Beyond “proximate cause”, the focus of most dam committee reports, are the root economic causes of most catastrophic failures. Imperial Metals had two principle mines, Huckleberry and Mt Polley that never achieved profitability and were developed and run on “shoe string” economics from the outset.
Writing in the cover to the 2000 Imperial Metals annual report , then CEO and Chair Murray Edwards ;”
“While both mines have been a technical success, they have yet to generate the financial returns that were expected when they were given the go ahead for construction in 1996, on the assumption that long term metal prices would be US$1/lb for copper and US$380/oz for gold.”
In 1996 the global average cu grade was .79 ( 1.26 weighted average grade) while grade at Mt Polley was .35. The CU Equivalent for Mt Polley taking into account other metals mined and processed was only 0.5 as compared with a Cu Equivalent of 300 copper mines over roughly this same period of over 2.0(Per Aguirregabiria & Luengo 2016). (http://isites.harvard.edu/fs/docs/icb.topic1465230.files/copper_mining_victor_27112014.pdf)
(The Aguirregabiria & Luengo is the first research we have seen taking full account of the role of metals other than copper in production volumes at copper mines. In their sample of 300 copper mines representing 85% of copper production globally, other metals accounted for abut 25% of equivalent cu production volume and value. Mt Polley, with both a very substandard primary ( CU) grade also had a very limited added value in other metals. Their profile of the 300 by “realized grade” (ie Cu equivalent) puts Mt Polley at about the 25%percentile whereas even any mine below a 50% percentile level would be marginal and struggling to stay alive and in production)
The 2000 annual report acknowledged falling grades and its spiraling economic impacts on overall performance and profitability:
“The average grade of both copper and gold mined during the year was down from 1999 levels resulting in lower metal production. In 2000, 34.2 million pounds of copper and 83,194 ounces of gold were produced, compared to 37.1 million pounds of copper and 99,585 ounces of gold in 1999. Improved copper prices and a weaker Canadian dollar were not sufficient to offset lower metal production in 2000. Operating revenues were $94.4 million and operating loss was $9.6 million compared to operating revenues of $98.1 million and operating loss of $2.4 million in 1999”.
The NI43101 prepared for the re-opening in 2005 after 4 years in stand-by ( 2001-2005) was by in house geologists based on a limited drilling program which had indicated a potential higher grade zone prior to standby. The re-enrty involved no re examination or independent expert review of economic feasibility. Stated expectations were never achieved.
Meanwhwile things got worse at Huckleberry also as a result of falling/inadequate grades according the 2007 annual report:
“Mill feed at Huckleberry is now sourced exclusively from the Main Zone Extension pit. This pit will extend mine life to the year 2010 but annual production will be reduced as the copper grade there is approximately 0.35% compared to historic grades of nearly 0.5%.”
The chart above is for the re-opening period pre-failure, 2005-2013. Recovery rates were low and uneven averaging 0.71. Expected grades were no better than the pre standby brief operating period 1997-2001.
Life of mine to failure, the “Very Serious” failure rate for Mt Polley is .011 per million tonnes of ore to the mill vs .0004 globally, that is 27 times higher than the global failure performance..
Operations at both Huckleberry and Sterling, Imperials in situ leaching project in the States, have ceased further impairing Imperials frail and declining economic condition.
In 2014 BC MOM approved Mt Milligan a very low grade deposit in the same area and having the same profile. It has a CU EQ of only 0.45, even lower than the Mt Polley re-opening period 2005-2013. It uses outmoded slurry deposition in its centerline TSF designed by Knight Piesold
Red Chirs, Imperials only other operating mine is operating with a water cover on tailings completely contrary to the stern and precise warning of the Mt Polley expert panel that stability concerns trump ARD generation in the sense that a method used to suppress ARD generation is not acceptable if it undermines stability of the structure containing the ARD generating materials.
Although the Mt Polley expert panel did address the specific importance of proven economic feasibility, QPO ( Quantitative Performance Objectives) and the need for checks and balances and standards/limitations on the invocation of “the Observational Method” ( responses in the field to changing or unexpected conditions) no part of this has been addressed discussed or responded to as reform of the regulatory framework in British Columbia, elsewhere in Canada or anywhere else..
Bowker Associates has long and repeatedly called for a financial audit of all still permitted and active ( i.e.not safely and permanently closed) mines . BC and other mining jurisdictions need to examine accept responsibility for accruing public liability risk, possible already formed failure conditions under the control of miners who can barely manage to stay in production at all and have never attained profitable operations.
This report sourced all data on Mt Polley entirely from Imperial Metals annual reports and from its NI43 101.
Lindsay Newland Bower, CPCU,ARM, Environmental Risk Manager
Lindsay Newland Bowker, CPCU, ARM Environmental Risk Manager
Bowker Associates Science & Research In The Public Interest
15 Cove Meadow Rd.
Stonington, Maine 04681