Category Archives: other minerals
Technology set to unleash mining innovation – Anglo’s O’Neill
16th August 2017 BY: MARTIN CREAMER
CREAMER MEDIA EDITOR
JOHANNESBURG (miningweekly.com) – In the next ten years, technology is set to unleash a wave of mining innovation, with the sweet spot centred on changing the thinking around orebodies and processing plants rather than much-spoken-about automation.
“Our focus has changed from hunting technologies to hunting value,” Anglo American technical director Tony O’Neill told Creamer Media’s Mining Weekly Online in an exclusive interview.
Three-dimensional metal printing, nonexplosive breakage of rock and microwave preconditioning of rock, as well as medical imaging equipment, are finding rapid application in mineral mining and processing.
The word in the industry is that mining companies that embrace the new era will be successful and the ones that do not will ultimately not survive. Anticipated are mines with footprints that can more readily coexist alongside a community in much the same way as farming.
The good news is that pathways are already starting to develop that change the current mining and processing paradigm.
Technologies are being reconfigured to make mining and processing far more precise, which offers massive potential reward.
Currently, much larger volumes of waste are brought to surface, compared with the scenario more than a century ago. This is because, outside of safety improvements, old methods are still being used today. For instance, in 1900, to obtain 40 kg of copper, 2 t of material had to be mined using 3 m3 of water and 10 kWh of energy, compared with currently having to mine 16 times more material, using 16 times more energy and drawing on double the volume of water.
“It’s risen at such a rate that it’s becoming unsustainable,” O’Neill commented to Mining Weekly Online.
While mining was, in the past, content to be a research and development laggard, other industries were not – and they shot ahead on the technological front, proving up technology that is now available off the shelf for mining to implement.
A successful pilot plant is already pointing the way for the more widespread introduction of coarse-particle recovery, which brings considerably larger-sized particles to surface and slashes water use.
Moreover, with the maturing of robotics technology, research is also being conducted into the introduction of swarm robotic mining, involving the use of small robots that will bring ultra-precision to a hugely wasteful industry.
As more precise mining methods gather momentum, those 40 kg of copper used to illustrate mining’s deteriorating position may one day be mined without any waste at all.
Coarse-particle recovery and advanced fragmentation (using smart blasting technologies) are good examples of putting existing technologies into new configurations to deliver value right now.
None of the technologies used is unproven, but what Anglo has managed to do is configure them in a way that adds immense value, with minimal additional capital investment.
While technology will have to be honed specifically for mining at some stage, a surfeit of technologies is ready for instant application.
“It’s more about a mindset change than having to make massive investments,” Anglo American technology development head Donovan Waller added to Mining Weekly Online.
Much of the improvement is being driven by data science and the modern world’s ability to analyse increasing volumes of data to a very high degree.
Virtually all the technologies needed have come of age; one of the biggest being the stabilisation of information technology, in which other industries have tended to advance much faster than the mining industry. These other industries include consumer electronics, manufacturing, automotive engineering and the pharmaceutical sector.
The coarse-particle recovery process captures coarse particles that are not recoverable using conventional flotation.
By needing to grind to only 500 micron instead of 170 micron, capacity is increased. Less energy is required in the crushing and grinding and water is more easily extracted from the larger particles and then recycled, significantly reducing the need for fresh water. The extraction of interstitial water results in a dry product, which can be dry-stacked, ultimately eliminating the need for tailings dams.
In copper, coarse-particle flotation has the potential to change the cost curve of the industry by allowing for 30% to 40% more throughput at a recovery loss of 2% to 3%, a 20% energy saving and 30% to 40% less water.
This is already a significant achievement for Anglo American in copper, and the company is hopeful of migrating it to other commodities, including platinum in South Africa, where testwork is still at an early stage.
If, for example, platinum ore can be pre-sorted in advance and be presented at a grade of 10 g/t instead of 4 g/t, output can be increased by two-and-a-half times from the exact same capital invested.
SWARM ROBOTIC MINING
Swarm robotic mining descales mining to make it much more precise, mimicking the actions of a swarm of locusts devouring a field or an army of ants working independently to execute tasks.
The technology envisages highly selective mining of ore types linked to real-time algorithms across a broad spectrum that includes constraints in energy, prices and associated issues.
As many people as possible are taken out of harm’s way in a remotely controlled environment.
Small operational teams will communicate with each other, without the need for a big-brother view from the surface that controls each of those small operational elements independently in self-learning operations.
Currently, the industry spends a lot of time adding water to its processes and even more time trying to get the water out afterwards.
A pathway has been developed to end up with a waterless mine through the adoption of a closed loop, using only a fixed amount of water that is then recycled time and again. Anglo already recycles or re-uses more than 60% of its water requirements.
Ultimately, the aim is to arrive at potentially chemical means that allow for the liberation of particles without having to add water to them, to arrive at a waterless process.
SUN, WIND, GRAVITY AND SMALL, GREEN NUCLEAR
In terms of energy, the focus is on using renewables for energy self-sufficiency.
The solutions will be a combination of sun and wind. As the sun does not shine at night and the wind does not always blow, other energy forms, including gravity, will take advantage of the mining sector having depth as one of those solutions.
Ultimately, nuclear may be incorporated should it become “greener”, smaller and more modular, as is expected.
Instead of spending billions to build one big plant, small modular plants will be built and scaled up quickly, with the lifespan of the modules being influenced by the next step up in technology.
Mines will move away from using the same technology for long periods of time and outlaying large capital expenditure on plants that last for 50 years and more.
Smaller, modular, cheaper units will allow for technology upgrades every five years, providing scalability as well as the opportunity to ramp up on new technology that has arisen.
Although mining is not an industry that has been used to technological change, there is no reason why it should not, from now on, accelerate advancing technology quickly, as other industries do.
“Our FutureSmart Mining programme is about far more than technologies alone. It is end-to-end innovation, in its broadest sense, addressing all aspects of sustainability for the business – safety, health, the environment, the needs of our communities and host governments, and the reliable delivery of our products to customers. Those that innovate and are agile will thrive in this industry. That is mining’s new future.” O’Neill concluded.
Miners Built on Wildcat Culture Now Want to Share the Risk
By Thomas Biesheuvel
August 10, 2017, 5:00 PM CST August 11, 2017, 2:07 AM CST
- Chastened by metals slump, new projects idle awaiting partners
- Industry made by swashbuckling gamblers ‘has lost its nerve’
Swashbuckling gamblers abound in the mining business, where billions are spent searching for mother lodes in some of the most inhospitable places on the planet. But a prolonged slump in metals and big losses on earlier solo projects are turning top producers into risk-avoiding wallflowers.
“The mining industry has lost its nerve,” said Mark Bristow, chief executive officer of Randgold Resource Ltd., a London-listed producer of gold in Africa. “The new fad in town is joint ventures. It’s very strange if you’re a major miner. They should be comfortable in their ability.”
At a time when prices are recovering — helping to make new projects viable again — metals producers including Anglo American Plc, BHP Billiton Ltd. and Rio Tinto Groupare seeking partners to share the investment risk rather than going it alone as they have in the past. While the more-cautious approach is a consequence of the near-death experience of the 2015 commodity crash, it could limit the payoff for shareholders during a metals rally.
The shift to more conservative financing comes as the industry confronts a core dilemma: the richest mines in the safest or most-accessible places have mostly been found and built. That means companies are increasingly looking to develop ore bodies that are of lesser quality and may be in higher-risk countries.
“They have to spend more to mine less,” said Rob Crayford, a fund manager at CQS Asset Management Ltd.’s New City Investment Managers in London. “A lot of the projects out there aren’t that great.”
Still, while prices remain well below their post-recession peaks, they’re up enough in the past year or so for companies to consider dusting off expansion plans they shelved during the glut. The London Metal Exchange index of six base metals, including copper and aluminum, has rallied almost 50 percent from a low in January 2016. Gold is heading for the biggest annual gain since 2010, and iron ore has almost doubled from the all-time lows reached in 2015.
S&P Global Market Intelligence estimates that exploration drilling for metals has risen for five straight quarters, off to its fastest start to a year since 2009, and there are signs the pace is accelerating.
Anglo American, a London-based producer that has been mining metal for more than a century, says its No. 1 new project is the giant Quellaveco copper deposit in Peru. But the company wants a partner before development starts, and says it will seek joint ventures for all future new mines, known as greenfield developments.
Melbourne-based BHP, the world’s largest mining company, is set to commit to the $13 billion Jansen potash mine in Canada after years of study, but says it wants to bring in a partner to help share the risk. London-based Rio Tinto also is seeking partners for future developments, while Glencore Plc says it won’t build any new mines at all.
“I’m not excited about greenfield,” said Chief Executive Officer Ivan Glasenberg, noting that over-development in years past created the oversupply and low prices that led to huge losses for the industry. “Unless something changes in the world, I don’t see Glencore doing greenfield for awhile.”
Acquisitions are more likely, Glasenberg said, because it doesn’t make sense to “bring new tons into the market which cannibalizes your existing production.”
The industry is still smarting from the self-inflicted wounds. Anglo’s giant Minas Rio iron-ore mine in Brazil cost $14 billion to buy and build, but it became an expensive mistake as prices plunged by more than half. Barrick Gold Corp., the largest bullion producer, spent $8.5 billion on the Pascua Lama project high in the Andes that has been stalled since 2013. The company recently signed a deal with China’s Handong Gold Group that may lead to a joint venture on the project.
It’s not just new mines that are making the industry more cautious. Some companies made investment mistakes that compounded the losses when prices fell. BHP has said its $20 billion spending on shale deposits was a mistake, while Glencore took a $7.7 billion writedown on its Xstrata Plc takeover. Rio Tinto bought coal assets in Mozambique for $3.1 billion that it later sold for $50 million.
To be sure, joint ventures aren’t a new idea. The giant Escondida copper mine in Chile is operated by BHP but also owned by Rio Tinto and Japanese companies including Mitsubishi Corp. But the push to share more of the risk is a marked contrast to the expansion during the previous bull market.
Still, the more swashbuckling method of going solo on projects may be the most beneficial for shareholders, according to Randgold’s Bristow, whose company built all of its three mines from scratch, including a joint venture with Johannesburg-based AngloGold Ashanti Ltd.
“Greenfield is absolutely where you should put all your money,” Bristow said. “But a lot of these companies are still dealing with their over-exuberant growth during the super cycle.”
Cash-rich Newmont Mining mulls boosting dividend as peers pursue debt reduction
TORONTO — Reuters
Published Wednesday, Aug. 09, 2017 4:29PM EDT
Last updated Wednesday, Aug. 09, 2017 5:11PM EDT
With a plump $3.1-billion (U.S.) pile of cash, Newmont Mining Corp. is mulling a sweeter dividend to attract a broader shareholder base, a move that makes it an outlier in the still recovering gold sector.
Although miners are no longer crippled by expansion-fuelled debt loads, the priority for their cash is building and expanding mines to replace depleting gold reserves, and further reducing debt.
Dividend increases are not on their immediate horizon, making Newmont, which has said it was considering doing so, stand out.
Like other producers, Newmont is also investing in expansion projects, but with the fattest purse among gold producers and no debt due until 2019, the Colorado-based miner may have excess cash to return to shareholders.
Newmont, the world’s second-biggest gold producer, has cut net debt by more than 70 per cent since 2013 to $1.5-billion, and will mull dividend payout options at its October board meeting.
“One of the things we’ll be looking at is what’s an appropriate level of dividend that might attract new investors,” chief executive Gary Goldberg told Reuters.
Newmont is nipping at the heels of Barrick Gold Corp. for the title of world’s largest gold miner, with plans to produce between 5 million to 5.4 million ounces of gold this year, against Barrick’s forecast of 5.3 million to 5.6 million ounce output.
The two miners are also wrestling for top valuation, with Newmont’s market capitalization of $19.3-billion just behind Barrick’s $19.4-billion.
Among Newmont’s potential options to boost its dividend is issuing a one-time special payment, said Chris Mancini, an analyst at Gabelli Gold Fund.
The company could also boost its gold price-linked dividend again, as it did last year, analysts said.
“The market does want them to reinvest in projects which have high rates of return and relatively low risk,” said Mancini.
“To the degree that there is excess cash on their balance sheet, the market would like to see that returned to them, in the form of a dividend.”
At a $1,250 per ounce gold price, Newmont would pay 30 cents a share for its 2017 dividend, a yield of about 0.8 per cent, TD Securities analyst Greg Barnes said in a note to clients.
That is broadly in line with current industry yields, but an increased payout could potentially put Newmont ahead of its peers.
For now, richer dividends are not compelling for producers including Barrick, Kinross Gold Corp., Goldcorp Inc. and Agnico Eagle Mines Ltd., which are focused on reducing debt or investing in projects.
But as gold miners gain firmer footing, there is potential to mirror global diversified miners, which are hiking dividends as commodity prices and profits surge, Clarksons Platou global mining analyst Jeremy Sussman said.
Rio Tinto, the world’s second-largest miner, last week promised a record-setting $2-billion interim dividend, for example.
“If we were to see this on the gold side from one of the majors, especially in a meaningful way, I think the others would probably feel some pressure to follow suit, because at this stage, the vast majority of balance sheets are in very good shape,” Sussman said.
Mining industry can now predict opposition to projects before it’s too late
August 7, 2017
It’s sounds too good to be true, but a new company is proving miners they can foresee opposition or any other form of social conflict related to their projects, before they even attempt going through a licencing process.
Chalkstone, a UK-based company founded by Donald Bray, a political anthropologist and academic at the University of Cambridge, bases its success in a very unique method, applying what’s known as “granular social intelligence.”
“We take a systemic approach and mix methodologies, combining big data and quantitative analysis with ethnography, qualitative interviews and focus groups, all of which help us dig deep into particular issues and accurately define the social stance of a target group,” Bray explains on the phone from his home in Paris.
“We are not interested if the community is, in any way, being taken advantage of” — Donald Bray.
Before going further, he’s quick to note that the goal of his company is not just to help mining companies get what they want, but to assist them in building mutual trust with the groups living in the areas in which they operate.
“We are not interested if the community is, in any way, being taken advantage of,” he says. “Our due diligence runs in a number of different directions.”
The expert, with more than 15 years of experience working across the globe, particularly in conflict zones, is not saying mining companies are the “bad guys” in the story.
“It’s not that firms don’t care about CSR [corporate social responsibility] or don’t want to invest in it. The problem is that most tools currently available don’t really help them grasp the human aspect of their projects,” he says.
Donald Bray, Chalkstone founder.
Half of all risks faced by extractives companies are non-technical ones, which in turn account for nearly 75% of all projects delays. “For a mid to large sized mining company, the costs of these delays (socio-political and community risks) can add up to some $20 million a week,” says Bray. “This is huge and it deserves far more attention than mere box-ticking or forms of corporate philanthropy.”
Chalkstone already has a known success story under its belt. After an intensive study on a ruby mine and a copper deposit in Afghanistan, applying counter-insurgency tactics used by deployed troops, Bray was hired in 2015 by Gemfields (LON:GEM), the world’s largest emerald and ruby miner. At the time, the precious gems firm had committed to building an emerald mine in Colombia.
Part of Chalkstone’s work to help Gemfields enter the market was the creation of a communications platform based in text messaging, which allowed the mining company and local communities to talk freely to one another.
Named by the community as “Suna Verde” (meaning “Green Pathway” in the Muisca aboriginal language), the system kept locals updated on everything from job-training initiatives to when the “health brigade” (a team of doctors and nurses that travel around the countryside) would be in each village. Soon, says Bray, Suna Verde was rivalling the radio as the region’s main source of news and other information.
“The experience showed us that communities want jobs, roads, hospitals and clinics, schools, and any other benefit offered by mining companies, but they want to be actively involved in their decisions. They don’t want to be just beneficiaries of someone else’s goodwill,” says Bray. “This is one of the most important lessons I’ve learned and which is transferrable to almost any community in the world.”
During the first months of work for Gemfields in Colombia, Chalkstone warned the company there was opposition brewing for another international mining firm in the region. Only four months later, that miner was hit by protests and even armed attacks.
“When you invite thousands of voices into a conversation, you need to be prepared for dissenting opinions (…) By listening to all of them, you’re able to get in front of the risks. That’s what happened in Colombia… we were able to see things that you wouldn’t normally see and we told Gemfields about it.”
While Gemfields decided in May to leave Colombia and Sri Lanka to focus on its African projects, the fact the company didn’t face hostility from community members is a testament to Chalkstone’s work, says Bray.
The company, currently involved in mining and oil and gas projects in East Africa, as well as a new venture in Colombia, believes its novel approach could also be useful to investors.
“Given that nearly 66% of shareholder value in a junior miner is linked directly to socio-political and community risks, according to some calculations, investing in understanding the social environment in which a miner will operate shouldn’t be an afterthought or something people turn their minds to only when times get tough,” Bray warns. “Trust is valuable,” he concludes.
These are a few examples of conflicts an approach such as Chalkstone’s could have prevented:
BHP presses for cheaper power ahead of Olympic Dam mine expansion
August 4, 2017
(Image courtesy of BHP Billiton)
BHP Billiton is looking for ways to shore up power supply and bring down power costs at its Olympic Dam copper mine in Australia, as it plans to expand following a string of electrical outages, the mine’s head said on Friday.
The mine has been badly hit by an energy crisis in Australia stoked by the rapid rise of wind power and closure of coal-fired power plants. This has destabilised the national grid and soaring natural gas prices have driven up power tariffs.
A blackout last year forced Olympic Dam to shut for two weeks, costing the company $105 million. Over the past year, rising power bills have added around $30 million to its costs.
Olympic Dam President Jacqui McGill said security of supply, price and system reliability are all challenges for the mine.
“Cheaper power – that’s the key for me,” she said at an American Chamber of Commerce event in the South Australian capital of Adelaide. Power prices need to drop 25 percent to make Olympic Dam copper more competitive globally, she said.
While the state of South Australia has taken steps, such as lining up 129 megawatt hours of battery capacity from Tesla Inc , to help avert power outages from next summer, more needs to be done, McGill said.
Olympic Dam, South Australia’s biggest power user, draws about 125 MW alone, around 8 percent of the state’s demand.
“We’ve currently got a nationwide study underway to look at our options for power,” she said.
Batteries would not help much, she said. “When you draw the amount of power that we do, options like that don’t provide us with a lot of confidence.”
BHP will need more power and cheaper prices to justify going ahead with plans to expand output from 218,000 tonnes this year to 280,000 tonnes by 2022. It plans eventually to more than double output using low-cost heap leach technology that the company is trialling in Adelaide.
McGill said tests to smelt material produced from the heap leach process have been successful, with “significant progress” made toward producing uranium and copper cathode. The trial is due to be completed in the 2019 financial year.
Heap leaching involves stacking crushed ore over a pad, pouring on acid and water and blowing air up through the pad to leach out metals.
(Reporting by Sonali Paul; Editing by Tom Hogue)
Rio Tinto’s first-half profit soars 93%, investors getting $3bn back
Shareholders will receive $2bn on the dividend side and $1bn of share buybacks.
Aug 2, 2017
The company’s iron ore business delivered 80% of the group’s underlying earnings. (Image of the Paraburdoo operation, in the Pilbara, courtesy of Rio Tinto)
Rio Tinto (ASX, LON:RIO), the world’s second largest miner, gave its shareholders an early Christmas present Wednesday as it declared its biggest interim dividend in the company’s 144-year history, thanks to climbing commodity prices that made first-half profit jump an impressive 93%.
The Anglo-Australian company also said it will increase its share buy-back program this year, as net profit for the first six months of the year came in at $4.14 billion, more than double the $2.13 billion it logged in 2016, yet slightly short of market expectations.
Rio will return a total of $3 billion to shareholders: $2 billion on the dividend side and $1 billion of share buybacks.
Further payouts could come “down the track” after Rio closes its $2.45 billion sale of Coal & Allied to Yancoal, expected to happen in the third quarter of 2017.
Chief executive Jean-Sebastien Jacques said the results unveiled today show the firm’s “very simple strategy” was working. “But we believe there is more we can do,” he noted, adding that further payouts could come “down the track” after Rio closes its $2.45 billion sale of Coal & Allied to Yancoal (ASX:YAL), estimated for the third quarter of 2017.
The London-based miner’s performance is a clear reflection of a reverse in the mining industry’s fortunes, as companies big and small are now benefiting from a recovery in prices of commodities including iron ore, which is Rio’s key commodity, as well as aluminum and even coal.
Should that rally fade, however, there’ll be no more cash flow from coal for Rio Tinto to fall back on, warned Wednesday Bloomberg analyst David Fickling. “And its copper-mine stakes — hit by strikes this year at Escondida in Chile and Grasberg in Indonesia, plus the vast cost of reaching full production at Oyu Tolgoi in Mongolia — aren’t producing enough earnings to make up the difference,” he wrote.
Fickling’s comments are based on the fact that the company’s shareholders receive dividends based on a policy set up in February 2016, which ensures between 40% and 60% of underlying earnings are paid out to investors as a dividend every six months. The old approach saw them receive guaranteed dividend payments, but Rio had to re-evaluate it to better reflect volatile commodity cycles, such as the one that took the whole industry down in 2015.
“These are strong results: operating cash flow was $6.3 billion and we met our $2 billion cash cost reduction target six months early,” said chief executive Jean-Sebastien Jacques.
The company’s iron ore division contributed 80% of Rio Tinto’s underlying earnings. The miner, the world’s second largest producer of the commodity, generated almost 130 million tonnes of the steelmaking ingredient during and received an average price of $67.80 a tonne in the period, 26% more than just a year ago.
Supreme Court of Canada confirms First Nations have no veto power over resource projects
By Nelson Bennett, Business in Vancouver
July 28, 2017, 2:45 p.m.
Image: Kinder Morgan Canada
Just days after the new NDP government said it would work to implement a declaration that ostensibly gives First Nations in B.C. a veto over projects like the Trans Mountain pipeline expansion, the Supreme Court of Canada ruled no such veto exists.
“Overall, the decisions are positive for project development in Canada,” said Robin Junger, an expert in aboriginal law for McMillan LLP and former head of the B.C. Environmental Assessment Office.
On one hand, David Eby, the NDP’s new attorney general, confirmed last week what Junger has previously said to be the case – that his government doesn’t have the legal authority to deny permits for the pipeline expansion.
Those are statutory decisions made by civil servants, not political decisions to be made by cabinet ministers.
On the other hand, last week Premier John Horgan issued a mandate to Scott Fraser, minister of Indigenous Relations and Reconciliation, to work with First Nations “to establish a clear, cross-government vision of reconciliation to guide the adoption of the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP).”
That declaration has a clause that states that indigenous people have the right to “free prior and informed consent” on development projects within their asserted territory.
On the surface, that sounds like the NDP would be handing the Tsleil-Waututh of Burrard Inlet a veto, since they deny the federal government’s and Kinder Morgan Canada’s right to expand the pipeline in their territory – the Burrard Inlet in Burnaby.
But as the federal Liberals discovered when they too promised to implement UNDRIP, actually giving it legal force would require a constitutional amendment, which is why the federal Liberals abandoned it.
Two Supreme Court of Canada decisions issued on July 26 made it abundantly clear that, while the federal government has a duty to consult, that does not mean that First Nations can veto a project.
In one ruling, the Supreme Court of Canada ruled that regulators like the National Energy Board (NEB) can represent the federal Crown in executing the duty to consult First Nations, but that those consultations must be real, not lip-service.
In the Clyde River Inuit case, the Supreme Court ruled that the NEB has the authority to represent the Crown in executing its duty to consult, but that, in that particular case, it had failed to do so properly. The court ruled the NEB’s consultation failed to properly address the Clyde River Inuit’s concerns.
The other case, involving the Chippewas of the Thames First Nation decision, is particularly relevant to the Trans Mountain pipeline expansion. In that case, the court ruled that the consultation with the Chippewas had been adequate.
The Chippewas were objecting to a reversal and expansion of a pipeline owned by Enbridge. The Supreme Court ruled against the Chippewas in that case and in doing so affirmed that, provided consultations are adequate, First Nations don’t have the legal authority to stop developments in their territory.
“The duty to consult does not provide a ‘veto’ for indigenous peoples over Crown decision,” Blake, Cassels & Graydon LLP explains in a legal brief on the two cases.
So what does that mean for the NDP’s promise to implement UNDRIP? Junger said it is clear that it has no legal force.
“This is the law,” Junger said. “No elected person can change the law by statements.”
“Courts have interpreted Section 35 of our Constitution as saying there’s no veto. So I think don’t any government would have the power, even by legislation, to make that change. It would have to be a constitutional amendment. You can’t make it law by saying you endorse it.”
John Ivison: Shocks to Canada’s natural resource sector should be the real cover story
As the prime minister graces the cover of Rolling Stone, the real news this week is how two major natural resources projects have been scuttled by government and the courts
The National Post
July 26, 2017
6:39 PM EDT
Petronas considered building the Pacific Northwest LNG project on Lelu Island near Prince Rupert, B.C.Handout/Pacific Northwest LNG
The fawning front cover of the latest Rolling Stone, which features Justin Trudeau and wonders wistfully, “Why can’t he be our President?” also touts a headline promising to explain how the Trump administration is destroying the U.S. Environmental Protection Agency.
Many Canadians will rejoice at the contrast — and, it’s true, few would exchange Trudeau’s golden aura for Trump’s tangerine tincture.
But the idea that Trudeau is getting everything right — particularly when it comes to balancing environmental protection and growing the economy — is fallacious.
The government is touting the International Monetary Fund’s forecast that Canada will lead the G7 in growth this year. But there is a lag before government action affects the economy. The warning this week from the Chamber of Commerce that Canada’s climate-change plan and other measures are raising the cost of doing business in this country to breaking point is a canary in the coal mine, gasping from exposure to the toxic gases of too many taxes and too much regulation.
This has not been a good week for the reputation of this country’s natural resource sector. On Tuesday, the $36-billion Pacific NorthWest liquefied natural gas project was cancelled, ostensibly because of poor global prices but really because of the reduced attractiveness of the Canadian market for investment.
This was compounded Wednesday by a Supreme Court of Canada decision to block seismic testing in Nunavut because of opposition by local Inuit, who said they had not been consulted adequately before the National Energy Board gave oil companies permission to search for oil and gas in northern waters.
There was some good news for industry in a companion Supreme Court decision that suggested the courts do not equate the constitutional duty to consult with a veto over development.
The court looked at a claim by the Chippewas of the Thames First Nation in southwest Ontario, who claimed they had not been consulted adequately over the reversal of the Enbridge-owned Line 9 pipeline between Sarnia and Montreal.
The court judged that the Chippewas were informed the National Energy Board would hold hearings; were granted funding to participate; and subsequently filed evidence outlining their concerns about increased ruptures and spills.
The NEB approved the project, on the basis that the impact of the reversal of an existing pipeline would be minimal and mitigated by conditions imposed on Enbridge. The Supreme Court agreed.
While the Court ruled the Chippewas were consulted, it said the Inuit of Clyde River were not given adequate opportunity to participate in the NEB process into offshore seismic testing for oil and gas in Nunavut.
The Court said the Inuit had a constitutional right to harvest marine mammals like whales, seals and polar bears. It said it was undisputed that the testing could negatively affect hunting rights and that the proponent of the project did not make clear to the Inuit what the impact might be, nor give sufficient opportunity for participation in the process. Unlike in the Line 9 case, there were no oral hearings and no participant funding.
“These cases demonstrate that the duty to consult has meaningful content but that it is limited in scope. The duty to consult is rooted in the need to avoid the impairment of asserted or recognized rights that flow from the implementation of the specific project at issue; it is not about resolving broader claims that transcend the scope of the proposed project,” the court concluded.
The Supreme Court appears to have struck a legitimate balance between rights and development that benefits Canadians. Ottawa, on the other hand, is still searching for symmetry.
In its most recent survey the Canadian Association of Petroleum Producers forecast that oil and gas capital expenditure in Canada will fall to $44 billion this year, nearly half the $81 billion spent in 2014.
CAPP blamed the dramatic change, in part, on “continuing uncertainty” in Canada’s policies and regulations, which are seen as “increasingly more stringent and costly.”
While politicians blamed poor global LNG conditions for the Pacific NorthWest decision, similar projects have gone ahead in Australia and the U.S.
The situation is likely to be compounded by changes to federal environmental assessment legislation being contemplated by the Trudeau government. The aim is to “restore trust” in the assessment process, according to the government but industry fears reviews will become the venue to implement broader public policy — notably on Indigenous reconciliation and climate change.
The expert panel that submitted its recommendations to the government urged that assessments move beyond the “bio-physical environment” to encompass all impacts likely to result from a project, according to the “five pillars of sustainability” — environmental, social, economic, health and cultural impacts.
Chamber of Commerce president Perrin Beatty said the changes would make the system “unworkable” and end of investment in Canada’s natural resources sector.
Beatty is not some swivel-eyed loon, bent on rapacious exploitation of the environment. His organization has backed carbon pricing while calling for the government to countervail cost increases with relief elsewhere.
But the balance of environmental protection and economic growth that Trudeau trumpets has been weighed heavily in favour of the former.
In addition to new carbon taxes, businesses find themselves facing rising electricity costs, federal government fee increases, Canada Pension Plan hikes, richer minimum wages and higher Employment Insurance rates than would have been the case had the government not increased EI costs.
Such is the flighty nature of international capital, Beatty’s warning may have come too late — the Canadian system may already have been judged unworkable and investment in new major energy projects reallocated to other jurisdictions.
The experience of Pacific NorthWest suggests projects can be approved and built elsewhere in the world more quickly and cheaply, with far less uncertainty than in Canada.
The Liberal government is going to have to create a more focused, predictable regulatory regime or Canadians will face a future of lower living standards, higher taxes and bigger debt. Glossy profiles in the house organ of middle-aged Democrats are poor compensation for that.
Husky Energy investing in carbon capture pilot plant at Sask. heavy oil
ALEX MACPHERSON, SASKATOON STARPHOENIX, SASKATOON STARPHOENIX 07.13.2017
Steam operations have started at the Edam East project near Lloydminster, the first of three new heavy-oil thermal projects in the province.
Husky Energy Inc. is increasing its investment in carbon capture and storage technology, which it hopes will make its expanding heavy oil operations in Saskatchewan more environmentally friendly.
The Calgary-based company has been operating a tiny CCS plant developed by Inventys Inc., a clean energy company headquartered in Burnaby, B.C., at its Pikes Peak South operation northwest of Maidstone for six months. Earlier this month, it invested millions of dollars in the B.C. company with the aim of developing a much larger plant at the site.
“We are moving ahead with a 30 tonnes per day pilot project. … We believe this technology has the potential to reduce the cost of carbon capture, compared to existing technologies, and could turn Lloyd thermal production into a lower carbon source of energy,” and Alberta more environmentally-friendly, Husky spokeswoman Kim Guttormson said in an email.
Carbon dioxide captured by the new project will be used alongside carbon dioxide recovered from other facilities for “enhanced oil recovery” operations in the region, Guttormson said. The process makes other types of oil wells more efficient, she added.
The new plant at Pikes Peak South is expected to be commissioned in the fourth quarter of 2018. Inventys CEO Claude Letourneau said it will have the footprint of two flatbed trailers, cost about $20 million and use the company’s second-generation CCS technology, which improves efficiency by absorbing the carbon dioxide into a solvent rather than a solid.
The increased efficiency, Letourneau continued, is expected to lead to significant cost savings. The capital cost of existing CCS technology is between $60 and $90 per tonne, but Inventys is aiming to cut that to about $30 per tonne — which the oil industry requires before it can start adopting CCS on a wide scale.
Last December, Husky’s board of directors approved three new $350 million steam-assisted heavy oil plants in Saskatchewan. The company, which has boosted its reliance on the facilities to 40 per cent from about eight per cent of total production, has many more projects “in the wings,” according to its former CEO.
That represents a major opportunity not just for Inventys — which wants to build 10 plants capable of capturing between 200 and 600 tonnes per day for Husky — but for an entire industry that is “looking for a solution,” Letourneau said. Husky’s investment, he continued, is a “clear sign” that energy companies are getting serious about addressing carbon capture.
Guttormson would not say how much the company has or is planning to invest in CCS technology, but Letourneau said its commitment is around 80 per cent of the $10 million it raised to support the pilot project in Saskatchewan.
Brandt wants SaskPower to catalyze renewable energy industry by favouring local firms
ALEX MACPHERSON, SASKATOON STARPHOENIX
Published on: July 12, 2017 | Last Updated: July 12, 2017 4:42 PM CST
The head of Saskatchewan’s largest privately-held company wants the province’s electrical utility to favour local firms, including his, as it works to boost Saskatchewan’s reliance on alternative energy sources to 50 per cent from the current 25 per cent during the next 13 years.
Brandt Group of Companies president Shaun Semple said a “local preference” in SaskPower’s procurement process could support not just his firm’s plan to build a wind turbine factory in Saskatoon’s former Mitsubishi Hitachi Power Systems Canada factory, but an entire industry in the province.
“Government procurement is not the solution, but it can be the seed, right? It can be the catalyst that starts an industry growing,” said Semple, just over three months after Brandt bought the sprawling 58th Street East factory for an undisclosed price and unveiled plans to fill the vacant facility with up to 500 of its employees.
The Regina-based company has already spent about $4 million on assessment, cleaning and refurbishment, and hired about 50 people to work at the massive facility. Semple said that total — Brandt currently has “just over” 2,000 employees — is expected to climb to about 100 by the end of the year, and could hit 300 by the end of 2018.
In addition to the turbine factory, the plant is expected to house elements of the company’s agricultural and custom manufacturing divisions, as well as research and development facilities, he said. Brandt does not disclose its finances, but Semple has said previously the purchase is part of a plan to boost its $1.7 billion revenue to $5 billion by 2025.
“We’re at the beginning stages of our industry on wind and alternate energy (sources), and if we don’t give the preference in the scorecards and use the procurement of SaskPower as a catalyst to develop it, it won’t happen and this plant will never see its full capability,” Semple said.
The Crown corporation’s procurement policy states its purchases must “obtain best value” for its money, ensure everyone is treated fairly, meet its operational requirements, comply with the province’s trade obligations, maintain “the highest ethical business standards” and support the development of Saskatchewan’s economy, including Aboriginal businesses.
SaskPower representatives were not available for interviews, but a spokesman for the Crown corporation said in a statement that it is “working closely with Priority Saskatchewan to ensure our procurement processes find the best value for our company.”
Priority Saskatchewan is a branch of SaskBuilds aimed at ensuring government procurement is fair and open.
“SaskPower procures goods and services in a fair and transparent public tendering process … We would look forward to any bid from (the Brandt) organization,” Jonathan Tremblay said in the statement.
While a homegrown wind turbine industry could have “huge” economic benefits for Brandt and other local companies, it’s vital that the government balance the need to support Saskatchewan businesses against the benefits of open competition, said North Saskatchewan Business Association executive director Keith Moen.
“We still are taxpayers and we want to see our government act prudently and judiciously in awarding their contracts, and whenever you can have that connection of it being a Saskatchewan company that gets the contract it’s a win-win. But it isn’t always a win-win because … we don’t want them to spend money frivolously.”