Q&M Feb-Mar 2014

NEW ZEALAND QUARRYING & MINING Volume 11 - No 1 | February - March 2014 | $8.95

FATHER AND SON

A long-standing commercial relationship with CablePrice

PUGMILL RULES

How Stevensons upped the quality of its quarry product

WHAT PRICE A WORKPLACE DEATH? One liability rule for you, another for the Crown

FISHING FOR MUDFISH

Lessons in environmental strategy in Northland

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C O N T E N T S

NEW ZEALAND QUARRYING & MINING Volume 11 - No 1 | February - March 2014 | $8.95

INSIDE 4 Editorial 6 Upfront 12 Workplace safety regulations 14 Cover story – Father and son 16 Quarrying – Pugmill rules 22 Environment – Fishing for mudfish 24 Innovation – Offshore ironsands 26 Finance – The mining gamble 28 Regulations – A consenting lesson 30 Comment – No blame, yeah right!

32 Legalities – What price a workplace death?

34 Comment – Mining for a greener economy 35 Technical lessons – From quarry to wine bottle 36 Health & Safety – Speaking from experience 38 Netta Burnside – Vote for major projects 39 Products and services

16

22 28

ON THE COVER: Father and son team Carl and Alan Gibson explain their longstanding commercial relationship with CablePrice.

See story page 14

30 Q&M February - March 2014

3

F R O M

T H E

E D I T O R

NEW ZEALAND QUARRYING & MINING

H&S in perspective In today’s world of competing internet and print publishing it pays to maximise the strengths of your particular sector, and magazines have a huge advantage over the internet when it comes to bringing together feature themes in depth.

The feature theme in this issue is workplace health and safety, as seen from multiple perspectives.

Hugh de Lacy spent many hours over his holiday break reviewing legal decisions made over the Pike River Mine disaster (page 32) while I, in between visiting Stevenson’s pugmill at Huntly, reviewed our unique ACC scheme, while in other pages we cover the new H&S regulations coming into play.

However, as Andy Loader says in his comment piece (page 36) – regulations are no good without enforcement, and us older ones can recall similar programmes (remember OSH) that have come and gone without effect.

Will the new workplace safety blueprint do any better, or is it just saying the same thing in a different way, and placing heavier responsibly and blame on the employer to do the Crown’s policing with the threat of criminal action? And where does the worker’s liability now realistically stand in workplace health and safety? As every employer knows it has become a nervous and litigious exercise disciplining staff for any reason.

It’s an intriguing question as to why the country is so accident prone, and I discuss the argument as to whether our accident compensation scheme, based on the principle of no blame, has complicated

the situation?

Whether it’s something in our water or a deep-rooted recklessness, Kiwis have never been very good at keeping safe – on the road, on the ocean, on top of a mountain, repairing the gutter over the Xmas hols, or adjusting a conveyor belt at work.

Sloppy, stupid and selfish are words that spring to mind. Is that moron thinking of you passing within a mere metre on the other side of the road as they challenge their driving skills by taking on a 55kpm bend at reckless speed?

What other first world country would allow its citizens to explode something like 1500 tonnes of fireworks every year under the guise of family fun, and shrug off an average of 450 injuries?

Pike River is embedded in our miserable safety history as the crowning tragedy of the nation’s history of workplace disasters, and the final cruel message for the Government to get off its arse and do something – quick.

I cannot help thinking that Pike River also represents the country’s nemesis, or fated punishment, for 25 years of ‘market’ experimentation where we took a sudden new direction with a naïve faith in market rules, de-regulation, lowest cost is best, profit before humanity, out-sourcing and bonuses, weakened workers representation, and an ‘honesty box’ approach to policing and enforcement.

If this is the case, then we are all to blame.

Alan Titchall Editor

“Without the provision of highly trained, qualified and experienced inspectors and litigators, the legislation and its intended instruments will be no more effective than the 1992 version.”

– Andy Loader page 36

Q&M covers news, views and trends from the extractive industries, along with features on projects and people in the industry.

PUBLISHER

Contrafed Publishing Co Ltd Suite 2.1, 93 Dominion Road, Mt Eden 1024 PO Box 112357, Penrose, Auckland 1642 Phone: 09 636 5715 Fax: 09 636 5716 EDITOR

Alan Titchall DDI: 09 636 5712 Mobile: 027 405 0338 Email: alan@contrafed.co.nz MANAGING EDITOR

Kevin Lawrence DDI: 09 636 5710 Mobile: 021 512 800 Email: kevin@contrafed.co.nz ADVERTISING MANAGER

Mike Bridgman DDI: 09 636 5724 Mobile: 021 228 4988 Email: mike@contrafed.co.nz REGULAR CONTRIBUTORS

Hugh de Lacy, Lindsay Clark, Netta Burnside, and Gavin Riley ADMINISTRATION/SUBSCRIPTIONS

Email: admin@contrafed.co.nz DDI: 09 636 5715 PRODUCTION

Design: Tracey Asher, TMA Design Printing: Client Focused Solutions Ltd 027 255 1818 Contributions welcomed.

Please contact the editor before sending them in.

Articles in NZ Quarrying & Mining are copyright and may not be reproduced in whole or in part without permission of the publisher.

Opinions expressed in this magazine are not necessarily those of the shareholding organisations or the publisher.

VISIT THESE WEBSITES Aggregate & Quarry Association www.quarrying.org.nz Institute of Quarrying (NZ) Inc www.ioqnz.co.nz New Zealand Minerals Industry Association www.straterra.co.nz Extractive Industries Training Organisation www.mito.org.nz NZ Contractors’ Federation www.nzcontractors.co.nz Roading New Zealand www.roadingnz.org.nz NZ Ready Mixed Concrete Association www.nzrmca.org.nz InfraTrain New Zealand www.infratrain.co.nz

4 February - March 2014 Q&M

ISSN 0110-1382

U P F R O N T

Quarry group works on new guidelines

Back row left to right: Ross Wallace, Russell Dixon, Gavin Brindle, John Burhenne, and Michael Adams. Front row Shane Parker, Scott Cann.

CablePrice (NZ) Top Team achieves on global stage The CablePrice team from New Zealand took on teams from 10 finalist countries in the Scania Top Team world finals held in Sweden to take second place. Some 60 countries competed in the annual competition, so it was no mean feat for the team made up of five members of the Whangarei branch staff: Scott Cann, Michael Adams, Gavin Brindle, John Burhenne and Shane Parker.

Assisting the team with their success in the competition was training manager for CablePrice, Ross Wallace.

The team from Australia took out the title of Scania Top Team, and Finland achieved third place.

The final took place over two days and was divided into nine challenges. Friday’s knockout round consisted of four challenges.

The first two, a theoretical and a practical one, determined the starting order for the remaining two. After the initial two challenges, New Zealand was in the lead: 25 seconds ahead of Australia, and 70 seconds ahead of Finland.

As part of the final two challenges, the teams had to first assemble and then mount a genuine Scania spotlight bar. This was particularly tricky for the Kiwi and Aussie teams as they had never fitted this accessory before. Trucks in New Zealand and Australia are not allowed to have this set-up, which proved an extra hurdle for the guys from the Southern Hemisphere.

In spite of this, both the New Zealand and Australian teams proved their tremendous skill and ability with both teams assembling their lighting bars the fastest, knocking Finland out of the race for the top two places. Despite starting 25 seconds down, Australian team Southern Stars worked hard and fast to assemble a lighting bar and mount it to a truck, which secured their victory.

The competition was closely followed by 400 on-site spectators, including the finalists from Argentina, Austria, Germany, Italy, Peru, Slovakia and Switzerland.

6 February - March 2014 Q&M

Unless you have been away visiting Mars over the past six months you would know there’s been change to workplace safety regs and rules.

The Health and Safety in Employment (Mining Operations and Quarrying Operations) Regulations 2013 replace the Health and Safety in Employment (Mining Administration) Regulations 1996 and the Health and Safety in Employment (Mining-Underground) Regulations 1999.

The regulations, developed in response to the recommendations of the Royal Commission on the Pike River Coal Mine Tragedy, came into force on Monday, December 16, 2013.

On the same day associated changes to the Health and Safety in Employment Act 1992 and the new industry regulator with a name that sounds as if it was made up by a PR agency, WorkSafe, came into force (just don’t call it OSH or make any comparison to that regime).

The Ministry for Business, Innovation and Employment has published a guide outlining the new requirements for mine operators and they cover mining hazard and risk management, increased training, stronger worker participation systems, and new emergency measures.

However, quarries and alluvial extraction have been separated from mining and new regulations and guidelines for this sector are still in progress and are being nutted out between the MBIE and quarry sector organisations AQA and IoQ. A quarry industry working group was set up to liaise with the ministry to shape these new health and safety regulations.

Its members are Mike McSaveney, Mike Higgins, Steve Ellis, Bill Bourke, Dean Torstonson, Brian Roche, and Roger Parton (AQA). Peter O’Sullivan represents the West Coast Minerals and alluvial sector, while Les McCracken represents open cast mining. Barry Larsen assists the group with reporting and secretarial functions.

“It is noted that a number of the issues are not sector specific, such as noise and dust, and that there are already guidelines that can be adopted,” says Roger Parton.

The guidelines should be finished before the end of 2014, he says.

“It is the general view that this is not about reinventing the wheel, rather gathering best practice from comparable jurisdictions and industries and compiling the best parts into fit for purpose guidelines for the New Zealand industry.”

While the mining sector has been working on regulations from which will flow codes of practice and then guidelines, the quarry sector has been working in the reserve order, says Parton.

“Once the quarry guidelines have been written, that material should then determine if any Codes of Practice are required and if so, they will be written.

“At that point, it will also become clear if any quarry regulations are necessary. If so, they will be drafted for promulgation.

“However, not having regulations or codes will not diminish the standing of the guidelines which will be seen as the ‘regulators best practice, or best knowledge’ for the industry, and anyone operating outside those guidelines may need to show that there is a good reason for such conduct.”

Be warned – this is not going to happen over night. The ministry in a statement said: “While the new regulations broadly cover extractive industries more specific regulations impacting the quarry sector may not come into force until as late as 2017.”

More WorkSafe information on page 12.

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The Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Bill was passed at the end of the last year with amendments that tighten up tax breaks for mining companies that are prospecting, developing gold, silver and iron sand operations.

These changes are designed to target miners who the Government feels have previously ‘enjoyed’ generous concessionary tax treatment.

While immediate tax deductions for prospecting and exploration expenditure stay the same, new mine operations and exploration expenditure on items used for mineral extraction will be clawed back and be deductible over the life of the mine. Tax deductions for development expenditure will be deferred and allowed over the life of the mine.

Expenditure incurred in the extraction of minerals will be subject to ordinary capital/revenue tax rules, and so does land acquired specifically for mineral mining, with sale proceeds taxable and the cost of acquiring and disposing of the land deductible.

Health and safety initiative Sandvik Mining has launched a health and safety campaign called Make It Count.

Its www.sandvikmakeitcount.com site serves as a portal for communicating a series of mini online campaigns over 18 months and you are welcomed to participate. The interactive campaign site currently features a film and information about hand and finger safety, the first of six mini campaigns making up the rolling initiative. The site also includes a version of the company’s Take 5 risk assessment app.

Talisman partner New Talisman Gold Mines signed a heads of agreement with a Chinese investor group called St Albans, which is looking at investing $10.9 million to fund the Talisman Mine development project in return for 65 percent of the physical gold and silver produced (after costs) from the reserves identified in the March 2013 pre-feasibility study. In addition the investor gets the first option to fund any future expansion at the Talisman permit area. Existing shareholders retain 100 percent title to the Talisman Mine and full rights to the ore once production from the pre-feasibility ore reserves is complete.

Quarry changes under new act Under the new Health and Safety in Employment Regulations 2013 Quarry operators should take note that they are required to provide WorkSafe with “written” notice of any appointment of a manager, or designation as acting manager.

This has been the case it the past but the practice has not been policed, as with numerous other regulations in this country. Obviously the ministry is reviving its old database of mine and quarry managers, and it might bcome as a shock to any operation that haven’t been employing a qualified manager.

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7

U P F R O N T

A world first for subsea mining December 6, 2013, was an important date in the history of sub-sea phosphate mining explains PETER OWENS. On that date the Government granted Chatham Rock Phosphate (CRP) a 20-year mining permit to collect phosphate from an 820 square kilometre area of the ocean floor under the Chatham Rise.

This grant was made by the Crown under the Amended Crown Minerals Act 2013, which was adopted as legislation by Parliament in May 2013.

The decision was opposed by the deep-sea fishing industry, which said that if CRP vacuumed the seabed for phosphate nodules (used in fertiliser) it would devastate the country’s only known juvenile hoki nursery ground. CRP rejects this allegation, which has not been upheld by the New Zealand Government.

CRP already holds an offshore prospecting permit covering an area of 4726 square kilometres on the central Chatham Rise.

The permit area, in New Zealand territorial waters, is located 450 kilometres east of Christchurch and includes significant shallow seabed deposits of rock phosphate.

The initial term of the permit is two years with rights to either extend the prospecting permit or apply for a mining licence.

The Wellington-based company has been assisted by Dutch company, Royal Boskalis NV, probably the biggest international dredging company in the world, which has also taken up a 20 percent interest in the shares of Chatham Rock Phosphate. The consideration for the deal is that Boskalis would receive dredging and associated work to the value of $4.7 million. That company also has a seat on the board of Chatham Rock Phosphate.

Boskalis will also be aware that global resources of phosphate are being quickly worked out. At present China, experiencing an agricultural boom in its north-east rural region, is paying top

dollar for phosphate from anywhere. It will not be long before the existing sources are totally worked out and this is why the chance to mine subsea is looking very attractive.

Chatham Rock Phosphate’s directors are confident the company will be able to mine, process and market 1.5 million tonnes of phosphate fertiliser annually after it starts mining at the end of this year.

The project is a world first for two reasons. First, no one has ever recovered phosphate from around 400 metres under the sea.

Second, it seems to be the first time a major dredging company has acquired a significant holding in undersea mining.

Chatham Rock Phosphate has also appointed three new directors who will contribute valuable expertise and experience to the company. They are senior Royal Boskalis executive Ko de Blaeij, marine mining entrepreneur Robert Goodden and eminent ocean scientist Dr Robin Falconer.

This is the first stage of enlarging the board to reflect the advancement of the project and will supplement the skills of existing directors Jill Hatchwell, Linda Sanders and managing director Chris Castle.

Castle says the new directors all are already closely associated with the project. “Robin’s knowledge of Chatham Rise rock phosphate goes back to the 1970s and he has been central to the operational success and the milestones we have achieved. Robert has had a lifetime working in the marine mining industry and has introduced us to hugely valuable international contacts. Ko has been a key sponsor within Boskalis and a staunch advocate since the start of the company’s involvement as our partner.”

Blow for South Island mining OceanaGold Corporation, the country’s largest gold miner and owner of the Macraes goldfield in Otago and the Reefton open pit on the West Coast, ended a rough year in 2013 with proposed staff cuts that will affect about a quarter of its operational and support workforce numbering around 560.

A scaling back at the Macraes operation and a new mine plan saw 106 jobs lost in the pit, leaving just 47 to work the open-cast mine. In addition, the Melbourne-based company dropped its 12-year-old service contract with Gough, resulting in 39 on-site mechanics, who service mining vehicles at Macraes, losing their jobs.

Gough Group chief Karl Smith said at the time that, although staff had been warned about potential job losses before Christmas as the contract came under review, it was still a “blow”.

“They’re a close-knit group of people,” he commented.

The Gough Group signed an $80 million contract with OceanaGold at Macraes in 2002, supplying Caterpillar equipment, parts and services.

“The upside is, we will do everything in our power to relocate our staff,” said Smith. The group had about 50 open positions around its network and he hoped to fill them with Gough employees from Macraes. “We’ll move people if they are willing to go, and pay for their removal costs.” He also believed at the time that some of the staff might have been picked up by OceanaGold.

Other contract job losses were expected as OceanaGold “re-optimises” the Macraes mine plan to sustain operations.

8 February - March 2014 Q&M

A new mine plan reduces the amount of material movement and gold production at the open pit. A smaller cutback is also planned at the Frasers 6 open pit, which will begin in the second half of this year and likely see the asset reviewed for an impairment charge in the end of year results. Reefton is being mothballed next year.

In the long run, the company said it would regularly review its plans, dependent upon the gold price, which fell 27 percent last year from abnormal highs, and what it says are high productions costs. Its shares fell by 50 percent last year.

The company has also made it clear it does not expect gold prices to languish forever, but does not relish holding large stocks of gold waiting for a price rise.

In addition to its Kiwi assets, OceanaGold operates the Didipio gold/copper mine in the Philippines (bought in April 2013) and a silver exploration and extraction operation in El Salvador that it bought for $12.1 million in October 2013 and paid for by a share issue to the vendor.

The Didipio Mine is expected to produce 100,000 ounces of gold and 14,000 tonnes of copper per year on average over an estimated 16-year mine life.

The company is able to offset gold production costs with income from copper mining as shown by the current production costs for major producers of between US$1250-US$1300 an ounce. Subsidised by copper returns, OceanaGold claimed last year an average production cost per ounce of between US$550 and US$650.

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U P F R O N T

A good future for coal Confidence in the coal sector is gradually improving, as it is for businesses generally, with global coal demand seen as strengthening – post the global financial crisis, says CHRIS BAKER, chief executive, Straterra.

T

he fate of Solid Energy mirrors that of many coal producers overseas, such as in Australia, where 100 percent of thermal coal producers were operating at a loss, as at July 2013. Among the causes were an increase in mining costs of 70 percent and a related decrease in productivity of 30 percent – driven largely by increasing wages. In addition, the global financial crisis, with stockpiling of coal in China and other markets, led to sharp falls in the price of export-grade coking coal, by as much as 40 percent.

But there are signs that the coal market is recovering, according to industry commentators.

With Japan having closed all 50 of its nuclear reactors, and with Europe broadly following a similar path, coal imports into these parts of the world have, and will continue to, increase.

China’s thermal coal stockpiles are at their lowest level in two years, Morgan Stanley has reported. At 400 power stations, representing 60 percent of China’s electricity generation, the stockpiles were down to 63.5 million tonnes in August 2013, or roughly two percent of total annual Chinese coal production. World coal prices are forecast to rise gradually in response to this growing Chinese demand.

These prices will, in time, flow through to New Zealand’s 22 operating coal mines.

These range from Solid Energy’s domestic and export operations, New Zealand Coal And Carbon’s mines on the West Coast, and Glencoal’s expanding assets in the Waikato, to many smaller operations.

Total coal production in 2012 was five million tonnes, of which 2.2Mt (value: $400m) was exported, according to the Government’s Minerals and Petroleum Sector report, released in September 2013.

Of the 2.8 million tonnes consumed domestically, the main uses were: to make steel; as a very cost-effective source of heat in industry and infrastructure, including the dairy sector (principally to make milk powder), cement, meat, wool, horticulture, timber, schools, hospitals; and a decreasing amount for electricity generation. Gas and coal fuelled 24 percent of total electricity generation.

A high-profile result in October 2013 was the Environment Court upholding

10 February - March 2014 Q&M

resource consents to Bathurst Resources for its proposed Escarpment opencast mine on the Denniston plateau. Bathurst plans over time to produce up to one million tonnes a year of premium-grade, low-sulphur coking coal for export to the global steel industry.

In addition to its existing assets, including the Cascade and Takitimu mines, Bathurst Resources acquired Canterbury Coal in August, as part of consolidating its New Zealand portfolio. The ASX-listed company moved its domicile from Perth, WA, to Wellington this year.

In terms of domestic coal consumption, some coal users are seeking to diversify away from coal use.

Genesis Energy’s electricity generation plant at Huntly has been increasingly using gas; 355 gigawatt-hours were generated from its coal-fired generators in the three months to the end of September 2013, down 46 percent from the same quarter a year earlier.

NZ Steel is trialling 9000 tonnes of biomass-sourced carbon for steel-making, noting that 800,000 tonnes of coal were consumed at Glenbrook in 2012. It is too early to assess whether Carbonscape’s product could make significant inroads into steel-making in New Zealand.

West Coast-based Taylor Coal has developed an additive to promote cleaner and more efficient burning of coal in boilers, as part of its customer focus.

More broadly, the challenge for the sector is to maintain the competitiveness of NZ coal, both in terms of the energy cost, and the alignment of coal quality and technology.

Despite the urgings of the anti-coal community, the fact remains that domestic coal is used, and will continue to be used, as a source of heat in industry. Coal’s cost advantages in many applications are significant, and an important contributor to our export success. This cost advantage is consistent with coal and fossil fuel use, globally.

Climate change concerns continue to create pressure to adopt low-carbon technologies. New Zealand is, of course, second only to Iceland in its use of renewables in electricity generation, and our efforts to further reduce emissions

need to be placed alongside global progress, or lack thereof.

The foregoing presents coal as a dynamic and complex sector here, while facing a number of specific challenges.

That has spurred the Coal Association to update its 2007 Five Year Plan. New draft objectives for 2014-2018 are to: overcome a disconnect between high-level, political support for mining, and bureaucratic complexity in the administration of regulations; improve access to resources; demonstrate performance in health and safety, and environmental management; improve industry competitiveness; and redefine or revitalise coal as important products for the economy, including via new research and development.

On legislative and regulatory matters, an important outcome for the coal sector in 2013 was the Supreme Court upholding the judgment of other courts that greenhouse gas emissions arising from the consumption of coal are the responsibility of the coal consumer, and not the coal miner. That was a victory for common sense, and is consistent with the globally accepted approach to managing responsibility for emissions.

The Government’s health and safety reforms will bring significant changes to the management of health and safety in coal mines (and other mines). These will include principal hazard management plans; new safety-critical roles at mines; new training and qualifications standards; new regulations, codes, and guidelines for H&S practices in mines; enhanced industry H&S representation; a new H&S agency (WorkSafe NZ); and a restructured mines rescue service.

For its part, the minerals industry restructured the industry H&S council, MinEx, with a substantial contribution from the Coal Association, to enable expert and committed industry input into the Pike River Implementation Team’s work. Among MinEx’ goals is to lead improvements in H&S in New Zealand mines, including coal mines.

An extract from Energy Perspectives 2014, also published by Contrafed publishing.

Also see Chris Baker’s comment piece on page 34.

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S A F E T Y

Understanding WorkSafe NZ Since December 16, 2013 WorkSafe New Zealand has dealt with all workplace health and safety matters, taking over responsibility from the Health and Safety group of the Ministry of Business, Innovation and Employment.

W

orkSafe is a new standalone Crown agency with its own governance board, as part of a huge reform of our workplace health and safety system.

The move was a key recommendation of both the Royal Commission on the Pike River Coal Mine Tragedy and the Independent Taskforce on Workplace Health and Safety.

The new agency says it will, with a single focus, have “high visibility, provide a single point of accountability and play a leadership role in improving H&S performance”.

It says the MBIE will continue to be primarily responsible for workplace health and safety strategy and policy, legislation and regulations but will work closely with WorkSafe NZ, which will have the ability to make recommendations on legislative change and play a major role in the development of strategy.

The agency will be mostly responsible for the implementation of workplace health and safety reform under a blueprint called Working Safer.

We asked the new agency if its functions are any different from previous ones as we all remember the old Department of Labour’s Occupational Safety and Health regime, and other agencies, and a litany of name changes, mergers, new directions and an obsession for acronyms as successive government departments chase their tails.

They replied: “The Government has provided funding at levels unprecedented in the past to ensure that to use the words of the Independent Taskforce on Workplace Health and Safety, ‘there is a step change in health and safety in this country’,” says the agency.

“The former Health and Safety group of MBIE has been through a significant inspectorate restructuring to ensure that resources are targeted where they can make the most difference.

“The inspectorate has been divided, essentially, into assessments and investigations, which allows either to specialise rather than in the past where an inspector would do both.

“It is clear from international experience that having a team of dedicated assessment inspectors makes a real difference as they

12 February - March 2014 Q&M

are able to be proactive – note our recent work in forestry where we’ve undertaken 150 or so assessments of cable hauling operations and issued 180 enforcements, including 14 prohibition notices (ie, shut down notices).

“Under the former structure, this kind of work would not be possible, and the proactive work is a high priority for WorkSafe NZ going forward.

“Additionally, there is the Safety at Work legislation which will go through Parliament this year and we’re expecting enactment about the end of 2014.

“This places duties across the workplace spectrum; increases fines and draws these I nto a graduated scale.

“This will give greater clarity to workplaces, but also a clear line for our educative and engagement activity along with enforcement.

“The Government has set WorkSafe NZ the task of leading the country to a 25 percent reduction in workplace deaths and serious harms by 2020 – the funding, the revised inspectorate model, and the mandate from the Government will all see this agency work in a more targeted and effective way than its predecessors.”

Professor Gregor Coster, the board chair of WorkSafe, says around 75 Kiwis are killed at work every year.

“Another 6100 report a serious injury suffered at work. A further 600-900 people die annually of diseases, cancers and illnesses associated with occupational exposures and hazards and it costs the economy $3.5 billion a year – and that takes no account of the devastating personal, family and community impacts,” he says.

“Unsafe and unsound – this is our current state of affairs. We need to work together to change it.”

WorkSafe NZ is a key plank in the Government’s strategy for change, he adds, and it is the first time in our history that there is a standalone Crown Agency solely focused on improving workplace health and safety, and the safe use of electricity and gas.

“We are acutely aware of the urgency of our work. WorkSafe has a plan and a clear set of priorities.

“We are building the capability of our growing ranks of inspectors, and we’ve changed the structure to ensure we are targeting our work to areas where we can

do the most good.

“We are also taking seriously the need for a collaborative approach – WorkSafe alone cannot tackle the problem.

“The combination of a motivated regulator and committed employers, employees and their representatives working in a true partnership is the only way we can bring down the toll.”

The tools they have to achieve this, he says, are through the major legislative reform we will see roll-out this year, starting with the Health and Safety Reform Bill introduced to Parliament early this year.

“It is anticipated the Health and Safety at Work Act 2014 will be fully operational

by April 2015. We are committed to helping keep you informed of the progress of the legislation, and helping to prepare businesses and workers so we are all aware of our respective roles and responsibilities when it comes into law.”

Among the principal changes is a new definition of ‘responsibility’ in the workplace and, yes, it involves another new acronym.

“It will be the core duty of a ‘PCBU’ (person in charge of a business or undertaking) to ensure the health and safety of downstream workers, contractors and subcontractors so far as is ‘reasonably practicable’.”

The duty will be applied more widely than the current definitions in the Health and Safety in Employment Act, he adds.

“There will also be a much greater requirement for PCBUs to consult and support their employees in health and safety matters. Wise businesses will begin preparing for these legislative changes now.”

Cabinet approved the final Health and Safety in Employment (Mining Operations and Quarrying Operations) Regulations 2013 at the end of last year.

These regulations are gazetted and are available on the Government legislation website (www.legislation.govt.nz/).

The Extractives Inspectorate Team of WorkSafe will of course be implementing the regulations.

WorkSafe says the Inspectorate will, “make every effort to discuss the new requirements with operators and provide support as these requirements are put into practice”. qm

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Think oil, think Total.

C O V E R

S T O R Y

FATHER AND SON Father and son team Carl and Alan Gibson explain their long-standing commercial relationship with CablePrice.

C

arl Gibson needs little convincing about the reliability and quality of the Hitachi brand.

He and his father Alan have used Hitachi machines for almost 40 years in their longstanding Levin-based earthmoving company Alan G Gibson Ltd, and Carl has a further three Hitachi excavators putting in the hard yards at his other business venture, Ohau Quarries.

“Dad and I have been tied up with CablePrice since he started the earthmoving company and have bought more than 60 Hitachi excavators over the years. I think they are a far superior machine to the other brands we’ve tried. Plus they have excellent resale value.”

Carl says he is also impressed by the backup and support provided by both CablePrice Wellington and the Hitachi manufacturers themselves.

“From the start we liked that Hitachi seem to use New Zealand as a proving ground for the product. Even today they make regular visits to their customers here to get feedback, and we can see in their later models that they really do listen and go with some of our suggestions.”

Ohau Quarries has been operating just south of Levin for over 50 years.

Carl became a partner in the business around six years ago with Warren Webb, on the retirement of Warren’s father Don, who founded the operation.

Most of the rock produced at the quarry is softer, and used mainly for cow races and roading materials. However it also produces harder rock and a bit of drainage metal.

Around a year ago Ohau Quarries purchased two Hitachi ZX210LCH Dash 5 excavators that operate alongside the quarry’s existing Hitachi 270 Dash 3 excavator.

“We’re very happy with the 210s which are mainly used to get the material out for crushing or getting it off the face. However the 270 is still the main machine in the quarry and after four years remains one of the best balanced machines we’ve operated.”

Carl says the 270 is not as big as machines used by other quarrying operations, but its speed makes it the ideal solution for Ohau, given its ability to deal quickly with the quarry’s softer rock material.

“It is an efficient machine, but there is definitely no compromise on power. It is more than capable of breaking out the harder rock when required,” he says.

When it comes to the newer 210s, Carl is pleased to see Hitachi return to the six cylinder engine, which he says is “solid, reliable, well proven technology”.

However, it is the comfort and design of the cab that is the biggest improvement from the older models, he says.

“The feedback we’re getting from our guys is that the cab is

14 February - March 2014 Q&M

“The feedback we’re getting from our guys is that the cab is a lot more comfortable and set out better, with everything well within reach.” a lot more comfortable and set out better, with everything well within reach.”

The new larger, heated cab features the largest seat currently available from Hitachi, with air ride suspension as opposed to mechanical suspension greatly improving operator comfort.

Any adjustments to seating or attachments are easily controlled by the onboard computer screen, which also features a reversing camera picture for increased safety on the worksite.

“Dad operates a 16 tonne Dash 3 in the earthmoving business, and likes the new cab on the 210s so much that he’s pretty keen to get a new one himself.”

Carl has been a director of Alan G Gibson alongside his father for around 12 years.

He says the company carries “almost 100 percent CablePrice machines” with John Deere dozers, Beull dump trucks, and Isuzu and Scania trucks making up its fleet.

“We bought a Beull B30D articulated dump truck for the earthmoving business at the same time as the Hitachi 210s and are really impressed with it.”

The six-by-six wheel drive, high performance truck is powered by a Mercedes Benz engine, with increased torque and long service intervals being two of its main features.

Hydraulic retardation extends the brake life on this vehicle, allowing the operator to brake gently or reasonably hard without creating additional wear.

The company currently has a John Deere 750 dozer on order from CablePrice, which is a “user-friendly, superior machine”, says CablePrice sales rep Ray O’Shanassy.

“For the size of the machine the fuel use and performance is far superior to past models, with the hydrostatic drive making it a very safe machine for use in the hill country. The latest technology also gives the operator precise control over this machine.”

Ray has dealt with the Gibsons during his 18 years with CablePrice, and says they are loyal customers who take a dynamic approach to the way they operate their businesses.

“Carl and Alan don’t tend to stick with the tried and true. They take on a wide range of projects – everything from regional council and telecommunications work, to river protection and diversion, beach work, subdivisions and roading work. If they see

an opportunity to get into a new market they are not afraid to buy a new machine and go for it.”

He says the same rules apply at Ohau Quarries.

“Carl and Warren want to grow the quarry and continue to produce a good quality product. It’s our job to provide them with the tools to allow them to do this in the most efficient and productive way possible.”

Both companies have a policy of turning machines over reasonably quickly, says Carl.

“We don’t do big hours with them which also allows us to get good resale value.”

He says the companies have a good relationship with Ray, and also equipment product manager Andrew Crane.

“Even though Andrew is in more of a management role, he is still available to talk to, which is an opportunity you don’t always get with other companies.”

On the rare occasion there is a known fault with a machine Carl says CablePrice fixes it before it becomes a problem.

“Again, in our experience it doesn’t seem to work like this with other brands.”

We don’t have any real down time.

Any issues are usually only minor ones that don’t stop the machines operating, and they are dealt with straight away.

Carl says he also has a “very good relationship” with the CablePrice service team who provide regular preventative maintenance and servicing.

“We don’t have any real down time. Any issues are usually only minor ones that don’t stop the machines operating, and they are dealt with straight away.”

Overall, he is happy to have developed the close, longstanding business relationship with CablePrice.

“We are well supported through the whole package, from sales, to delivery, to after sales service of our machinery. Our companies aren’t huge, but we seem to get looked after by CablePrice as if they were.” qm Q&M February - March 2014

15

Q U A R R Y I N G

PUGMILL RULES

ALAN TITCHALL catches up with one of the busiest

quarries in the Waikato region and finds out why the pugmill could become a more a common sight in the pit these days.

16 February - March 2014 Q&M

O

ver the past four years Huntly Quarry has produce massive volumes of metal for major roading contacts in the northern Waikato. Almost 700,000 tonnes was produced in one year alone.

As Stevenson Resources’ minerals executive Steve Ellis explains, when the company committed to these roading jobs, it had to also avoid interrupting aggregate supply from its static plants to existing customers, many of them concrete manufacturers.

“I suggested to the company CEO and the board that if we get the Te Rapa Fulton Hogan roading project we commit to installing a pugmill down at Huntly.

“To produce roading metal we could take our mobile to Huntly from Drury, rough the product out, crush a 10C40 and then put it through a pugmill and add what was missing in the grading, whether a bit of top-size or fines, or water.”

Stevenson won the contract to supply 300,000 tonnes of aggregate from Huntly over 100 weeks for the Te Rapa section of

the SH1 Waikato Expressway. Delivery began in November 2010.

And the company procured its second pugmill.

Initial lessons The first pugmill was commissioned at Drury Quarry in 2006 and its performance convinced management that – through precise control and the addition of lime, cement, water, reclaimed aggregates, emulsions, polymers, recycled glass or crushed concrete to natural aggregates – these mixers make superior products, particularly better performing road bases, in terms of grading and grading curve shape control.

As Ellis explains, research for the first pugmill eight years ago took the company to Texas where he and colleagues saw Aaron Equipment pugmills in action. Short of aggregate, fast continuous mixers are commonly used in the state to produce a number of by-products for road base.

Q&M February - March 2014

17

Q U A R R Y I N G

The very capable three bin pugmill at Huntly.

They liked features of the Aaron mixer, but considered the bins too small for their own use. Back in New Zealand they contacted subsidiary company Rocktec about modifying the original Aaron design. It happened that Fletchers was using an Aaron pugmill on an Auckland harbour project, and Roctec had been involved in modifying that machine for the specialist job.

The company designed and built a new pugmill, capable of producing 600 tonnes an hour at the Drury Quarry, where it has been used since 2006; receiving positive feedback from customers about the aggregates it produces.

Stevensons won the Te Rapa Alliance contract to supply 300,000 tonnes of roading aggregate over 100 weeks for a section of the SH1 Waikato Expressway. Delivery started in November 2010.

Once the Te Rapa Alliance contract was sealed, a smaller pugmill with three silos (with room for a fourth) and capable of producing 400 tonnes an hour, was designed and built at Huntly using five years of feedback from the Drury operation.

“The Huntly pugmill is semi-mobile, unlike the one at Drury, and we improved the gearbox sealing and other small things that all add up,” says Ellis.

A control hut was going to be built alongside the complex until a weighbridge operator suggested they run cable from the old plant office controlling the static plant some 100 metres away and operate it from there, which is what they did.

Stevenson’s success with the big roading contracts in the Waikato area has been ‘pudding proof’ of the pugmills meeting client specs and NZTA revisions of M4 specification. Suffice to add, quarry management are firm converts to using pugmills for grading control, rather than just relying on screening.

Both Huntly and Drury have produced modified aggregates with 18 February - March 2014 Q&M

consistent performance within spec with every batch, iterates Ellis.

“And I believe they are the way of the future.

“Yes they are more costly to run, but they can’t be beaten for blending and correcting product.

“Screening will only take out what it is presented in the material from the face, and you end up with inconsistencies.”

For the record He says that for a single roading job, the quarry was sending out the gate up to 100,000 with not one batch lot failing.

“Each lot was made up of 6000 tonnes. At times we had 40,000 tonnes stocked ready for jobs and every lot was traceable – we knew where the shot from the face came from and when it was tested. Nothing went out of the gate until the client had approved it.

“Each lot was put through four tests at the Stevenson’s lab at Drury Quarry.

“We spend around $250,000 on lab costs each year between the two quarries.”

And it is not all about roading material. The Drury pugmill has solved some interesting one-off challenges.

These include a speedway track in Auckland for a worldracing event. The finish involved fine clay and -6ml put through the pugmill.

“They reckon it was the best material finish they had seen.

Sure, it wasn’t a big job – maybe 6000 tonnes – but they were paying $20 a tonne.”

Another small, but rewarding job, involved a temporary track for the 2013 UCI BMX World Championships held in Auckland’s Vector Arena.

“We played around with recycled concrete waste and then

Top: Shawn McLean, current manager (right), sits with Brien Golding (Chow), one of the original managers.

crusher fines to which we added small amounts of concrete.

Different samples were laid down with a hand compactor in situ until they got the finish they wanted, which was superb they told us.”

A future with pugmills Stevensons believes there are still many more products that can come out of a pugmill that are ideal for quarry clients.

Ellis says the idea of putting cement into the base roading aggregate during the Te Rapa section build was mooted as an alternative to using road stabilisers and mixing in situ.

“We did challenge them to do the numbers and it was very close

[in cost] and they said after the job was finished they would do it our way if they were doing it over again.

“OK, the stabliser guys wouldn’t agree, but I think you have more control with a pugmill. We do it by weight – and you can’t get more accurate.”

Ellis sees pugmills becoming as common in New Zealand quarries as they are in Australia as the pressure builds to preserve the country’s good resources and we need to upgrade the poorer material with polymers and such like, as already done in blacktop production.

“We can’t keep burrowing into the good rock for every job. We have to start using lesser grades. Major roads come and go, but we have to keep developing our quarries.”

Q&M February - March 2014

19

Q U A R R Y I N G

Static plant built in 2000 and still going strong.

Production consents Although they both produce aggregate from greywacke, Huntly and Drury are very different operations.

The greywacke resource is fine at Huntly and coarse at Drury and one operation is consented in the Auckland region and the other in the Waikato, although Ellis says the consenting is very similar. Local Government staff involved with consenting in both regions were probably trained by the old Auckland Regional Council, he jibes.

As with other quarries in the Waikato region, Huntly has a ‘five year’ production limit in its new consent, based on local authority road levies.

Its consented production average over five years is 550,000 tonnes a year. In one busy year recently, it produced around 700,000 tonnes, so is scaling back for the immediate future, while finishing its five-year consent cycle.

Reflections over cake and coffee Just before Christmas Steve Ellis drove me down to Huntly for a site inspection and a meeting with its young manager, Shawn McLean, and one of the original managers, Brien Golding or Chow as he’s known amongst old workmates.

We were cooped up in the quarry’s front office for afternoon tea, eating cake and drinking mugs of coffee. Golding reminisced with infectious humour on the old quarrying days in Auckland, when Jack Stevenson astutely controlled his quarry managers by shuffling them around sites and pitching individual strengths and weakness among his workers.

That conversation, as you can appreciate, has to remain censored, but many respectful words were mentioned about the previous manager, and Shawn’s mentor, Pat Wallbank.

Pat first worked at Huntly Quarry in the 1970s when it was operated by the Roose/Stevenson alliance. He left in 1980 to become a mines inspector for Crown Minerals and was replaced

by Brien Golding.

When Brien retired in 2003, Pat returned to the quarry as manager. In early 2011 he was tragically killed in an accident involving his ute and an out-of-control truck and trailer near Ngaruawahia. The northern Waikato roads are among the most dangerous in the country. Take it easy around there please readers. Not to say Pat stood much of a chance.

20 February - March 2014 Q&M

Perhaps this is the appropriate opportunity to recognise Pat Wallbank as a much-respected man within the quarry industry, who excelled at mentoring staff and was a founding member of the Institute of Quarrying of New Zealand when it was set up in 1969. He was made an Honorary Fellow in 2003.

Brien Golding, an ex manager at Stevenson’s short-lived Patumahoe Quarry in South Auckland during the 1960s, (covered in Hard quarry – tough quarrymen,Q&M, April-May 2012), had worked for W Stevenson & Sons for many years on numerous jobs, including drilling, before taking up his managing stint at Huntly in April 1980.

He is remembered for his hands-on approach to quarry operations and strong opinions on how it is done. He wasn’t keen on a new static plant for the site when it was proposed in the late 1990s. That was until his faithful cone crusher gave up the ghost and he called Steve Ellis and said, “How soon can you get me a new plant.” The original quote has a number of expletives.

The new plant was commissioned in 2000. Golding retired three years later, but the plant (photographed) is still faithfully grinding out stone. The only major change is coming up – a guarding refit for both Huntly and Drury to keep ahead of new specs.

The ‘principle’ of the plant follows the old plant, Golding tells me. Ellis adds that he used to take the first plant plans down to Huntly from Auckland to show Brien. “Leave them with me,” he would say. “I’ll look over them tonight.”

By the time Ellis returned, those plans had been almost completely redrawn.

Many of the old quarry managers got their first quarrying experience on a drilling rig, it was noted over coffee, and they had a panoramic view of what was going, including best practices and worse mistakes, that placed them at an advantage when they were finally in control. And there’s a large number of quarrymen out there today that will still tell you the best education is onsite, not just in a class room learning rules and regulations.

Maybe that is because quarrying has never been a precise science and every resource around the country is different and has to be approached differently.

“On top of everything else, a quarry manager has to have a ‘can do’ attitude, as operations are a percentage of science and a percentage ‘black art’, with no definitive rule book,” Ellis says with a smile. qm

E N V I R O N M E N T

FISHING FOR MUDFISH – use marmite

Believe it or not, marmite and mudfish featured in an award-winning environmental strategy for a Northland quarry.

HUGH DE LACY explains.

T

he Christchurch Marmite factory taking a massive hit in the 2011 Canterbury earthquakes briefly stymied one aspect of the environmental strategy at Rodney Aggregates’ Whangaripo quarry, but no mudfish rose to the alternative baits of Vegemite and jam anyway.

And so a half-hectare of wetland at the quarry’s site 90 kilometres north of Auckland could safely be used for dumping overburden.

Marmite, the iconic Kiwi edible spread, was the bait recommended by the Department of Conservation (DoC) for the traps that quarry manager Jason Hinton had borrowed to find out if any native mudfish lurked in the little wetland intended as the overburden site.

At the time the trapping began last year though, Marmite had been off the supermarket shelves for the two years since the factory was destroyed in the earthquakes, so Hinton had to settle for rival product Vegemite – and, just to make sure, jam was tried as well.

Neither of the alternatives drew any mudfish into the traps and, unless the mudfish palate gives it an exclusive preference for Marmite over both Vegemite and jam, it was fair to conclude there were no mudfish to be found.

It was this sort of sensitivity to ecological considerations that won Hinton and Rodney Aggregates the Mimico Environmental Excellence Award last year.

The mudfish trapping exercise was just a small part of an environmental programme that Hinton established at Whangaripo primarily, he told Q&M, to improve the quarry’s community relations.

Whangaripo is a joint venture between Winstone Aggregates and Fulton Hogan on a leased site 10 kilometres west of Matakana, producing around 190,000 cubic metres of aggregate a year for the Auckland market.

22 February - March 2014 Q&M

The 400-hectare farm has been in the Petrie family since 1919 and its greywacke outcrop was quarried for construction of the Matakana Hill road about 1937.

It was further worked in the 1970s

by Wharehine Contractors and later by a local contractor, Roy Gubb, but had lost its existing-use status under the Resource Management Act by the time that asphalting company Bitumix signed a profit a pendre quarrying agreement with the Petrie family trust in 1989.

There was vocal opposition to Bitumix’s subsequent application for a quarrying resource consent, especially from locals who didn’t like the idea of streams of trucks using the hill road, and the eventual consent banned them from it.

That prohibition has since been commuted to 20 truck movements a day over the hill, but all other trucks have to take a 20 kilomtre northward detour to Wellsford before turning south to Fulton Hogan’s Northland and Winstone-owned Firth Concrete’s plants at Silverdale and Albany.

As such it greatly inflates the joint venture partners’ transport costs in bringing Whangaripo’s aggregates down to the Auckland market.

Winstone Aggregates bought Bitumix out in 1995, and the joint venture with Fulton Hogan to form Rodney Aggregates was signed in 2003.

For a quarryman, Jason Hinton came from an unusual background.

A chef by trade, he spent 12 years with the La Bonta restaurant in Albany before following a brief stint in Australia by taking up a position as site foreman and quarry manager with McBreen Jenkins Construction at its Puketona quarry in 2002.

Global construction and resource giant Transfield Services bought McBreen out in 2005, and for the next five years Hinton managed eight of the new owner’s quarries

in the Northland area.

Taking voluntary redundancy from that role in 2010, he joined Winstone Aggregates as an assistant quarry manager, quickly rising to manager of its Whitehall, Camerons and Hancock's forest management quarries in the Bay of Plenty.

Two years ago he was appointed to run Whangaripo, by which time he had accumulated qualifications that include a Level Five National Diploma in Extractive Industries Management, a Certificate in Applied Work Practice, a National Certificate in Occupational Health and Safety, a National Certificate in First Line Management, and an Exito A-grade Quarry Manager’s Certificate.

He had also been appointed an Exito national assessor.

Marmite, the iconic Kiwi edible spread, was the bait recommended by the DoC for the traps that quarry manager Jason Hinton had borrowed to find out if any native mudfish lurked in the little wetland intended as the overburden site.

Quarry manager Jason Hinton

In 2011 Hinton won the Institute of Quarrying’s Roctec Award, before last year lifting the prestigious Mimico environmental award with a special mention for his Vegemite-and-jam strategy to find out if there were any mudfish at the Whangaripo overburden site.

More broadly the Mimico award, judged by former Commissioner for the Environment Dr Morgan Williams, recognised Hinton’s work with the local iwi, Ngati Manuhiri, in bio-diversity plantings and weed control at Whangaripo.

It also recognised his initiative, in concert with the iwi’s environmental officer, Fiona McKenzie, in linking the Whangaripo quarry to a community and catchment water monitoring programme

run by the Auckland City Council.

Called Wai Care, the long-running programme encourages groups, individuals and businesses to join in regular monitoring, maintenance and improvement work to optimise the environmental health of water catchments.

Whangaripo’s joint venture partners have been committed supporters of Hinton’s environmental strategy, which has its own budget within the quarry’s wider commercial management strategy.

“We set our environmental objectives every year, just as we do our health and safety objectives, and we strive to achieve what we’ve set,” Hinton told Q&M. “[The partners] check our progress every year on the various management objectives, so we can concentrate on

certain areas where we feel we’re not doing as well as we should.”

From the partners’ point of view, Whangaripo represents a business input cost, with the quarry’s budget pitched at creating a small annual net profit after tax.

And the mudfish?

“There weren’t any: we set some traps that we got from DoC last August, and baited them with Vegemite and jam in the absence of Marmite, but nothing showed up in them so we were able to start dumping our overburden on it,” Hinton says.

And should Hinton ever have occasion to go trapping native mudfish again, he can do so in the comfort of knowing that the Christchurch factory’s been fixed, and genuine Marmite bait is back on the supermarket shelves again. qm Q&M February - March 2014

23

I N N O V A T I O N

Offshore ironsands project under way LINDSAY CLARK updates the first offshore ironsand mining project south of Taranaki, which hopes to win consent approval this year and plans to begin extraction in two years time.

T

he proposal by Trans-Tasman Resources is believed will be the biggest seabed ironsand mining project in the world.

Most of the offshore ironsand off the North Island’s West Coast was originally ejected by the Mt Taranaki volcano, eroded by rivers, and concentrated in old river mouths and beach dunes when sea levels were lower during previous ice ages.

Trans-Tasman Resources (TTR) has developed plans for mining and export of five million tonnes a year of titanomagnetite iron ore that will be sucked up from the seafloor by a 350 tonne crawler-miner travelling slowly in front of an irons and processing ship.

TTR chief executive Tim Crossley says the company has identified a large resource and the technology to supply low-cost iron ore to international markets.

The TTR project involves the excavation of up to 50 million tonnes per year of seabed material, which will yield about four to five million tonnes a year of ironsand concentrate – not much more than the three million tonnes of onshore ironsand, which New Zealand Steel expects to export by 2015.

TTR, an Australian originated and now Wellington-domiciled private company, 24 February - March 2014 Q&M

has done a lot of work prospecting for ironsand offshore, test drilling, and finding an initial economically recoverable resource of over one billion tonnes of iron ore at 60 percent iron (Fe) content in the offshore south Taranaki-Wanganui area.

Last year TTR applied for an ironsand mining permit within its 3300 square kilometre Continental Shelf Licence.

The proposed mining area is over 30 to 40 kilometres offshore south of Hawera and lies just south of the Kupe gasfield production platform.

The 65 kilometre square mining area has an indicated mineable resource covering 97 percent of the proposed mining permit at reasonably high ore grades. Nearly the whole permit area’s seabed sand area is thought to be capable of mining down to about 11 metres, yielding about 10 percent concentrated titanomagnetite ironsand ore.

Trans-Tasman’s planned totally seaborne operation will be based around two ships that will carry out the mining, processing and trans-shipping of the resource.

The key vessel will be a Floating Production Storage Offloading (FPSO) ship, which will also control an attached remote-controlled crawler-miner.

TTR says the crawler and FPSO was

proven in international operational experience. TTR’s technology partner (the Dutch-based IHC Merwede with decades of experience in dredging and mining in shallow and deep water) has worked in projects of a similar scale to TTR’s operation.

The 350 tonne crawler will be lowered off the stern of the 180,000 tonne FPSO ship onto the shallow sea bottom (still only 20 to 40 metres deep though 30 kilometres off the coast).

The 350 tonne crawler-tracked machine will have a 12-metre-wide suction head on a boom out in front. The mining head will pump seawater under pressure through nozzles to fluidise the sediment, which will then be pumped as a slurry up the delivery line to the FPSO ship. The crawler will move slowly creating a 12-metre-wide lane along the mining face.

For this mining system to work the big ship has to be held in a controlled place in the ocean – not an easy thing to do.

The ship will be fitted with a four point, dynamic positioning thruster-assisted winch mooring system.

For each 300-metre by 600-metre mining block, four anchors will be set on each corner of a larger square outside the block. Then four cables will be linked from

U P F R O N T

the anchors back to each ‘corner’ of the ship. The ship will gradually be winched backward and forward above the mining face in pace with the crawler.

This mining method has the advantage of being able to place the large amount of tailings sand, down a trailing outlet pipe on the other side of the ship, onto an already mined area close to where the sand was taken.

The FPSO ship is a large purpose-built vessel (180,000 tonnes) used to host the ironsand concentration plant including magnetic separation of the titanomagnetite sands and initial storage of ironsand ore.

Fresh water, to flush sea salts from the finished iron ore concentrate and to use as a slurry medium, will be created using an onboard reverse osmosis plant.

A smaller ship, a floating, storage and offloading vessel or FSO, will unload the iron ore concentrate from the FPSO ship and de-water the cargo for storage – ready for transfer to bulk carrier ships for export to world markets. Transfer will take place at sea near the project area. During adverse weather, transfer will take place in a sheltered location such as Admiralty Bay in the northern Marlborough Sounds.

An anchor handling tug will also be

For each 300-metre by 600-metre mining block, four anchors will be set on each corner of a larger square outside the block. Then four cables will be linked from the anchors back to each ‘corner’ of the ship.

The ship will gradually be winched backward and forward above the mining face in pace with the crawler.

needed not only to move the anchors, but to assist with provisioning, re-fuelling and assisting in emergencies.

TTR says a study of the economic impact of the project by the New Zealand Institute of Economic Research based on an average production of 4.4 million tonnes of iron ore concentrate a year over its 20-year lifespan assumes an ironsand price of US$81.80 a tonne ($99), or about 75 percent the price of the highest grade iron ore.

At these prices TTR would generate annual revenues of US$357 million (or about $450 million).

The project will need capital expenditure of US$575 million if it gains consent later this year. The private company has some US investment, but is expected to draw new Chinese capital.

TTR estimates it will employ some 200 people in its offshore operations plus another 50 onshore.

Trans-Tasman has had to re-notify its application with the Environmental Protection Authority for a marine consent with submissions closed on 28 January 2014. Under the EPA statutory timetable the consent decision is due to be released 60 days after the hearing begins – in May this year. qm Q&M February - March 2014

25

F I N A N C E

The mining gamble LINDSAY CLARK sat in on a presentation by GEOFF LOUDON, who chairs

two small Kiwi mining companies, on mining investment.

G Geoff Loudon

“The best opportunities whether in mining or business are in the darkest hours. That is when good opportunities pop up if you are still alive to take advantage of them.”

26 February - March 2014 Q&M

eoff Loudon is a prominent exploration geologist and Sydneyborn international investor who has chosen to live in Christchurch. He is also chairman of the small New Zealand mining company L&M Mining and the pioneering international company Nautilus Minerals, which plans to mine the volcanic seafloor off Papua New Guinea.

He has Kiwi family roots going back to the Hokitika gold fields in 1875 and some 40 years of experience as a mining professional and having, in this time, discovered a major gold mine and others.

Loudon was asked to speak at the last AusIMM minerals conference on, ‘How to make money in mining’, and is a regular attendee at New Zealand AusIMM branch conferences. In 2012-13 he was awarded the prestigious AusIMM Presidents Award.

“Making money out of mining is a difficult task and was particularly so in 2013,” Loudon said upfront.

High risk capital has evaporated. About half the 1200 small exploration or junior companies listed on the Toronto Venture exchange were expected to run right out of money by this past Christmas.

“Is this the end of junior mining as we know it? Well, when you have as many grey hairs as me, you will know it has been this bad before. In fact it’s been worse.

“Only a few years ago in 2009 things ground to a halt during the financial crisis.

And between 1999 and 2002 the gold price sunk as low as US$244 an ounce, way below the current price.

“The best opportunities whether in mining or business are in the darkest hours. That is when good opportunities pop up if you are still alive to take advantage of them,” Loudon said.

Minerals are a commodity business, which is cyclic. When prices are at their highest, even the biggest companies think

the good times are never going to end.

The opposite occurs when prices are at their lowest.

So what are the hallmarks of making money in mining? What are the indications of successful executive teams?

“Often it seems to be having their own skin in the game, and being disciplined about acquisitions.”

And avoid companies with large corporate multi-layered managements who don’t understand what is going on at the workplace.

Loudon said the first company he worked for in PNG, if these principles of making money were applied, “would have failed all of them”.

An example of a gold mine that did work with a bigger team was the Lihir gold mine in PNG. It was a successful operation for a number of years and was eventually sold off three years ago for $10 billion. “The buyer wasn’t all that pleased later on,” he noted wryly.

Another mine, a small alluvial gold mine near Gore in Southland, “was a complete cock-up, though technically highly successful. And I was responsible.”

Because the gold grade was not correct, it was a “financial dud” and the plug was pulled on the operation.

Another opportunity that Loudon was involved in was a copper project in Peru with two friends.

“This was one of my successes in mining – though we weren’t quite sure at the time.

The project was known to have 400 million tonnes of copper ore at a grade of 0.6 with bad metallurgy by reputation.

The reputation was so bad that no one submitted a tender except ourselves.

“Drilling was done and higher grades were found. Eventually another company paid $680 million for the project. So that was a profitable mining venture.” qm

A community mining operation L&M Mining is seeking an extension to its current resource consents for its alluvial gold mining operation near Alexandra in Central Otago. The current consents with the Central Otago District Council and Otago Regional Council expire in April 2016.

L&M Mining initially started at Earnscleugh early in 2010, using a small “pilot plant” to assess the commercial viability of the gold prospect, before moving to full dredging operations early in 2011.

“We wanted to make sure the gold was there, and was recoverable,” company chief Geoff Loudon told an Alexandra business forum in mid-2011 and before spending $10 million around Central Otago to prepare for the next six years of alluvial gold-mining operations.

With a permanent workforce of 40, L&M is now a major Central Otago employer. Despite establishment problems and a severe loss of time and money as a result of a barge sinking at the operation, L&M Mining has done well with this project. The majority of the 150 hectares being mined is farmland, with 32 million cubic metres of gold-bearing overburden processed and 14 million cubic metres of gravel washed (with the wash containing the higher gold concentration). The tenement has never been mined before, but it is near the historic Earnscleugh Tailings Reserve where gold was mined in the 19th and early 20th centuries. The project is one of the country's largest, processing about 150 cubic metres of gravel an hour.

L&M Mining has estimated the Earnscleugh flats gold resource is about 10,000 ounces.

During the past year, it is believed to have returned on average about 750 ounces per month; varying from 500 ounces to 900 ounces per month, depending on the gravel quality.

Originally, Geoff Loudon estimated there was four years’ more work at Earnscleugh, but obviously the area is a much better prospect than originally assessed.

Most locals enthusiastically support L&M Mining at Earnscleugh despite some initial adverse reaction. Both the Central Otago District Council Mayor, Tony Lepper, and the council’s economic development manager, Warwick Hawker, have noted the flow-on effects in the district from wages and other expenses.

Locals are also impressed with the conscientious way in which the company has kept the community appraised about what is happening at the mine. Two previous open days have attracted large crowds of people from all over Central Otago and the third such open day is planned for March 29, 2014.

BY PETER OWENS

Q&M February - March 2014

27

R E G U L A T I O N S

Cold Gold's 65-metre dredge struck problems when it became operational in February 2012

A consenting lesson PETER OWENS reviews the trials and tribulations of a small gold dredging operation on the Clutha River in Otago.

T

he “mini-storm in a tea cup” surrounding Cold Gold Clutha’s operations at Millers Flat in Central Otago has been resolved, but gave a hectic start for the company’s attempt to bring back dredging to an old, river bed prospecting site.

In the late 19th and early 20th centuries the Clutha River was dredged by literally hundreds of dredges. These operations slowly withdrew, leaving the West Coast of the South Island as the only location for gold dredging.

That was until the Cold Gold Clutha Company started dredging a 65-metre stretch of the Clutha River between Roxburgh and the mouth of the Tuapeka River. It obtained a resource consent from the Otago Regional Council in 2008 to dredge the river between those two points for 13 hours, seven days a week (with restrictions at Christmas and Easter).

Its 24-metre long dredge was built in Nelson over 18 months, and was designed to suck up the gold left behind from the old dredging days with a 300mm-wide suction pump capable of drawing up 30 cubic metres per hour.

This dredge was launched in the Clutha River in February 2012 with a crew of six, but struck several problems after becoming operational. It was winched ashore near Ettrick in October 2012 for repairs and modifications, and not re-launched until August 2013.

Then more trouble came along when a local couple, Ernie and Irene Brown of Millers Flat near the Clutha River, objected to the noise of the dredge and inquired of the Central Otago District Council as to the consented level.

On checking the district plan and the terms of the existing consent, the council found that although there was no excessive noise, Cold Gold Clutha Company did not have a land use consent for some of the company’s operations and the construction of a temporary slipway (required for statutory inspection by Maritime NZ). Although a consent for this and an access track had already been granted by the Otago Regional Council, the Central Otago District Council said it was not good enough.

28 February - March 2014 Q&M

The company then filed an application for retrospective consent, which drew only one submission – from the Browns at Millers Flat, who opposed the application to the district council if (and only if) the dredging operation continued operating in its current location at this location and its new application before the council only related to a slipway and access track.

A Central Otago District Council hearings panel heard the application on December 10, 2013. Both of the Browns filed a submission opposing the application. Irene Brown somewhat mystified the panel by saying in evidence that it was not the loudness of the noise from the dredge that bugged them, but its constancy.

For the company, Cold Gold Clutha’s project manager Peter Hall argued that it would be impracticable to further restrict the hours the dredge was working and pointed out that the company already had a licence to operate on the Clutha River from the Roxburgh Dam to Tuapeka Mouth. The consented noise limit was 55 decibels, he said also, and readings taken below the Brown’s property were well below that.

The Otago District Council released its findings on January 6 of this year acknowledging the company had taken all practicable steps in the design and construction of the dredge to mitigate noise effects and declined to further restrict its operating hours, or force it to move 500 metres upstream, as suggested by the Browns. The temporary slipway was also approved. However, the council did include a clause in its consent requiring Cold Gold Clutha to notify the couple at least 30 days before it started working near their property.

If there is a moral to this story it is that anyone operating a dredge anywhere in New Zealand would be well advised to check the exact number of consents required and by whom before starting operations.

Having done this it would not be a bad idea to seek an acknowledgement in writing from the relevant local authorities that no further consents will be required. qm

In the late 19th and early 20th centuries the Clutha River was dredged by literally hundreds of dredges. These operations slowly withdrew, leaving the West Coast of the South Island as the only location for gold dredging.

Q&M February - March 2014

29

C O M M E N T

No blame – yeah right!

ALAN TITCHALL reviews the country’s unique accident insurance scheme, which is now four decades old, in the light of workplace safety and escalating reparation costs and fines being doled out to employers by the courts following workplace accidents.

A

fter being changed from covering just workplace accidents to all accidents, the Accident Compensation Act 1972 came into force in April 1974 as administered by the Accident Compensation Commission.

It was originally sold to the nation as a better and fairer alternative to the litigious, fault-based system used, and still used, in most countries around the world. To make it work as a compulsory, ‘no blame’, compensation scheme we had to abolish an accident victim’s right to sue for exemplary and punitive damages as a means of compensating personal injury under the common laws of tort (a civil wrong as opposed to a criminal act).

We have a fondness for Crown entities and homegrown practices of a Fabian-socialistic nature where one size fits all.

The list is a long one and includes the RMA, Pharmac, the old Dairy Board and the NZ Bill of Rights.

Over four decades our state compensation scheme has been radically changed to cope with unforeseen claims costs, financial viability and political game playing. The scheme’s governing legislation has been amended five times through acts of Parliament, with resulting cuts in services and levels of entitlement, and increased funding levies for the earners’ fund.

Today, the original principle of ‘no blame’ looks like it got lost along the way, with increased fines lumped on companies deemed negligent by the courts, while the size and scale of reparations ordered to accident victims, on top of ACC payouts, under the guise of punitive or exemplary damages, has escalated.

We have seen, recently, a dark public mood for revenge against companies held responsible for workplace accidents, but no similar outrage when it comes to liability and reparations with non-workplace accidents. It has become a common saying in this country – “being in the wrong place at the wrong time”.

The scheme has not worked in the area of accident prevention and you can argue that it could have exacerbated the country’s record for being exceptionally accident prone, and even

30 February - March 2014 Q&M

dangerous in some activities such as ocean recreation and outdoor pursuits.

Our universal accident compensation scheme (or compulsory government accident insurance) is still touted by those who operate it as a world leader, but it has never been copied. Most first world countries operate a common law system for accident compensation, and if someone is injured through another’s negligence, their form of redress is to sue for damages (most commonly between insurance companies).

And it is interesting to observe our own workplace in terms of accidents becoming more litigious and a complex system of ACC appeal processes involving a growing army of specialist lawyers.

Was it necessary?

The scheme has always had its critics. I was a young law student at the time it was mooted and observers pointed out that, compared to other countries, our employment relations in regards to settling workplace injuries and compensation were not that litigious. Yes, the old Workers’ Compensation for Accidents Act 1900 was due for a review, but could have been amended.

We also had a modest workers' compensation scheme in place, set up in 1900 that provided injured workers with a weekly benefit for a limited time, and not withstanding their right to sue over employer negligence. That could have been reformed as well.

You only have to look at Australia to see a traditional tortbased compensation system work fine, as long as it is updated.

In practice, the common law system overseas is not as litigious as the movie and TV script writing industry would imply. The majority of claims are settled out of court through insurance companies in the same way as property claims are done in New Zealand.

The early reforms Within its first decade of the ACC scheme hit trouble coping with intangible claims related to emotional suffering and the loss of dignity, or enjoyment of life. Claims such as sexual abuse were compensated by lump sums of money. By 1991 intangible claims were costing the country around $259 million, or more than medical and hospital accident costs.

Huge changes with the Accident Rehabilitation and Compensation Insurance Act 1992 cut entitlements, especially for intangible injuries and lump sum payments were abolished.

Visitors had their entitlements whittled down.

Another massive change came in July 1999 when a National Government allowed private insurance operators to provide work-related accident insurance and the scheme became (albeit) briefly exposed to competition. In November 1999 a Labour Government won the election and, out of sheer principle, re-instated ACC’s monopoly in July 2000 and replaced the 1992 Act with the Injury Prevention, Rehabilitation and Compensation Act 2001 (renamed in 2010 as the Accident Compensation Act 2001 and note the drop of the word ‘prevention’).

The scheme had been funded on a pay-as-you-go basis since 1982 (collecting only enough levies during the year to cover the cost of claims). The 1999 reforms included placing ACC on a ‘fully funded’ model where sufficient levies are collected to cover the lifetime cost of each injury – which might require compensation over a period of 30 years or more.

The past decade It has been over the past 10 years that the scheme has hit the headlines the most.

When the National party returned to power in late 2008 it accused the previous Labour government of underfunding ACC to the tune of about $1 billion. The following year ACC posted a $4.8 billion loss – described as the biggest corporate loss in this country’s history.

The blowout was blamed on regulatory changes to the scheme by the previous government and a widening of entitlements and consequent increase in claims. For instance, a 100 percent reimbursement scheme for physiotherapist services between 2000 and 2008 contributed to an increase in physiotherapy costs of 214 percent.

This set off another regime of cost and service cutting. Suffice to say, free physiotherapist services ended and more legislative changes were made to “get people off the scheme and back to work quicker” through the Injury Prevention, Rehabilitation and Compensation Amendment Bill 2009, and reducing ACC’s liability by billions of dollars.

While ACC levies and car registration costs increased, cuts to entitlements included dropping compensation for suicide or acts of self-harm and anyone convicted of committing a serious crime resulting in imprisonment. One of the most controversial service cuts was (and still is) related to pre-existing medical conditions and general aging (or human-wear-and-tear) when accessing injuries. If the injures are determined on an aging scale, then why aren’t the premiums?

This hardline approach led to a significant turnaround in financial performance. By the 2010/11 year, ACC recorded an operating surplus of $3.5 billion, and by 2012 was only $4.5 billion short of matching liabilities ($28.5b) with its assets ($24b).

In the 2013 budget, the Government announced a $1.3 billion cut in ACC levies over the next two years. The ‘earners’ and workers’ accounts became fully funded after the Corporation reduced the number of long-term claimants from 14,000 to less than 11,000. ACC reports are now full of self-praise about the scheme being a ‘world leader’, and defensive discussion over its huge ‘ethical’ investments around the world.

Does it prevent accidents?

Without fear of civil prosecution or compulsory liability insurance, has this country suffered a lackadaisical attitude and ‘lack of care’ in avoiding accidents?

We have six times the number of workplace accidents than the UK, and three times higher than Australia, and we tolerate a high number of deaths and injuries related to recreation in a country of rugged terrain and tempestuous weather.

We woke up to the country’s a general lack of care and H&S regulations after the Pike River Mine disaster with the biggest changes to workplace legislation for decades with the new Health & Safety in Employment Regulation 2013 (that borrows a lot from Australia) and a raft of company disciplines and regulations that increase a director’s liability with the threat of criminal action, large fines and reparations.

It goes to prove that ‘liability’ is an effective deterrent.

While the alternative tort system does not act as the only detriment to negligence, and every country needs a robust H&S regime, it is far more effective than a ‘no blame’ compensation system.

Put it this way – would some past commercial practices, legal under New Zealand’s existing regulations, be sustainable if they had to find private accident liability insurance to cover negligence, as they would in other countries?

Is this why commerce in New Zealand is facing even stiffer threats under health and safety regulations and punitive damages will likely become more common? qm

OVERSEAS IMAGES: www.darkroastedblend.com and www.miningmahem.com

Q&M February - March 2014

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L E G A L I T I E S

What price a workplace death?

HUGH DE LACY reviews the aftermath of a series of multi-fatality

workplace disasters, including Pike River, and asks if there’s one rule for private company liability and another for Crown?

K

ill eight people in an overloaded fishing boat, or seven in a canyoning disaster, and the full weight of the law comes down on you – at least if you’re a private citizen or organisation.

But kill 29 people in a badly regulated coalmine or 17 students on a badly built viewing platform and you get away scot-free – possibly because you’re a government department.

That’s the conclusion that might be drawn from the performance record of the Health and Safety in Employment (HSE) Act and its administrator, formerly the Department of Labour (now the Ministry of Business Innovation and Employment) in the wake of a succession of multi-fatality tragedies since the legislation was introduced in 1992.

Excluding the Canterbury earthquakes and four aviation cases, there were four accidents involving seven or more deaths in the Act’s first decade, of which two resulted in prosecutions of the private entities allegedly responsible.

Government departments were heavily implicated in the other two but no one was prosecuted.

The four were: • The Cave Creek disaster of April 28, 1995, when 13 Aoraki Polytechnic students and a teacher died following the collapse of a viewing platform in Paparoa National Park.

• The Tongariro tragedy of April 15, 2008, when six students and a teacher from the Elim Christian College in Auckland died in a flash flood in the Mangatapopo Gorge while on a course at the Edmund Hillary Outdoor Pursuits Centre in the central North Island.

• The Pike River coalmine disaster of November 19, 2010, in which 29 miners and contracters were killed in methane explosions in the Brunner seam near Greymouth.

• The Foveaux Strait tragedy of March 14, 2012, when an overloaded fishing boat flipped and sank, taking eight people with it, while on its way from Bluff to the mutton-bird islands.

Following the Tongariro disaster, the MBIE laid two charges against the Outdoor Pursuits Centre, essentially for failing to ensure the student party’s safety while in its care by not using the freely available meteorological information which would have warned of a likely flash flood in the gorge.

The centre pleaded guilty and was fined $480,000, with the judge saying the penalty would have been higher had the centre not been a charitable trust.

The victims’ families would each be awarded $60,000 of the fine, and the four surviving students $5000 each.

In the Foveaux Strait case, both the company that owned the boat, Az1 Enterprises Ltd, and its sole director, Bluff woman Gloria Davis, face three charges under the HSE Act and two more under the Maritime Transport Act. Davis was due in court on January 25 this year, and two of the charges she faces carry prison terms.

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Hugh de Lacy

By contrast, no one has been held accountable for either the Cave Creek or Pike River disasters, though Conservation Minister Denis Marshall resigned a year after the Cave Creek tragedy, and Labour Minister Kate Wilkinson soon after Pike River.

The absence of accountability otherwise was despite commissions of inquiry finding the Department of Conservation had acted illegally and negligently in the Cave Creek case – it had built the viewing platform without a building consent - and MBIE failed in its duties under the HSE Act at Pike River by providing an inadequate mines inspectorate.

Last December 12 charges that the MBIE had brought against the manager of the Pike River mine, Peter Whittall, were dropped, because they were deemed unlikely to succeed.

A proviso of the dropping of the charges was that the $3.41 million in compensation earlier awarded to the victims’ families by the Greymouth District Court against Pike River Coal Ltd, despite it being in receivership and unable to pay, would instead be paid by the insurance companies funding Whittall’s defence.

The victims’ families have reacted to the payout, presently under way, by calling it blood money to prevent Whittall, and ultimately Pike River Coal’s directors and shareholders, from being held accountable.

The families have since vowed to take a criminal prosecution against Whittall and the Pike River directors, and it may be that the aftermath of the Tongariro canyon tragedy may provide them with some sort of precedent.

In the Tongariro case, the judge said the tragedy could have been avoided had the Outdoor Pursuits Centre simply checked the weather forecast.

The MetService provided no fewer than four warnings that day of the thunderstorms about to turn the Mangatepopo Stream into the torrent that carried away the six students and their teacher, but the Outdoor Pursuits Centre hadn’t even bothered to sign up to receive them.

This was despite an Australian student at the centre being killed in an identical situation in 2000, and the centre’s parlous record of having had three other fatalities and seven nearmisses in its 40-year history.

The case appeared to turn on the failure of the centre to use the freely available MetService information, and as such it may well have set a legal precedent, if it didn’t already exist, that is relevant to Pike River.

The core conclusion of the commission of inquiry into Pike River was that the MBIE had failed to implement the HSE in relation to mining, and that the coal company’s directors had acted improperly over health and safety standards.

Whittall, the company itself and one of the contractors, Valley Longwall International, were all charged, but not the directors – nor MBIE. Valley Longwall, which lost three employers in the disaster,

pleaded guilty to three charges under the HSE and was fined $46,800.

The awards levied against the company were tokens since it was already in receivership, and those against Whittall were withdrawn.

But if the Outdoor Pursuits Centre could be successfully prosecuted for not using the safety information available to it, why not Whittall and the Pike River directors?

Whittall, an Australian, had personal experience of the effective health and safety procedures applied in the Queensland coalmines because he worked in them before moving to New Zealand and Pike River.

Yet he, no less than his directors, who had ready access to professional advice, failed to apply effective health and safety regimes to Pike River simply because the MBIE didn’t oblige them to.

It will be for the victims’ families and their high-powered lawyers, now funded by the $3.4m being stumped up by Whittall’s and Pike River’s insurers, to see whether the precedent set by the conviction of the Outdoor Pursuits Centre can provide some sort of a basis for a suit against Whittall and the Pike River directors.

Such a suit would, of course, still have to navigate its way round the Accident Compensation Corporation (ACC) legislation and its suspension on its formation in 1974 of the common law right to sue for damages over such accidents.

The other lesson from the multi-fatality accidents that have occurred since the introduction of the HSE Act relates to the Government’s refusal to meet public demands to pay the $3.4 million awarded against Pike River Coal by the Greymouth District Court because, it said, that would set a precedent.

In fact such a precedent exists: In the aftermath of the Cave Creek viewing platform tragedy, which occurred just up the road from Pike River, the Government paid out $2.6 million to victims’ families.

This point is now moot, given the insurers’ agreement to pay the $3.4 million awarded against Pike River as a proviso of the charges against Whittall being dropped, but it refutes the Government’s assertion that doing so itself would set a dangerous precedent.

Overall it’s hard to escape the conclusion that when

PIKE RIVER THE PAYOUT SO FAR

If money, rather than accountability, were the issue for the families of the Pike River victims, the cynic might say they’ve done all right: each of the 29 families has so far received a total of $468,000.

Of this $110,000 is the otherwise unpayable award from the Greymouth Court that has been picked up by Pike River’s insurers, and also paid to the two survivors, making up the $3.41 million total.

ACC has so far paid out $141,000 to each family ($5 million), along with unspecified one-off funeral grants, and survivors grants to financially dependent spouses and children with mental or physical disabilities.

Spouses and children also get weekly compensation based on a percentage of the deceased person’s earnings, and a weekly amount for childcare based on the number of children.

The families have also received about $217,000 each from the Pike River Disaster Relief Trust which attracted more than $8 million in public donations (and was kick-started by a $500,000 pledge from Pike River Coal Mine, matched by a contribution from shareholder NZ Oil & Gas), plus $3000 each to set up family trusts.

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To view the full range of LED work lamps visit www.hella.co.nz Q&M February - March 2014

33

C O M M E N T

Mining for a greener economy This comment from CHRIS BAKER the chief at Straterra was circulated at the end of last year. We thing it is so good, it deserves more coverage.

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n TV3 (November 2013) a debate was held on: “to mine or not to mine” in New Zealand. It was a strange framing of the issue because mining is essential to life –you either grow it or you dig it.

Led by TV presenter Guyon Espiner, the anti-mining team on The Vote argued that New Zealand does not need more mining, and should transition to a green economy instead. The main concern for these debaters was climate change.

I have news for Green Party co-leader Dr Russel Norman, Gisborne District Councillor Manu Caddie, and Greenpeace NZ executive director Bunny MacDiarmid – the green economy will require more mining, not less.

One of the problems with some “green” technologies, eg, wind and solar to generate electricity, is that they are low grade, or low intensity. That means a lot in infrastructure is required for each unit of energy produced, compared to higher-intensity energy sources such as fossil fuels, or nuclear. Of course, wind and solar have an important role because the fuel itself is free.

French academics Olivier Vidal, Bruno Goffé and Nicholas Arndt reported in the November 2013 issue of the international journal Nature Geoscience: “Humankind faces a vicious circle: a shift to renewable energy will replace one non-renewable resource (fossil fuel) with another (metals and minerals).”

For an equivalent installed capacity, solar and wind facilities require up to 15 times more concrete, 90 times more aluminium, and 50 times more iron, copper and glass than fossil fuels or nuclear energy.

The World Wildlife Fund for Nature (WWF) projects that wind and solar energy, globally, will rise from the current 400 terawatthours to 12,000 TWh in 2035, and 25,000 TWh in 2050.

According to Vidal, Goffé and Arndt, those two uses alone will require 3200 million tonnes of steel, 310 Mt of aluminium, 40 Mt of copper, 800 Mt of glass, and 20 billion tonnes of concrete – to say nothing of rare earth elements, and many other metals, including gold, silver and platinum. To provide this amount of material will require a 5%-18% annual increase in global mining production over the next 40 years.

These numbers are truly staggering. To make any sense of them, consider that it would take centuries for New Zealand to produce the iron ore (and the coal) to make the steel, even with an expansion into offshore ironsands mining.

At issue for the world is where these metals are going to come from – for the uses identified above, and for all the other uses to which they will be put in coming decades. (Alternatively, or in addition, we must ask which technologies will allow us to achieve the same outcomes, while consuming less.)

Mining can only be done where there are minerals in economic concentrations. These deposits are getting harder to find, as the more easily-accessible ones have already been extracted. Mining technologies are advancing correspondingly: to deal with more complex geology and mineralogy; and to manage costs when

mining at greater depths, and lower ore grades.

New Zealand is of interest here because the greatest demand for metals and commodities is global, and driven mostly by growth in the developing countries, and we have reasonable minerals potential. We also have a resource management regime that is the envy of many nations, with improvements being made to our workplace health and safety regime, and our country offers a great lifestyle.

It is, surely, far better to mine in New Zealand than in those parts of the world where the rule of law does not apply.

A case in point is the rare earth elements and other metals being extracted from forced-labour mines in the Democratic Republic of Congo, and like parts of the world. Moves are afoot for global electronics manufacturers to move away from sourcing “conflict metals”.

New Zealand will never be a large mineral producer on a global scale, but we have coal, iron (ironsands) gold, phosphate and a number of other mineral products that have an important role as globally we move to a more sustainable economy. If we continue to develop these, we can earn wealth and wellbeing in the bargain.

Consider: one-third of household income on the West Coast is earned from mining, off a footprint of 14km2 compared to the region’s total area of 23,000km2. No other land-use earns anywhere near the same wealth per hectare as mining does. Miners earn on average double the national average wage. Imagine if that was expanded to the Waikato, Southland, Otago and Northland.

There are several challenges to resolve to advance this opportunity. They include access to resources, removal of bureaucratic complexity that discourages investment, and better administration of regulation.

Public concern over mining is an issue – including fears raised over mercury poisoning in Northland, species being driven extinct at Denniston, fisheries affected by seabed mining, the climate affected by coal mining.

Logically, for mining to continue in New Zealand, we as an industry need to address those concerns. We are heartened by robust opinion polls that demonstrate more than 80 percent public support for resource development, provided locals are employed, most of the money stays in New Zealand, and the environment is managed. We say all of that is the case.

Environmental management is core business for any responsible mining business, and it is best-practice to engage early with stakeholders on projects.

Even if mining in New Zealand trebled in investment on the ground, and in output, the total footprint on land would still be less than that of many individual high country stations, or the annual area of forestry harvest. At the same time New Zealand would be adding billions of dollars a year to the economy.

In answer to the question posed at the beginning – we need to mine more for a greener economy. qm

For an equivalent installed capacity, solar and wind facilities require up to 15 times more concrete, 90 times more aluminium, and 50 times more iron, copper and glass than fossil fuels or nuclear energy.

34 February - March 2014 Q&M

T E C H N I C A L

L E S S O N S

From quarry to wine bottle

More Aussie lessons Tooperang Quarry near Adelaide, South Australia, has recently commissioned a new silica sand washing plant to produce glass sands for Owens-Illinois at its glass bottle manufacturing plant in Adelaide.

US

-based Owens-Illinois is the world's largest glass container manufacturer and uses the fine glass produced by the quarry for wine bottles.

The new turnkey plant includes a range of equipment from the CDE product portfolio including the M2500 with its fine sand screens, attrition cells and spirals. The plant configuration also includes an AquaCycle thickener that reduces the volume of fresh water required to feed the washing plant by more than 90 percent.

The design feed rate to the plant is 100 tonnes per hour and this produces 50 tonnes per hour of glass sand with an additional 30 tonnes per hour of concrete sand. The plant accepts 120mm feed to the M2500 hopper and this material is then transferred to an integrated ProGrade double deck-rinsing screen. The top deck removes the 40-120mm material to a stockpile while the bottom deck sends the 7-40mm material to another stockpile.

The 0-7mm material collects in the ProGrade sump and is then pumped to a five-deck fines screen. At this point the silica sand is screened at 0.43mm and the 0.43mm to 7mm material is sent to a separate EvoWash sand washing plant to allow for the production of concrete sand. Meanwhile, the 0-0.43mm material is sent to an EvoWash fines recovery plant where following delivery to the EvoWash sump the material is then pumped to the integrated hydrocyclone which removes the -63 micron material.

The cyclone overflow containing the waste material is then sent to the AquaCycle thickener.

The underflow from the cyclone is delivered to the EvoWash dewatering screen before being transferred to the attrition cells.

The function of the attrition cells is to assist with the removal of iron oxide and other deleterious materials from the silica sand.

The iron oxide is adhered to the silica particles and must be

scrubbed from the surface of the particles to allow removal later in the process.

Refractory heavy minerals and iron oxide particles are then separated from the silica sand through the introduction of spiral classifiers.

As these particles have a higher specific gravity than the silica sand particles, the spirals are able to perform the required separation.

Rejects from the spirals – a sand product containing the liberated heavy mineral and iron oxide – is delivered to the EvoWash sand washing plant sump and is destined for the concrete sand product.

The silica sand slurry is delivered to the sand sump on the M2500 where it is then pumped to the integrated counter flow classification unit, which remove the <106um particles from the sand as required by the specification. It works on an upward flow classifying unit and the principle that an upward flow of water will cause the lighter particles to rise and the heavier particles to sink. This facilitates the removal of any remaining fines while the silica sand slurry is then delivered to a dewatering screen. The dewatered silica sand is transferred via an integrated stockpile conveyor. The fine material removed in the CFCU is sent to a concrete sand Evowash for recovery into the concrete product.

Wastewater from the plant is processed by the AquaCycle thickener, which recovers 90 percent of the water for re-circulation around the washing plant. The plant requires 400 cubic metres per hour of water for its operation. Sludge from the AquaCycle thickener is pumped to on-site settling ponds.

• The glass sand produced by Tooperang Quarry is used at Owens-Illinois’ Adelaide plant in West Croydon, which produces mainly wine bottles to supply Aussie’s huge wine industry (and plenty of them end up in my wine rack – Ed).

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H E A L T H

&

S A F E T Y

Speaking from experience Q&M magazine talks to an industry stalwart about the new health and safety regulations and their future implementation.

A Andy Loader

“It is now official that no-one is to be held accountable for the deaths of the 29. It is incredulous that you can have a disaster in a workplace of this magnitude with no accountability other than from a failed company and a contractor to that failed company.”

36 February - March 2014 Q&M

ndy Loader, the chief executive of the NZ Safety Council is very angry.

“Justice in relation to occupational safety and health is effectively dead,” he says in reference to the dropping of prosecution against Pike River’s chief executive officer Peter Whittall and charges over the Pike River Mine disaster.

“It is now official that no-one is to be held accountable for the deaths of the 29. It is incredulous that you can have a disaster in a workplace of this magnitude with no accountability other than from a failed company and a contractor to that failed company.”

The directors of Pike River Coal, the management, the mine manager, the safety manager, the safety regulator (MBIE), and the Government should be all accountable as entities in their own right, he says.

“And the employees of each of those entities should have been held accountable in relation to their individual responsibilities with regard to the opening and operation of the Pike River Mine,” he says.

“The Royal Commission found that this disaster came about due to some of this country’s worst health and safety failings, and yet not one person has been held to account for any of those failings.”

The District Court declined to carry out a prosecution of Peter Whitttall due to lack of evidence, with a number of evidence briefs not being signed, over the three years since the incident, and failure to get witnesses to return from overseas to appear at any hearing, says Loader.

“This brings the investigatory skills and proficiency of the regulatory staff and prosecutors into question.”

Loader, an ex mine inspector back in the day when the Labour Department had 17 inspectors, believes trouble was foreseeable and risks should have been effectively controlled and engineered out.

“Even to a discerning lay person, a single entrance to a methane rich mine with a single ventilation system, a single escape tunnel (90 metres vertical and also used as an exhaust for the gases) would be forewarning enough.”

Loader also raises the question of regulation relating to ladder standards, and the requirement of step-off cages every six metres.

At the time of the disaster the Department of Labour had one sole inspector and, reportedly, they had to ask permission from the company to enter the site.

After the HSE Act was implemented in 1992 a decision was made to transfer the mining inspectorate from the Ministry of

Commerce to the Ministry of Labour and it went from being fully funded by levies paid by the mining industry to being funded out of the ministry’s budget, says Andy.

“With this change and the resulting effects on the staff of the inspectorate, it went from having 17 (highly qualified and experienced) inspectors across the whole country to one inspector at the time of the disaster.

“This sole remaining inspector was unable to cope with the work-load and as a consequence the levels of regulatory inspections for large coal mines reduced from at least six times per year, to virtually nil.”

When health and safety failures are taken into account and added to the inspectorate failures, which allowed standards to deteriorate to an unacceptable level, then a disaster was a realistic probability, he says.

“This lack of regulatory oversight with compliance significantly contributed to the developing circumstances that resulted in the explosion at the mine.” The MBIE admits its own safety regulator performed poorly in the lead up to this disaster, he adds.

Nor is Andy impressed with the new H&S legislation’s lack of enforcement teeth. While the standalone regulatory enforcement (WorkSafe) is a commendable decision, without the provision of highly trained, qualified and experienced inspectors and litigators, the legislation and its intended instruments will be no more effective than the 1992 version, he says.

“The mining industry cannot, and should not, rely on check inspectors from within the industry to ensure safety of mining operations. With the lack of any minimum standards of competency being set for inspectors, this is exactly what is predicted to happen.

“It’s one thing that directors, PCBU’s (any person conducting a business or undertaking), employees etc should take responsibility for ensuring that they comply with any new law and for the consequences of their actions or inactions, but the inspectors need to be trained and qualified in the industry sector so that they know immediately when something is not in line with common industry practices or even best practice.”

Without qualified professionals in charge, the new health and safety improvements will be hindered, he iterates.

“Currently there is no minimum competency standard set for qualification of inspectors in the mining industry. If this situation continues then the government will have no guarantees that the legislative changes will make any significant improvement in the rates of deaths and injuries in the workplace.

“You can introduce all the regulations you like, but without efficient enforcement, and well-funded enforcement, they are worthless.”

Andy has a lot of time for the new chief mines inspector Tony Forster. “I think he will do a very good job, as long as he not restricted too much by budgetary constraints.”

Andy adds that Forster has said he intends to be recruiting from the industry, which is good news. qm

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C O M M E N T

Vote for major projects Without prejudice (of course) Netta Burnside provides advice on getting your shit together for 2014 and casting a vote in the right direction for progress.

A

NZ chief economist Cameron Bagrie tells us that business confidence is at an 18 year high, and one of the biggest challenges the country faces this year will be keeping supply up with new demand.

It’s no secret that everyone has been struggling over recent years, and there have been more than a few good businesses go into receivership, or worse. So, for those of us still here – this increased business confidence is not only exciting, but also somewhat cathartic to know that we have made it through the rough patches.

That supply challenge in the heavy machinery sector is expected to become evident by the second half of this year.

Those of you who have purchased capital equipment over the past couple of years have enjoyed buying fantastic gear at unbelievably good prices. However, companies thinking of buying heavy machinery now should do so while stocks are still available at reduced prices.

Because, once suppliers start to re-stock, discounting will stop and prices of imports will start to rise again with the demand.

The strong Kiwi dollar, although not so flash for our exporters, is great for imports of used equipment.

Looking across the ditch, there will be more than a few of us who are now glad we didn’t take the leap over the Tasman.

Aussie’s extractive and mining sector seems to be shrinking faster than a shrimp on the barbie, and no doubt we will see the return of a few expats – which is great if they bring back a better skill base than which they left with.

In the latter part of this year we have a national election and that always throws a spanner in the works for our industry for a few months as everyone gets distracted with political nonsense.

Contractors have historically been responsible voters, but will a Labour-greens coalition allow us to continue with our current infrastructure projects and requirements into the future?

Will they put a halt to Transmission Gully and other Roads of

Netta Burnside

National Significance in the planning?

Can we afford this?

Over in my neck of the Kiwi woods we are facing the aftermath of last year’s local elections. Here in Taranaki we think we are a bit special as we have the highest GDP per capita in the country and lead the country for regional economic growth.

However, we became complacent when it came to our local body elections and who is in charge of running the show, with apathy being the winner on voting day.

Unfortunately, what I call the non-business (or should that be anti-business) movement of the vocal ‘great unwashed’ with little else to do but find conspiracies behind every district plan and consent, were not so complacent. And in today’s internet world where every fool can be published and have a say via tweets, texts and Facebook dribble, those with loads of time and little nous of how the business world functions, roused other like-minded souls into voting for change and now we have to amuse the opinion of every navel-gazing, sad-sack, pot-head in the province while the rest of us get on with progressing its economy and future.

Personally, I would not like that to happen to our central government political stance as well, and watch the nation retreat back into a Jurassic park to amuse hippies and nature tourists and movie jerks infatuated with the Lord of the Rings movie trilogy.

So my message for the 2014 year is, spend some bucks, and buy some gear while it is at a good price, employ some expat staff from Aussie and give them really flash titles so they feel important, and for Christ’s-sake encourage friends, workmates, and family to read more of these sort of magazines, become informed about the good folks who are investing their skills and savings to push this fine country into the 21st century, and get down to the polling booths come the national election, before the ‘lets knock business’ zombies do.

• Maybe what we need is a Contractor’s party Netta – want to step forward? - Ed

DON'T READ THIS IF YOU ARE A TRUCK DRIVER The future arrived Downunder for driverless mine trucking operations when Rio Tinto’s trucks achieved a milestone at Yandicoogina mine.

Under the glorious title of its ‘Mine of the Future’ (trade marked) programme, Rio Tinto and Komatsu started hauling iron ore at the Yandicoogina mine in Western Australia without a single hand on the steering wheel.

A new autonomous pit at the Yandicoogina mine now has a fleet of 10 Komatsu driverless haul trucks as the first step towards full operational deployment of the project. The trucks are used for all haulage requirements in the pit, moving high grade, low grade and waste material from multiple loading units.

Rio Tinto Iron Ore chief executive Sam Walsh and Komatsu president and chief executive officer Kunio Noji, attended

38 February - March 2014 Q&M

the start of the operation.

“The deployment of these trucks at Yandocoogina is the next step in our programme to introduce over 150 driverless trucks to our Pilbara operations, making us the world's largest owner and operator of these vehicles,” said Walsh.

“Autonomous haulage is an important component in our Mine of the Future programme. These new trucks will work with our pioneering operations centre that integrates and manages the logistics of 14 mines, three ports and two railways.

“They will be a critical part of our drive to outstanding safety and production efficiency as we grow our business towards 353 million tonnes a year.

“Rio Tinto has been using Komatsu's advanced truck technology at our mines, for almost 20 years.”

P R O D U C T S

High-powered LED work light Hella NZ has a new range of innovative, high-power LED work lights designed for demanding workshop conditions, and featuring a wide variety of easy to use battery, rechargeable and mains power models, with built in hooks and strong magnets.

The LED IP 68 inspection lamp illuminates an area four times wider than traditional LED inspection lights by spreading light up to an 80 degree arc, and features an adjustable and retractable suspension hook and LED charge indicator, and 240V charger.

The Nova 30 Work Lamp features a protective rubber and flexible stand that allows for angle adjustment and suspension.

Lightweight yet shock and impact resistant and constructed to endure the rough work environment of a building site, these work lights are resistant to water, oil and most commonly used chemicals.

Quick protected circuit addition for vehicles Narva has taken the awkwardness of adding a new electrical circuit to a car, van or truck away with a new range of fuse holders.

Called ‘Add-a-Circuit’ Blade Fuse Holders, they offer a simple and convenient way for vehicle owners to hook up a new circuit to run accessories such as navigation aids, radios, communications devices, telephones and dispatch systems.

Adding a fuse or circuit to an existing set of fuses can be a messy and complicated process, but these fuse holders can be simply plugged into existing fuse slots, and are pre-wired and ready to use straight from the pack to add a protected circuit with ease. They

can take 5-amp and 10-amp fuses and are available in a standard ATS blade fuse-type (product number 54409BL) and mini blade fuse-type (54408BL) commonly found in modern vehicles.

New industrial strength wipes Big Wipes have been around for years and now there’s a new formula and product called Big Wipes Industrial-Plus – an industrial-strength multi-purpose cleaning wipe for removing oil, paint, tar and even glue from hands and work surfaces. This European brand of cleansing wipes is distributed through Griffiths Equipment.

“They’re amazingly effective,” says Bruce Walker, sales manager for Griffiths Equipment. “I’ve seen demonstrations where hands have been completely covered in paint, oil and grease and the Big Wipes have totally cleaned them up.”

Bird’s eye view Here’s something to take precision positioning, surveying and aerial mapping to new levels – the Phantom 2 Vision made by DJI Innovations is the latest in the company’s unmanned, multifunctional integrated aircraft and camera platform line-up.

New Zealand distributor Synergy Positioning Systems now offers the new rotor-wing UAV for sale or rent. “The robust, all-in-one nature of the Phantom 2 Vision makes it both exceptionally practical, as well as predictable to utilise for survey mapping and inspection work,” says Synergy Positioning UAV technical manager Louie Schutte.

A 14-megapixel camera allows for multi-capture, continuous capture, timed capture and high definition video, and can be controlled remotely through an app on a smartphone.

Advertisers Index Cable Price.....................................................................IFC, 1

Real Steel........................................................................... 27

Gough Group .................................................................... 21

Rocktec.............................................................................. 29

Fire Suppression Systems.................................................... 37

Hella.................................................................................. 33

Metso............................................................................... OBC Mimico................................................................................. 2 Porter..........................................................................40, IBC

REMco.................................................................................. 9 Total Oil............................................................................. 13 Transdiesel.......................................................................... 5 West-Trak Equipment......................................................... 11 Youngman Richardson.......................................................... 7

Q&M February - March 2014

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Rock solid value Top operators know the value of Metso’s mobile crushing and screening plants. Our contracting solutions offer you true mobility, high capacity, quality end products and reliable operation. With Lokotrack, you have the freedom to crush just about any type of feed material – from hard rock to recycling and demolition debris. And every Lokotrack is backed

by Metso’s know-how and distributor support. Simply rock solid.

Our distributor Metso www.metso.com/miningandconstruction For more information contact MIMICO. Phone 0800 806 464, www.mimico.co.nz

New Zealand 0800 806 464