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2012 Schneider Electric. All Rights Reserved. Schneider Electric, EcoStruxure, Active Energy Management Architecture from Power Plant to Plug, and Make the most of your energy are trademarks owned by Schneider Electric Industries SAS or its affiliated companies. All other trademarks are property of their respective owners. www.schneider-electric.com s 998-3877_CA

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22

CONTENTS|CONTENUCIM MAGAZINE | SEPTEMBER/OCTOBER 2012 | SEPTEMBRE/OCTOBRE 2012

NEWS 16 Industry at a glance 22 Pride of ownership First Nation takes equity stake in

Avalon Rare Metals by V. Danielson

25 Nova Scotia fishes for exploration talent Prospec-tors get a late-season boost from government by R. Brighton

26 Chinas oil sands CNOOC bids US$15.1 billion forNexen by A. Reitman

28 Ready for a close-up First large-scale hyperspectralmaps of Afghanistan released by USGS by A. Reitman

30 Back in action Satellite zones give Goldex a new leaseon life by V. Danielson

TOOLS OF THE TRADE 10 Water treatment Compiled by Z. Koulouris

COLUMNS 32 MAC Economic commentary Time to confront railway market power in Canada by P. Gratton 34 Eye on business Todays feasibility studies must take energy costs into account by M. Chiesa 36 Standards NI 43-101 standards and best practice guidelines: data verification using geophysical

logs when sampling coal by G. Gosson and R. Parent

38 HR Outlook WIM Canada creates HR strategies that work by A. Kennedy 39 Marketing Successful communication starts with the right research by R. Simpson 40 Safety Best practice basics for project construction safety by D. Welshons 42 Voices from industry Raising a stink by J. K. Nixon

46

4 | CIM Magazine | Vol. 7, No. 6

UPFRONT 44 Energy-focused EMBA targets international

need University of Calgary program offers exclusiveenergy content in alternative format by K. Lagowski

46 From dust to dollars River Energys hunt for valuein the coal fines of South Africa by A. Lopez-Pacheco

48 Total rehaul New training program improves safetyand efficiency at Suncor by D. Zeldin

50 Mix and match OSLI tailings research probes technology combinations by A. Lopez-Pacheco

52 All fired up Ann Marie Hann shares her vision forCanadas coal industry by A. Dion-Ortega

54

CIM COMMUNITY 81 Homegrown CIM Saskatoon Branch supports next

generation of mining leaders by D. Zeldin

83 Mining law magnate Faskens MichaelBourassa three-time lawyer of the year by V. Heffernan

84 Come together Networking by Design eventunites Torontos mining networks by M. Dregischan andM. Cortes

86 From tunnels to the moon Hildebrant MemorialScholarship recipient digs deep and aims highby D. Plouffe

87 All for one, one for all Sherritt Coals Paintearthmine takes collaborative approach to safetyby A. Lopez-Pacheco

88 Nouvelle approche des solutions RH Qubec Mines 2012 Module Maillage, recrutement et ressources humaines mobilise lindustrie par L. Charbonneau

A Fresh take on HR solutions at QubecMines 2012 Networking, Recruitment, and HumanResources module engages industry by L. Charbonneau

90 Des mines et des hommes Lhistoire miniredu Quebec revue et mise jour par L. Charbonneau

91 Constant change Tony Eltringham shares in-sights from four decades in copper mining by A. Lopez-Pacheco

93 MiHR explores the oil sands Mining in Sands provides another perspective on labour shortage byM. Roberts

HISTORIES 94 Historical metallurgy The rush for gold: Part II

by F. Habashi

TECHNICAL ABSTRACTS 96 CIM Journal 98 Canadian Metallurgical Quarterly

IN EVERY ISSUE 6 Editors message 8 Presidents notes / Mot du prsident 85 Calendar 92 Obituaries 99 Innovation showcase100 Professional directory102 Mining Lore: Sidney Ells pioneer of oil sands

research by C. Baldwin

FEATURE |ARTICLE VEDETTE 54 The Athabasca Express New infrastructure and evolving strategies keep oil sands min-

ers on track by E. Moore & K. Lear

62 LExpress Athabasca Des infrastructures neuves et des stratgies en constante volutiongardent les mineurs des sables bitumineux sur la bonne voie par E. Moore et K. Lear

September/October 2012 | 5

7466

PROJECT PROFILES |PROJETS EN VEDETTE

66 Eyes on the horizon Coalspur Minesthermal coal project in Alberta is designedto fuel distant furnaces by C. Baldwin

72 Les yeux rivs sur lhorizon Le projetdexploitation de charbon thermique deCoalspur Mines en Alberta alimentera lesappareils de chauffage dans des rgionsloignes par C. Baldwin

74 Citrus twist A Calgary company opensup a new frontier in bitumen mining by G. Chandler

78 Le secret des agrumes Une compag-nie de Calgary savance dans des terri-toires inexplors de lextraction de bitumepar G. Chandler


editors letter

Editor-in-chief Angela Hamlyn, [email protected]

Managing editor Wah Keung Chan, [email protected]

Senior editor Ryan Bergen, [email protected]

Section editorsFeatures: Ryan Bergen, [email protected] and Upfront: Peter Braul, [email protected], CIM Community, Histories and Technical Section:Dinah Zeldin, [email protected] editor / Communications coordinatorZo Koulouris, [email protected]

Web editor Nathan Hall, [email protected]

Publisher CIM

Contributors Correy Baldwin, Rachel Brighton, Graham Chandler,Luc Charbonneau, Mauro Chiesa, Manuel Cortes, CNW, VivianDanielson, Antoine Dion-Ortega, Marty Dregischan, Greg Gosson,Pierre Gratton, Fathi Habashi, Virginia Heffernan, Alana Kennedy,Krystyna Lagowski, Kim Lear, Alexandra Lopez-Pacheco, EavanMoore, John K. Nixon, Ron Parent, Dan Plouffe, Anna Reitman,Martha Roberts, Karen Rolland, Robert Simpson, Erik Stout, MarkStout, Dan Welshons

Published 8 times a year by CIM1250 3500 de Maisonneuve Blvd. West Westmount, QC, H3Z 3C1Tel.: 514.939.2710; Fax: 514.939.2714 www.cim.org; Email: [email protected]

Subscriptions Included in CIM membership ($170.00); Non-members (Canada), $220.00/yr (PE, MB, SK, AB, NT, NU,YT add $11.00 GST, BC add $26.40 HST, ON, NB, NL add$28.60 HST, QC add $32.95 GST + PST, NS add $33.00 HST)Non-Members USA and International: US$240.00/year Single copies, $25.00.

Advertising SalesDovetail Communications Inc.30 East Beaver Creek Rd., Ste. 202Richmond Hill, Ontario L4B 1J2Tel.: 905.886.6640; Fax: 905.886.6615; www.dvtail.com National Account Executives 905.886.6641Janet Jeffery, [email protected], ext. 329Neal Young, [email protected], ext. 325

This issues coverA haul truck at Syncrudes Aurora project transports oil sandsto be processed. Todd Korol/Aurora Photos

Layout and design by Cl Communications Inc.www.clocommunications.com

Copyright2012. All rights reserved. ISSN 1718-4177. Publications Mail No. 09786. Postage paid at CPA Saint-Laurent, QC. Dpt lgal: Bibliothque nationale du Qubec.The Institute, as a body, is not responsible for statements made or opinions advanced either in articles or in any discussion appearing in its publications.

Printed in Canada

Fuelling Canadas energy industry

Simply stated, the oil sands industry is a victimof its own success. Skilled workers cannot be hiredquickly enough, and supporting infrastructure can-not be built fast enough to answer the ever-growingdemand for oil. And although these are good prob-lems to have, they are still big problems. Their sig-nificance is marked by the fact that some in theindustry viewed the recent economic downturn asa blessing in disguise; it gave them the opportunityto play catch-up in various areas, namely recruit-ment, training and infrastructure development.Still, keeping up and catching up are just first steps,as the global appetite for energy that is poweringgrowth and development in the Athabasca region

will not be satiated any time soon.In our feature The Athabasca Express, we take a detailed look at some of

the key challenges confronting the oil sands industry from pipeline and road-way capacity to construction costs and regulatory hurdles and how operatorsand suppliers are addressing them.

We also explore developments in Canadas other energy powerhouse, the coalindustry, throughout the issue. Our coverage includes a new approach to con-verting coal fines to revenues, Sherritt Coals Paintearth mines collaborativeapproach to safety and a profile of Coalspur Mines Ltd.s flagship Vista Coalproject. We feature an interview with Ann Marie Hann, president of the CoalAssociation of Canada, whose deep understanding of both industry and govern-ment helps put current developments in context.

You will also find calls for nominations for our prestigious CIM Awards,which recognize the outstanding achievements and contributions made byindividuals and companies to the mining and minerals industry, and arehanded out every year at our CIM Convention. Be sure to make your nomina-tion before the December 1, 2012 deadline, so that you can shine the spotlighton an industry leader.

And speaking of awards, I would also like to take the opportunity to passalong my congratulations to the CIM Magazine editorial and production teamsfor the recent acknowledgement by the 2012 Tabbies International Editorial andDesign Awards. Our November Quebecs Plan Nord issue was among the Top25 in the Best Single Issue category, which is quite an accomplishment as therewere over 500 entries from business and trade publications from around theworld. It is an honour to be part of such a dedicated and talented team.

Angela Hamlyn, [email protected]

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Hopefully, after an ex -ceptional summer, we haveall refilled our energy re -serves and are ready for thetask before us. Metals andmineral prices have droppedin recent months and theglobal economic situationremains uncertain. It is all themore important that CIM andits members keep workingtowards improving the globalcompetiveness of ourindustry.

CIM continues to take onthese large-scale challenges. This month, Bob Schafer, CIM president-elect, and executive director Jean Vavrek will meet with our sistersocieties from around the world during MINExpo in Las Vegas toadvance the effort to align industry technology standards and improveequipment interoperability.

Fall is the time we kick off our awards nomination process. Everyyear, CIM honours long-time leaders, up-and-coming young talent andproven performers. I encourage all members to nominate individualsworthy of recognition for their current excellence, as well as lifelong

presidents notes

contributions. Details about the awards and the nomination process areavailable at www.cim.org. These awards serve many purposes: theybring well-deserved smiles to the faces of the recipients on awardsnight at the annual CIM Convention; they are a celebration of our pridein and commitment to our professions; and when we honour theaccomplishments of our peers and bring them to the attention of thebroader community, we illustrate the importance and relevance of ourindustry. The awards ceremony is one of the highlights of our annualevent, but can only be successful if nominations are forthcoming.

Branch activity will also pick up in September, and I want to mentionthat we have an excellent lineup of distinguished lecturers who areavailable to provide interesting insights to our members across Canada.Details about the lecturers and booking them to speak can also befound at www.cim.org.

On a final note, former CIM president Don Worth is heading up theCanadian Mining Hall of Fames (CMHF) Mining Song Contest and islooking for worthy submissions by October 15th. He can be reached [email protected]. The contest winners will be awarded theirprizes at the annual CMHF dinner in January 2013.

Terence Bowles, CIM President

Aprs un t exceptionnel, nous avons tous, esprons-le, refait leplein dnergie et nous sommes prts affronter les tches qui nousattendent. Au cours des derniers mois, les prix des mtaux et des min-erais ont baiss et la situation conomique mondiale demeure incer-taine. Il est dautant plus important que lICM et ses membres continu-ent duvrer au renforcement de la comptitivit de notre industriedans le monde.

LICM continue de relever ces dfis grande chelle. Ce mois-ci,Bob Schafer, prsident lu de lICM, et le directeur gnral, Jean Vavrek,rencontreront nos socits surs de partout dans le monde au salonMINEXpo, qui se tiendra Las Vegas, afin de faire progresser les effortsdalignement des normes technologiques de lindustrie et damliorerlinteroprabilit des quipements.

Lautomne est la priode du lancement de notre procdure de miseen candidature des prix dexcellence. Chaque anne, lICM honore deschefs de file de longue date, des jeunes talentueux lavenir promet-teur et des professionnels qui ont fait leurs preuves. Jinvite tous lesmembres mettre en candidature des personnes dignes de mentionque ce soit pour lexcellence de leur travail actuel ou pour leurs contri-butions de toute une vie notre industrie. Vous trouverez des prcisionssur les prix et sur la procdure de mise en candidature sur le site delICM www.cim.org. Ces prix servent plusieurs objectifs : ils font natredes sourires bien mrits sur les visages des gagnants pendant lasoire de remise des prix au congrs annuel de lICM; ils soulignentnotre fiert pour notre profession et notre engagement envers elle; et

quand nous soulignons les ralisations de nos pairs et que nous les por-tons lattention de la communaut un niveau plus large, nous illus-trons limportance et la pertinence de notre industrie. La crmonie deremise des prix est lun des faits saillants de notre congrs annuel, maiselle ne peut tre une russite que si des mises en candidature nousparviennent.

Les activits des sections locales reprennent aussi en septembre, etje souhaite mentionner que nous avons un excellent groupe de con-frenciers qui seront disponibles pour prsenter des exposs intres-sants nos membres dans lensemble du Canada. Vous trouverez delinformation sur les confrenciers et sur la procdure suivre pour lesinviter sur le site de lICM www.cim.org.

Enfin, lancien prsident de lICM, Don Worth, qui dirige le concoursde chansons sur le thme de lexploitation minire organis par leTemple de la renomme du secteur minier canadien, attend vos uvresqui doivent lui parvenir avant le 15 octobre. Vous pouvez le joindre ladresse [email protected]. Les gagnants du concours recevrontleur prix au souper annuel du Temple de la renomme du secteur miniercanadien, en janvier 2013.

Terence Bowles, Prsident de lICMTraduit par CNW Group

Heigh-ho, off to work we go

H Ho! H Ho! On reprend le boulot


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TOOLS OFTHE TRADE water treatment

Better togetherGE has integrated ultrafiltration (UF) and reverse osmosis (RO)technologies in its Seapak, Propak and Repak products for desalination,

surface water, mine drainage and re-use. Thesesystems offer a 35 per cent footprint reduction,

and 10 per cent to 20 per cent capital costsavings compared to independent UF andRO skids, says Brian Wise, global productmanager for GE Power & Water. For over 30years, GE has been manufacturing all of the

individual components that go into thesecomplete, integrated systems which we also

manufacture, Wise notes. When you have thatbottom-up knowledge, it allows you to more completely

understand the way these technologies work in concert.

Liquid assetThe Optimized Pretreatment and Unique Separation (OPUS)technology from Veolia Water Solutions and Technologies is aproprietary process for desalination of feed water with highconcentrations of silica, organics, hardness, boron and particulates.It uses a reverse osmosis process operated at an elevated pH, whichallows the overall treatment solution to achieve over 90 per centhydraulic recovery, even with total dissolved solids concentrations ofup to 7,500 parts per million. By combining a proprietary high-ratechemical softening process known as Multiflo with filtration, ionexchange and reverse osmosis, OPUS generates high-quality waterwith low-waste volumes. Veolia also offers the option of usingCeraMem ceramic ultrafiltration membranes for upstream oil andgas applications. The OPUS technology is a proven process thatprovides a high-quality effluent for reuse or discharge to surfacewater, explains Lnsp Nagghappan, who helped develop thetechnology. It offers more uptime, greater reliability and longermembrane life than comparable systems.

Self cleaning filtersThe Sofi Filter is a high cross-flow tool forpolishing filtration in mining and mineralsprocessing applications. The patent-pendingdesign from Finnish company Sofi Filtrationtreats overflows from settlers, clarifiers andthickeners; clarifies wastewater before beingreleased into the environment; pre-filterssolid particles before desalination; andremoves contaminants from the electrolyticprocess. The Sofi Filters state-of-the-artself-cleaning ability provides automatedmicrofiltration starting from one-micrometrepore size, and it has a high capacity ofbetween three to 30 m3/h/m2, says VilleHakala, marketing manager, Sofi Filtration.It also consumes less energy than traditionalmethods at 0.05 kWh/m3 and handles awide range of concentrations, specificallyfrom 1 mg/l to 100,000 mg/l.

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Worth its saltSaltMaker zero-liquid-discharge technology, developed bySaltworks Technologies Inc., concentrates brine and treatschallenging industrial waters to produce fresh water and solidsalts. Compared to traditional evaporators and crystallizers,SaltMaker can save up to 50 per cent capital and operating costfor industrial water treatment, according to Saltworks. Thetechnology uses a moderate temperature humidification-dehumidification process to evaporate salt water and generatesolid salt. SaltMaker impacts mine tailings and oil and gas byproviding a lower cost, lower energy solution for brine anddischarge management with the potential to ease projectpermitting, says Joshua Zoshi, co-founder and president ofSaltworks Technologies Inc. Its highly modular design supportsrapid deployment to site, capacity expansion and simplifiedmaintenance.


Remote disposalSince 1985, Cowater has specialized in watersupply and sanitation services for mining sites,rural areas and small communities around theworld. Its patented Flush Tank and Haul systemhas been used in remote northern communitiesfor over 20 years. The system, explainsCowaters vice-president Norman Looker,allows communities to have a high level ofservice, while at the same time it uses simple,inexpensive technology. It avoids the need forexpensive piped networks. Wastewater iscollected through a regular indoor plumbingnetwork and transferred to an insulated outdoorholding tank. A small vehicle such as asnowmobile or an ATV with a haul tank on atrailer empties the household storage tank andtransports the waste to its final disposal location(e.g. sewage lagoons). Particularly suited toareas in difficult terrain (permafrost, bedrock),the system is flexible and scalable, with tanksizes to meet a variety of needs.

From problems toprofits

BioSulphide and ChemSulphide processesfrom Bioteq Environmental Technologies aresulphide precipitation technologies that cleanand recapture the value of heavy metals frommining wastewater streams. They use biologicalor chemical sources of sulphide to selectivelyprecipitate dissolved metals as saleableproducts, leaving treated water compliant withdischarge requirements. Sale of the metalproducts generates revenues to offset watertreatment costs, notes Andrew Hall, Bioteqsvice-president of sales and marketing. Byrecovering the metals, waste sludge volumesare reduced or eliminated as are the long-termsludge monitoring and storage costs. This hasthe potential to transform water treatment froma cost to a profit centre.



Soft water for heavy oilEco-Tecs new RecoPur Super-Softening Technologyis designed for oil sands companies that depend onproduced water or low-quality well water in thermalextraction techniques. Since Eco-Tec introduced itsRecoPur technology, our clients have been pleasedwith the performance and safety associated with oursystems, says Mike Dejak, vice-president, businessdevelopment, Eco-Tec. But they also expressed aneed to produce soft water with very low hardness,which helps reduce steam generator fouling,especially when the produced water has highersilica concentrations. Now, clients can realize thebenefits of consistently feeding low hardness waterto steam generators without compromising safety oreconomics. Super-Softening Technology also pavesthe way to eliminating the very costly silica removalprocesses commonly used in Alberta SAGDoperations since very low hardness may offset highsilica in steam generator feed water.

Combined strengthWetlandsPacific Corp.s new Nayadic M6-Evolution is anall-in-one pre-treatment, treatment and dosing tankperfect for small camps. It is made of heavy-dutyfiberglass for long life, making it both lightweight (550kg)and compact (2.1m high x 2.6m long x 1.7m wide). The0.5-hp high-head pump uses a maximum of 110/230V

9.5A/4.6A, and the aircompressor is rated at

110/230V, 100 W. Ittreats 1,890 litresper day of campdomesticwastewater,producing a clear,odourless effluentthat meetsbiochemicaloxygendemand/totalsuspended solids

(BOD/TSS) 10/10 mg/L standards. To complete thewastewater cycle, all that is needed is a dispersal field orwetland. Ultraviolet treatment and custom field/wetlanddesigns are available. Compact size, ease of installation,rapid start-up, very high reliability and superior treatmentability make for a practical solution for smaller camps,both temporary and permanent, says Curt Kerns,president and COO, WetlandsPacific Corp.

Good gas guzzlerTreatment of petroleum-contaminated wastewater justgot easier thanks to Cypher Environmentals latestUltraZyme Hydrocarbon Powder. What sets UltraZymeHydrocarbon Powder apart from the competition isthat it consists of both enzymes and bacteria, saysCypher Environmental president Todd Burns.Enzyme-only or bacteria-only products, can producemixed results. The bacteria and enzymes work insynergy to digest hydrocarbons. With a cycle time ofaround three weeks and the ability to resist toxicshocks, this powder gives customers more control,eliminates eyesores that trouble regulatoryauthorities, treats contamination on-site instead ofrelocating the problem, and is equally effective in saltand fresh water, across a broad range of pH levelsand temperature ranges.

Magna Tough

BaldorDodge MagnaGear XTR speed reducers are designed and manufactured to be the most rugged and reliable reducers in the world for high torque applications. Available in parallel shaft or right angle with torque capacities from 100,000 to 920,000 in-lbs. and capable of accommodating 2,500 Hp or more, the MagnaGear XTR is ideal for bulk material handling in dirty, dusty, harsh environments.

Proven BaldorDodge planetary and helical gear technology, a universal housing design allowing for multiple mounting configurations, and bearings designed for projected L-10 life twice that of the competitions, all make the MagnaGear XTR one tough act to follow.

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Impact of Argentinasglacier law uncertain

The Supreme Court of Argentinaimposed glacier protection legislation inJuly that effectively bans mining activityon or around glaciers or peri-glacialareas. The court decision overturnedtemp orary injunctions from Barrick that

had prevented the law from beingapplied since it was first passed in 2010.

But until an inventory of glaciersrequired under the National Glacier Actis complete, it remains unclear how thenew law will affect Barricks PascuaLama gold-silver project and other proj-ects under exploration and develop-ment in the Argentine Andes.

According to Barrick, the SupremeCourt must still rule on the constitution-ality of the act, and even if the law is ruledconstitutional, construction at Pascua-Lama will not be affected. We believe weare legally entitled to continue our cur-rent activities on the basis of existingapprovals, the company said in a state-ment. The EIA for Pascua-Lama [...]determined that the project would nothave any adverse impacts on glaciers.

Armed robbers pillageDynasty facility

Thieves made off with dore bars con-taining 1,300 ounces of gold and 4,000ounces of silver from the processingplant at Dynasty Metals and MiningInc.s Zaruma project in southwesternEcuador. The theft happened in theearly morning of July 23, and thoughthere were some injuries, none werefatal. The gold storage facility was dam-aged but is repairable. Dynasty has threeoperations in the region, but Zaruma isthe only one currently in production.The company has insurance to cover theloss and a claim is pending.

Canada to export uranium to China

An agreement signed in late July byForeign Affairs Minister John Baird andLiu Tienan, head of Chinas NationalEnergy Administration, will allow Cana-dian uranium miners to export theirproducts to China. The deal expands onthe existing Sino-Canadian nuclearcooperation agreement, in place since1994. The expansion is good news forCameco, which already has long-termsupply deals with two Chinese energycompanies for 52 million pounds ofuranium concentrate through 2025. Sofar, that uranium has come fromCamecos operations in other countries,although about 89 per cent of the com-panys production originates in Canada.Even as Germany moves to phase outnuclear-generated power, Chinesegrowth makes no question of thedemand for uranium; there are morethan 25 nuclear reactors under con-struction in the Asian state.

news | industry at a glance

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Antofagasta Mineralswelcomes new CEO

Diego Hernandez, the former headof Codelco, joined Antofagasta Mineralsas chief executive in August. Shares ofthe London-based copper miner rose1.8 per cent following the announce-ment. Hernandez, a former BHP Billitonexecutive who resigned from his posi-tion at Codelco in May because of differ-ences he had with the board ofdi rectors, will lead a number of projectscurrently being developed by Antofa-gasa, starting with the Antucova copperoxide deposit. We are delighted thatDiego has accepted our invitation tolead the mining division business as itsCEO, said Antofagasta chairman Jean-Paul Luksic, who was CEO in theinterim. In another development, Nel-son Pizarro was appointed as an inde-pendent, non-executive director at thecompany. This is a big score for Antofa-gasta Minerals, said Prof. GustavoLagos from the Mining Center at Chiles

Universidad Catolica. They now havethe two most reputed professionals inChilean mining.

U.S. Silver combines withRX Gold & Silver

Hecla Mining Company terminatedits unsolicited $110 million takeoverbid for U.S. Silver Corporation afterU.S. Silver shareholders voted to ap -prove a merger with RX Gold & Silverin early August. The merger was set inmotion in June, and Hecla had offeredto buy U.S. Silver only if the merger dealdid not go through. U.S. Silver share-holders will control 70 per cent of thenew company, to be called U.S. Silver &Gold Inc. The Hecla offer is simply notcompelling enough for us to abandonour strategic plan going forward, saidGordon Pridham, interim CEO of U.S.Silver. Hecla president and CEO PhillipsBaker had said his companys offer wasbetter than the U.S. Silver Corp-RXGold deal.


US$4 billion expansion atCerro Verde to commencein 2013

U.S.-based Freeport-McMoRanCop per & Gold Inc. (FCX) announcedplans to start the expansion of concen-trator facilities at its Cerro Verde cop-per operation in Perus Arequiparegion. Once complete, the expansionwill increase daily throughput capacityfrom 120,000 tonnes to 360,000tonnes, and annual production to 600million pounds of copper and 15 mil-lion pounds of molybdenum. Accord-ing to Richard Adkerson, FCX CEO, anenvironmental impact study for theproject was filed in Q4 2011 and isprogressing well; permitting is beingadvanced and engineering and pro-curement of long-lead items are inprogress. The US$4 billion project isslated to start in 2013 and to be com-pleted by 2016. Adkerson said theexpanded operation will be one of theworlds largest concentrator and mil -

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ling operations. FCX owns 53.7 percent of Cerro Verde. The remainder isheld by SMM Cerro Verde Netherlands(21 per cent), local precious metalsminer Buenaventura (19.3 per cent)and various stakeholders.

Tecks Lindsay remainstight-fisted

Despite an apparent buyers mar-ket for mining stocks and delays insome of its key development projects,Teck Resources CEO Don Lindsaysaid the company remains cautiousabout bo osting production by acquir-ing existing mines. From a marketvalue point of view, the landscape istilted towards buy versus build, saidLindsay during the companys sec-ond-quarter earnings conference call.He added, however, that there arerisks that the markets have notaccounted for that operators mustconsider. According to Lindsay, re -source nationalism, environmental

liabilities, as well as labour laws andhealth and safety conditions are onlysome of the elements that are takingthe shine off potential acquisition tar-gets. Those who are trading in themarket dont have to deal with thoseissues, [] but we have to live withthem for a long, long time.

Recently, Teck saw the timelinesextended for both its Quebrada Blancacopper expansion project in Chile andthe reopening of its Quintette mine inBritish Columbia due to additionalrequirements from regulators.

Teck also reported a record totalcopper production of 90,000 tonnes forthe quarter, due in part to expandedcapacity at Antamina, as well as im -proved throughput at Highland Valleyand Andacollo. For metallurgical coal,the company aims to expand outputfrom its six mines to 28 million tonnesper year, and add another three milliontonnes with the re-opening of theQuintette mine near Tumbler Ridge, BCin 2014.

New Certificate in MiningManagement at Ryerson

The Chang School of ContinuingEducation at Ryerson University isexpanding for the coming year with asix-course post-graduate Certificate inMining Management. The new certifi-cate is motivated by the mining indus-trys urgent need for employees whohave practical as well as theoreticalskills, and who understand and havebeen exposed to real-world cases andsimulations. According to Philip Walsh,academic coordinator for the program,courses will be taught by professorsalong with executives from the miningindustry. The courses are designed tocreate links between science and busi-ness as well as community develop-ment and business. The three requiredcours es are: CSR, Sustainability andMining; Resource Valuation, Financing,and Investor Relations; and CorporateStrategy in the Mining Sector. Studentscan choose elective courses covering

industry at a glance | news


exploration and development opera-tions, risk management, managerialstra tegies in the mining sector, and min-ing in the global environment. In orderto help students juggle their studies,work and family, Walsh says, they cantake up to six years to complete the certificate.

Vancouver Island projectlooking for mineralpotential

The Northern Vancouver IslandExploration Geoscience project is off toa flying start with a total project budgetof $930,000. It will generate new geo-science data for northern VancouverIsland, near the communities of Camp-bell River, Port Hardy, Port McNeill,Alert Bay, Port Alice and Zeballos. Thefirst data set is scheduled to be releasedin early 2013. Geoscience BC con-tributed $530,000 to the project withthe Island Coastal Economic Trust(ICET) providing the other $400,000.

Stakeholder engagement in the devel-opment phase will be supported by theBC Ministry of Jobs, Tourism and In -novation. The project includes an air-borne magnetic survey, conducted byGeo Data Solutions GDS Inc. this pastAugust, and a stream sediment geot-echnical sampling and ana lysis pro-gram as well as community awarenesssessions on geoscience, mineral explo-ration and mining. The aim of the proj-ect is to help attract mineral ex plo rationinterest and investment, increase theunderstanding of the mineral potentialin the region, and provide local FirstNations and com munities with moreinformation on the local geology.

CN heads study forproposed Labrador Troughrail line

CN, with funding support fromCliffs Natural Resources, Labrador IronMines, New Millennium Iron, Cap-ExVentures and Alderon Iron Ore, will


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lead a feasibility study into the con-struction of a rail line and a handlingfacility that would provide a continu-ous connection between the iron oreoperations in the Labrador Trough andthe Port of Sept-les in Quebec.

The pension fund investor Caisse deDpt et Placement du Qubec is alsofinancing the study that will examinethe cost and engineering demands ofthe project, as well as the best route.CN is now coordinating the environ-mental permitting requirements need -ed to set the study in motion.

Currently, the Iron Ore Company ofCanada operates the southern majorityof the rail line between the port andEmeril Junction near its operationsaround Labrador City, and it acts as acommon carrier for other mining oper-ations including Cliffs Bloom Lake andWabush mines and Labrador IronMines James mine near Schefferville.The final 212 kilometres to Scheffervilleis serviced by the aboriginal-ownedTshiuetin Rail Transportation Inc. CIM

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A recently signed accom-modation agreement bet -ween Avalon Rare MetalsInc. and the Deninu KueFirst Nation (DKFN) hasraised the industry bar onAboriginal engagement. Ava -lons agreement with theDKFN provides for business,em ploy ment and trainingop portunities, but it alsogoes beyond these typicalcomp onents of Impact Bene-fit Agre ements (IBAs) byproposing a limited partner-ship. The DKFN will acquirea 3.3 per cent limited part-nership stake in the com-pany. Along with theac com modation ag re ement,Avalon has agreed to transfer10,000 of its com mon sharesand 50,000 share purchasewarrants to the DKFN, sub-ject to various con trac tual and statu-tory restrictions.

This type of agreement is an ad -vancement of the IBA model as it offersequity ownership rather than just cashtransfers, said Avalon president DonaldBubar. Its new to the Northwest Terri-tories [NWT], and while there are otherexamples in Canada, not many of themare in mining.

The formal signing ceremony in Julyattracted local and federal politicians,including federal cabinet minister TonyClement and NWT Premier BobMcLeod.

Bubar says Avalon hopes to finalizeaccommodation agreements soon withtwo other First Nations (YellowknivesDene and Lutsel Ke Dene) near itsNechalacho project, situated about 100kilometres southeast of Yellowknife.These efforts are assisted by the Vancou-ver office of Fasken Martineau (previ-ously Fasken Martineau and Du Moulin).The law firm has helped apply theequity-based Aboriginal partnership

Pride of ownershipFirst Nation takes equity stake in Avalon Rare Metals

By Vivian Danielson

model, used more widely in the energysector, to mineral projects. The firmsAboriginal practice group was strength-ened by its 2000 merger with Vancou-ver-based Russell & DuMoulin, as manyAboriginal rights cases affecting resourcedevelopment originated in BritishColumbia.

Avalons new accommodation agree-ment builds on the experience of Van-couver-based Polaris Minerals Corp.,which invited First Nations to partici-pate in the development of its Orcasand and gravel project on VancouverIsland in 2005. Fasken MartineauDuMoulin was involved in the devel-opment of a groundbreaking limitedpartnership which resulted in theNamgis First Nation holding 12 percent of the project and Polaris holdingthe balance. The Kwakiutl First Nationparticipates in the Orca projectthrough a traditional IBA.

Many Aboriginal groups are seekingdirect partnership roles in resource proj-ects within their traditional lands, as

recently articulated by Shawn Atleo,chief of the Assembly of First Nations.But the promise of equity-based partici-pation is no guarantee of future Aborig-inal support, as proponents of somehigh-profile energy and pipeline proj-ects have found.

In the case of Nechalacho, ChiefLouis Balsillie insists that developmentwill not come at the expense of the tra-ditional lands where the DKFN con-tinue to hunt and trap. He publiclystated in July, The mitigation of theenvironmental impacts and provisionfor environmental monitoring on theselands are crucial to our members.

For Avalon, the DKFN agreementand the potential of others to followare critical in the development of whatis considered to be the worlds largestrare earth element deposit outsideChina. Bubar says Avalon is well-fund -ed to complete a bankable feasibilitystudy by 2013. If all goes according toplan, construction would follow with aproduction start in late 2016. CIM

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Avalon Rare Metals' exploration camp for its Nechalacho rare earth elements deposit beside Thor Lake in the Northwest Territories

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Prospectors and junior miners inNova Scotia will have to lace up theirboots quickly to capitalize on a new$700,000 mineral incentive programfrom the provincial government beforethe season ends. Projects were notapproved until August, after a hurriedprogram launch in July.

According to Fred Walsh, who isvice-president of the Nova ScotiaProspectors Association, the programis extremely necessary to close afunding gap with other provinces. But,he said, the program launch will bepushing it in terms of this years sea-son. It kind of should have been doneat the beginning of the season inApril.

The program was oversubscribed,and a departmental panel was chargedwith finding the best prospects amonga pile of some 70 applications: about40 for prospectors grants of up to$15,000 each and about 30 seekingpublic and private matched fundingfor advanced-stage exploration projectsof up to $100,000. The advanced-stageexploration grants require applicantsto find matching funding from the pri-

Nova Scotia fishes for exploration talentProspectors get a late-season boost from government

By Rachel Brighton

vate sector. To receive complete fund-ing, reports for all exploration workwill have to be submitted to the gov-ernment by February.

Gold was the overwhelming com-modity of interest, said Donald James,who is the executive director of theprovinces mineral resources branch inthe natural resources department.Other targets were base metals,notably zinc, rare earth elements andgypsum.

Despite the programs delay, whichone official put down to the usualprocesses of government, the strategicinjection of funds may give industry aleg up in such a tight investment cli-mate. Glenn Holmes, CEO of NSGoldCorporation, said although equitymarkets are effectively closed for jun-ior explorers, the funding sought byhis company would enable a falldrilling program to assess the open pitpotential of the West Zone of itsMooseland gold property, the site ofthe first recorded gold discovery inNova Scotia in 1858. NSGold appliedfor a $50,000 advanced-stage explo-ration grant.

According to Pat Mills of the MiningAssociation of Nova Scotia, the grantprogram signals the government isattempting to change the perceptionamong investors that Nova Scotias notreally in favour of mining.

James affirmed that most otherjurisdictions in Canada have a mineralincentive program or tax incentives[and] we didnt have one. He hopesthe new program, modelled on NewBrunswicks and crafted with industrysupport, will level the playing fieldamong provinces competing for scarceinvestment dollars.

One third of the $700,000 wasearmarked for prospectors grants,just over half for advanced projects,and the rest for marketing and train-ing grants. The latter include$30,000 to polish and market prop-erties at mineral exploration eventsin the new year and $50,000 to traina new cadre of prospectors, saidJames, who noted that manyprospectors in Nova Scotia got theirstart under a four-year prospectorsassistance program launched in thelate 1990s. CIM

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Nexen and the Chinese National Offshore Oil Corpora-tion (CNOOC) have been partners in the Long Lake oil sandsproject since 2011, when CNOOC bought out Nexens part-ner OPTI Canada. Now, the Chinese state-owned enterpriseis set to gain a stronger foothold inAl berta with the recentlyannounced US$15.1 billion cashacquisition of Nexen, which alsohas operations in the North Sea,the Gulf of Mexico and offshoreNigeria.

It will be the largest overseasacquisition to date for Chinasincreasingly bold public enter-prises, and will boost provenreserves by approximately 28 percent to over four billion barrelsand production up by approxi-mately 23 per cent to about 1.1million barrels of oil per day. Andwhile Long Lake and Syncrudeaccounted for just one fifth ofNexens production in 2011, bitu-men and synthetic oil make up thebulk of the companys proved andprobable reserves.

During a conference call on July23, Nexens CEO Kevin Reinharttold investors that CNOOCs strongbalance sheet means projects will

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Chinas oil sandsCNOOC bids US$15.1 billion for Nexen

By Anna Reitman

The upgrader facility at Nexens Long Lake project

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get much needed capital. In other words, Nexen has desir-able assets and CNOOC has lots of cash to develop them the bid valued Nexen shares 61 per cent higher than theirclosing price on the NYSE.

CNOOC chief executive Li Fanrong said, We are inCanada to invest, to be a good employer and in tend to con-tinue Nexens com mit ments to the environment and com -munities just as we do in our own operations throughout theworld. In Long Lake, for example, the companies offer ayouth scholarship program.

When asked if any divestitures were planned, Fanrongsaid simply, No.

Other assurances from Fanrong include servicing Nexensoutstanding US$4.3 billion debt, keeping current employ-

ees, listing its shares on the TSX and establishing a headoffice in Calgary to oversee North and Central Ameri-

can operations which will represent a combinedUS$22 billion of assets after the acquisition.

The next step for the deal is to get regulatoryapproval. Although initial phone calls were

made to relevant ministries immediatelybefore the deals announcement,

Oil sands foreign investment since 2004 in billions of dollars


announcement when the U.S. markets regulator obtained anemergency order to freeze a firms assets, alleging insidertrading in Nexen shares immediately before the acquisitionannouncement.

The complaint is against Hong Kong-based Well Advan-tage, controlled by Zang Zhi Rong, who also controls anothercompany that the Commission says has a strategic coopera-tion agreement with CNOOC.

Such headlines are anathema to large cross-border trans-actions already exposed to political risk, but Graham-Woodbelieves this acquisition is a done deal.

CNOOC is buying at the top end of the range and, if itgoes well, there will be more, said Graham-Wood. Outsideof Canada too, media and brokers have identified companieswhich might be next, such as African explorer Tullow Oil,which could end up being a US$20 billion deal.

He added that Chinas investment is advantageous toCanada in particular because of a prevailing long-terminvestment mindset. If the oil price dips, he explained,CNOOC is unlikely to backtrack on development justbecause oil sands oil is expensive to produce.

Nexen is not CNOOCs only presence in Canada. It hasa 14.2 per cent stake in the oil sands through MEG Energyand a 60 per cent stake in a conventional oil and gas playin the Yukon via Northern Cross. CNOOC is the thirdlargest oil company in China and the largest offshore oilproducer. CIM


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Oil Sands & Heavy Oil

according to a spokesperson, CNOOC will not comment onthe governments reaction.

There has been some opposition coming out of the U.S.surrounding the deal, which for some may bring back mem-ories of CNOOCs failed US$18.5 billion bid for Unocal, incompetition with Chevron, seven years ago. U.S. SenatorChuck Schumer has moved to block CNOOCs resultingownership of Nexen-owned Gulf assets on the basis of a lackof reciprocity. However, only national security concernscould legally stop the transaction and, considering that U.S.-based assets comprise under one tenth of Nexens portfolio,such an argument is unlikely to hold up. Almost half ofNexens assets are in the U.K.

Malcolm Graham-Wood, an oil analyst at investment firmVSA Capital, pointed out that since the Unocal deal, thelandscape has changed considerably.

North Americans need inward investment, he said.Recently, Exxon did a deal with Rosneft which allowed theRussian company to share assets in the U.S. That opens thefloodgates. How can the U.S. stop CNOOC coming in andbuying up assets?

CNOOC has already completed two large shale dealswith Chesapeake Energy, without regulatory or political resistance.

And although neither directly related nor likely to stop thedeal from moving forward, recent actions by the U.S. Securi-ties and Exchange Commission cast a shadow on the

Ministryof Mines is now

using the maps intender information

packages. It was an opportunity

for Afghanistan to rejuvenate the min-eral sector for the revitalization of theeconomy, and USGS was tasked withcollecting data, said Trude King, proj-ect lead of hyperspectral data collectionat USGS, adding that the countrys lackof humidity and barren landscape is theperfect environment for the technology.About 70 per cent of Afghanistans sur-face has now been mapped.

What sets this technology apart fromtraditional geophysical studies, Kingexplained, is that collected data showthe inner actions on the electron levelof the minerals, enabling the identifica-tion of specific minerals and mineralassemblages.

The hyperspectral sensors used tocreate the maps measure unique spec-tral signatures for different minerals,which are matched to the USGS data-


The U.S. Geological Survey (USGS)released the first hyperspectral datamaps ever made on a country-wide levelin July, giving the mining industry afull-scale view of the mineralogicalspread in Afghanistan.

To create the map, data were col-lected in 2007 using a NASA aircraft aWB-57 piloted by ex-space shuttle com-manders that was fitted with a HyMaphyperspectral sensor owned by Aus-tralian company HyVista Corporation.Rounding off the collaboration was theAfghan government, which approachedthe USGS in 2005 with funding ofUS$8.86 million for oil and gas, hyper-spectral, airborne gravity and mag stud-ies. Afghan officials are working hard toattract investors and junior miners tothe region and the countrys

Ready for a close-upFirst large-scale hyperspectral maps of Afghanistan released by USGS

By Anna Reitman

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base. A user could, for instance,locate and quantify different types

of building materials or minerals thatmight be present within an area ofinterest.

On the shortwave end of the spec-trum, the USGS team examines howcations vary in the mineral structure.They look at absorption features result-ing from overtones of fundamentalvibrations of the crystallographic struc-ture of the minerals in the longer wave-lengths.

When we look at this data, we canidentify the intricacies of the composi-tion, so we can tell several variationsthat are important in ore farmingprocesses, King said. Mineral assem-blages are identified so you can poten-tially tell what kind of materials arethere whether it is a gold deposit, cop-per porphyry or whether it is an irondeposit, for example.

Having the majority of Afghanistanmapped out, with data available to thepublic, could reduce the cost forprospective juniors to access theregion. Terry Cocks, managing directorat HyVista, said that though there areother applications for the technology,such as monitoring wildfires or

One of the USGS's hyperspectral mapsof Afghanistan showing carbonates,phyllosilicates, sulfates, altered mineralsand other minerals

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changes in tailings, the companys day-to-day operations are dominated bymining company clients. Most of thecompanys Australian work is done inthe area of geological mapping andmineral ex plor ation for juniors.

The cost of hyperspectral mapping isusually not prohibitive and can havemajor benefits for prospectors. For anarea of 500 square kilometres at a flyingheight of 1.4 km, it took LithexResources of Western Australia approxi-mately two months and AU$40,000 toidentify the first group of targets forexploration at its Shaw River project.Brendan Borg, exploration manager atLithex, explains that traditional geo-physical methods were inadequate to getthe results the company was looking for.

There werent any other studies wecouldve used and it was such a largearea, we couldve gone out there andspent three or four months walkingalong the ground trying to find the tar-gets, he said. For us, this has helpednarrow down the search and that is whyit is a good value proposition for us.

In comparison, the area surveyed bythe USGS more than 450,000 squarekilometres is nearly 1,000 times thesize of the Lithex survey. Cocks, ofHyVista, explained that prices of sur-veys can vary widely and depend onlocation, size and scale of data beingacquired, and what level of mapping isneeded to meet a clients explorationgoals. For mineral exploration, semi-arid areas are best for these surveys.

The sensor has to be able to see therocks or soils and heavy vegetationmakes that impossible, Cocks said.But surveys can still be successfullycompleted in the presence of somevegetation, say up to around 30 percent to 40 per cent cover, and oftenthis means choosing the dry season toundertake a survey.

Outside of juniors, HyVista has alsodone mineral mapping projects forother state and federal geological sur-veys. Earlier this year, it surveyed about

11,000 square kilometres for ONHYM[the Geological Survey of Morocco] andsince 2004, has worked with the Geo-logical Survey of Namibia on severaloccasions.

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Whether other jurisdictions will col-lect and display data on a level likeAfghanistan remains to be seen, but thepotential research and investment bene-fits are clear. CIM


news

Agnico-Eagle Mines announcedit will develop two satellite zonesat its Goldex property in Val dOr,Quebec, less than a year afterwater inflow and ground stabilityproblems forced the suspensionof operations at the mine lastOctober.

The Goldex mine was a low-cost gold producer for the com-pany before mining of the GoldexExtension Zone (GEZ) washalted. In the meantime, whilethe company performed monitor-ing, assessment and remediationwork, it also got busy exploringits wholly owned property, result-ing in a decision to develop thetwo zones for production in early2014.

Based on a preliminary eco-nomic assessment, the revivedmine will have higher costs and ashorter life than the previousoperation. But that could changewith further success of this years $18-million exploration effort, notably atthe promising D zone where what thecompany calls a large and growingresource is being outlined about 150metres below the GEZ.

We have seven drills on site todefine and establish additional satellitezones, said Goldex general managerDaniel Par. But we wont have all theresults in until next year, so dontexpect any changes to the mining planthis year.

The newly defined M and E zoneshost Measured and Indicated re -sources of 2.1 million ounces of gold(36.8 million tonnes at 1.8 g/t), plusan Inferred resource of 1.6 millionounces (31.1 million tonnes at 1.6 g/t)that is not included in the new mineplan. At start-up in 2008, the GEZ hadproven and probable reserves contain-ing 1.63 million ounces of gold (averaging 2.2 g/t), plus additionalIndicated resources.

Back in actionSatellite zones give Goldex a new lease of life

By Vivian Danielson

Well be taking a different ap -proach than we did with the GEZ,which was mined as a [single] openstope, Par said. The new zones willbe mined by longhole open stoping,with paste backfill for additionalground support.

The paste backfill plant to be builton site is expected to cost aroundUS$24 million, making it the largestcomponent of the estimated US$95million capital expenditure required torestore Goldex to production. Par saidroughly US$7 million will be spent onmobile underground mining equip-ment, with the balance allocated fordevelopment and construction, andunderground monitoring.

The mine design and ground sup-port plan have been thoroughly re -viewed, including by a team of outsideconsultants, so we arent expecting anysurprises, Par added.

The revived mine will make use ofexisting infrastructure, including the

shaft and mill. Based on a proposeddaily rate of 5,100 tonnes, the mine isexpected to generate 300,000 ouncesthrough to 2017.

Before the suspension, Goldex oper-ated at 6,786 tonnes per day and wason track to produce 184,000 ounces ofgold per year from the GEZ. The minebenefited from operating synergieswith Agnico-Eagles nearby LaRondemine, which had processed Goldexconcentrates so as to eliminate theneed for a cyanide circuit (the Goldexmill has only grinding, gravity andflotation circuits).

Under the M and E zone plan, minesite costs are estimated at C$41 pertonne, up from the C$20-per-tonnelife-of-mine forecast before the closure,with cash costs projected at US$900per ounce. Nevertheless, the after-taxinternal rate of return is still expectedto exceed Agnico-Eagles 15 per centinvestment target rate, assuming aUS$1,500-per-ounce gold price. CIM

The secondary crusher (pictured) and other existing facilites at Agnico-Eagles Goldex operation will continue to be used asthe mine develops new satellite zones by longhole open stoping with paste backfill.

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Time to confront railway market power in Canada

BY PIERRE GRATTON

columnsM A C E C O N O M I C C O M M E N T A R Y

Rail freight service is a key determinant of the Canadianmining industrys ability to compete internationally.Given the significant prospects for continued growth inmining operations, overcoming the obstacles posed byCanadas vast geography to deliver products to ports andsmelters effectively is crucial. This is especially relevant whencompeting against countries with significantly shorter logisti-cal supply chains.

Although many characteristics contribute to the quality ofdelivered service, a competitive market is perhaps the mostessential in ensuring firms optimize their performance. As ageneral rule, the more competition there is, the more likelycompanies are to provide proficient service at lower prices.

Railways are often considered a typical example of a naturalmonopoly, and the Canadian context is a case in point. Thecosts associated with building and running a rival rail networkthat can service Canadas vast geography act as a barrier, mak-ing competition economically unviable in many regions. Theremote locations of many mining operations often leave minescaptive to one of two railways Canadian National or Cana-dian Pacific and frequently stranded without an alternativemode of shipping.

The issue with natural monopolies boils down to marketpower. A firm with market power has the ability to influenceprices, or to reduce service quality without losing customers.Given that shippers already pay significant freight rates toovercome obstacles posed by Canadas vast geography, the useof market power exacerbates the situation.

The current economic framework regulating the railwayindustry, the Canadian Transportation Act (CTA), has largelybeen ineffective in protecting captive shippers against highprices and unreliable service. The Government of Canadas RailFreight Service Review report serves as an excellent benchmarkby which to assess how effective the CTA has been in regulat-ing the railways. Beyond acknowledging that it has long been

recognized in transportation law that regulations are requiredto address the potential abuse of market power by the rail-ways in Canada, the report reveals the following statistics: On a week-to-week basis, each railway provided grain ship-

pers with at least 90 per cent of cars ordered only 54 percent of the time. CN performance was 57 per cent and CPperformance was 51 per cent.

Railway performance in meeting shipper demand on aweekly basis for merchandise traffic differed between rail-ways. CN provided at least 90 per cent of the cars orderedonly 68 per cent of the time, while the figure for CP was 50per cent.Although service levels can be measured in different ways,

the above indicates very poor performance of rail cars suppliedversus cars ordered on a week-to-week basis, over a two-yearperiod.

Think of this in another way: if your cable provider was onlysupplying the majority not even all of your television chan-nels just over half the time, would you not switch providers?

The above serves as one example of how the railways useof market power has persisted under the current CTA. Thebiggest problem rail customers have is that they do not knowwhat they are getting for the rail rates they pay. Also, manyhave no alternative service provider. Under the current CTA,railways unilaterally impose rates and have no obligation toprovide any particular level of service.

Fortunately, the federal government appears poised toamend the CTA in order to rebalance the bargaining positionsof those party to the monopoly market structure. Mining com-panies need more predictable and reliable rail service to main-tain their customer relationships. To achieve these objectives,the mining industry is advocating that legislation tabled thisfall enact a shippers right to negotiate service levels and a dis-pute resolution process should such negotiations fail. Theseenactments are big ticket items that can be remedied at no costto government, allow for commercial negotiations, maintainCanadas export success, and deliver revenues and jobs acrossthe country.

The Canadian mining industry relies heavily on the rail sys-tem. In 2010, shipments of coal and processed minerals rep-resented 56 per cent of total Canadian rail-freight revenue andone half of overall volume. In a truly competitive environment,wouldnt you expect muchbetter service?

Its time to level the playingfield. CIM

Shearer becomes interim Orusur chairman

Orosur Mining Inc. appointed Tony Shearer as a non-executivedirector and chairman until a new chairman is selected. He waschairman of Orosur Mining from 2002 to 2009. I am pleasedto welcome Tony back to the board, said Orosur Mining CEODavid Fowler. Having served as chairman for seven years, heknows the company well, and as a shareholder has continuedto follow its progress since he stepped down in 2009.

MOVING ON UP

Pierre Gratton is president and CEO of The Mining Association of Canada

The past decade has brought three major economic shiftsthat impact mining companies looking to expand existingmines or develop greenfield projects: product- destinationmarkets have expanded from Europe, North America andJapan to include emerging markets in Asia, Africa and SouthAmerica, which have nine times the population; energy costshave increased from $17 per barrel of oil on September 9,2001, to over $140/bbl and backdown to $100/bbl in the eco-nomic downturn; and public sec-tors are running fiscal deficitswhile mining remains profitable,leading cost-sharing for capital-intensive projects to be re-evalu-ated by governments.

As mining companies preparetheir feasibility studies (FS), theyshould not underestimate thepotential impact of these trends.This requires a thorough review oftraditional cost and cost-sensitiv-ity practices. To provide a starting point, the following factorsmust be taken into account when preparing an FS.

Milling costs Energy costs are a major part of the mill- processing cost formula. Countries often support miningprojects by offering energy prices below cost as an incentiveto industrial development. However, cost-recovery policiesimplemented due to public-sector deficits, combined withthe increasing cost of energy, may alter the economic sustain-ability of certain projects. An FS may require analysis using amarket proxy to confirm project viability should marketcosts prevail. Renewable and co-generated energy optionsalso warrant review. The national grid should also be assessedto see where the grids fuel bases and capacities stand, espe-cially in fast-growing, emerging economies whose fuel-basemay be soon obsolete or taxed by the growth.

Energy distribution With projects assuming more remoteor frontier locations, and countries running fiscal deficits, itis no longer viable to assume supporting infrastructure willcome from the public sector. Even if it does, the private pro-curement option should still be assessed due to the timingadvantage, as infrastructure availability must often precedethe projects construction. Private procurement will also re -duce the risk of inflation and the wish list required of thepublic sector, allowing the mining company to focus more onobtaining investors and permits. However, the cost of procur-ing private infrastructure must be weighed against the tightercapital markets.


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Land transport Whether by rail or by road, transporting theend-product to tidewater adds additional energy expenditure especially from a frontier location. The host countrys policytowards the pricing of transport fuels should be carefullyconsidered; many countries in difficulty are pressured toremove or reduce such subsidies. Again, a market proxy maybe helpful in determining the projects sustainability.

Ocean transport The global shiftin destination markets impactsCargo-Insurance-Freight pricingand Freight on-Board Asian Portpayment term costs. The greater dis-tance and the demurrage/queuing atthe destination port, and the priceof fuel are new cost factors. Theseaspects are generally dismissed as aworking capital (inclusive ofworks in progress) of 60 days to 90days, by the traditional FS. This isno longer accurate.

Logistics Rising fuel costs force bulk carriers to reconsiderthe Less-than-Cargo-Load term, to raise the threshold vol-ume required for a stop and to add extra stops to reduceexcess capacity risk. For mining companies, this means moretonnage in the supply-chain, more inventory waiting at exit-the-mill, in-transit while on rail or truck, and at tidewater,and longer ocean-transit periods to Asian destination ports.The traditional FS has tended to overlook the specific logis-tical needs of a projects situation relative to its markets. Thiswould be an expensive oversight on capital requirements at atime of scarce funding.

In summary, globalizations demands and the rising costof energy have combined to render efficient transport andsupply chain management essential and especially vital ata time of conservative capital markets. Combined with apublic sector that may be less willing to subsidize, the FSmust now include more relevant cost-proxy tests and rele-vant supply chain reviews to reflect the economic sustain-ability of a project. Simplistic sensitivity assumptions of,say, +/- 10 per cent for cost variances and of three monthsof working capital are less applicable. A mining companylooking for a complete and current FS must insist the con-sultancy group doing the study has supply chain andenergy expertise. CIM

Todays feasibility studies must take energy costs into account

BY MAURO CHIESA

The author is now a semi-retired consultant andhas over 33 years ofexperience in financing and advising extractive and infrastructure projectsaround the world, having worked with multinational banks, the World BankGroup and EDC. He has an MBA and a BA from UBC.

Globalizations demands andthe rising cost of energy havecombined to render efficienttransport and supply chainmanagement essential andespecially vital at a time of

conservative capital markets.

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is lost from the drilled interval, but without a geophysical log,it is not possible to determine whether or not the lost core iscoal. Core recovery should be determined by comparing thetotal length of recovered core with the total length of the coalseam, as determined from the geophysical logs.

QA/QC During sampling: Separating the coal samplesinto coal plies and partings based on geophysical logs duringcore sampling is best practice because a rock parting may beobserved on the geophysical log, with no evidence of it in thecore log. In addition, a parting may have been misidentified bythe core logger, or not recovered at all during drilling. It is notgood practice to sample two coal plies together and an internalparting separately. Individual coal plies and partings should besampled independently, except for thin (


had entered the industry. Most agreed that they had fallen intoa mining career, as opposed to making an intentional choice tolearn about the industry. They felt a large-scale promotionalcampaign would attract more women to the mining industry.They also suggested employers target women in the classroommore aggressively; synergies could be achieved if companiescollaborated in their approach.

The discussion of retention focused on reducing mid-careerattrition of women. Retention through innovative retentionprograms was first recommended in a WIM research study,2010 Ramp-UP: A Study on the Status of Women in Canadas Min-ing and Exploration Sector. Members of the focus group agreedwith the studys recommendations, suggesting employerscould improve retention by implementing truly flexible workarrangements, and child care and parental leave practices. Par-ticipants stressed the importance of these arrangements forwomen in roles where travel to remote sites is part of the job.

Discussions on advancement began with an alarming statis-tic: the Canadian mining, and oil and gas industries have lessthan 1.4 per cent of CEO roles occupied by females. Only 5.9per cent of board positions and 12.3 per cent of senior rolesare occupied by female staff. Leadership and mentoringquickly emerged as a possible solution to advancing women inthe industry. In general, women in the group were not con-cerned about their mentors gender but indicated it was impor-tant for women to be given the tools and the opportunity todevelop their own leadership style. Also, participants indicateda womans leadership style is different from the traditionalmasculine idea of leadership.

If you are an employer reading this, what can you do toattract, retain and advance more females in your organization?To be successful, organizations need the full engagement andcommitment of their entire workforce both women andmen, expressed Leanne Hall, Noront Resources humanresources vice-president, who moderated the WIM forum. Theexecutive learning elements of these HR focus groups is meantto speed up that process. Together we can create practical solu-tions to the challenges many of our organizations face.

Women in Mining Canada would like to thank CIM for itssupport and BHP Billiton for sponsoring the event. For moreinformation on WIM Canada and resources like the Ramp-UP study, please visitwww.wimcanada.org. CIM

This years Women in Mining Canada (WIM) plenary, heldat the 2012 CIM Convention in Edmonton in May, took a freshapproach to engaging women in the industrys challenges byrunning a forum structured like a focus group to encourageattendees to share their views and experiences on how toattract, retain and advance women in mining.

We wanted to take the conversation to the audience, saysCatherine Shaw, chair of the WIM Canada forum. The forumwas an opportunity to ask participants how they would addressthe three key challenges faced by employers in the areas ofattraction, retention and advancement of women. WIM ple-nary attendees were split into four focus groups to explore theseissues and were overseen by an expert panel of mining HR rep-resentatives, geologists, engineers and diversity experts.

Currently, women in the Canadian mining industry repre-sent 14 per cent of the workforce the lowest among primaryindustry categories and far less than the national average of47.4 per cent. The mining industry will need over 100,000new workers in the next decade. If women are truly anuntapped resource, how can women and industry worktogether and attract bright minds for the future?

Participants who were part of the discussion group thatfocused on attraction began by examining how they themselves

Alana Kennedy, director of marketing and communications at the MiningIndustry Human Resources Council, is responsible for promoting MiHRsolutions and products through stakeholder communications.Alana wasformerly head of marketing for a group of accountants in the UK.She is aChartered Marketer (UK) with more than 14 years of experience.

H R O U T L O O K

WIM Canada creates HR strategies that work

BY ALANA KENNEDY

Anglo American South Africa ops get new chiefs

Anglo American Plc made several executive managementchanges at its businesses in South Africa. Chris Griffith, for-merly of Kumba Iron Ore Ltd., was named chief executive atAnglo American Platinum Ltd., and Norman Mbazima, a for-mer chief executive of Scaw Metals, was appointed CEO ofKumba Iron Ore. Godfrey Gomwe was named CEO of AngloAmericans Thermal Coal unit. Gomwe led the companys oper-ations in Zimbabwe. Khanyisile Kweyama was named exec-utive director of Anglo American South Africa, where she willcooperate with the heads of the South African units to deliverthe groups strategy in the region. I believe that this series ofleadership changes will enable us to continue our success indriving operational performance across our portfolio of busi-nesses in South Africa, in line with our clear strategic objec-tives, said Anglo American CEO Cynthia Carroll. I congratulateChris, Norman, Godfrey and Khanyisile on their new roles aclear demonstration of the depth of management talent withinAnglo American. I thank them all for their strength of leadershipand significant achievements in their current roles.

MOVING ON UP

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comp any in communication with local journalists who,until that point, had given more credence to the oppositionspoint of view.

The other goal in conducting the survey was to collectdata about how stakeholders in the community gather andprocess information and use it to create an education pro-gram focused on raising awareness about responsible mining

of metallurgical coal and to addresssome negative, outdated percep-tions of the industry.

It was discovered that the major-ity of those who opposed the projectprocessed information visually andverbally. The company opted todeliver its message in a format stake-holders would find relatable which,

in this case, involved creating a narrative, using video,images and online tools.

A three-part video series was created to meet the needs ofvisual learners. The first video illustrated mitigation measuresfor dust, noise, protection and the protection of water; thesecond told the story of the companys long-standing commu-nity involvement and commitment to environmental protec-tion; the third focused on educating audiences about the useof metallurgical coal, as well as on modern extraction andreclamation methods. CDs of the series were distributed toeach household in the area. The videos were also broadcastedon local television in high frequency over a four-week period.

For verbal learners, the company created interactiveonline tools, including a project-specific website that allowedfor a two-way conversation with community members.Questions posed by community members were answeredonline on a daily basis.

For the verbal communicators, a telephone hotline was setup to allow community members to discuss concernsdirectly with a company representative. There were alsoweekly town hall meetings to give people an opportunity topose questions directly to the company president.

Research was used to measure the effectiveness of thetools. It revealed that 67 per cent of the households surveyedhad viewed the videos and 88 per cent of community mem-bers had seen the television broadcasts. Overall, impressionsof the company and support for the expansion plans im -proved seven percentage points, up to 78 per cent. CIM

No mining company would think of building a minewithout knowing what was in the ground. Why thendo so many launch communication campaigns withouthaving a clear understanding of target audiences? Companiesthat take the time to understand stakeholders before launch-ing communication programs will be far more successfulthan those that do not. Strategic, science-based research canmake or break such programs.Using stakeholder analysis as afoundation for strategic corporatecommunication is a relatively newapproach for the coal mining indus-try. Its popularity is growing asstakeholders become more sophis-ticated in how they process, deliverand consume information. Compa-nies can use information gathered through qualitative andquantitative research to develop strategies for connectingwith stakeholders that have the added advantage of aligningwith internal corporate strategic and operational goals.

A metallurgical coal mining company recently contactedour firm for assistance in responding to increased commu-nity opposition to mine expansion plans. Organized localopposition to the project appeared to be gaining momentum,and the company was concerned about its potential to derailthe proposed expansion.

The company already had a communication plan in place,but the community relations piece of the plan had been devel-oped without baseline research. As a result, the company didnot clearly understand the extent of the communitys opposi-tion to the project, or how this opposition could impact itsability to earn social licence and secure the necessary permitsto move forward. It also meant the company had no way tomeasure the success of its plan to change perceptions.

Our first step was to design a statistically significant per-ception audit to determine the level of community support ofand knowledge about the project. The audit also revealed thedemographic makeup of the community, its perceptionsabout the companys outreach efforts to date, as well as itsattitudes towards the mining industry in general.

The survey data provided some surprising results. Mostsignificantly, it showed 72 per cent of respondents actuallysupported the mine expansion project, thus contradictingthe companys perception of significant community oppo-sition. The research gave the company a more accurate pic-ture of the communitys attitudes towards the project, andbecame the basis for its subsequent communication withprovincial and federal governments. It also helped the

Successful communication starts with the right research

BY ROBERT SIMPSON

M A R K E T I N G

72% of respondents supported the mine expansion project,contradicting the companys

perception of significant community opposition

Robert Simpson is the president of PR Associates, a national public relationsfirm that specializes in providing strategic communication for the extractivesectors.

Best practice basics for project construction safety

BY DAN WELSHONS

S A F E T Y

perspective. Project stakeholders should provide theirexperiences, beliefs, values and commitment to building aproject safety management system that fits the needs of theproject. This will promote ownership of the projects goals, poli -cies, plans and work procedures.

Document the health and safety policy A written and signedhealth and safety policy, posted prominently on-site, de -monstrates the project stakeholders commitment to safety. Italso encourages leadership staff and other team members tobecome involved, and acts as a powerful reminder of thecommitment to and the expectation of safety that all partiesshould maintain.

Set project performance goals All incidents are preventable.Stakeholders must state zero harm as an overall goal to drivehome the safety message. While there is nothing wrong withother statistical performance goals, or lagging indicators,significant emphasis should be placed on identifying leadingindicators that support the desired behaviours of the projectteam. This approach will uncover gaps within the attitudes orcompetencies of the workforce, their degree of leadershipinvolvement, their understanding of each individuals role, aswell as their knowledge of the overall safety managementsystem. Actionable and measurable leading indicators allow theteam to analyze results and look for improvement op -

portunities. The practice of setting goals,measuring against them, and taking ad vantage of the takeaways, is a key in gre -dient for developing a culture based onbest practices.

Make safety planning a priority Planningis a critical component of everything wedo. Strategic planning, from a projectsafety perspective, identifies the besttools for the job and documents how touse them in an organized approach.Typical safety planning documents dealwith proper training, active leadership,roles and responsibilities, reporting,incident management, communication,auditing/gap analysis, and continuousimprovement methods. Understandingthe content of planning documents canbe a challenge for those performing thework. Best practice suggests that clearconcise procedures, documents and

E ach construction site is unique, so each projects safetymanagement system should be as well. When putting thesystem in place, many variables must be considered,beginning at the planning stages and continuing through tocloseout. Environment, region, culture, workforce skill andability, contractor ex

cim magazine september/october 2012

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