MT POLLEY BEYOND PROXIMATE CAUSE OF FAILURE: Pre Failure Economics

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”.

 mt-polley-pre-failure-economics

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

 

207 367 5145

 

lindsaynewlandbowker@gmail.com

lindsaynewlandbowker.wordpress.com

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About lindsaynewlandbowker

Bowker Associates, Science & Research In The Public Interest, is an independent non profit providing self initiated pro bono analysis on key issues with a potential for massive adverse environmental impact . Bowker Associates has been an internationally recognized and cited voice in analysis of the Samarco failure, its consequence, and the possibilties for recovery. In 2015 Bowker Associates collaborated with globally respected geophysicist David M. Chambers to recompile global authoritative accounts of significant TSF failures in recorded history and to analyze these data in the context of gloal mining economics 1910-2010 ( Risk, Economics and Public Liability of TSF Failures, Bowker/Chambers July 2015) In 2014 Bowker Associates commissioned globally respected geophysicist and hydrogeologist Dr. David Chambers to undertake two technical works: (1) development of technical go no go criteria for vetting mine applications tp://lindsaynewlandbowker.wordpress.com/2014/01/05/a-new-statutory-regulatory-framework-for-responble-sulfide-mining-should-this-mine-be-built/ and (2) a case study of Maine's Bald Mountain, an un mined low grade high risk VMS deposit demonstrating the efficacy and accuracy of two risk assessment tools in vetting mine proposals https://lindsaynewlandbowker.wordpress.com/2014/02/28/mountain-x-would-you-issue-a-permit-to-this-mine/ In Maine, Bowker Associates has deeply engaged and been a public voice in the Searsport DCP LPG Tank, The Cianbro proposal for a Private East West Toll Road, JD Irvings rolling pipeline of Bakken crude to its plant in St. John and review of Phase II plans at The Callahan Superfund site in Brooksville, Maine, and Maine's revisitation of mining in statute and regulation... Our only “client”: is always “the pubic interest”. Our model is to focus on only one or two issues at a time so that we have a substantive command of the relevant field as our foundation for ongoing engagement. Our core work is in envirommental risk management, science and technology as well as bringing any available “best practices” models to the fore. The legal and regulatory history/best models are also a major thrust of our work in building and evaluating public policy. Director/Principal Lindsay Newland Bowker, CPCU, ARM is a recognized expert in Environmental Risk Management., Heavy Construction Risk Management and Marine and Transit Risks and has more than 3 decades of engagement in buiding public policy. Appointed by Governor Mario Cuomo to New York State Banking Board (served 1986-1996); President New York Chapter Chartered Property and Casualty Insurers; Environmental Committee, Risk and Insurance Management Society; Director, Convenor/Co-Chair Bermuda Market Briefing "From Captive to Cats" Hamilton Bermuda. Published Articles of Significance The Risk Economics and Public Liability of Tailings Facility Failures, co-authored with David M. Chambers, July 2015 Beyond. Polarization: Superfund Reform in Perspective, Risk & Insurance Managing Risk For Loss Prevention & Cost Control (Jan. 24, 1997). Lead Hazards and Abatement Technologies in Construction: A Risk Management Approach CPCU Journal 1997 Employee Leasing: Liability in Limbo Risk Management June 1 1997 Environmental Audit Privilege and the Public interest Risk & Insurance Managing Risk For Loss Prevention & Cost Control, April 1997 Asbestos:Holes In Abatement Policies Need To Be Plugged, Lloyd’s Environmental Risk International, May 1993 Editor Published Letters Evironmental Risk Management Beware of Facile Policies Like Fetal Protection Business Insurance 1995(?) High Court Review May Increase Sale of Bank Annuities Business Insurances August 8, 1995 Professional Profiles Protecting the Big Apple’s Core Managing Risk For Loss Prevention & Control December 1996 Major Career Highlights First rigorous analysis showing Relationship Between declining ore grades and TSF Failures of increasing consequence ( July 2015) FIrst Documentation that Gentrification Has Same Impacts as Unassisted Displacement from Urban Renewal Sites Direted Court Ordered EIS of FHA Mortgage Scandal Created Nation's First Homeownership Program for Low Income People (SHIP) Created Earliest Geographic Information Systems Using Defense Technology Developed By IBM Designed and Conducted Parallel Census Count to Show Systematic undercount in minority neighborhoods Documented Bias in ISO Territory Rating Plans for Private Passenger Auto Insurance Using ISO's own Rating Techniques Demonstrated Inherent Bias in Mortgage Policies of Banks With Inner City Branches Demonstrated that NY Telephones Plan for Area Code Split To accommodate anticipated cell phone demand was not efficient and would exhaust in 5 years ( which it did) Undertook First Systematic Evaluation of Child Protective Services Caseload Using Multi Variate Analyic Techniques Developed Child Protective Caseload Management and Tracking System (CANTS) and directed implementation in 4 client states including Illinois, Florida and New York Created and Ran Office of Risk Management for NYC DEP the Nations largest Water & Sewer Authority . Designed, Created and Administered Nation's First Owner Controlled Insurance Program (OCIP)for High Risk Tunneling Education Masters NYU Graduate School of Public Administration BSC New School For Social Research Maine Public Schools Deering High School
This entry was posted in Bowker Associates Science & Research In The Public Interest, Catastrophic Tailings Failures, Causes Of Catastrophic Tailings Dam Failures, Environmental Risk Management, financial risk and public liability, Imperial Metals, Lindsay Newland Bowker, Mine Feasibility, Mining Economics, mining environmental risk management, Mining Financial Feasibility, Mining Regulation, Mt. Polley, Risk & Public Liability of Tailings Dams, Risk Avoidance & Loss Prevention Metallic Mining, Uncategorized. Bookmark the permalink.

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