June/July 2014

Industry at a glance

News briefs

By Peter Diekmeyer, Tom DiNardo, Herb Mathisen, Christopher Pollon, Chris Windeyer

Prez takes a pie

Bob Schafer gets a pie in the face

CIM past-president Bob Schafer is presented with a pie by Mining Association of British Columbia president and CEO Karina Briño at the annual Teck Celebrity Pie Throw in downtown Vancouver on May 15. Schafer and 16 other mining professionals took pledges prior to receiving a pie in the face for the Mining for Miracles charity, which is raising funds to create a biobank at the B.C. Children’s Hospital. Schafer raised $17,944.45 and the event brought in a total of $777,259.

– Herb Mathisen

Canada faces a zero-spam future

Canada’s new anti-spam legislation will come into effect July 1, forcing many Canadian businesses to change their current electronic communications practices or potentially face large fines.

The new act will apply to “commercial electronic messages” (CEM) sent by email and text message and through social media like Facebook and Twitter, originating from both within and outside Canada. Individuals contravening the act will face up to $1 million in penalties, while businesses could be fined up to $10 million.

Victor Dudas, a lawyer at Vancouver firm Clark Wilson, said the first step companies must take is to determine if the messages they send are in fact CEM as defined by the new law. Such messages include offers to purchase, sell, barter or lease a product, goods, a service, land or an interest or right in land. For example, an email sent out by a junior mining company reporting new mineral discoveries or assay results with the hopes of driving investment is considered a CEM and would be subject to the new law.

A major thrust of the law is to ensure recipients of commercial messages have granted consent in advance of receipt. According to analysis by the firm, the law will require that “prior express consent” be obtained from a recipient before the message is delivered. The onus will be on the sender of commercial messages to prove that this mandatory prior consent has been granted, meaning all companies will need to create new systems to properly document all consent received, while continually updating all customer email lists and databases. In many cases, companies will also need to obtain “fresh” consent from their customers to ensure they are compliant with the rules. Finally, Dudas said companies must document all the steps taken to comply with the act.

– Christopher Pollon

Agnico Eagle pledges $5M for Nunavut university

The news came pretty much out of the blue. Agnico Eagle Mining’s (AEM) chairman, Jim Nasso, stood on stage at the Nunavut Mining Symposium in Iqaluit in April and did something nobody had done before: commit money – $5 million to be exact – to the establishment of a university in Nunavut.

Canada remains the only circumpolar nation without a university in its polar regions. Training opportunities for trades and specific professions like nursing and teaching abound, but aspiring students of the humanities, sciences and commerce must leave the territory to pursue their studies.

But do not expect a U of Nu to open its doors any time soon. Nunavut suffers from a high school dropout rate approaching 75 per cent, and government policy is focused on that problem, said Wende Halonen, a spokeswoman for the Department of Education. “The gesture by AEM and interest in building a university is appreciated and came as a surprise,” Halonen said, but added, “there has not been any lengthy discussion around a university.”

By contrast, Nasso is bullish on the project. He expects the first donation to inspire more benefactors to come forward. “We were bent on doing it,” he told Iqaluit’s Nunatsiaq News. “I think a lot of people are going to come forward [with funding] and this will come to fruition sooner than you think.”

– Chris Windeyer

NRCan’s Rickford optimistic with new Quebec regime

Quebec’s extractive industries could see renewed vigour following the election of Philippe Couillard’s Liberal provincial government, said Greg Rickford, Canada’s recently appointed federal minister of natural resources. “We want to extend our hand to work together,” said Rickford in a mid-April presentation to the Conseil des Relations Internationales de Montréal (CORIM), his first to a Quebec audience.

Rickford cited several areas of potential cooperation including a better climate on federal-provincial joint review panels, implementation of the 2011 Canada-Quebec agreement related to the development of hydrocarbons in the Saint Lawrence River, mine safety issues, and building new export markets.

“We always liked the Plan Nord,” said Rickford, referring to the previous Liberal administration’s plan to develop minerals in the province’s northern region. That plan was essentially put on hold following the Parti Québécois defeat of the Liberal Charest government in 2012. The Parti Québécois regime was widely seen as having done damage to Quebec’s mining-friendly reputation through its efforts to toughen the existing royalty regime.

Several aspects of Rickford’s biography suggest that he will extend more than just a friendly ear to Quebec mining sector stakeholders. The new minister hails from northern Ontario’s mineral-rich “Ring of Fire” region, completed both law school and his MBA in Quebec, and in his first press conference demonstrated a good knowledge of local issues.

Raymond Chrétien, CORIM chairman, echoed Rickford’s optimism about the province’s resource extraction sector, saying that the new federalist Couillard regime would bring “four years of stability.” Chrétien added that recent challenges with the proposed Northern Gateway and Keystone pipelines increased the chances of a possible flow reversal of Enbridge’s 9B pipeline, which would see shipments of Alberta oil sands production to terminals in Montreal and possibly Quebec City. This change would boost economic development in Quebec and reduce the province’s dependency on foreign energy sources, he said.

– Peter Diekmeyer

Jochen Tilk named PotashCorp CEO

PotashCorp announced in early April that Jochen Tilk will take over as the next president and CEO of the company. After stepping down from the top position, CEO Bill Doyle will stay on as a senior advisor to Tilk until June 2015, to aid in the transition.

The appointment, effective July 1, 2014, ends a three-year selection process for PotashCorp’s new leader. Tilk has worked in the mining industry for 30 years, most recently serving as president and CEO of Inmet Mining, although he has no previous experience in potash. “He has a very strong reputation as an operating CEO with an ability to manage a company’s assets very wisely and he’ll be a very good leader,” said Bill Johnson, senior director of public affairs at PotashCorp.

Outgoing CEO Bill Doyle served as PotashCorp head for nearly 15 years, building it into the largest potash producer in the world. During his tenure, PotashCorp staved off a 2010 hostile takeover bid by BHP Billiton. However, in the last year, the potash price drop has hit the Saskatoon-based company hard: in December 2013, it cut roughly 18 per cent of its workforce. “Bill Doyle has been a tremendous leader of this organization and overseen incredible growth in not only our potash operations but also our nitrogen and phosphate operations as well,” said Johnson.

– Tom DiNardo

Two dead in latest Sudbury accident

On May 6, a “fall of ground” incident killed two drillers at First Nickel’s Lockerby nickel mine southwest of Sudbury. In the wake of the accident, two stop work orders were issued by the Ontario Ministry of Labour for water drainage and ground fall issues at the mine. According to the company, work at the mine was suspended until May 8, when activities resumed everywhere except at the accident site.

The tragedy comes exactly one month after a 36-year-old worker died and another was seriously injured at Vale’s Copper Cliff smelter in Sudbury, and two years after two perished at the city’s Stobie mine. This latter incident, caused by a muck slide, led the labour ministry to launch a one-year “safety and prevention review” this February, which has brought together experts from industry, labour and health and safety to review ways to make current mining operations safer.

Topics for review include worker training, water management practices, and the proper use of barricades and warning systems around open holes. Technological advances like new bolting and reinforcement techniques to prevent collapse and rock bursts will also be reviewed. “We have assembled a group of experts committed to occupational health and safety in the mining sector to provide advice to the review,” said George Gritziotis, chief prevention officer for Ontario, who is leading the process. “This will be a targeted, well-focused consultation.”

In the meantime, Labour’s investigation into the causes of the Lockerby accident continues.

– C.P.

Fire claims 301 at Turkish coal mine

An explosion and fire in a Turkish coal mine killed 301 workers on May 13. Authorities are still investigating the cause of the explosion in the mine in Soma, roughly 230 kilometres southwest of Istanbul.

Carbon monoxide poisoning is thought to have claimed the most victims, as an underground fire carried the deadly gas throughout the entire mine, which is owned by the Soma Coal Mining Company. Reports from Turkish media indicate that company officials ignored high levels of carbon monoxide on sensors in the mine days prior to the fire. Government and mining officials claim, however, that the mine was inspected regularly and that safety standards were met.

Following the incident, the Turkish court arrested eight suspects for “causing multiple deaths” in the mine disaster including Ramazan Dogru, general manager of the company, and CEO Can Gurkan, Reuters reported. The tragedy is the worst mining accident in the country’s history. The incident has sparked unrest in Soma and demonstrations across Turkey.

– T.D.

Northern Dynasty upbeat despite new setbacks for Alaska’s Pebble mine

Storm clouds continue to gather over Northern Dynasty Minerals’ proposed Pebble mine, one of the largest undeveloped copper-gold-moly resources on the planet, located upstream of the world’s biggest sockeye salmon fishery at Alaska’s Bristol Bay.

Concerns about potential impacts to the salmon resource have brought attention from international media and more recently, the U.S. government. In February, the Environmental Protection Agency took the unusual step of launching a Clean Water Act process to identify options to protect the Bristol Bay salmon fishery. On May 22, Northern Dynasty applied for an injunction to stop the process, which the company says threatens to derail the project even before a development proposal is submitted.

As the court action unfolds, the estimated US$6-billion project has become a political hot potato for potential partners. In April 2014, Rio Tinto abandoned the project, “gifting” its near-20 per cent stake in Northern Dynasty to two Alaskan charitable foundations. This was after Anglo American withdrew from an option agreement with Northern Dynasty last year, and Mitsubishi divested in 2011.

In late May, Sean Magee, Northern Dynasty’s vice-president of public affairs, said the company is pursuing two priorities: identifying new funding partners and finalizing documents needed for an environmental review. He noted that both Anglo and Rio Tinto’s departures were influenced largely by the 10-year lag time between investment and Pebble production. Northern Dynasty’s share price dropped from over $21 in early 2011 to under 90 cents at the end of May.

– C.P.

Cline compensated for B.C. coal properties

Toronto-based Cline Mining reached a settlement agreement with the government of British Columbia in April to abandon coal licences and applications in the province in return for $9.8 million in cash. The settlement resolves a civil claim, filed two years ago by Cline against the provincial government, over three affected mining leases in southeastern B.C.

In a surprise announcement in 2010, the provincial government declared a moratorium on mining in the Flathead Valley of B.C., just north of the Montana border. Following that decision, Cline, which had been granted three mining leases in the area prior to the ban, filed a claim for compensation of the property valued at $500 million. After attempts to negotiate a settlement stalled, Cline filed a civil claim with the Supreme Court of British Columbia in 2012. The company alleged that the provincial government had expropriated their coal properties in the area.

“The B.C. government recognizes the value of mineral exploration and mining but there are instances where this must be balanced with the need to protect environmentally sensitive areas, like the Flathead,” said mining ministry spokesperson Matt Gordon. “Including the recent Cline mining settlement of $9.8 million, eight of 10 tenure holders’ claims have now been settled and their tenures relinquished for a total cost of $21.56 million.”

In December 2010, Cline Mining had a market capitalization of around $500 million. Since then, however, it has lost nearly all of its value, and the company recently extended a forbearance agreement with senior lenders to June 30, 2014.

– T.D.

The battle for Osisko

In April, Osisko announced it was being acquired by Yamana Gold and Agnico Eagle, ending a dramatic four-month bidding war. In the deal, Yamana and Agnico Eagle each acquired 50 per cent of Osisko for a total of $3.9 billion, while creating a spinoff company, New Osisko. The partners will form joint committees to operate Osisko’s Canadian Malartic gold mine in Quebec. The process, however, started in January with a hostile takeover bid by Vancouver-based Goldcorp, which Osisko fought tooth and nail. Here is a look at the timeline of the bids:

Osisko_timeline

– T.D.

By the numbers: N.W.T. ice road

Though it was a common gripe across most of the country this winter, you likely did not hear any miners in the Northwest Territories complaining about how cold it was. That is because those consistently frigid temperatures allowed their vital winter ice road, which connects northern mines to the southern highway system in Yellowknife, to open – and stay open – supplying them with much of the fuel, commodities and equipment needed to sustain year-round operations. The 365-kilometre road opened on January 30 and closed March 30, according to Tim Tattrie, project manager of ice roads for Nuna Logistics.

Yellowknife_stats

Next: Quebec's key asset 
Ressources Quebec’s $1 billion fund helping local projects advance

H.M.


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