Offering mining equipment and services ranging from basic ‘big iron’ to high tech, companies in the Sudbury/North Bay/Timmins area are taking a hard look at export-market opportunities
By Russell A. Carter, Managing Editor
Canada’s Northern Ontario, a region larger than France and Germany combined—representing about 90% of the land area of the entire province, but containing only a small fraction of its people—is geographically distant from most population centers but is solidly emplaced in the nexus of world-class mining districts that form the backbone of the global minerals industry. The region’s Sudbury Basin is host to one of the world’s largest deposits of nickel and copper, and offers such favorable prospects for additional mineral wealth that it has attracted billions of investment dollars from both Canadian and international mining giants such as Brazil’s Vale (Vale Ltd., formerly Inco) and Switzerland’s Xstrata plc (Xstrata Nickel, formerly Falconbridge).
The dollars continue to flow in. The Ontario Mining Association reports that Vale plans to invest $3.4 billion in its Sudbury area operations, including $200 million to upgrade the Clarabelle mill, $360 million to bring the Totten mine into production and up to $2 billion on an Atmospheric Emissions Reduction (AER) project to cut sulphur dioxide emissions by 80%. Quadra FNX intends to spend $200 million on Sudbury area expansions and North American Palladium, north of Thunder Bay, is sinking $270 million into an expansion of the Lac des Iles mine.
Somewhat obscured by the reputations and revenues of the region’s world-famous mines, is the scope of mining-related commerce that has developed in support of the industry. A recent study commissioned by the Ontario North Economic Development Corporation (ONE-DC) estimates the total value of the service and supply sector’s output at $5.6 billion annually, encompassing about 500 companies with 23,000 employees that derive at least half of their revenue from sales of mining-related goods and services.
Covering the Equipment Spectrum
During a recent tour of Northern Ontario mines and mining vendors, E&MJ had the opportunity to discuss business objectives and challenges with a number of suppliers, which range from international companies such as Atlas Copco, Boart Longyear and J.S. Redpath to local machine shops whose financial survival often hinges on renewal of a single contract or two for specialty items used by larger fabricators.
One of the larger local companies is Mining Technologies International Inc. (MTI), which employs more than 300 workers and operates manufacturing facilities in Sudbury and North Bay producing a wide range of underground mining equipment, including hydraulic drill jumbos, LHDs, dump trucks, shaft drilling jumbos, long hole jumbos, in-the-hole (ITH) drilling rigs, computerized drill rigs, automated ITH drills with rod handlers, rail haulage systems, mine locomotives, buckets and bucket lip assemblies, bucket wear parts and low profile crushing plants as well as custom equipment for specific underground requirements. In addition, MTI also manufactures a full line of drill string components for drilling large diameter raises, blast holes, exploration holes and ITH applications.
Ask Robert Lipic, the CEO of MTI, about the history of the company, and he’ll walk you through the mergers, acquisitions and growth that followed his buyout of Smith International’s Drillco unit in 1986, when that division was marked for closure by the parent corporation. Lipic explained that present-day MTI incorporates a number of well-known past brands within the industry, including Drillex, Continuous Mining Systems and John Clark. MTI also bought Ingersoll-Rand’s underground product line and currently supplies (and repairs) Montabert rock drills on its various rig models.
As a direct competitor against larger, multinational companies—such as Atlas Copco, Caterpillar and Sandvik in the mobile underground equipment market, for example—MTI has to make sure its products meet the customer’s needs, Lipic explained, and the best approach for reaching that goal is to design them with the demands of the job in mind, then build them with top-grade materials. “The lab we use for our research and development is every mine that buys our equipment,” he said. “And, there are only about three mills in the world that we trust to supply our steel with the quality we demand.”
Lipic plans to expand MTI’s market share in the North and South American tunneling business, offering its Tunnel Runner 1LB and 2LB jumbo rigs featuring larger, more rugged carriers. Its line of LHDs ranges from 0.5 m3 to 5.4 m3 bucket capacity, and all except the smallest model employ load-sensing hydraulics for operational efficiency. Currently the company’s most popular model is the LT-350, a 1.9-m3 LHD with rated load capacity of 3,636 kg (8,000 lb) and an all-mechanical drivetrain.
The company also is looking ahead to adopt new technology to its traditional mining equipment—testing, for example, a hybrid diesel-electric LHD as well as hydrogen-injection systems for conventional diesels, a concept that offers high potential for cutting emissions and improving fuel economy.
Other regional players in underground equipment supply include Minesteel Fabricators, and its sister company, Nordic Mine Technology. Both are located under the same roof at a facility in North Bay, but as Business Development Manager Phillip Brown explained, Minesteel focuses on designing and building equipment primarily intended for vertical movement of ore—headframes, skips and cages, etc.—while Nordic specializes in horizontal transport of ore, involving mine cars, chutes and dump stations.
Acquired by the Canadian company in 2006 after its startup in Sweden in 1967, Nordic Mine Technology’s track haulage systems can be outfitted with either end-hinge or side-hinge cars in capacities ranging from 2.5 m3 to 20 m3, while its chute sizes include 1,520 x 900 mm up to 2,438 x 1,828 mm (5 x 3 ft to 8 x 6 ft). According to Brown, Nordic’s use of tapered roller bearings in its mine car wheel assemblies allows the use of smaller locomotives due to lower rolling resistance, and its car design allows for continuous loading while the train is in motion, when used with Nordic loading chutes. The chutes are supplied in sections for easy installation, and can be reused in new stope or ore-pass locations. They are available with direct, local remote or distant TV-remote control options.
Another innovative haulage concept is being advanced by Rail-Veyor Technologies, incorporating the use of light rail track with a series of interconnected, two-wheeled cars, creating an open trough capable of continuous movement. The cars are connected to allow articulated movement for curves and dumping, and trough lengths are designed to meet tonnage requirements. Sealing of the gaps between cars is accomplished with flexible flaps that prevent material leakage and form a chute for product discharge.
This technology, according to Mike Romaniuk, president and CEO, was originally developed in the 1960s in France, but was not put into an actual production environment until many years later—by Harmony Gold in South Africa in 2005, where it has been transporting roughly 3.7 million mt/y of ore at the Phakisa mine. A test installation has been in place at Vale’s Frood-Stobie mine in Sudbury since 2007 and Vale recently announced it plans to install at least one Rail-Veyor system at its Copper Cliff mine in Sudbury later this year and may be interested in using it at other operations as well.
The current version of the system employs 30-in.-wide cars, but Romaniuk sees potential benefits in expanding the technology to larger, 48-in. cars in surface mine applications.
Mindoka Technology, North Bay, approaches high technology in mining from a completely different direction: It has developed the Mindoka Information Resource System (MIRS), a suite of complementary personal productivity functions that stands by itself but also supports other modular software solutions from this developer. Of particular interest to the mining industry is Mindoka’s D3C technology.
According to Todd Shortt, vice president of operations at Mindoka, its D3C document conversion engine allows workers to maintain and publish job-related documentation using tools they are already familiar with. In order to publish a document to the Web, a user simply drags the document into a D3C folder, and the D3C engine converts proprietary file formats such as Adobe PDF or Microsoft Word to common HTML format, offering users the ability to produce Web-ready content in seconds. Each of the converted documents is completely searchable from both inside and outside the document, saving valuable time and reducing the possibility of on-the-job errors caused by lack of pertinent information.
The technology has attracted mining-industry clients such as Atlas Copco, Fordia and others that have mounting demands for providing updated, easily accessible information to enterprise-wide users, such as a drill mechanic in a remote location who needs parts or diagnostic information for a specific rig. According to Shortt, customers have the option of setting up their document management systems employing D3C either as a server-based system they manage themselves, or as a Web-hosted system “in the cloud.”
Looking at Market Expansion
Although many of the products and services provided by Northern Ontario vendors seem to have industry-wide applicability, the market presence of many of these suppliers doesn’t extend significantly beyond Canadian borders. The ONE-DC study mentioned previously showed 81% of sales from Sudbury/North Bay/Timmins/Thunder Bay mining-related businesses was to Canadian buyers; of that share, 62% of sales was to Northern Ontario customers, 7% elsewhere in Ontario and the remaining 12% elsewhere in Canada. Of the 19% of sales outside Canada, 5% was to U.S. buyers, 8% went to buyers outside of North America and the remaining 6% of sales was to unspecified regions.
In addition to having a predominantly domestic focus, many of these suppliers are heavily dependent on just one or two major customers: The study indicated 48% depend on one customer for almost 30% of sales, while 51% rely on two customers for at least 50% of sales. Almost two-thirds (63%) of “best customers” as well as 54% of “second best customers” are mining companies; while another 16% of best customers are manufacturers of complete mining systems and another 6% manufacture components for such systems.
Not surprisingly, many of these Northern Ontario enterprises would like to expand their market horizons. However, survey participants listed several barriers to expanded market presence: lack of market intelligence ranked at the top of this list, followed by lack of connections to complementary companies that might facilitate access to broader markets. About one-quarter of participants felt their product pricing was noncompetitive while 18% believed that entering the export market would require unaffordable investment. Interestingly, only 4% thought their products weren’t competitive from a quality standpoint.
The study offered several recommendations for companies interested in market expansion: 1) develop an “e-quartermaster” capability—essentially, a virtual inventory of products and services to raise potential customer awareness of the sector’s capabilities; 2) establish a Northern Ontario Best Practices Standard to promote the assertion that suppliers are world-class caliber, and offer an avenue for lesser-known suppliers to penetrate offshore markets; 3) overcome barriers of scale by establishing consortia among various regional suppliers, able to support specialization of goods and services by mining sector (gold/base metal, underground/surface, etc.) as well as provide capability for quick response to global opportunities; and 4) establish a foreign market entry program that would facilitate market-broadening efforts in terms of partnerships, distributors and product/service profiles.
Some of these concepts are already being tested and explored, according to various Northern Ontario business leaders, and the sector as a whole appears to be optimistic about the future—83% of surveyed businesses expect to see significant revenue increases over the next three years.