace. I have heard a mine manager inform his leadership team he wants 30 per cent of its positions filled by women within two years; and he expects the male members to support this without dissent. I have also been surrounded by 100 underground miners, listening to them scream abuse because their manager has introduced me as somebody who can teach them how to be “better men.” One man declared: “You try to change

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us and we’ll walk.” This occurred at a place where a fatality had recently occurred and where a man approached me with tears in his eyes to confess he had not hugged his wife in years because of the impact the workplace culture was having on him. The mining industry may not be the most dangerous industry in Canada, but 85 per cent of its workforce is comprised of men. So, if we are serious about safety, we need to start thinking seriously about gender. This industry needs people who are willing to recognize their own vulnerabilities. It needs workers who understand the limits and fragility of their bodies and who understand the connection between what it means to be a man in this world and what it means to stay safe. CIM

TIPS FOR ADDRESSING GENDER ISSUES IN THE WORKPLACE Conduct a gender review. Use an established methodology to help identify areas of strength and weakness when it comes to mainstreaming gender throughout your business. This process involves conducting interviews, completing document reviews and holding focus groups with key personnel to reveal what needs to be done to ensure your company offers a gender-fair workplace.

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Pilot a gendered behaviours mentorship program with a few crews or workplace teams at mine sites: this approach has proven to work exceptionally well with male sports teams. It is a focused attempt to help men forgo assumptions about gender and to find newer and safer ways of behaving. Provide participatory training for safety personnel to ensure they understand the link between gender and safety. They will then be better equipped to recognize and respond to at-risk behaviours. Encourage your leadership team to engage in some awareness training and to learn about how gender impacts the workplace. This is not a solution, but it is an important way of fostering dialogue. For the above to work, a company needs to commit time and money. It is important to enlist the help of experts to get the process started, as they can set you on the right path and provide the skills to sustain a company’s efforts.

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www.cim.org/ edmonton2012 82 | CIM Magazine | Vol. 6, No. 6

author

Dean Laplonge is a leading researcher in the field of gender in male-dominated contexts. Through the cultural research consultancy Factive, he heads up the Mining for a Safer Masculinity project. Laplonge continues to work with mining companies and industry bodies throughout Australia and Canada to address gender issues in the mining industry. He currently also holds an adjunct senior lecturer position at the University of New South Wales.

aboriginal perspectives | COLUMNS

Aboriginal entrepreneurship in the oil sands Alexandra Lopez-Pacheco “Across the country, we’re seeing a huge renaissance of vibrant entrepreneurship among the First Nation, Inuit and Métis,” says Clint Davis, chief executive of the Canadian Council for Aboriginal Business. Until recently, Davis says he and others who work in the sector realized this renaissance was translating into a significant contribution to the economy by Canada’s Aboriginal peoples. “But we were not able to put a number to it,” he says. That changed this past June when TD Economics released its special report, “Estimating the Size of the Aboriginal Market in Canada.” Its findings: Aboriginal households, businesses and governments will reach $24 billion this year and balloon to an estimated $32 billion in 2016. It went on to say that Aboriginal peoples have been making their mark across a number of goods and services areas, but the big boom in the last decade has been in Western Canada’s resource and construction sectors. “There is a whole variety of different Aboriginal businesses now that support the oil sands in some capacity,” says Davis. “I always say one way to address Aboriginal unemployment is to support Aboriginal businesses because they make it a priority to hire Aboriginal people. They’re building skills and capacity, and are effectively transforming lives.” When Tyrone Brass left his job at Syncrude after 20 years to found Bayzik Oilsands Electric, which provides industrial electrical services to major oil sands project clients, he was not setting out to transform lives but to pursue a lifelong dream of entrepreneurship. He was, however, pleasantly surprised. “You sit back one day and think about how so many of your employees have gone out and bought a home, raised their children, provided them with an education,” says

Brass. “They’re contributing members to the Fort McMurray community.” The Aboriginal entrepreneurial boom has not, however, come easy.

“Right off the bat, a major challenge is access to capital and financing,” says Davis. “Typically, when Aboriginal people start up a business,

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September/October 2011 | 83

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| aboriginal perspectives

they’re the first in their family or the first in their community to do so. Therefore, gaining access to seed capital is certainly a challenge, but the research we did indicated that the majority of Aboriginal businesses are actually very successful once they get past the first six to 12 months.” Wood Buffalo region’s Ryan Pruden had to overcome this very challenge when he founded his first company, Wapose Medical Services

Inc., about eight years ago. “There’s a huge potential for businesses servicing the oil sands,” he says, “but there’s a huge need for money for payroll, equipment and so on when you’re starting out,” says Pruden, who recently founded a second company, Pruden Contracting Ltd. “It can be difficult to get people to believe you are a strong, reliable business so that you can access financing.” Another challenge is access to business mentors and supporters,

MOVING ON UP Kilo Goldmines Ltd. has hired Dutch mining engineer Alex van Hoeken as the junior miner’s new president and CEO. Van Hoeken, who has global gold mining management experience, will replace interim CEO Peter Hooper. *** Stornoway Diamonds has announced that Eira Thomas, its cofounder and chairperson, has left the company to pursue other interests. Tony Walsh, CEO of Sabina Gold & Silver Corporation and the director at Stornoway since 2003, will be replacing her. *** Forbes & Manhattan has hired Kevern Mattison as general manager of its Slater Coal operations based in Dundee, Kwazulu-Natal, South Africa. Mattison has over 20 years of experience in coal mining. He has worked in both underground and opencast operations and has managed operations covering a wide spectrum of mining methods.

84 | CIM Magazine | Vol. 6, No. 6

something that entrepreneurs such as Pruden and Brass are trying to change. Both men are on the board of the Northeastern Alberta Aboriginal Business Association (NAABA). “Joining the NAABA was my way of giving back to my community,” says Brass. “I wanted to become part of promoting Aboriginal business in this area to help it become better.” Both entrepreneurs would like to see more diversification in the type of Aboriginal businesses oil companies work with. “I’ve yet to see an Aboriginal fiber optic splicing company,” says Brass. “There just aren’t any here. So there are business opportunities, but a lot of them are in the non-technical service side of things. Still, it has to start somewhere.” Much more education and training is needed, says Brass, to address the shortage of professionals and skilled workers at every level in Aboriginal communities and in the oil sands sector. The shortage is particularly tough on smaller businesses, as it is difficult competing with the big companies in terms of pay and benefits. “I lose a lot of my good workers to the oil companies, many of which are my clients,” he says. “My approach is ‘you put some time in with me, be a good employee, learn the skills I need you to learn, and when it comes time to work for the big show, I will recommend you.’ Actually, I have work now from some former employees who went on to the large organizations. If you stifle something or someone, it doesn’t work out.” That is the same attitude Aboriginal business leaders have toward the oil sands development. “I’m not saying the oil sands industry is perfect and that there are no issues,” says Davis. “But I find it unfortunate when the opposition characterizes Aboriginal people as being collectively opposed to the industry. That’s not accurate. The other side of this story has to be told, in terms of the positive aspect this development has had on the lives of so many Aboriginal people, not only in Fort McMurray, but across the country.” CIM

student life | COLUMNS

Solid foundations Integrating occupational health and safety into mining programs Michael Tuters It is widely said that the most important thing to leave a mine is not the ore, but the worker. To truly ingrain this belief into the mining culture means instilling the ideals of safety into the future workforce. Believing that occupational health and safety is just as important as any other core subject within an undergraduate mining program, in January 2010 I undertook a study to determine how it is integrated into the curricula of Canadian, American and Australian mining schools. Twenty-five universities in these countries were surveyed on the nature of their syllabuses. Twelve schools participated in the study and only 42 per

cent of them required a course on occupational health and safety to obtain a degree. Every school that did not require one had the topic integrated into a number of other courses. The dominant mining literature for these countries was quantified and compared in relation to relevant health and safety material. The Mine Safety and Health Administration (MSHA), the Commonwealth Scientific and Industrial Research Organization (CSIRO), the National Institute for Occupational Safety and Health (NIOSH), the Society for Mining, Metallurgy and Exploration (SME), and the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) were

determined to be the organizations that provide the most pertinent literature in relation to mining health and safety. The courses that offered relevant information on the topic for each university were compared based on the relevance of their textbooks and course content. Using this analysis, changes to the curricula at certain schools were recommended. Upon completion of this study, the following suggestions were developed for Canadian, American and Australian mining schools: • A specific course on occupational health and safety should be mandatory for the completion of an undergraduate mining degree in all three countries. The addition of this course should not

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| student life

justify the removal of occupational health and safety components that are already present in other courses. The specific course should be an integrating mechanism to build on the materials covered in other technical subjects, such as mine design or ventilation. • An action plan should be created for the sharing and exchange of resources. MSHA, CSIRO, NIOSH, CIM and SME are the best candidates for creating such a plan. The most prominent occupational health and safety resources should be catalogued to align the similar material utilized in all three countries. This must be done by one of these organizations so that participation in the accumulation of resources from educational institutions and the mining industry is maximized. • Once available information has been catalogued, an online database of resources should be created and maintained to ensure that information on best industry practices in health and safety is easy to access and emulate. The database should contain all resources available from MSHA, CSIRO, NIOSH, SME and CIM, as well as all regulations and acts pertinent to health and safety in all countries. Access should be granted to all universities with mining and mineral resource programs. These schools should also be encouraged to

86 | CIM Magazine | Vol. 6, No. 6

participate in the sharing of their resources, and they should be capable of having a forum to discuss the information provided by other schools and of providing recommendations on reference materials and studies added by other institutions. • Universities in every country should utilize the resources provided by NIOSH, CSIRO, MSHA, CSIRO, NIOSH, CIM and SME. Additionally, each institution should require, but not be limited to, analysis of their provincial and federal occupational health and safety acts. SME’s Mine Health and Safety Management by Michael Karmis is the best candidate for a required textbook in all countries because of its emphasis on occupational health and safety in the mining sector. • A mining health and safety short course should be created and sponsored by a mining industry leader. This would allow schools without mandatory health and safety courses to integrate it into their curriculum quickly. It should be a one week course led by an adjunct professor – preferably a practicing engineer. The course’s focus should be on, but not limited to, state or provincial occupational health and safety legislation,

workplace hazards and risks that result in ill health or death, and occupational health risk assessment and management. The best way to improve safety in the future of the industry is to emphasize it: call on industry’s leaders and have them catalogue all of their information on the subject; make it available to students; and ensure that safety is mandatory in the education of mining professionals. The effect of these changes can be measured by the monetary benefits attributed to fewer lost time injuries and illnesses and, most importantly, the lives saved as a result. While mines come and go, improving safety is a project we must continue, until the day that lost time injuries, illness and fatalities are completely eliminated from the industry. CIM Reference and source information is available upon request at michael.tuters@gmail.com.

author Michael Tuters graduated from the Robert M. Buchan Department of Mining at Queen’s University in 2010.

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Inciting a riot The Bienfait coal strike of 1931 Correy Baldwin

n September 29, 1931, a parade of vehicles carrying miners and their wives and children entered the town of Estevan, hoisting banners and protesting a sweeping range of poor working and living conditions that plagued the Bienfait coal mines in southeastern Saskatchewan. There were hundreds of confrontations across Canada during the Annie Buller addresses a crowd before the Estevan riot. struggle for labour rights in the early 1930s, but none as deadly as the one that crushed the BienAfter several days of speeches, the fait coal strike. union had signed up 100 per cent of The Great Depression had brought the miners – around 600 men. The a drop in coal prices and with it, layunion instructed its members to offs and massive wage cuts at the remain nonviolent. They also chose mines. Mine workers were caught men of British decent for the local between seeking better working conleadership to undermine rumours that ditions and facing unemployment. In “the foreign element” was inciting Bienfait, wages had been slashed, extra labour unrest. work was going unpaid, safety regulaThe union then approached the tions in the mines were not being foloperators of the nearly two dozen coal lowed, company housing was squalid, mines in the area to negotiate wages, rents were high, and the company working conditions and living condistore demanded a full monopoly while tions. The operators refused to meet. charging exorbitant prices. After repeated attempts to negotiate, On top of this, company intimidathe union set a deadline and threattion had prevented workers from ened to strike. On September 8, the unionizing, making it difficult for miners walked off the job. them to express any grievances. By the The local RCMP was immediately summer of 1931, things had become put on alert, attempting to keep the unbearable. The miners approached peace as the situation grew more and the Workers’ Unity League (WUL), a more tense. The local detachment in labour union operated by the Communearby Estevan was surprisingly symnist Party of Canada. The WUL sent pathetic to the miners. The officer in several organizers, including its presicharge, Sergeant William Mulhall, was dent and the notorious, fiery speaker, insistent that his force not be used as Sam Scarlett. strikebreakers, a stance that angered 88 | CIM Magazine | Vol. 6, No. 6

and frustrated the mine operators and many of Estevan’s more prominent citizens. The Coal Operators’ Association (COA) began a public campaign against the police force and its sergeant, painting them as incompetent, unwilling and unable to crush the so-called Communist agitators. The COA also sent complaints to the provincial authorities. The provincial RCMP was hesitant to take sides, but the national authorities were especially wary of the union’s links to the Communist Party. When the COA demanded that Sergeant Mulhall be replaced, the national RCMP Commissioner complied, overruling provincial objections. Inspector W. J. Moorhead arrived, along with a contingent of heavily armed officers mandated to protect industry property. As the strike approached three weeks, the union invited popular organizer Annie Buller to speak to the miners and help organize support for their cause. Buller had quickly gained a reputation as a powerful speaker and a passionate socialist and political activist. After speaking at a mass meeting for the miners, Buller was asked to stay and speak again at a public meeting the following Tuesday, September 29. The union had planned a vehicle parade from Bienfait into Estevan, where they would meet with the citizens of Estevan. The union was concerned about the negative portrayal they were receiving in the press and

wanted to inform the public of the issues and rally their support. On Tuesday morning, the Estevan town council met and voted to prohibit the parade, and called on the RCMP to enforce the ban. No attempt was made to communicate this decision to the union leaders, who went ahead with the day’s plan, unaware that a heavily armed RCMP force would try to stop them. The parade of vehicles met the police blockade as they entered Estevan. When the strikers refused to leave, the police moved in. A struggle broke out and the police cracked down, armed with sticks. Seeking to gain control, the police chief ordered the fire department to turn their water hose on the demonstrators. But a group of miners climbed onto the fire truck, preventing them from doing so. It was then that the RCMP pulled out their guns, killing Nick Nargan, one of the miners on the fire truck, with a bullet through the heart. In the violence that followed, several more miners, five bystanders, and an RCMP officer were wounded by police gunfire, and many on both sides were injured. The wounded were taken to the Estevan hospital, but were turned away. The doctor in charge was employed by the mine operators as well and had been given orders not to admit any wounded miners. A miner named Julian Gryshko, shot in the abdomen, died outside the hospital. The rest were sent to the hospital in Weyburn, 86 kilometres away. A third miner, Peter Markunas, would die in Weyburn three days later. The next morning, police conducted armed raids around Bienfait, arresting 13 men and placing machine guns around the town. Additional officers had been sent from Regina. Ninety officers patrolled Bienfait for

the next two weeks, searching homes and making a further 13 arrests, including several union organizers and local leaders. The trials began in October to great national interest. The police crackdown had been labelled a “riot,” and union organizers were convicted of rioting and inciting a riot. Sam Scarlett was sentenced to a year in prison and fined $100. Another organizer, Isidor Minster, was sentenced to two years of hard labour. Annie Buller was sentenced to a year of hard labour in jail and fined $500. After an appeal, Buller was granted a new trial. She heroically conducted her own defense, but was sentenced again, this time to one year in solitary confinement. The RCMP admitted no responsibility, and no officers faced prosecution.

The only officer to suffer any setback was Sergeant Mulhall, who received a damaging report on his service record. The miners returned to work on October 6, after gaining a number of concessions from mine organizers and agreeing to drop their union membership. They would not gain union representation until 1944, the year Tommy Douglas’ CCF (Co-operative Commonwealth Federation) party came to power in Saskatchewan and put pressure on industry operators to recognize labour unions. Nick Nargan, Julian Gryshko and Peter Markunas were buried in a common grave in the Bienfait cemetery. Their tombstone reads, “Murdered in Estevan, September 29, 1931, by the RCMP.” CIM

September/October 2011 | 89

cim news Goodbye, not farewell One of the industry’s brightest leaders taking her next big step

Patricia Dillon, the only female president in CIM’s history, is retiring from Teck Resources and leaving behind a legacy of work that could have easily filled a few lifetimes. But do not use the word retirement around her. “I don’t like the term,” Dillon says. “It’s not what people in the mining industry do.” It is this tireless effort and enthusiasm that has made her an outstanding leader in the field. “My real passion is helping people understand the value of the mining industry,” she says. After several summers working as a field geologist, Dillon began her career as a high school science teacher before joining Teck full time in 1979. She held various positions, initially in exploration, which culminated in her becoming director, employee communications and engagement. In the early 1990s, she got involved with the Prospectors & Developers Association of Canada (PDAC) where there was a unique opportunity to serve the public through the organization’s education committee. As a graduate in geology (1974) and education (1976) from the University of Toronto, Dillon utilized her background to usher in one of her greatest achievements, the establishment in 1997 of PDAC Mining Matters, a charitable organization that has contributed significantly to society’s awareness of the minerals industry. Experts in education were consulted and engaged to develop the first Mining Matters Grade 6/7 earth science curriculum kit for Ontario teachers, which was introduced in 1994. The annual budget of the Mining Matters has grown from approximately $200,000 to $800,000 over the past 17 years. Shortly after the initial classroom program was introduced, it won the Conference Board of Canada’s Partnership Focus Award for “promoting 90 | CIM Magazine | Vol. 6, No. 6

Credit: PDAC

By Hartley Butler George

Thoughts on industry’s attitude to “open its doors” “Twenty years ago, at backyard BBQs we were almost ashamed to say we worked in this industry,” she says. “I believe strongly in the value of this industry and I’m proud of the fact that I’m in it. Fellowship, networking and the knowledge that we make a significant contribution to society are what drive us. We all have an opportunity to promote this great industry.” science literacy for the world of work.” Currently, the Mining Matters message has reached approximately 500,000 students and the initiative is being extended to Quebec and Canada’s eastern and western provinces. In addition to PDAC, Dillon’s involvement with other industry organizations and initiatives has been extensive:

• Chair of the CIM Toronto Branch • Ambassador for Keep Mining in Canada (KMIC) • Member of the Mining Association of Canada’s (MAC) Public Relations Committee and Towards Sustainable Mining Committee • Chair of the Minerals and Metals Industry Sector Study Steering Committee • Co-chair of the CIM Mining Millennium Conference and Exhibition in 2000 (held in conjunction with PDAC) • President of the Minerals and Economics Management Society As president of CIM (2000-2001), a major project for Dillon was reworking the CIM Strategic Plan and pinning down an updated vision and mission – a decision that made CIM more relevant and understandable, both to its membership and the public. She also took a special interest in CIM’s student associations and used every opportunity to help them better prepare for interaction with the industry. From 1998 to 2001, Dillon did a three-year secondment to the Lassonde Mineral Engineering Program at her alma mater as director, external liaison. She returned to Teck thereafter as the manager of corporate relations. Dillon’s need to be challenged has been her compass throughout her career. “I made decisions that were right for me,” she says. “I never actively sought leadership roles, but if I was approached, I never said no. I never backed away from opportunity and always pushed myself to grow and develop new skills.” It is this attitude that has afforded her recognition along the way: the CIM Past Presidents’ Memorial Medal (1998) for setting an example to people contemplating a career in mining; the Athena Award (2000) from the town of Oakville for her community service and mentorship of young

cim news women; the CIM Distinguished Service Award; and, most recently, the PDAC Distinguished Service Award. She attributes her success to hard work, great mentors, an infectious enthusiasm, and support from her family and company.

New challenges Dillon leaves Teck at the end of September and shows no signs of slowing down: she will continue her involvement with Mining Matters, the Canadian Mining and Metallurgical Foundation, the International Council of Mining and Metals (ICMM), and with an upcoming collaboration with Royal Ontario Museum to create the travelling Canadian Mining Hall of Fame exhibit. She is also the incoming chair of the Mining Industry Human Resources Council (MiHR). It looks like retirement is not on the agenda, but Dillon’s latest career move will involve one notable bonus: “I’m happy about not having to set the alarm for 5:50 a.m. every day,” she laughs. CIM

MOVING ON UP The Iron Ore Company of Canada has appointed Julie Gelfand as vice-president of environment and social responsibility. Previously, Gelfand served as the Mining Association of Canada’s vice-president responsible for implementing the Towards Sustainable Mining initiative, which unites a wide range of stakeholders in establishing mine site protocols that include crisis management planning, safety and health, community outreach and tailings management. Under Gelfand’s direction, three new protocols were added on issues related to safety and health, biodiversity conservation and Aboriginal relations. She was also responsible for all the biodiversity and corporate social responsibility (CSR) files at MAC, including a committee on international social responsibility, which deals with issues such as transparency, accountability, various international standards that apply to the extractive sector and the Canadian CSR Strategy.

*** Neo Material Technologies Inc. has appointed Geoff Bedford as its COO. Bedford has over 10 years of experience with the company. This transition will allow Constantine Karayannopoulos, president and CEO, to focus largely on the strategic growth, diversification and future direction of the company.

John “Blue” Evans

Douglas Bryan

Lucy Rosato

Obituaries John “Blue” Evans began his professional career in 1951 working for North Broken Hill Ltd. in Australia. He had a long and varied professional career, working in Canada, Australia and the United States, working as a practical mining engineer, a consultant, a researcher and an academic at various times throughout his career. In 1955, he worked as a mining engineer at the Canex Placer operation in Salmo, British Columbia, and ended up working as the assistant to J. D. Simpson, the founder and president of Placer Development. In 1969, he joined the University of British Columbia (UBC) as professor and head of the Mineral Engineering Department. During his nine years at UBC, he revitalized the department during a period of strong mining industry growth in the 1970s. Blue left UBC in 1978 to work in minerals research for Esso Resources in Calgary. Later, he returned to Australia to head up the mining department at the University of South Australia in Adelaide. He returned to Canada in 1991 and continued to work as a consultant for eight years. He spent his last few years living in retirement in Richmond, British Columbia. Blue Evans, who joined CIM in 1954, became a Life Member of both CIM and of the Association of Professional Engineers and Geoscientists of BC. He was a CIM Distinguished Lecturer in 1977, and in 1978 received the CIM District 6 Distinguished Service Medal. He was also the recipient of the CIM Metal Mining Society’s Award in 2001. In 2010, a group of Blue’s former students established the “John Blue Evans Student Enrichment Fund” at UBC. An initial endowment of $120,000 was contributed to help support student initiatives and for student participation in conferences, field trips and special courses such as mine rescue. In the words of Reverend Terry Allen, a lifelong friend of Blue’s from his Salmo days, Blue was “a professional who knew what he was talking about, an engineer who knew how to build it right, an enterprising larger-than-life figure, a bluff Australian with a kind heart, and above all a good friend.” Blue was the inspiration and mentor for a generation of UBC mining engineers who have gone on to prominent careers in the industry. He will be missed but his legacy lives on through those in the industry who knew him, worked with him, and learned from him. He passed away on June 4, 2011. Michael Allan, CIM past president 2009-2010 Douglas Bryan, was a member of CIM since 1977, and the recipient of this year’s J.C. Sproule Award. He died on June 15. Lucy Rosato was an active member of the Hydrometallurgical Section of MetSoc in the 1990s. She passed away on April 30. September/October 2011 | 91

cim news

| plan stratégique

M4S

• MINES • MINÉRAUX • MÉTAUX • MATÉRIAUX

Normand Huberdeau / NH Photographes Ltée.

LES MINES DANS LA SOCIÉTÉ

ÉLEVER LE M4S À UN NIVEAU SUPÉRIEUR

l y a un peu plus d’un an, le salon Les mines dans la société de l’ICM a changé de nom afin de mieux refléter les divers aspects constitutifs du secteur minier : les mines, les minéraux, les métaux et les matériaux. Maintenant appelé M4S, sa mission demeure la même : faire prendre conscience au grand public de l’impact de l’industrie minière sur notre vie de tous les jours. Fort d’un succès qui n’a cessé de croître depuis le début, l’ICM est maintenant prêt à franchir une nouvelle étape dans l’histoire du M4S.

UN NOUVEL OBJECTIF Faisant partie intégrante de la feuille de route de l’ICM, la nouvelle image du M4S vise à intégrer les éléments interactifs du salon ainsi qu’à attirer une plus grande diversité de personnes au sein de l’industrie, lesquelles n’auraient peut-être pas envisagé une carrière dans le domaine minier. « À l’avenir, l’intention est d’élever le M4S à un niveau supérieur en matière de sensibilisation et d’éducation en ciblant différents segments et groupes qui sont sousreprésentés dans cette industrie », explique Lise Bujold, directrice des événements de l’ICM. Les élèves et les enseignants des écoles primaires et secondaires représentent la majorité de l’auditoire du M4S. En élargissant la portée du modèle de réussite du M4S vers d’autres communautés, l’objectif de l’ICM est 92 | CIM Magazine | Vol. 6, No. 6

d’élaborer des stratégies, des messages et des activités visant à atteindre ces segments de la population, à savoir les étudiants de niveau postsecondaire, les femmes, les Autochtones et les professionnels à la retraite. Il est important de changer les idées fausses du grand public au sujet de l’industrie minière afin de joindre les groupes ciblés. « Nous savons que nous avons une grande bataille à entreprendre », a déclaré Jean Vavrek, directeur exécutif de l’ICM. « Nous devons promouvoir l’industrie auprès des jeunes et des groupes de population moins traditionnels, mais nous devons également détruire l’image d’une industrie dépassée et non écologique. » Lors du Congrès et Salon commercial de l’ICM à Montréal, Chris Twigge-Molecey, alors président de l’ICM, a dit ceci : « Si vous ne favorisez pas la croissance, vous sombrez. » La clé de la réussite est de faire prendre conscience au public de l’importance de l’incidence de l’industrie minière sur nos vies. Élever le M4S vers de nouveaux sommets exige d’entreprendre un certain nombre de mesures précises, notamment d’examiner les moyens de rendre le modèle interactif plus mobile afin de l’amener dans des lieux plus petits. « Des sociétés membres et des sections de l’ICM nous ont demandé d’organiser le M4S dans les communautés des Premières Nations », a indiqué M. Vavrek. « Déplacer le salon sur les routes

plan stratégique nous permettra de diffuser notre message aux personnes qui n’auraient pas nécessairement participé à l’événement annuel. » L’ICM examine également la possibilité de collaborer avec d’autres associations industrielles afin d’accroître la popularité du site Web du M4S. « Nos partenaires ont diffusé beaucoup de contenu et nous recherchons une façon d’en intégrer une partie sur le site Web du M4S », a-t-il ajouté. Il est aussi prévu d’intégrer M4S dans le curriculum scolaire; Une mine de renseignements de la PDAC serait un partenaire idéal pour cette initiative.

d’obtenir de meilleurs résultats. Au milieu de 2012, le comité entend présenter un document d’information sur les résultats. Pour Mme Bujold, l’avenir du M4S s’annonce radieux. « Nous commençons notre aventure et nous avons besoin de dirigeants, de visionnaires et de personnes qui ont une idée des segments de la

| cim news

population qui pourraient devenir une main-d’œuvre éventuelle. Les chefs de file de l’industrie s’accordent sur l’objectif du M4S. Il n’y a aucun nuage en vue; tout ce dont nous avons besoin ce sont des personnes qui souhaitent s’engager dans cette cause en contribuant à sensibiliser le public et en faisant la promotion de l’industrie. » ICM

UN APPEL À L’ACTION La collaboration des parties prenantes de l’industrie est nécessaire à la mise en œuvre des initiatives relatives au M4S. « Nous recherchons actuellement les meilleurs moyens de nous associer avec les structures de base de l’ICM et d’autres acteurs de l’industrie qui partagent nos objectifs », a souligné Mme Bujold. « Environ 100 000 emplois seront bientôt vacants dans le secteur minier; ces postes doivent être comblés. La nécessité de s’attaquer collectivement à cet enjeu n’a jamais été aussi importante, et la mise en commun de nos ressources constitue la prochaine étape logique pour promouvoir notre industrie ainsi que les diverses carrières sur lesquelles elle ouvre. » L’ICM est en voie de créer un comité consultatif du M4S à l’échelle du Canada. « À l’heure actuelle, nous recherchons des ressources », explique Mme Bujold. « Nous avons besoin de personnes qui connaissent l’industrie et qui sont prêtes à s’engager dans la mise en œuvre de ces étapes stratégiques en participant à un programme qui produira des résultats mesurables. » Les connaissances collectives de ce comité seront exploitées afin d’évaluer la situation actuelle et de discuter de la mise en place d’initiatives réalisables permettant

The Power of Collaboration The Mining Industry Human Resources Council

Released August 2011: ;^V UL^ Z[\KPLZ MVJ\ZPUN VU [OL O\THU YLZV\YJLZ JOHSSLUNLZ MHJPUN [OL TPULYHS L_WSVYH[PVU ZLJ[VY HUK OPNOS` X\HSPÄ LK WLVWSL

Visit www.MiHR.ca to access these studies

September/October 2011 | 93

cim news

| award winner

Striving for balance Pierre Lassonde takes home CIM award

Mining tycoon, published author, philanthropist, family man – these are just some of the words used to describe Pierre Lassonde, this year’s winner of the Robert Elver Mineral Economics Award. Selected for “his landmark contributions, visionary efforts and entrepreneurial-driven spirit in transforming the Canadian mineral economics field,” Lassonde embarked on the fast track to success at the onset of his mining career. Today he strives for more balance in his life. “I try to divide my time almost in thirds: business, philanthropy and personal or family time,” he says. On the work front, Lassonde is chair of Franco-Nevada Corporation and a director at New Gold Inc.. “I enjoy helping young entrepreneurs in the diamond, gold and base metals industries,” he says. “It keeps me pretty busy.” Last summer, Lassonde spent close to three months in France with his family, soaking up French food, language and lifestyle. “It’s a perfect way to mix business and pleasure,” he adds. From a European base, it is easy for him to travel to London or Mauritania, where Franco-Nevada holds royalties in Kinross’ operation. “I need to go kick the tires, to check it out once in a while,” he says. As a philanthropist, Lassonde is involved in a great number of pursuits. He is a staunch supporter of education, made evident by his contributions to a number of universities both here and in the United States: the University of Utah’s Pierre Lassonde Entrepreneur Center, the University of Toronto’s Lassonde Mineral Engineering Program, and various buildings at Western University and École Polytechnique. As chair of the Quebec National Art Museum in Quebec City, he is leading the fundraising campaign for a $100 million expansion. “I’ve been collecting [art] for over 30 years now,” he says. “It’s a real passion for me.” 94 | CIM Magazine | Vol. 6, No. 6

Courtesy of Janelle Lassonde

By Heather Ednie

Lassonde and his wife Janelle at New Bright Angels School, one of the schools they support through microfinance with Opportunity International.

Lassonde stresses the importance of investing in the community in which one lives. “If you want to make a difference, you have to pick where you want your support to be,” he advises. “I’ve said it a thousand times – the natural resource of a country is not its commodities, but its people. So that is what we invest in.”

Though work and philanthropy keep him busy, Lassonde ensures family time remains a top priority. The importance of maintaining a balanced life has been a life lesson for him. “Work can be so much fun, but even having fun can kill you,” he explains. “You can end up separated from your family because you lose sight of what’s truly important.” CIM

blueprint

TAKING M4S TO THE NEXT LEVEL By Marlene Eisner

RENEWED FOCUS As an integral part of CIM’s roadmap for the future, the re-branding of M4S is an effort to integrate the interactive elements of the initiative and attract a greater range of people to the industry who might not otherwise consider a career in mining. “Going forward, the intent is to elevate M4S to a greater awareness and education level by targeting different segments and groups that are under-represented in this industry,” explains Lise Bujold, CIM’s director of events. Elementary and high school students and teachers make up the majority of M4S attendees. By extending the successful M4S model into other communities, CIM’s goal is to develop strategies, messages and activities to reach these segments of the population, namely postsecondary students, women, Aboriginals and retiring professionals. Changing the general public’s misconceptions of the mining industry is important when reaching out to these demographics. “We know we have a major battle on our hands,” says CIM executive director Jean Vavrek. “We need to attract young people to the industry and some of the less traditional demographics, but we also have to demystify the image of an antiquated and environmentally unfriendly industry.” At the recent CIM Conference & Exhibition in Montreal, CIM’s then-president Chris Twigge-Molecey summed it up best: “If you don’t grow it, you mine it.” Getting people to understand just how big an impact mining has on their lives is key. Taking M4S to new heights involves a number of specific actions, including examining ways to make the

M4S

• MINING • MINERALS • METALS • MATERIALS

MINING FOR SOCIETY

interactive model more transportable to bring it into a smaller arena. “We’ve had requests from CIM branches and companies to bring M4S to First Nation communities,” says Vavrek. “Taking the show out on the road will help us spread the message to a demographic we wouldn’t necessarily reach with the annual event.” CIM is also looking to other industry associations to help populate the M4S website. “Our partners have distributed a lot of material and we are exploring how we can include some of it on the M4S website,” he adds. Integrating M4S into schools’ curicula is also in the plans; PDAC Mining Matters is an ideal partner in this initiative. Normand Huberdeau / NH Photographes Ltée.

little over a year ago, CIM’s Mining in Society show received a name change to better represent the facets that make up the mining industry: mining, minerals, metals and materials. Now rebranded as M4S (Mining for Society), the show’s mission remains the same: to educate the general public on the impact mining has on our daily lives. A success from the get-go, CIM is now ready to take M4S to the next level.

| cim news

A CALL TO ACTION Collaboration from industry stakeholders to help carry out the M4S initiatives is critical. “We are presently researching the best ways to partner with CIM constituencies and other industry voices that have the same objectives as us,” says Bujold. “Approximately 100,000 jobs will soon be available in the mining sector; these positions have to be filled. The need to tackle the issue collectively has never been greater, and pooling our resources is a logical next step in promoting our industry and the various careers it offers.” CIM is in the process of creating a Canada-wide M4S advisory committee. “At this point, we are asking for input,” Bujold explains. “We want people with knowledge of the industry who are prepared to commit to these strategic stages by contributing to a program that will produce measureable results.” The collective knowledge of the committee will assess the current situation and explore tangible initiatives for greater results. By mid-2012, the intention is to present a white paper on the results. For Bujold, the future of M4S looks bright. “We’re starting out on our quest and we need leaders, visionaries and people who have access to segments of the population that could represent a potential workforce,” she says. “Industry leaders agree on the purpose of M4S. I see nothing but blue skies ahead; all we need now are people who wish to commit to the cause by helping to raise public awareness and create buy-in.” CIM September/October 2011 | 95

cim news

| scholarship winner

Italy and PDAC: invaluable experiences that cemented a young geologist’s career path It had the makings of an amazing summer vacation: hiking Mounts Vesuvius and Stromboli, visiting the Solfatara Volcano and the Campi Flegri geothermal fields, exploring Procida, Herculaneum and Pompeii, and topping it all off with visits to the Vatican and the Coliseum in Rome. But a vacation it was not. Evan Gladney, a geology student at Saint Mary’s University in Nova Scotia, was participating in a once-in-a-lifetime field school course – an experience so impactful it confirmed existing interests, sparked new ones and gave Gladney a taste of what life could be like as a geologist. “That trip proved my love for the outdoors and for applying lecture knowledge to the field,” Gladney says. “It showed me that geology offers a lot of opportunity to travel and see different parts of the world, and to be outdoors. This trip also consolidated my interest in igneous rocks!” Last September, Gladney was honoured with the Rory Kempster Memorial Earth Sciences Scholarship given out by the CIM New Brunswick Branch. This was followed in December with the Mineralogical Association of Canada’s 2009-2010 Undergraduate Student Award. His high marks are a result of the marriage of his sharp mind and voracious interest in the courses he is taking. “A few of my classes sparked my interest in minerals, specifically precious metals and platinum-groupelements (PGEs),” he explains. “After taking an igneous petrology course, I knew that I was going to be a hard rock geologist; my interests were in the processes and mechanisms responsible for the crystallization of ore-bearing minerals.” Gladney complemented his course load with research and field work, including working with Dr. Jacob Hanley on PGE-bearing gabbroic 96 | CIM Magazine | Vol. 6, No. 6

Courtesy of Evan Gladney

By Heather Ednie

Gladney visiting the Solfatara Volcano, which is currently active and of concern, as the magma chamber is very shallow (about two kilometres below the surface) and many people live nearby.

pegmatites from the Lac des Îles Complex in Ontario, followed by an honours project on the same complex and on the Greendale Complex in Antigonish, Nova Scotia. The findings led to Gladney co-authoring a paper published in Economic Geology. But, it was a trip to the PDAC (Prospectors & Developers Association of Canada) convention in March 2010 that really cemented his career plans. “After exploring career options and current job opportunities available, I knew that working in the industry on ore deposit exploration and research was the path for me,” he asserts. Gladney graduated with his bachelor of science (honours) degree this past January and is commencing his master’s in earth sciences this autumn at St. Francis Xavier University. Although he readily states that the

courses he took while doing his bachelor’s degree were very valuable, his undergraduate learning went far beyond the classroom. “The most valuable lesson I have learned is time management, and the most valuable experiences throughout university were travelling in Italy, experiencing the culture, and attending the PDAC Convention and learning about job opportunities.” Once he completes his second degree, Gladney aims to work for either a junior exploration or a major mining company. “I have always had a strong affection for the outdoors and would like to work in precious metal and PGE exploration, with future opportunities to continue research and to publish,” he says. “I would like a job that has room for me to flourish and rise up within the company, to display my leadership skills and my personality.” CIM

Bonds beyond borders CIM increasing collaboration with sister societies globally By Nathan Stubina

CALENDAR CALENDRIER CIM EVENTS MEMO 2011 Maintenance Engineering / Mine Operators’ Conference Colloque sur l’ingénierie de maintenance et l’exploitation minière November 6-9 | Saskatoon, SK Contact: Chantal Murphy cmurphy@cim.org www.cim.org/memo2011

From left to right: Nathan Stubina, CIM vice-president international; Reinaldo Nascimento, ABM manager of external relations; and Professor Varadarajan Seshadri, Universidade Federal de Minas Gerais

CIM’s vice-president international, Nathan Stubina, recently attended the Associação Brasileira de Metalurgia, Materiais e Mineração’s (ABM) 66th Annual Congress, which took place in São Paulo, Brazil, from July 18 to 22, 2011. ABM was founded in 1944 and currently has 4,500 individual members and 120 corporate members. The purpose of the meeting was to discuss areas in which CIM and ABM can work more closely in the future, as both Canada and Brazil both have a strong tradition in mining and metallurgy. This is in keeping with CIM’s strategic objective of exploring avenues for increased collaboration with sister societies globally. CIM’s recently established “Cyber Membership” will also facilitate these efforts, enabling professionals who reside around the world to become CIM members at a reduced fee. CIM

Symposium 2011 sur l’environnement et les mines Symposium 2011 on Mines and the Environment 6-9 novembre | Rouyn-Noranda, Qc Responsable : Chantal Murphy cmurphy@cim.org www.cim.org/rouyn-noranda2011 CIM Saskatoon Branch: Mineral Processing Night November 17 | Saskatoon, SK Contact: Mike Castleberry Michael.castleberry@mosaicco.com CIM Saskatoon Branch: 46th Annual CIM Ball November 25 | Saskatoon, SK Contact: Jeff Spence Jeff_Spence@cameco.com CMP 2012 44th Annual Canadian Mineral Processors Operators’ Conference 44e Conférence annuelle des minéralurgistes du Canada January 17-19, 2012 | Ottawa, ON Contact: Janice Zinck Janice.Zinck@NRCan-RNCan.gc.ca www.cmpsoc.ca CIM Saskatoon Branch: Environmental Night January 19, 2012 | Saskatoon, SK Contact: Mike Castleberry Michael.castleberry@mosaicco.com

September/October 2011 | 97

cim news

| distinguished lecturer

The age-old battle of new versus old Klaus Kacy discusses history of modern hoisting technology By Alexandra Lopez-Pacheco Klaus Kacy is one of the world’s top mine hoisting experts. The 2007 winner of the CIM McParland Memorial Award for his outstanding contributions to the industry in mine hoist safety controls, Kacy began his career as a foreman in a Polish coal mine in 1968. Two years later, he set up an automation centre for Polish coal mines that eventually employed more than 50 qualified engineers and technicians. Over the decades, his work in developing new control systems (particularly for mine hoists) has resulted in more than 30 patents. In 1979, Kacy began teaching at Kaduna Polytechnic in Nigeria, where he was recognized for outstanding academic

achievement, and in 1982, he joined ABB (ASEA) South Africa. There, he focused on mine hoisting, including marketing, design, commissioning and field services. Since 1987, he has been at ABB Canada where he developed a technical team for the ABB Mine Hoist Group, which today is one of the best mine hoist teams in the world. Kacy is a speaker in this season’s CIM Distinguished Lecturers Series, where he will talk about the history and development of modern hoisting technology, as well as its advantages and disadvantages. CIM: What are the most significant differences between modern and older mine hoists? Kacy: The best way to illustrate the differences is to think of an electrical engineer, a hoist operator and a mechanical engineer, all of whom retired 40 years ago. Now, imagine

CIM Distinguished Lecturers Éminent conférenciers de l’ICM 2011-2012

Klaus Kacy

Bernhard Klein

A. Hamid Mumin

William Westgate

Barbara Kirby

Jim Utley

ABB Automation-Canada Westbank, BC * Modern Hoisting Systems Systèmes de treuils modernes

University of British Columbia Vancouver, BC * Energy Efficiency in Mining Efficacité énergétique dans l’industrie de l’exploitation minière

Brandon University Brandon, MB * Iron Oxide Copper-Gold Deposits in Genetic Context Gisements de type oxyde de fer-cuivreor dans un contexte génétique

3M St. Paul, MN, USA * Processes and Collaboration Propelling Innovation through Execution Processus, collaboration et exécution : un passeport pour l’innovation

Mining Industry Human Resources Council, Ottawa, ON

Teck Resources Limited, Vancouver, BC

* Canadian Mining Credentials Program – Certification: Recognizing and Retaining Skills Programme des titres de compétences de l’industrie minière canadienne – certification : reconnaissance et la retention des compétences

BOOK NOW • RÉSERVEZ DÈS MAINTENANT

www.cim.org 98 | CIM Magazine | Vol. 6, No. 6

them seeing a modern hoist. The hoist operator would have a very positive opinion, much as someone comparing their experience driving a car 40 years ago with driving a modern automatic car would have. He’d be impressed with the ease of the controls and manoeuvring and that there’s no rollback. The electrical engineer would be impressed as well. He’d think the hoist is great from the perspective of being “network friendly,” with little voltage drops or harmonics and low maintenance, but he’d be confused by its complexities and computer technology. If he had to fix it, he’d be lost. The mechanical engineer would see some differences in the design but there would be only a few components he wouldn’t recognize, with the exception of modern brake controls. From these three perspectives, you can come to a conclusion as to where the biggest changes in modern hoists have been. CIM: Are there any advantages to older hoists? Kacy: On the mechanical side, we have to give credit to the mechanical engineers of the past. In most cases, their designs were very good and they built good, long-lasting equipment. We like them from that point of view, with the exception of the brake systems. Modernizing them by adding modern controls, modern brakes and modern drives creates a good hoist. CIM: What about modern hoists? Kacy: Modern hoists have features that provide greater reliability, performance and control. They are also more user friendly. CIM: Does revamping old mine hoists with modern technology make sense? Kacy: Yes! Since 1987, we have revamped more than 100 hoists, changing the controls and modernizing them. Mine hoists are very expensive. They can run up in the millions of dollars, depending on the size. So, if you can reuse the mechanical parts, there’s an economical advantage. Sometimes time is also a factor. It can take about a year to have a large, modern hoist delivered, especially in a good economy when the few manufacturers there are in the world are kept very busy. On the other hand, getting the modern electrical components for revamping is far easier and faster. The reality is there are many available old hoists. In my time, when I worked in coal mines in Europe, mines could be 80 years old, so when they ceased operation, the equipment was so old it was not worth transporting to another place. But here in North America, we have mines that are closing after 10 years and people can take the equipment to a new mine. I would say many of the hoists today were originally used somewhere else. They usually have modern systems but the mechanical part is being reused. CIM September/October 2011 | 99

SYMPOSIUM 2011 SUR L’ENVIRONNEMENT ET LES MINES HÔTEL GOUVERNEUR LE NORANDA

ROUYN-NORANDA MINES AND THE ENVIRONMENT ROUYN-NORANDA, QUÉBEC

DU 6 AU 9 NOVEMBRE 2011 • NOVEMBER 6 TO 9, 2011

COMITÉ ORGANISATEUR | ORGANIZING COMMITTEE PRÉSIDENT | PRESIDENT Denis Bois Unité de recherche et de service en technologie minérale de l’Université du Québec en Abitibi-Témiscamingue (URSTM-UQAT)

PROGRAMME TECHNIQUE | TECHNICAL PROGRAM Michel Aubertin Chaire industrielle CRSNG Polytechnique-UQAT en environnement et gestion des rejets miniers (École Polytechnique de Montréal)

Jean-Claude Belles-Isles Association minière du Québec (AMQ)

Mostafa Benzaazoua Chaire de recherche du Canada en gestion intégrée des rejets miniers sulfureux par remblayage (UQAT) et INSA Lyon, LGCIE

Bruno Bussière Chaire CRSNG Polytechnique-UQAT en environnement et gestion des rejets miniers et Chaire de recherche du Canada sur la restauration des sites miniers abandonnés (UQAT)

Michel Julien Golder Associés

Gilles Tremblay programme NEDEM

Jean Dionne Ministère des Ressources naturelles et de la Faune

Jean-François Doyon Mines Agnico-Eagle Limitée

Gérald Zagury

PROGRAMME PRÉLIMINAIRE | PRELIMINARY PROGRAM L’Université du Québec en AbitibiTémiscamingue (UQAT) et l’Institut canadien des mines, de la métallurgie et du pétrole (ICM) vous invitent à Rouyn-Noranda, Québec, du 6 au 9 novembre 2011, à l’occasion du Symposium 2011 sur l’environnement et les mines.

The Université du Québec en AbitibiTémiscamingue (UQAT) and the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) invite you to attend the Symposium 2011 on Mines and the Environment in Rouyn-Noranda, Quebec, from November 6 to 9, 2011.

Le symposium est le résultat d’une collaboration entre la Chaire CRSNG Polytechnique-UQAT en environnement et gestion des rejets miniers, l’Unité de recherche et de service en technologie minérale (URSTM), l’Association minière du Québec (AMQ), le Programme de neutralisation des eaux de drainage dans l’environnement minier (NEDEM), le ministère des Ressources naturelles et de la Faune du Québec (MRNF) et l’industrie.

The symposium is a collaboration between the Industrial NSERC Polytechnique-UQAT in Environment and Mine Waste Management, the Unité de recherche et de service en technologie minérale (URSTM), the Association minière du Québec (AMQ), the Mine Environment Neutral Drainage (MEND) Program, the ministère des Ressources naturelles et de la Faune du Québec (MRNF), and the industry.

Les objectifs du symposium visent à partager les connaissances les plus récentes et à discuter des expériences pratiques afin de « trouver des solutions pour concilier rentabilité et protection de l’environnement.»

The objectives of the symposium are to share recent knowledge and research developments, and to discuss common practices to find solutions that reconcile profitability and environmental protection.

SÉANCE PLÉNIÈRE | PLENARY SESSION ENVIRONNEMENT MINIER ET ACCEPTABILITÉ SOCIALE | MINING ENVIRONMENT AND SOCIAL ACCEPTANCE Lors de ce panel, des opérateurs miniers, des chercheurs, des représentants des communautés minières et des leaders d’opinions échangeront sur les défis de la gestion environnementale et de la restauration des sites, dans une perspective d’acceptabilité sociale des projets miniers. Mine operators, researchers, representatives of mining communities and opinion leaders will discuss the challenges of environmental management and site restoration from the perspective of social acceptability of mining projects. DATE : Mardi 8 novembre en après-midi | Afternoon of Tuesday, November 8

École Polytechnique de Montréal

www.cim.org/rouyn-noranda2011

COURS INTENSIF | SHORT COURSE DISPOSITION DES RÉSIDUS DENSIFIÉS | DISPOSAL OF DENSIFIED TAILINGS Ce cours intensif sera axé sur : · · · · · · · · · · · ·

Les objectifs; Les caractéristiques générales; Les résidus épaissis, en pâte et filtrés; La préparation et le transport; Le mode, la séquence et l’angle de déposition; Les propriétés hydro-géotechniques et géochimiques; L’écoulement de l’eau : conditions saturées et non saturées; L’analyse du comportement géotechnique : tassement, consolidation, dessiccation, fissuration; La stabilité : sollicitations statiques et dynamiques; La diffusion et l’oxydation; La modélisation physique et numérique; et La restauration.

This short course, given mainly in French, will cover the following topics: · · · · · · · · · · · ·

Objectives General characteristics Thickened, paste and filtered tailings Preparation and transport Deposition technique, sequence and angle Hydro-geotechnical and geochemical properties Water flow: saturated and unsaturated conditions Geotechnical behaviour: settlement, consolidation, desiccation and cracking Stability: static and dynamic loadings Diffusion and oxidation Physical and numerical modelling Reclamation

Case studies will also be presented.

Des études de cas seront aussi présentées. DATE : Dimanche 6 novembre / Sunday, November 6 | HEURE / TIME : 8 h 30 – 17 h | ENDROIT / LOCATION : Université du Québec en Abitibi-Témiscamingue | INSTRUCTEUR / INSTRUCTOR : Michel Aubertin, Chaire industrielle CRSNG Polytechnique-UQAT en environnement et gestion des rejets miniers (École Polytechnique de Montréal) et Bruno Bussière, Chaire CRSNG Polytechnique-UQAT en environnement et gestion des rejets miniers et Chaire de recherche du Canada sur la restauration des sites miniers abandonnés (UQAT)

EXCURSION | FIELD TRIP VISITE DE SITES D’ENTREPOSAGE DE REJETS MINIERS | SITE TOUR OF MINE WASTE STORAGE FACILITIES L’excursion traversera l’Abitibi d’Ouest en Est et permettra de réaliser une visite guidée de trois sites miniers : le site récemment réhabilité de l’ancienne mine Aldermac, la mine Canadian Malartic de la Corporation minière Osisko (site actif d’exploitation minière) et le projet de remise en état de Manitou-Goldex (site actuellement en restauration). Les places sont limitées et l’inscription préalable sera nécessaire. Les vêtements et équipements de protection individuelle seront disponibles sur place. This field trip will cross Abitibi from west to east and will include guided visits to three mine sites: the old Aldermac Mine (recently restored), Osisko Mining Corporation’s Canadian Malartic project (active mine) and the Manitou-Goldex Rehabilitation project (presently in remediation). Places are limited and pre-registration is required. Individual safety equipment and clothing will be available on site. DATE : Mercredi 9 novembre / Wednesday, November 9 | HEURE / HOUR : 7 h 30 – 17 h | DÉPART ET RETOUR / DEPARTURE AND RETURN : Hôtel Gouverneur Le Noranda

www.cim.org/rouyn-noranda2011

PROGRAMME TECHNIQUE | TECHNICAL PROGRAM La traduction simultanée sera offerte en français et en anglais pour les présentations du programme technique. Simultaneous translation in English and French will be available for technical presentations.

LUNDI 7 NOVEMBRE | MONDAY, NOVEMBER 7 REJETS DE CONCENTRATEUR | TAILINGS Planning effective disposal of tailings in permafrost terrain D. Hayley, EBA Engineering Consultants

Vers une mise à jour des critères de stabilité géotechnique pour la conception des ouvrages de retenue des rejets miniers M. Aubertin et al., École Polytechnique de Montréal

The potential benefits and challenges of using tailings as foundation material to increase capacity of tailings storage facilities M. Julien et al., Golder Associés ltée

Les défis associés à la gestion des rejets miniers en milieu urbain J.S. David et al., Corporation minière Osisko

REMBLAYAGE SOUTERRAIN | BACKFILL Démarche relative à l’obtention du permis environnemental de remblayage souterrain à la mine Kittilä, Finlande S. Ouellet et al., Mines Agnico-Eagle Limitée

Stabilisation de l’arsenic dans les remblais miniers en pâte cimentée M. Benzaazoua et al., INSA Lyon, LGCIE et Université du Québec en Abitibi-Témiscamingue

Analyse de la réponse des remblais formés de rejets miniers pour la conception sécuritaire des chantiers et barricades M. Aubertin et al., École Polytechnique de Montréal

An investigation into physical and microstructural properties of Gelfill F. Hassani et al., McGill University

ROCHES STÉRILES | WASTE ROCKS The Diavik waste rock research project: geochemistry, scale-up and gas transport R. Amos et al., University of Waterloo

Comportement géochimique et hydrogéologique des stériles de la mine Tio B. Bussière et al., Chaire industrielle CRSNG Polytechnique-UQAT en environnement et gestion des rejets miniers

The behaviour of blended reactive and alkaline waste rock in a high rainfall environment W. Wilson et al., University of Alberta

Classification of waste rock weathering based on test pile, field cell and mineralological studies B. Klein et al., University of British-Columbia

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SALON COMMERCIAL | TRADE SHOW

POLITIQUES ET RÉGLEMENTATION & MINES ET SOCIÉTÉ | POLICIES AND REGULATIONS IN MINING IN SOCIETY Gestion du bruit à la division LaRonde et relations avec les communautés voisines P. Lavoie et al., Mines Agnico-Eagle Limitée

Implementing the Troilus agreement – A joint study of Cree employment and service contracts in the mining industry V. Roquet, Vincent Roquet & Associates Inc.

Programme de réduction des rejets industriels (PRRI) - 2e décret secteur minier C. Dugas, Ministère du Développement durable, de l’Environnement et des Parcs du Québec (MDDEP)

Regulation of uranium mines and mills in Canada J. Leclair, Commission canadienne de sûreté nucléaire

MARDI 8 NOVEMBRE | TUESDAY, NOVEMBER 8

Des fournisseurs mettront en vedette leurs produits et leurs services durant le Symposium. Le salon commercial est l’occasion parfaite pour faire de nouveaux contacts et pour renouer des liens avec des fournisseurs, des entrepreneurs et des consultants. Suppliers will showcase their products and services at this year’s Symposium. The trade show is a great opportunity to drum up business while reconnecting with suppliers, contractors and consultants. Exposants / Exhibitors :

RESTAURATION DES SITES | SITE RESTORATION

Environnement ESA Inc.

Lessons learned from geomembranes in MSW landfills

Filtration Tapp Inc.

R. Brachman, Queen’s University

Restauration du site Manitou à l’aide des rejets de la mine Goldex : design et suivi du site J. Dionne et al., Ministère des Ressources naturelles et de la Faune (MRNF)

Goechemical partitioning and distribution of U, Th, Ra, and trace metals in flooded, pre-oxidized uranium mine tailings E. Yanful et al., Universty of Western Ontario

Innovex Inc. John Meunier Inc. Les Industries Atlantic Ltée PerkinElmer Canada

La restauration du site minier Aldermac D. Isabel, SNC-Lavalin inc.

Génération2 Filtration

QUALITÉ DES EAUX | CONTAMINATED WATER Reactivity of uranium-bearing waste rock during simulated weathering D. Sapsford et al., Cardiff School of Engineering

Causes of Mn marginal removal in passive systems treating acid mine drainage C. M. Neculita et al., Korea Advanced Institute of Science and Technology (KAIST)

Stavibel Université du Québec en Abitibi-Témiscamingue (UQAT) WESA Envir-Eau

Gestion des eaux souterraines à la mine Goldex M. Tremblay et al., Mines Agnico-Eagle Limitée

Mine water management in cold climates: case study of Meadowbank S. Robert, Agnico-Eagle Mines Limited

NOUVELLES TENDANCES | NEW TRENDS

Inscrivez-vous en lign dès maintenan e t!

Water management at Syncrude Canada Ltd. – An integrated open-pit mining/extraction/upgrading facility W. Zubot, Syncude Canada Ltd.

Projet BNQ 21000 F. Craig, en partenariat avec le MDEIE, le BNQ, Neuvaction et la Chaire de gestion de développement durable

www.cim.org/ rouyn-noranda 2011

Mine reclamation in the USA À confirmer / To be confirmed

A review of closure strategies for pit lakes at hard rock metal mines in the United States L. E. Eary, Interralogic Inc.

www.cim.org/rouyn-noranda2011

SESSION AFFICHES ÉTUDIANTES | STUDENT POSTER SESSION

PARTENAIRES PARTNERS

Des affiches reliées aux pratiques minières durables et à l’environnement minier, sur n’importe lequel des sujets du Symposium seront présentées. Les affiches seront vues par tous les délégués et exposants à cet événement. Les étudiants diplômés qui s’intéressent aux pratiques minières durables et à l’environnement minier saisissent la possibilité de démontrer leurs talents. Posters on the full range of topics related to mining sustainable practices and the mining environment will be presented. They will be seen by all delegates and exhibitors at the event. Graduate students interested in sustainable mining practices and the mining environment are seizing the opportunity to showcase their talents.

INSCRIPTION | REGISTRATION Les frais d’inscription des candidats retenus seront payés; ils comprennent l’accès aux présentations techniques, au salon commercial, à la réception d’ouverture du dimanche soir et aux dîners du lundi et du mardi. Successful candidates will receive complimentary registration, which includes: access to the technical presentations and trade show, Sunday night opening reception, and luncheons on Monday and Tuesday.

PERSONNE-RESSOURCE | CONTACT Vous pouvez contacter Louise Labbé au 819-762-0971 (poste 2558) ou par courriel à louise.labbe@uqat.ca pour toute information additionnelle. Please contact Louise Labbé at 819-762-0971 (ext.2558) or louise.labbe@uqat.ca for further information. DATE : Lundi et mardi, 7 et 8 novembre / Monday and Tuesday, November 7 and 8

PROGRAMME SOCIAL | SOCIAL PROGRAM DIMANCHE 6 NOVEMBRE | SUNDAY, NOVEMBER 6 Cocktail de bienvenue de 18 h à 21 h | Welcoming Reception from 18:00 to 21:00

LUNDI/MARDI 7 ET 8 NOVEMBRE | MONDAY/TUESDAY, NOVEMBER 7 AND 8 Dîner dans le salon commercial | Lunch at the Trade Show Chaire CRSNG Polytechnique - UQAT en environnement et gestion des rejets miniers

LUNDI 7 NOVEMBRE | MONDAY, NOVEMBER 7 SOUPER SPECTACLE

Le souper spectacle mettra en vedette des produits du terroir local, le tout suivi d’un spectacle de haute qualité (19 h à 22 h 30), précédé d’une réception (18 h). Lors de la soirée, le prix carrière sera remis à une personne dont la carrière a marqué le développement de l’environnement minier au Québec. BANQUET

The evening begins with a cocktail reception at 18:00, followed by a banquet featuring local specialties and a fantastic show from 19:00 to 22:30. During the evening, the Career Award will be presented to someone whose career has marked the development of the mining environment in Quebec.

www.cim.org/rouyn-noranda2011

cim news

CIM welcomes new members Abdel Sabour, Sabry, USA Acott, Gerry, Alberta Adendorff, Jaco, South Africa Aitaok, Jorgan, Nunavut Ajumogobia, Somiari, Alberta Aleshkov, Sergey, Russia Anguelov, Raytcho, British Columbia Arbi, Ali, British Columbia Ardito, Cynthia, USA Arko, Tara, Nunavut Baldwin, Jessica, Newfoundland & Labrador Barja Castellano, Rebeca, British Columbia Barry, Ryan, Nunavut Beaune, Calen, Ontario Berlizov, Andrey, Ukraine Boadu, Richmond, Ghana Boldyrev, Valeriy, Russia Boley, Trey, USA Bowal, Curtis, Alberta Boytsov, Alexander, Russia Bresser, Hugh, Australia Brisco, Margaux, Nunavut Bryant, Colin, Australia Buhlman, Nick, Ontario Campbell, John, Alberta Cash, Aileen, Ontario Cavasin, Alex, Ontario Chalmers, Mark S., Australia Chan, Ming Kit, China Chan, Wendy, China Chan, Sik Lap, China Chaudhari, Bhavesh, India Chaytor, Sandra, Newfoundland & Labrador Cheng, Tony, China Cherepanov, Andrey, Russia Chesney, Cindy, Ontario Cheung, Michael, British Columbia Chirchikbayev, Bakyt, Kazakhstan Cole-Rae, Kendall, Ontario De Windt, Bertrand, Ontario Del Mastro, Jonathan, Alberta D’Orazio, Rosanne, Nunavut Dunn, Hunter, Alberta Erskine, Dan, USA Fauconnier, Anne, France Ferraro, Jean-François, France Fisher, Scott, Ontario Freed, Rina, British Columbia Gabriel, Sophie, France Ganesan, Arjun, British Columbia Geslin, Wilfried, France Getz, Arnold, Australia Gingras Little, Kristopher, Ontario Girgis, André, Ontario Golovko, Valery, Russia Graham, Jim, USA Granchinho, Sophia, Nunavut Graves, Doug, USA Gubago, Moopi, Ontario Guimaraes, Flavio Marcio, British Columbia Gupta, Brijesh, India Halliday, Matthew, Ontario Hames, Ben, British Columbia

Han, Wei, British Columbia Harkema, Albert, Ontario Harris, Douglas, USA Hassani, Selemani, British Columbia Hein, Glen, Kazakhstan Hem, Priyadarshi, British Columbia Hisatani, Koichi, Japan Ho, Chin Choi, China Ho, Ivan, British Columbia Hockley, Daryl, British Columbia Hogg, LuVerne E.W., British Columbia Horner, Mark, Ontario Huan, George, British Columbia Hubbard, Martin, United Kingdom Hughes, Alan, Australia Indyk, Sergey, Russia Jaganathan, Satishkumar, USA Johnson, Anne, Ontario Johnson, Leif, USA Khan, Nizam, Ontario Kirk, Patricia, USA Kriz, Petr, Czech Republic Kyle, John, USA Langille, Steve, Ontario Langton, Chris, Alberta Lau, Paul, China Ledoux, Luka, Ontario Lee, Haydn, China Lee-Sheriff, Janet, British Columbia Leuret, Théo, France Li, Tianbai, Alberta Li, Wenjie, China Li, Xizhong, Alberta Lickers, Samantha, Ontario Lingel, Ed, British Columbia Litke, Shauna, British Columbia Longo, Sue, Alberta Luminita Crisu, Tereza, British Columbia Lyle, Glenn, Ontario Maley, Mark, Australia Maskokian, Siamak, Iran Mason, Peter, USA Mathema, Bruce N., Ontario McGladrey, Alexandra, British Columbia McPhee, Lindsey, Alberta Mensah Fynn, Anthony, Ghana Mikhaylenko, Mikhail, Russia Moghadam, Sanaz Zadeh, British Columbia Mokgosi, Emmanuel, Ontario Moodie, Kelly, Ontario Moodley, Kasuren, South Africa Morrison, Parker, Ontario Mushinski, Ken, USA Navratil, James, USA Neumann, Jessica, Ontario Nikbakhtan, Babak, Alberta Noor, Meskatun, Ontario Norris, Christopher, Ontario Ohnemus, Joachim, Germany Okure, Unyime Martin, Alberta Okutsu, Misato, Ontario Paatero, Erkki, Finland Paju, Greg, Ontario

Pandhari, Abhijit, British Columbia Parenteau, Jason, Alberta Pasco, Luis, Peru Peddada, Sharath, Ontario Perez-Ramirez, Javier, British Columbia Pitts, Michelle, Ontario Playter, Tiffany, Alberta Pohjolainen, Esa, Finland Qin, Shijia, British Columbia Regli, Andrea, Ontario Rodgers, Matthew, USA Rooney, Jodi, Alberta Samuelson, James, USA Savytska, Margarita, Ukraine Schmidt, Roland, USA Schmidt, Sherry, Ontario Scott, Robert, Ontario Seifried, Helen, Alberta Seredkin, Maxim, Russia Shahwan, Moein, Newfoundland & Labrador Sheriff, William, British Columbia Shimoda, Tomoya, Australia Shkwarek, Meagan, Ontario Shtusa, Mikhail, Russia Shulga, Dmitry, Russia Skibsted, Brant, Alberta Soldatek, Steven, USA Spoelstra, Nico, South Africa Srigyan, Dipankar, Alberta St-Pierre, Sylvain, United Kingdom Sutton, Carson, Alberta Sze, Marco, China Tang, Mark, British Columbia Tarkhanov, Aleksey, Russia Tisdell, Dominic, Australia Tomlinson, Steele, British Columbia Trump, Daniel, USA Ubah, Chinedu, British Columbia Vekris, Evangellos, Ontario Viel, Marcel, Ontario Vincent-Lambert, Warren, Alberta Walter, John, Ontario Wasylik, Darrin, British Columbia Watson, Curtis, Ontario Wiley, Chris, USA Woolley, Richard, Alberta Workman, Lyall, USA Yoshie, Hiroshi, Alberta Yuan, Haoyue, British Columbia Zalokotskiy, Taras, Ukraine Zhang, Shujing, British Columbia Zhang, Tianhang, British Columbia Zhang, Zhao, Alberta Zhivov, Vadim, Russia Zhu, Shanyu, British Columbia Zimmerling, Stephanie, Ontario Zubair Mir, Hasan Ali, Alberta

Corporate Members Intergraph Canada Centre Jardin Lac Pelletier (3088-6469 Québec Inc.) September/October 2011 | 105

HISTORY OF

economic geology The foundations of modern economic geology (Part 6) By R. J. (Bob) Cathro, Chemainus, British Columbia

On the eve of World War I (1917 for the U.S.), engineer-journalist Thomas A. Rickard commented on the difference between the levels of prestige accorded to the profession in the United States and Britain. He wrote that a young American woman regarded the mining engineer “as an energetic explorer on the frontier, as a resourceful technician that finds the metals required in civilized life”, whereas the young Englishwoman had “a vague idea that the mining engineer is a somewhat nomadic person connected with queer doings on the stock exchange” (Rickard, 1937). On the same topic, Herbert Hoover told of being with a charming female companion, an Englishwoman, on a trans-Atlantic voyage. When the trip was nearly over, in response to her query, he told her he was a mining engineer and she was shocked. “Oh, I thought you were a gentleman”, she said (Hoover, 1951). Spence, 1970, p. 16.

[Hoover later served as president of the United States between 1929 and 1933.]

106 | CIM Magazine | Vol. 6, No. 6

The final step in building a strong foundation for economic geology was to train enough mining engineers and mining (economic) geologists to satisfy the rapidly growing demand in the western United States and other parts of the world. The reason this article focuses on mining schools is because they provided the best technical training during that era. Many of the future geologists probably did not even know they had an interest and aptitude for the subject until they began their mining courses or, in some cases, until they had embarked on their careers in the industry. Engineer Benjamin B. Lawrence described mining in 1910 as “the most polyglot of all the professions. … Geologist, surveyor, lawyer, mechanic, chemist, metallurgist, mineralogist, electrician, this was the mining engineer of the old school.” As long as technical knowledge had not advanced too far, the engineers were able to remain general practitioners, but ultimately – even before the 20th century – they began to develop specializations that might take them in half a dozen different directions. During much of the 19th century, most engineers were of the practical variety – men who through circumstance, ability, hard work and experience in the different aspects of mining and milling had won their positions without special education. But from the mid-1860s on, the trend moved in the opposite direction, and it was estimated that 85 per cent were college-trained by 1921 (Rickard, 1921). “It was the American universities that took engineering away from rule-of-thumb surveyors, mechanics and Cornish foremen and lifted it into the realm of application of science, wider learning in the humanities with the higher ethics of a profession ranking with law, medicine and the clergy” (Hoover, 1951). Prior to about 1870, most of the educated mining engineers in America were the products of European schools, the most important of which was the Bergakademie at Freiberg in Saxony. As noted in previous articles, the school had produced some of the most influential economic geologists, including Rossiter Raymond, Waldemar Lindgren, Samuel Emmons, Richard Rothwell and John Hays Hammond. Whereas only a handful of Americans had enrolled there before 1850, the number increased rapidly to as many as 25 annually during the early 1860s. By the late 1860s, about half of the enrolment of 100 came from the United States. By 1876, however, the trend was changing and only 18 of 139 were American. Students from the United States or Canada came with varying backgrounds and, although not mandatory, most had taken some previous college courses before they entered. Applicants were required to pass examinations that were roughly equivalent to Harvard admission standards, to be followed by a practical fourmonth preparatory course in the mines and smelters. Most American students were not degree candidates; however, many remained at least three years. If they were not working towards degrees, they were not required to take examinations and could do very little, if they so desired. The Bergakademie combined theory and practice. The latter, covering both mining and smelting, was a spring and summer program designed to prepare students for the regular fall classes. By the 1870s, Freiberg had four principal courses: mining engineering, metallurgical engineering, mine surveying, and iron mine engineering and metallurgy. Students studied geology under Bernhard Von Cotta and Alfred Stezner. Except for drawing, surveying, mineralogy and petrography, physics and chemical analysis, blowpipe and assaying, all teaching was done through lectures with a minimal emphasis on laboratory work. That emphasis would soon shift in American schools.

HISTORY OF

economic geology After leaving Freiberg, many American students spent complete,” he had to admit that the new technical school was time at other European mining schools, such as the École des “creating a sensation.” Editors lauded the institution and visMines in Paris, where they were taught mineralogy by itors were impressed with the rigour of the curriculum. Daubrée and geology by Élie de Beaumont and De Church, an expert on the subject, stated in 1871 that it was Chancourtrois. Other outstanding schools included those in already “one of the best schools in the world – more scientific Clausthal (Hartz Mountains), Berlin, Frankfurt, Gotingen than Freiberg, more practical than Paris.” By this time, and Schemnitz (Slovakia). John A. Church, an American Columbia Mines had been reorganized as a general school of mining engineer, wrote in 1871 that there were only four technology that offered five regular courses of instruction: first-class mining schools in Europe: Freiberg, Berlin, Paris mining engineering, metallurgy, civil engineering, geology and the Royal Mining Academy at St. Petersburg. Very few and natural history, and analytical and applied chemistry. Americans were trained at the latter. Church did not include The two initial professors who were credited with making any British schools, although a few Oxford and Cambridge the school a success were Francis Vinton and Thomas Egleston. graduates did become mining engineers. Even the Royal Vinton, a graduate of West Point military academy before comSchool of Mines at London lacked the prestige and influence pleting the course in Paris, was the first professor of mining of the best European and American institutions, in part engineering. Egleston studied geology and mineralogy at Yale because the profession had less social and intellectual pres- under Benjamin Silliman before attending Paris with Vinton. tige in England. The eminent graduate T. A. Rickard wrote in He taught geology and metallurgy. Because of them, the 1904 that if British technical men held their own, “it is rather European impact lingered for some time, although James through inherited ability than the aid afforded by the miser- Dana’s Manual of Geology (1863) was a basic tool from the ably financed … (British) schools of mines.” beginning. Because of the superior facilities in metallurgy, early One of the first American schools that trained engineers students tended to gravitate towards it rather than mining. was the Rensselaer Polytechnic Institute at Troy, New York By 1872, a preparatory year had been added to the curstarting in 1835. Most of those were civil engineers although a riculum and the minimum age had been raised to 18. By few, including Richard Rothwell from Ontario, became mining 1873, the enrolment of 140 students at Columbia Mines engineers. The Polytechnic College in Pennsylvania, chartered exceeded that of Columbia College itself. Of the 189 degrees in 1853, was probably the first institution to offer a degree in awarded by Columbia Mines by the end of 1881, 60 per cent mining. About 50 of the first 369 graduates prior to 1890 are were engaged in mining or kindred fields, 29 per cent were thought to have worked in the minerals industry. However, chemists or assayers, six per cent were metallurgists, and four that school languished because it was unable to attract funding per cent were geologists or mineralogists. The early domior good teachers and students on a continuing basis. nance of Columbia Mines was demonstrated in 1879 when it The first successful American mining institute was the awarded 20 of the 31 mining engineering degrees presented School of Mines at Columbia College in New York, which in the country. Of the 871 mining engineering graduates in enrolled 29 students when it opened in 1864. When a new the United States prior to 1892, 402 (46 per cent) were from building was built the next year, the enrolment increased to 79 Columbia (see table). By then, at least 25 graduates were and Columbia Mines, as it was known, was well on its way to becoming the most outstanding Total number of graduates from U.S. mining schools to 1892 (Spence, 1970; Table 1, p. 40) institution of its kind. In the beginning, it offered Date of Institution No. of grads Average a three-year program to those who were at least 16 first to 1892 per year graduation years old and had passed exams in algebra, geom1867 Columbia School of Mines 402 15.46 etry and trigonometry. First-year courses included 1867 University of Michigan 41 1.57 drawing, stoichiometry, mathematics (analytical 1868 Massachusetts Institute of Technology 126 5.04 geometry and differential and integral calculus), 1869 Washington and Lee (none since1875) 8 0.03 physics (heat and the steam engine), electricity 1871 Lehigh University 48 2.28 and magnetism, inorganic chemistry, quantitative 1871 Lafayette College 40 1.71 analysis, mineralogy (including blowpipe use and 1874 Missouri University 26 1.31 1874 Washington University, St. Louis 43 2.26 analysis), French and German. In the second year, 1877 University of California 55 3.44 students continued mineralogy and quantitative 1878 University of Illinois 6 0.40 analysis and added metallurgy, mechanics, geol1879 University of Wisconsin 12 0.92 ogy, botany and mining engineering (machines). 1882 Colorado School of Mines 26 2.60 In the final year, metallurgy, quantitative analysis, 1888 Michigan School of Mines, Houghton 27 5.40 theory of veins, “exploitation of mines,” assaying 1890 Alabama Polytechnic 4 1.33 and “conservation of force” were added, along 1891 Montana School of Mines 6 3.00 1892 Pennsylvania University 1 1.00 with an attempt to connect the various sciences. Although a Yale professor thought that the Total in 26 years 871 33.05 1866 course load was “not very thorough or September/October 2011 | 107

HISTORY OF

economic geology based in Colorado, 12 in New Mexico, seven in Utah, six each in California and Arizona, and four in Nevada. In addition to the schools listed in the table, a few mining engineers had graduated from Texas A&M University, Armour Institute, University of Wyoming, Stanford, South Dakota School of Mines (1887), University of Arizona School of Mines (1891), University of Nevada School of Mines (1892) and New Mexico School of Mines at Soccoro (1893). Some of those eventually grew into very prominent schools. The School of Mines at the Berkeley campus of the University of California had an inauspicious beginning as a private school in 1864. However, once it was merged into the state system a decade later, it soon emerged as the leading institution of its kind in the West. Stability was achieved when Samuel Benedict Christy became professor of mining and metallurgy in 1885. Increased demand from Australia and South Africa for American engineers led to an increase from an average of three graduates annually between 1880 and 1898 to 29 per year from 1899 to 1917. California School of Mines had conferred 536 degrees by 1917. The Colorado School of Mines also had a slow and difficult start because of inadequate financial support by the state. One professor described the students in 1917 as a “fair attendance of the roughest specimens of youthful humanity that can be found anywhere.” It is not known whether they became above-average engineers or not.

The earliest mining engineering schools established in Canada were the School of Practical Sciences at the University of Toronto (1878), McGill University which claims to be the oldest (1879), Queen’s University (1893), Nova Scotia Technical College at Halifax (1906), University of Alberta (1914) and University of British Columbia (1915). The Nova Scotia school was created to amalgamate mining courses first offered before 1900 by the University of King’s College, followed by those at Acadia, Mount Allison and Dalhousie. King’s College and the Technical College later became associated with Dalhousie. CIM

Acknowledgments Most of the information in this article has been derived from Spence (1970).

References Hoover, H. (1951). The memoirs of Herbert Hoover, Vol 1. New York: Macmillan, p. 131-132. Lawrence, B. B. (1910). Engineering profession. New York: The (Columbia) School of Mines Quarterly, April, p. 207. Rickard, T. A. (1904). Engineering and Mining Journal. New York: Vol. 78, p. 459. Rickard, T. A. (1921). The education of a mining engineer. San Francisco: Mining & Scientific Press, Vol. 123, p. 815. Rickard, T. A. (1937). Retrospect: an autobiography. New York: Whittlesey House, McGraw-Hill Book Company, p. 138. Spence, C. C. (1970). Mining engineers & the American west: the lace-boot brigade, 1849-1933. New Haven: Yale University Press, 407 p.

Canadian Metallurgical Quarterly The Canadian Journal of Metallurgy and Materials Science New to Maney in 2011...CMQ publishes original contributions on all aspects of materials science, including mineral processing, hydrometallurgy, pyrometallurgy, materials processing, physical metallurgy and the service behaviour of materials. Issue 1 of Volume 50 now published...Including a letter from Editor-inChief, Professor Doug Boyd, Queen’s University, Canada Online content...The full archive of CMQ is available to member subscribers. To view archive and current content online visit: www.ingentaconnect.com/content/maney/cmq Member subscriptions...To subscribe as a member, simply log-in as a CIM member and proceed to subscribe: www.cim.org www.maney.co.uk/journals/cmq

108 | CIM Magazine | Vol. 6, No. 6

www.cim.org

HISTORICAL

metallurgy Gold in Siberia: a historical essay By Fathi Habashi, Laval University, Quebec City

Introduction In 1717, Isaac Newton (1643â&#x20AC;&#x201C;1727), Britainâ&#x20AC;&#x2122;s Master of the Mint, set the value of currency at three pounds, 17 shillings and 10.5 pence (based on one ounce of gold). In 1844, the Bank of England established the Gold Standard by which all notes were fully backed by gold. After the gold rushes of the 1840s and the increased supply of gold, the price for the precious metal stabilized. With the expansion of industry and commerce in the late 19th century, there was an increased demand for gold and silver as currency. Gold also became the basis for the credit and banking systems, which were involved in financing important new projects overseas. Furthermore, new demands for both metals arose during this period due to the invention of plating and its application to inexpensive silverware and jewelry, for which very large markets quickly developed.

Gold mining in Russia Russia was one of the major gold producers in the 19th and 20th centuries. Many Russian counts and tsars sent men out on expeditions to prospect for gold, silver and base metals in the outskirts of the great empire. However, the earlier attempts failed due to lack of experience. When travelling in Western Europe, Peter the Great (1672â&#x20AC;&#x201C;1725) familiarized himself with the fundamentals of mineralogy, mining and metallurgy. Confident in the mineral potential of his country,

he invited skilled explorers from England, Germany and Holland on geological expeditions in Russia. A series of gold discoveries followed: on the northern coast of the White Sea in 1737; in the Altay Mountains in 1733-1735; and by a peasant on the eastern slope of the Ural Mountains in 1745. It took two years to verify the latter find and, in 1748, the first Russian gold mine was set up. However, a gold rush did not ensue as the vast majority of the Russian population was comprised of serfs and political prisoners bonded to numerous noble landlords or a few industrialists. This was well-documented by American engineer George F. Kennan (1845-1924) in his book Siberia and the Exile System, first published in 1891. Kennan was employed in 1864 by the Russian American Telegraph Company to survey a route for a proposed overland telegraph line through Siberia and across the Bering Strait. In May 1885, Kennan began another voyage, this time across Siberia beginning in Europe. Exploration in Siberia began in 1826 when the Crown began granting authorizations to several entrepreneurs to search for gold. As a result, a wave of gold rushes inundated southern Siberia in the early 1830s. Hundreds of alluvial deposits were found in the mountains of Altay, Sayan and Eniseysky Kriazh. The gold output in the southern part of western and central Siberia grew to 17.4 tonnes in 1855, however, began to decline in 1913. At the time, gold was

Map of Siberia showing the major gold producing areas in Magadan, Yakutsk and Krasnoyarsk

September/October 2011 | 109

HISTORICAL

metallurgy primarily mined by hand, put through Chilean mills and then amalgamated. In the early 19th century, Irkutsk was flourishing as a trading and administrative centre as it was near the border of China and on the Angara River. It was perfectly positioned along the ancient river trading route running from the Arctic Ocean and the Yenisei River via the Angara to Lake Baikhal. Irkutsk further benefitted from the opening of the Siberian Trakt – a direct road from Moscow. Although a rough route to travel, it was used to transport goods, and accommodations were available along the way. Exiles, traders, industrialists and travellers began arriving in Irkutsk. Soon it was established as the capital city and the seat of the governor general of eastern Siberia. After the abolition of serfdom in 1861 and with rapid industrial development, gold mining techniques became more advanced and operations were further mechanized. However, horsepower remained the main earthmoving force until the end of the 19th century when, Isaac Newton with the assistance of Western professionals, dredging was introduced. Gold was first discovered in the Amur River basin in 1850, and in the winter of 1857-1858, an expedition found gold in the Maya River basin. The next several years were marked by numerous discoveries. Zeyski, a major gold district in the Amur region, yielded 66.8 tonnes of gold between 1876 and 1900. The first dredger, Karl Marx which was built in Holland, was introduced in Amur in 1894. The operation was so successful that another dredge was ordered a year later. From 1902 to 1915, about 96 tonnes of gold were produced in the province. The Lensky Gold District was part of Transbaikalia, a major gold province. The first finds of alluvial gold in this area occurred in 1843, but they were minor compared to those in other parts of southern Siberia. Three years later, two exploration parties discovered two enormously rich placers in the Khomolkho River basin. A series of new discoveries followed over the next five to eight years. In 1868, 110 | CIM Magazine | Vol. 6, No. 6

placers were discovered in the Bodaibo River basin. Dredging began in the district in 1914. Exploitation of gold deposits in the Urals led to the founding of Ekaterinburg and in 1901, to the inauguration of the Trans-Siberian Railroad. Before World War I, Russia maintained its status as one of the world’s major gold producers, with an annual output of about 64 tonnes.

The Russian Revolution Gold mining was interrupted during the Revolution of 1917 and the Civil War that followed. When the Soviets took over the government, the philosophy at that time, as formulated by Karl Marx (1818– 1883), was that gold will eventually lose its value when Communism prevails, that this explains the diminishing interest in exploring for gold, and why all efforts were to be directed to iron and steel. However, Joseph Stalin, who came to power in 1922, was very impressed by the California Gold Rush after reading a number of books on the subject. Fearing Japanese imperiPeter the Great alism would occupy the sparsely populated eastern provinces, he opened the region up to miners to explore for gold in hopes of recreating the California rush in the area. In 1927, Stalin sent Alexander Pavlovitch Serebrovsky (1884-1938), director of Azerbaijan Central Oil Administration and a professor at the Moscow School of Mines, to study gold mining in the United States. Serebrovsky, a native of Ufa, hired John D. Littlepage George F. Kennan (1894–?), an American mining engineer working in the gold mines in Alaska, to develop Russia’s gold industry. A Gold Trust was being established for this purpose; miners from Germany and other countries were hired and mining equipment was purchased. Prospectors and miners were encouraged to search for gold, which kicked off a gold rush. Several hundred thousand men and women were working under the control of the Gold Trust. Remarkably, the rush was well organized and the miners were well behaved. However, due to the policy to liquidate the kulaks and the use of forced labour, the industry suffered a setback resulting in numerous

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Serfs and political prisoners on their way to exploit the gold mines in Siberia belonging to the tsar (from George F. Kennan, 1891)

acts of sabotage, which led to the purges of 1933. Russia’s main mines were located near the city of Bodaybo in central Siberia, at Magadan on Siberia’s east coast, and on the Chukotskiy Peninsula on the Bering Strait. After World War II, the USSR became the second largest gold producer in the world. Alexander Serebrovsky, a member of the Communist Party of the Soviet Union, studied at St. Petersburg Institute of Technology, graduated from the Higher Technical School in Brussels, and was the deputy of People’s Commissar for Heavy Industry of the USSR. He was arrested on September 23, 1937, and on February 8, 1938, was convicted of “counter revolutionary activities” by the Military Collegium of the USSR Supreme Court. He was shot in on February 10, 1938. Many heads of industry in the USSR were subjected to repressive measures in 1937-1938, however, they were rehabilitated in the 1960s after the Stalin era. CIM

Core programming includes:

Hydrometallurgy Corrosion Clean Metallurgical Processing Sustainability Issues in Mineral & Metal Extraction Sustainability through Mining

Organized by:

Acknowledgments The comments of Professor Igor Petrov of Moscow are gratefully acknowledged.

Suggested Readings Habashi, F. (2010). Mining and Civilization. An Illustrated History. Québec City: Métallurgie Extractive Québec. Distributed by Laval University Bookstore (www.zone.ul.ca). Habashi, F. (2009). Gold. History, Metallurgy, Culture. Québec City: Métallurgie Extractive Québec, 277 p. Distributed by Laval University Bookstore (www.zone.ul.ca). Kennan, G. F. (1891). Siberia and the Exile System. New York: Century Company. Facsimile edition by Eliborn Classics (2006). Littlepage, J. D. & Bess, D. (1938). In Search of Soviet Gold. New York: Harcourt-Brace, 310 p. Russian translation available. Prohorov, A. M., ed. (1973-1983). The Great Soviet Encyclopedia. New York: Macmillan. Contains a biography of Serebrovsky, but no mention of his trip to the United States or of Littlepage.

September/October 2011 | 111

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voices from industry

Resource potential… the best is yet to come By Brad Anderson, executive director, Alberta Chamber of Resources

xploration has always been at the heart of resource development in Alberta, yet only a few years ago industry and government leaders were questioning whether it even had a future in the province. Fast forward to 2011, and the Alberta Chamber of Resources’ Task Force on Resource Development & the Economy has found that past predictions could not be further from the truth. Established in 2009, the task force looked at the resource sector’s historical impacts and assessed the future potential for resource develop-

and tradespeople who bring home significantly above-average incomes. The report’s most encouraging finding is a simple confirmation: that there is a future for resource development and it will continue to drive our economy. For those of us who work in the industry, we can feel confident that we are making a difference for future generations. Wise government policies and smart corporate strategies have the potential to add an incremental $700 billion in Alberta’s GDP and almost four million incremental person years of employment in the next decade. The social benefits should not be forgotten: in 2007, the oil and gas sector alone paid almost $60 billion to Canadian governments, resulting in more funding for social infrastructure such as schools, hospitals and roads, which contribute greatly to our quality of life. The stereotype of “hewers of wood and drawers of oil” is gradually being supplanted by the realization that the resource sectors of the 21st century are characterized by the sophistication of business and technology. By focusing on innovation and productivity, resource companies are able to reduce impacts on the environment, extend the life of resources and generate social and economic benefits for future generations of Albertans, and Canadians in general. While I was at the Alberta Oil Sands Technology and Research Authority in the mid-1980s, we were determined to find a way to tap into the deep reserves of bitumen. Ideas and creativity certainly played a role in our research; however, it was the courage of our convictions that truly made the difference in the creation of a new technology called steam-assisted gravity drainage (SAGD). The same can be said for the next decade of resource development. The future is not limited by the reserves in the ground, but rather by the limitations of our imagination, innovation and stewardship. If you are interested to learn more about the task force and the recommendations for industry and government to achieve the potential that exists in resource development over the next decade, visit www.acralberta.com. CIM

The future is not limited by the reserves in the ground, but rather by the limitations of our imagination, innovation and stewardship. ment in Alberta. It found that the province is nowhere near the end of its conventional oil and gas reserves, due primarily to new technologies that have extended production horizons by decades. It is estimated that hundreds of years of bitumen and coal production lie ahead. Forest management and sustainability practices have resulted in a renewable resource base, which is satisfying the growing global demand for wood and fibre. Waiting to be discovered and quantified is a diversified basket of industrial minerals, including iron, potash, lithium, titanium, uranium and diamonds. Along with Robert Mansell, an eminent resource economist from the University of Calgary, the task force documented how resource sectors have been the mainstays of Alberta’s economy. Over the past 10 years, resource development has generated 62 per cent of Alberta’s GDP and 50 per cent of employment. Nationally, the sector is the largest net contributor to Canada’s favourable trade balance and accounts for one-quarter of all Canadian business profits. Resource development requires smart, highly skilled workers, including engineers, technologists

114 | CIM Magazine | Vol. 6, No. 6

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