Feast, Famine and Faith

Feast, Famine and Faith

The Nordic region’s mining firms and technology suppliers have not escaped the chill winds that swept through the world’s financial and trading centers. But neither have they stopped key investment programs.

By Kyran Kasteel, European Editor

For some companies, particularly those producing zinc, 2008 was generally negative. But for most it was a year of two moods. Up until September, things seemed to be going very well, as was still the view of most mining and technology attendees at MINExpo in Las Vegas late in that month. A month later, when the first Euro Mine Expo took place in Skellefteå, Sweden, exploration drilling in the Nordic countries had pretty much been stopped, demand for industrial metals was disappearing, equipment orders were being postponed or withdrawn and equity markets slumped. It was a time to take the tough decisions, while keeping the long-term strategies in focus.

LKAB Sticks to its Guns but Keeps the Safety On

Iron ore producer LKAB’s progress through the slough of despond clearly illustrates the evolving situation.

The company performed exceptionally well through the first three quarters of 2008, which doubtless encouraged its board of directors to approve development of a new haulage level at the Kiruna mine, in addition to that already agreed for Malmberget (see also p. ?? and E&MJ, pp. 76-77). By this time too, LKAB had invested SEK4.6 billion (1 Swedish kronor = $0.1429) on the new pelletizing plants, improved logistics and other assets and paid SEK1,950 million in compensation to the Swedish Rail Authority, Banverket, for future rerouting of the railway in Kiruna.

Even so, operating income for the full year 2008 increased by 68% and amounted to SEK10,327 million. This was the best result in the company’s history and the board suggested that dividends paid to the owner, the Swedish state, for the year 2008 should total SEK2,800 million. The year’s production of crude ore in both of LKAB’s iron ore mines was a record too: nearly 43 million mt of crude ore, 27.5 million mt at Kiruna and 15.4 million mt in Malmberget. was produced. This represented a total increase of almost 2 million mt compared with 2007. Pellet production also rose to new record levels following the major investments in new pelletizing plants in recent years. The production volume reached 19.9 million mt, over 1 million mt more than LKAB produced during the previous year. In addition, the company matched its 2007 record for pellet deliveries of 17.9 million mt.

But the good times ended in the last quarter and LKAB was forced to sharply apply the brakes. Operating income for the fourth quarter of 2008 declined by 63%. Management reacted swiftly to the downturn and in late November 2008 announced the closure of pellet plant MK3 in Malmberget for four months, starting December 1, 2008. The Svappavaara plant would be closed from the start of the New Year until the end of May. In other pelletizing plants, production would be stopped for shorter periods during the spring of 2009. Maintenance and renovation would be carried out in all plants. However, recruitment of personnel for rock reinforcement work, as part of LKAB’s long-term safety-improvement program, would be carried through as planned and long-term expenditure plans remained unchanged.

Deliveries remained low during the first quarter of 2009 and LKAB trimmed all of its operations and reviewed cost structures. In early March the company decided to stop virtually all iron ore production for five weeks in summer. Operations at both iron ore mines and five of the six pelletizing plants would be suspended during the month of July. Stockpiles would allow LKAB to meet delivery commitments. Operations at stock facilities, on the railway and at the harbors were to continue throughout the summer to ensure ongoing transport and shipping of iron ore products. Investment in the new main levels would still proceed as planned, and no redundancies of permanent employees were slated.

But the devil drove on and on March 31 LKAB announced an extension of the summer production stop at the mines and pellet plants to eight weeks and the closure thereafter of the Svappavaara plant and pelletizing plant MK3 in Malmberget until mid-2010. The rate of production in the mines in Kiruna and Malmberget will also be slowed for the first half of 2010. Management also decided to reassess LKAB’s future investment plans, although the long-range outlook remained unchanged.

Commenting on the second quarter 2009, acting President and CEO Lars-Eric Aaro* described it as one of the most dramatic in LKAB’s history. Although Mining Division deliveries were marginally better than through January–March, the first half still saw a 42% drop as compared with H1 2008. Worse, iron ore price negotiations resulted in an effective 50% reduction so that the 2009 price was just under the 2007 level. Income was immediately affected and April–June operating income fell by 119% to SEK –558 million. For January–June the decrease was 10% to SEK –486 million, as compared with SEK 6,111 million in first half 2008. First half 2009 cash flow from operating activities amounted to SEK –2,480 million.

More recently, however, orders for deliveries in the second half picked up and LKAB reached agreements with Chinese customers for deliveries during 2009–2011. Sales in the Middle East also improved and in Europe some producers’ ore stocks now needed replenishing although their rate of steel making was not increasing yet. Aaro also confirmed that the long-term strategic investments in logistics and new main levels at the mines were to continue, even if commissioning dates may be postponed.
—————————————————

*Mr. Aaro has been acting since late April when Ola Johnson became ill. Sadly, Mr. Johnson did not recover and died in August. [INSERT FOOTNOTE AT BOTTOM OF PAGE.]

Boliden on the Mend?

The Nordic region’s largest base metals producer, New Boliden, has actually had a tough 18 months. Zinc prices had already weakened in first half 2008, the company’s zinc mine production were lower than in 2008 and copper prices went south in the fourth quarter. Boliden’s revenues for the full year fell from SEK33,204 million in 2007 to SEK30,987 million. Operating profit decreased from SEK5,428 million to SEK1,004 million. However, operating profit in the fourth quarter was SEK –491 million as Boliden decided to revalue its smelter process stocks sharply downward. Free cash flow in the second half of 2008 was likewise negative so the full year figure was cut back from SEK1,212 million in 2007 to SEK877 million in 2008, as compared with last year’s H1 figure of SEK1,488 million.

The downward revenue trend continued in the first and second quarters of 2009 but operating profit in Q2 was higher than that in Q2 2008, mainly because Boliden was able to reduce the cost of goods sold. Operating profit for the first half of this year was SEK1,442 million compared with SEK1,637 million in January–June 2008. Cash flow in first half 2009 was sharply negative, down to SEK –1,908 million compared with SEK 1,488 million in January–June 2008. But the deficit in the second quarter was only SEK –97 million. Liquid assets decreased by SEK486 million for H1 2009 as a whole but increased by SEK290 million in the second quarter.

Boliden says cost-cutting measures in 2009 have mainly achieved lower costs for external services and personnel so that, excluding raw materials purchases, operating costs in the second quarter were lower than in January–March 2009 and also lower than in April–June 2008. The management observes that activity levels in the Chinese economy improved in the second quarter this year, to the extent that the country’s base metals demand was as great as the combined demand from the USA and Europe. Global demand for zinc and copper increased by 7% and 5%, respectively, in the second quarter relative to the first while the equivalent figures for Chinese demand were up by 11% and 7%. Global demand for both metals was still well down on the April–June period of 2008, although in China restocking in H1 2009 helped copper demand to reach a level 19% better than that in first half 2008. Weak demand for sulphuric acid has been a limiting factor for smelter operating rates, Boliden says.

In May this year Boliden announced a reorganization aimed at generating further efficiency improvements within the Group’s material flows. The bulk of the operations carried out by the former Business Area (BA) Market, comprising raw materials purchasing and metals sales, will be integrated with the Smelters Business Area and responsibility for concentrates sales will be transferred to BA Mines. Boliden President and CEO Lennart Evrell explained that creating BA Market had achieved significant improvements in these material flows but the need to make further improvements requires this area of responsibility to be tied even more closely to the production units. Svante Nilsson is now president of BA Smelters.

The Mines segment revenues in January–June 2009 were, at SEK3,069 million, ahead of first half 2008 and so was the operating profit of SEK891 million, which was also greater than that for the whole of 2008. On the other hand, Smelters segment revenues and operating profit were well down on first half 2008’s SEK17,465 million and SEK903 million, reaching only SEK12,041 million and SEK 689 million.

Smelter zinc production tonnages in H1 2009 were, as compared with first half 2008, reduced from 147,506 mt to 138,516 mt at Kokkola in Finland, from 73,949 mt to 65,248 mt at Odda in Norway and from 21,564 mt (clinker) to 19,347 mt at Rönnskär in Sweden. Copper cathode production was also cut back from 114,009 mt to 93,406 mt at Rönnskär and from 62,955 mt to 46,363 mt at Harjavalta in Finland. Lead and gold recovery also declined at the Swedish facility but silver production was significantly higher. Similarly, at Harjavalta gold output fell but silver went up. Sulphuric acid production at Odda, Rönnskär and Harjavalta was reduced.

January–June mines output relativities also varied. In Ireland, Tara produced less contained zinc and lead in first half 2009 but Q2 output was up on that in April–June 2008. In Sweden, Garpenberg produced more contained zinc, lead and silver in the first half of this year compared with H1 2008 but less copper and gold; the Boliden area operations produced less contained zinc, copper, lead and silver but more gold in January–June 2009. Aitik again produced more copper, although head grade was down; more gold, at a slightly higher head grade; but much less silver, on account of a sharp drop in head grade.

Despite the trauma of fourth-quarter 2008, Boliden has continued to develop all of the mines’ mineral assets, although with a less intensive approach than previously. Favorable results were achieved at all four. New Group environmental goals have been set for 2009–2013 in respect of metals emissions into the air and water, energy consumption levels, and SO₂ and CO₂ emissions into the air.

The aggregate accident frequency for 2008 was 9.1, corresponding to a decrease in comparison with 2007 as a whole, when the accident frequency was 9.9. A fatal accident occurred at Tara in October. Boliden has an established zero accidents philosophy at work and has now further intensified its focus on reducing accidents by setting a goal of zero accidents every month for all units, as of 2009. Boliden’s goal was for all of its production units to be certified in accordance with the work environment standard, OHSAS 18001, by the end of 2008. The goal was achieved at all units with the exception of Rönnskär, which will achieve its certification in the spring of 2009.

Inmet Plays Patience

One of Toronto, Canada-based Inmet’s international spread of operations is the Pyhäsalmi mine in central Finland. Like Boliden, Inmet had a tough year overall in 2008 and has faced challenges in 2009.At Pyhäsalmi the target set for for tons milled per day last year was exceeded by 100 mt at 3850 mt. The mill had a record availability of 96% and the total tonnage processed reached over 1.4 million mt. Mining efficiency also improved. The operation contributed 23% of Inmet’s overall revenue. However, the fall in copper prices from $4.00/lb in March 2008 to $1.32/lb at year-end reduced earnings and the Inmet share price tumbled from $81 to $19. Net income last year was C$217 million below the 2007 figure.

In the first six months of 2009 the amount milled per day improved again to 3900 mt/d, but cost per ton milled also rose slightly. As compared with H1 2008, contained copper output increased 11% for the six months to 7300 mt but rose 19% in the second quarter. Contained zinc production on the other hand fell by 40% over the six-month period though only by 26% in the second quarter of 2009. This was due to lower grades. Pyrite output in H1 2009 rose by 6% to 132,200 mt but persisting weakness in pyrite demand reduced sales returns and volumes. The pyrite target output has therefore been reduced.

Inmet says increased ground support costs in the first half this year put pressure on mine operating costs but mill operating materials costs should be lower in the second half. Pyhäsalmi has introduced remote controlled drilling rigs which are able to work in the vicinity of the mine’s automated loading and haulage areas and will add new bolting rigs.

Overall Inmet believes that its strong balance sheet, low operating costs and consistent long-term focus on cost control will enable the company to pull through the downturn and possibly gain a strategic advantage. But continuous review of discretionary spending levels will be essential. Petaquilla in Panama will be maintained as a “ready-to-build project”.

Lundin Hangs In

Like Inmet, Lundin Mining has corporate headquarters in Toronto but operational headquarters near London, U.K. Like Boliden, the company saw some rebound in the second quarter of 2009 from the low point in the first quarter. However, sales in January–June this year fell from $599.8 million in H! 2008 to $318.2 million and operating earnings were slashed from $320.1 million to $129.2 million. But net income recovered from $29.6 million in first half 2008 to $34.9 million in January–June 2009. And in the second quarter this year net income was $43.5 million.

Lundin President and CEO Phil Wright remarked: “We ran cautious in the short term with a continuing focus on tight expenditure controls.” Investment in the copper project at Lundin’s low cost Zinkgruvan mine in Sweden continues. The aim is to access the copper orebody and improve zinc mining flexibility by installing a second underground crusher and a daylight ramp access.

Outokumpu Holds Back

Finland’s stainless steel specialist Outokumpu also had a difficult year in 2008 but has seen some encouraging signs recently. Operating profit fell from €589 million in 2007 to € –63 million in 2008 and in December through January 2009 moved to reduce costs, reduce working capital and postpone investments in 2009 such that the amount invested could be reduced by over €500 million to €300 million. The first quarter this year saw an operating loss of €249 million but this was reduced to €94 million in April–June.

Some workers at the stainless steel plant in Tornio were laid off and the project to double ferrochrome capacity was postponed in December 2008. Closure of the Kemi mine, which supplies Tornio’s chromite feed, was announced in February 2009. Outokumpu saw signs of recovery in June and says that employee lay-offs at the Tornio steel operations will end at the end of September. Those at the Kemi mine and the ferrochrome works will end in early October, as previously scheduled.

Euro Mine Expo

From June 8–10, 2010, Nolia AB and Georange are organizing a second event at Skellefteå—the Euro Mine Expo 2010. It will be an international trade fair and conference though doubtless with a large contingent from the Nordic mineral exploration and development community. The conference will have three themes: securing Europe’s mineral and metal resources; the Mine of the Future, and mining and society. Check www.eurominexpo.com

Could be the timing is good.

Mining High Latitude, Low Grade Magnetite

North of the Arctic Circle, the Fenno-Scandian Shield rocks of the Nordic countries host substantial magnetite deposits and some hematite. Substantial exploitation of these resources in three main areas started in the early 20^th century. Although production by LKAB in Sweden has continued, the mines in Finland and Norway ceased working in 1988 and 1996. But the rapid growth in demand for iron ore in the present decade has occasioned a re-evaluation of the resources previously mined in these locations.

In Norway, which hooks round the north of both Sweden and Finland, Northern Iron is about to start iron ore production at the port of Kirkenes, close to the Russian border. On either side of the Sweden-Finland border Northland Resources has advanced projects to mine the Pajala-Kolari area deposits. Meanwhile,

LKAB has started to extend the mines at Malmberget and Kiruna and plan a new mine project at Svappavaara.

Sydvaranger Mines Again

The Australian company Northern Iron Ltd. expects its wholly owned subsidiary Sydvaranger Gruve will start production in October 2009 of high quality concentrate at the Sydvaranger iron ore project, resuming a business first established in 1906.

Finnmark, the rugged northernmost county in Norway, has a long though not extensive mining history. At Kåfjord near the county’s largest town Alta, mines supported the Alten Copper Works from 1826 to 1878 and again from 1896 to 1909. To the east, on Varanger, which is the last major fjord in Norway before the border with Russia, A/S Sydvaranger was established in 1906 to mine and process magnetite iron ore. An open pit mine was developed at Bjørnevatn, just south of Kirkenes, and was linked to the process plant and shipping facilities in the town by a railway in 1907. Production started in 1910 and continued, albeit under military occupation during World War II, until 1996, by which time the operation had mined over 200 million mt of ore. Now, the mining operation has been redesigned and the processing plant refurbished and upgraded by the Australian-based company Northern Iron and its wholly owned local subsidiary Sydvaranger Gruve (SVG).

Cast Iron Case

This renaissance has not happened overnight, explained SVG Managing Director Donald (Don) Hunter when E&MJ visited Sydvaranger in August 2009. In 1997, the Norwegian government finally decided to close down the loss-making state-owned Sydvaranger ASA. The government sold its stake to the local company Varanger Kraft (63%) and the Sør-Varanger Municipality. This move did not go unnoticed among iron ore industry entrepreneurs, nor did the fact that previous governments had invested quite heavily in the operation since 1980 for strategic and social reasons, so the surface mining and the processing facilities were technically sound. The resource base was also adequate for further production and Sydvaranger had developed accesses for underground mining. Poor financial performance could be put down to a combination of difficult market conditions and, possibly, a management that may not have been very commercially astute.

In 1999, Arctic Bulk Minerals—a subsidiary of Savage River, Tasmania mine owner Australian Bulk Minerals—bought the Sydvaranger production equipment. However, Arctic’s attempts to reactivate the operation foundered and the assets were transferred back to Sydvaranger ASA in 2002. Meanwhile, the privately owned Tschudi Shipping Co. (TSC), a Norwegian shipping and logistics operation that dates back to 1883, had established activities in Kirkenes in 1990. These included a subsidiary for lightering gas condensates from the Barents Sea.

For its part, in a bid to maintain employment in Kirkenes after the mine closure, the Norwegian government had invested in creating a harbor development site. One scheme was a rail connection to the Russian system at Nikel which is not far from the international border.  TSC anticipated that further hydrocarbons development in the Barents Sea would drive more business development in the Kirkenes area and decided to build up a land position, primarily by acquiring Sydvaranger ASA, which it did in 2006.

Almost immediately, Tschudi also responded to the continuing Australian interest in the iron ore assets. As a result, a number of Australian entrepreneurs established Northern Iron in Perth for the express purpose of acquiring the Sydvaranger iron ore mining and processing operation. Tschudi took a substantial stake in the new venture, sold Sydvaranger’s iron ore subsidiary Sydvaranger Gruve to Northern Iron, but retained the rest of the Sydvaranger AS assets including the office accommodation, ore storage and ship loading facilities at the Kirkenes site.

The plan was to capitalize on high iron ore prices and demand by getting Sydvaranger back into production as fast as possible, supplying a high quality concentrate for pellet production in Europe, the Middle East and possibly elsewhere in Asia. Things haven’t worked out exactly as planned but Northern Iron has stayed almost on schedule and, seemingly, viable.

Laying a Fast Track to Cash Flow

Michael (Mick) McMullen, a geologist and established mining company maker, was appointed a director of Northern Iron in May 2007, becoming managing director and CEO, and in November Neil Hamilton, whose experience is in legal affairs and business management, was appointed chairman. The team immediately sought to promote a fast track project based on:

• A well-explored mineral resource;
• Established high quality iron ore product;
• Favorable project location in terms of political, financial and regulatory environment and in terms of proximity to European and Middle Eastern iron ore pellet and steelmakers;
• Short lead time to production at low capital intensity because significant part of the necessary basic infrastructure (water, electricity, roads, railway), mining infrastructure, processing plant and ship loading facility were in place;
• Well credentialed major shareholder;
• Experienced senior management and board with good track records in financing, developing and operating mines;
• High current iron ore prices; and
• Further growth opportunities.

In a mining community significantly focused on new iron ore projects Northern Iron was able to attract investment in short order. In December 2007 the company organized a successful $140-million IPO and listed on the Australian Stock Exchange.

To define the scope of work required to bring the operation into production as quickly as possible, the Northern Iron executive team turned to a consulting project management team they knew well, the Coffey Mining office in Perth. Coffey would also advise on the tendering process for new equipment and services. Initially the project team undertook a Detailed Mine Planning Study and a Plant Refurbishment Study.

The mining study reviewed the geotechnical inputs to determine if steeper slopes could be used in the proposed open pits. The site geological, grade and survey data and results from drilling by Sydvaranger Gruve were incorporated into resource models to upgrade to the JORC Measured Resources and Indicated Resource categories where possible. The optimal mine schedule, mine fleet requirements and preferred equipment suppliers were determined, enabling the negotiation of supply, lease and Maintenance and Repairs Contracts (MARCs). Likewise consumables needs were estimated and preferred suppliers chosen to enable the negotiation of contracts. The fast track supremacy driving this exercise meant that scaling of the open-pit plans was influenced by the sizes of equipment that would be deliverable in the then prevailing market.

In similar fashion, the plant study reviewed the cost and availability of appropriate crushing and milling equipment to allow flexibility in sizing the respective machinery, then determined the preferred crusher and mill selection with regard to operating/capital cost and delivery time using a cost/benefit analysis. A detailed design and engineering plan for plant refurbishment was completed, preferred suppliers selected for fixed, consumable and utilities required to enable contract negotiations, and tenders prepared for long lead time items. The style of the construction contracts was also defined. The planned ore production rate was 7 million mt/y ore, yielding 2.9 million mt/y concentrate over a 30-year mine life and start-up was scheduled for mid-2009.

Project Execution: Processing and Shipping

Throughout 2008 Northern iron, SVG and Coffey Mining made rapid progress with all the major components of the redevelopment plan.

The existing run of mine ore treatment facilities are split between the mine site at Bjørnevatn and the concentrator at Kirkenes—where the existing rail unloading system, process plant and offices are located on high ground above the fjord. Three storage silos for the iron ore product, each 30 m in diameter, 75 m deep and with a capacity of 70,000–80,000 mt, are located under the plant and discharge to the ship loading facility at the bottom of the seaward cliff. A concentrate storage capacity of 180,000 dmt has been guaranteed and can potentially be doubled. The port has a draught of 12.9 m suitable for 80,000-dwt Panamax-size vessels and can be dredged—at minor cost, Northern Iron says—to 18 m in order to accommodate Cape-size ships. Tschudi has been refurbishing and upgrading the ship loader to handle 4000 mt/h in future, instead of the previous 1000 mt/h.

At the mine there is a primary crushing plant and a cobbing plant in which a simple magnetic drum separator drops out about 5% of non-magnetic waste from the ROM ore before it is loaded on to trains running on the dedicated 8-km line to Kirkenes. The elderly primary Nordberg gyratory crusher had suffered quite a lot of cracking that required extensive welding and the electrics have been repaired and upgraded to meet today’s standards. Remarkably, the knife-gate discharge and the conveyors, which have individually lubricated rollers, required only limited refurbishment. As part of the equipment package bought from and supported by Atlas Copco, SVG has an HB4200 hydraulic breaker that is mounted on a Cat 345 hydraulic excavator and can alternatively be used for clearing jams in the crusher or breaking oversize blasted rock in the mine. At the time E&MJ visited SVG the commissioning team were putting the crushing station and the breaker through their paces.

The rail line has required new ballast and track repairs, and SVG opted to purchase a track laying machine for these and ongoing maintenance. The existing rolling stock has been repaired as necessary and a spare loco will be leased.

At Kirkenes, processing starts at the secondary and tertiary crusher building. This has been re-equipped with three new Sandvik CH870 cone crushers installed, within the specified time frame and budget, where the former Symons’ secondary and tertiary cone crushers used to be. The secondary CH870 cone crusher has a capacity of around 1200 mt/h, and each of the two in the tertiary stage has a capacity of around 500 mt/h. Sandvik comments that the high-reduction and high-capacity CH870 has no plastic compound between the head center and the mantle which makes this crusher more environmentally friendly than other designs. The Swedish company’s supply contract has also included seven SP pan feeders (4 x SP1423 and 3 x SP1323H), a conveyor system for the ore storage silo and ship loading facilities, and conveyor components.

The grinding facilities in place comprise six 1–1.2-MW Nordberg ball mills but the primary ball mill had been sold and removed prior to Northern Iron’s involvement. To replace this mill a new 8-MW ball mill has been supplied from Perth, Australia, within budget but behind schedule, and new closed circuit hydrocyclone clusters have also been built and shipped within budget and on schedule. Four of the existing secondary mills have been reconditioned.

The primary mill will supply 200-mm undersize to the existing wet magnetic separators, which have been refurbished, and the secondary milling circuit will deliver 54-mm material. The magnetic separation circuit feeds concentrate slurry to three existing Scanmec vacuum disc filters that have also been reactivated and installed within the required timeframe but slightly over budget. These filters yield a concentrate with 9% moisture but SVG has added a new ceramic filter from Larox that delivers a filtrate with 6% moisture so the final concentrate for shipment will have a TML of 8%. This concentrate will be discharged to a new Sandvik conveyor system for transfer to the storage silos.

The end product grades (%) 69.5 Fe, 2.8 SiO₂, 0.210 Al₂O₃, 0.205 MgO, 0.168 CaO, 0.064 MnO, 0.032 TiO₂, 0.014 S, 0.012 K₂O, 0.011 Na₂O, 0.010 P and 0.003 Zn. LOI at 1000°C is -3.33%. It is potentially feasible to recommission the existing silica removal circuit in order to produce a concentrate with 71% Fe and about 1.5%–2.0% SiO₂ suitable for Direct Reduction. There is also an extant pelletizing plant and a 200,000-dmt silo for pellet storage available should SVG decide to go down this route.

The one component of the processing system that could not meet current standards was the process water supply. The plant previously used seawater but this causes polluting chemical reactions. The new system has been designed to use the plant’s fresh water supply and to recycle as much water as possible. To this end a new 35-m-diameter high rate thickener has been installed, a new fresh water pump house has been completed, the necessary new pumps have been installed and the system wet commissioned. Some seawater will be used to dilute the tailings prior to submarine discharge about 450–460 m from the dock and at about 28 m below surface. The tails have no significant effect on the marine environment, according to official tests.

New high- and low-voltage switchgear and cabling have been installed as necessary to meet operational requirements and current standards and also a PLC-based process control system. The latter is mainly intended to monitor product flows.

Mining Adapts to New Realities

The SVG mining concession covers an area of 35 km² that contains 23 more or less separate ore deposits that differ in size and quality. The primary crusher, cobbing plant and railway terminal are located close to the northwest corner of the existing Bjørnevatn pit and the mine offices, maintenance and other buildings to the north.

Geological work during 2008 increased the resource base by 39% and Coffey Mining staff compiled resource and reserve information according to the Australasian JORC Code, establishing a probable reserve of 111.5 million mt. The main resource, worked by the former operation in a sizeable open pit, is Bjørnevatn with a probable reserve of 90.5 million mt at 32% (total) Fe. Two smaller shallow deposits were also evaluated to probable reserve status as they were suitable for rapid development. These are Hyttemalmen, with 4.2 million mt at 33% (total) Fe, and Kjellmannsåsen which has 16.8 million mt grading 32% (total) Fe.

These deposits are limited in extent and also significantly further from the primary crusher and the mine maintenance workshop facilities than the existing open pit, but they do provide SVG with a degree of flexibility. This has proved helpful when mine planning for production in the new market scenario emerging in the wake of the global financial crisis. The remaining 20 deposits are estimated to contain 118 Million mt of ore grading 31% (total) Fe. Of these the largest are Tverrdalen and Fisketind Øst which have inferred resources of 43 million mt (32% Fe) and 29 million mt at 31% Fe, respectively, as of February 9, 2009.

SVG geologist Nick Szebor explained that the Algoma type Banded Iron Formation deposits are hosted by basement gneiss. They extend 12 km along a roughly north-south strike and mainly dip at 70–80° but with some extensive folded areas where they lie flatter. There is actually an east and a west ore zone within the Bjørnevatn pit and some zones may need high wall stability control. To restart mining the open pit will require a lot of pre-stripping for a new pushback, which is why SVG subsequently decided to mine the easy access ore in the two shallow deposits first.

In February 2008, Coffey Mining sought bids for the supply of drilling equipment, explosives, shovels and wheel loaders for loading, 100- and 150-ton-capacity haul trucks, tires and lighting equipment. The tendering process, which also coved MARCs, was extensive but quick, recalled Atlas Copco’s Anders Berglund who handled the company’s bid, having moved to Atlas Copco Anlegg og Gruveteknikk AS in Oslo as Business Line Manager – Aftermarket around the time of the tendering process. Bids had to be submitted by end of March and the orders were confirmed in July 2008, with Atlas Copco providing the rock breaking, drilling and lighting equipment, all supported by a MARC; the Norwegian Caterpillar dealer Pon Equipment supplying Terex-O&K hydraulic excavators and Cat wheel loaders, graders and haul trucks, again backing them with a MARC; EPC Scanexplo Norway delivering explosives to the blastholes; and OTR looking after tires.

The Atlas Copco drilling equipment fleet selected to match this mining scheme included four ROC L8³⁰ down the hole (DTH) rigs from the company’s Surface Drilling Equipment unit and two larger DML rigs from the Drilling Solutions operation in Texas, also equipped for DTH drilling. Two of the L8 rigs were equipped for standard bench drilling in the new pits and two with a reverse circulation system for grade control wherever required. The two DML machines were selected with the larger benches at Bjørnevatn in mind. Both have the high pressure air option for DTH drilling and are equipped with the non-standard South African Mammoth drill pipe handling system.

Two RH120-E hydraulic excavators were supplied by Pon Equipment under the terms of Caterpillar’s marketing arrangement with Terex-O&K. One is equipped with a face shovel attachment and the other with a backhoe. There is also a Cat 345 hydraulic excavator for various duties. The Cat equipment package also includes two 992K wheel loaders for clean-up and rehandling work and two 14M graders for haul road maintenance. The haulage fleet selected comprises 12 x 100-ton-capacity 777F trucks primarily for the long haul from the two new pits and three 150-ton 785D trucks selected for hauling from the bigger benches in the Bjørnevatn pit. The 785D is a proven match for the RH120-E. The Triple Sevens have been delivered in three sets of four, and all three of the larger trucks were on site at the time of E&MJ’s visit. DnB NOR, the largest bank in Norway is providing financing of NOK 350 million for both the Atlas Copco and Caterpillar fleets.

Both Atlas Copco and Pon Equipment have signed five-year MARC deals with SVG covering these equipment fleets and the two companies have both been provided with large and well-equipped maintenance workshops and offices on the ground floor of a refurbished premise leased by SVG that also houses the SVG mine management team on the second floor. OTR, which has the tire supply and repair contract, is housed in a separate building nearby. Atlas Copco is also providing a full bit regrinding service in another unit at the mine site.

SVG has contracted explosives supply for five years to EPC Scanexplo AS – Norway. The Holmestad-based company has constructed an emulsion blending factory on site. Scanexplo also operates in Sweden and claims to have developed Scandinavia’s most extensive system for delivery of explosives directly into shot holes.

Preparation work for the pushback at Bjørnevatn and the two new pits started in August 2008, shortly after the contract awards. Blasting approvals came through in November, and the first four Cat 777F trucks plus a tool carrier were delivered by the end of the year, with the first 992K wheel loader arriving a little later. SVG had also recruited most of the senior management team by year end, attracting people with extensive experience of projects around the world.

However, the global financial crisis of third quarter 2008 caused Northern Iron to take stock— by way of an Expansion Study. This considered a range of throughputs from 8.4 million mt/y to 17.5 million mt/y and indicated that doubling the ore output from the planned 7 million mt/y and producing 6 million mt/y concentrate over a 15-year mine life would be optimal. Completion of the earlier underground mine development project would add a further two years’ life. The estimated cost of this expansion would be A$200 million at +/- 15% accuracy, plus an additional US$21 million for leasing the necessary extra equipment. The gain would be a 10% reduction in cost per mton and the payback period for the capex would be about one year. This expansion would include refurbishing the flotation circuit. On the other hand increasing throughput by 20% to 8.4 million mt/y would cost very little.

All apparently attractive options—but in the febrile post financial crisis atmosphere Northern Iron chose not to initiate an expansion, at least until SVG had achieved regular production. With costs forecast to rise and iron ore prices expected to stay depressed, SVG decided to reduce costs by mining Hyttemalmen first, as a 300-m-long by 80-km-wide open pit with 12 benches each 8-m high, followed by Kjellmannsåsen and Bjørnevatn. The redevelopment plan for the Sydvaranger Gruve (SVG) assets was now based on initially producing 2.65Million mt/y and later 3Million mt/y of concentrate with a P₈₀ of 53 micron. Meanwhile, despite the cost of operational activities and share-related
expenses, Northern Iron made a profit in 2008, mainly from earned interest and foreign exchange gains.

Grid power supply has been negotiated, albeit with an additional cost of A$6.4 million, and by early 2009 all Norwegian national permit and other approvals had been granted. These included:

• a concession from the Ministry of Trade and Industry for Northern Iron to acquire the shares in Sydvaranger Gruve;
• mining rights concession and an industrial concession from the Directorate of Mining;
• rail permit and concession from the Railway Inspectorate;
• water extraction permit from the National Water Authorities;
• submarine tailings disposal, waste rock disposal and water drainage approval from the Pollution Control Authority and a pipeline permit from the Coastal Administration.

In addition the Sør-Varanger Municipality, within whose patch the operations lie, gave the necessary municipal planning approval.

In January 2009, Northern Iron announced another crucial success, an offtake agreement with Corus, the Anglo-Dutch steelmaker that is part of the Tata Steel group. This covers 45% of planned output over five years—6 million mt iron ore—and a mutual option for another 0.5 million mt/y subject to moving to a DR product. The term commenced on July 1, 2009 and pricing is referenced to the Vale SSF benchmark. Corus was previously a satisfied Sydvaranger customer and will probably use the concentrate at the Ijmuiden works in The Netherlands. Northern Iron has also signed a Memorandum of Understanding with another party, based in the Middle East, for the remainder of production and other parties have expressed interest.

In February 2009, Northern Iron completed a capital raising intended to accelerate the case for an incremental expansion and provide a buffer against possible further worsening of market conditions. At this time Northern Iron Ltd had 165 million shares and 4.7 million options on issue, with 17.5 million shares to be issued as a result of the capital raising. The company also had A$ 55 million in cash on deposit with three Australian and one Norwegian bank. The majority of Norwegian kronor (NOK) and Euro costs had been covered by transfers made when the Australian dollar had been at historic highs and company policy is to use physical cash holdings to hedge currency exposure for capital expenses.

Also on the bright side, the project started to benefit from decreases in some operating costs and shorter equipment lead times. And in April, Coffey Mining released new resource estimates for the Fisketind Øst and Tverrdalen orebodies, based on 2008 drilling, which increased the Project Indicated Resource by 18%. However, production of the new primary mill was delayed, eventually pushing anticipated process plant start up forward from July to October 2009.

In May, Northern Iron announced it had updated its funding arrangements following a consultant’s cost review that indicated a material increase in the forecast cost to complete the project. A share placement had raised A$29 million and the company also accepted debt offers totaling A$29.2 million from Onnovasjon Norge and DnB NOR in Norway. In late June the company reported that mining had started at Hyttemalmen and Kjellmannsåsen. Some 300,000 mt of material had been excavated and 65,000 mt of ore had been trucked to the ROM pad. The mining exercise, which employed the ROC L8 drilling rigs and the RH120 face shovel in the Hyttemalmen pit and Cat 777s, established that the mining system could effectively produce ROM ore at the planned rate. SVG is using Surpac software for planning. However, the process plant could not be completed in time for the scheduled July 2009 start up.

When E&MJ visited the operation in August, Senior Mining Engineer Andrew Buechner explained that SVG was taking advantage of the delayed process plant start up to test drill string options to determine the best combination of Atlas Copco tools and was also experimenting with pre-split drilling. The ore/waste boundaries are sharp and the host gneiss is softer to drill than the magnetite but blasts create a fair amount of large slabs. The hard banded ore fragments very nicely. The required powder factor is 0.9 kg/m³. The mining rate target is just under 10 mm³/y material at a 1.8:1 strip ratio. The benches at Hyttemalm will have a high wall with slope angles of 60–61°. The remaining ROC L8 RC rig will drill three benches ahead for grade control. This pit will probably work for 18 months, Kjellmannsåsen for 4–5 years, with Bjørnevatn kicking in 2–3 years from now. The mine staff will work two 10 hour shifts with a blasting break from 16.00 to 20.00 hours; the MARC service crews will work two 7 hour shifts.

At the time of E&MJ’s visit there were still 250 contractor personnel at work and 110 SVG employees. However, said Donald Hunter, SVG will need 220 people when production starts on a two-shift basis. He was confident that SVG would be producing iron ore in October 2009.

Outlook

Northern Iron considers that, notwithstanding the anticipated three-month delay to the start of iron ore production, the execution of the Sydvaranger Gruve project has pretty much delivered on the IPO Prospectus, especially if the sharp changes in the financial climate and iron ore market are taken into account.

For the future an expansion along the lines of the study already carried out remains a possibility. As Northern Iron states that producing the highest quality product is the best strategy for ensuring the ability to sell 100% of mine production, the production of a DR grade concentrate seems a likely development. A move downstream to pelletization and underground mining development are probably a few years away.

Northland Resources Sets New Course

On September 7, Northland Resources Inc. announced the completion of a new Preliminary Economic Assessment (PEA) of the Kaunisvaara project. NRI will now proceed with a full feasibility study.

The Kaunisvaara project is the latest refinement of Northland’s original plans to mine magnetite and iron-copper-gold ores from the Pajala Shear Zone which straddles the Sweden-Finland border north of Haparanda on the Gulf of Bothnia. The reformulated project responds to challenges which arose in the second half of 2008—after the company had digested the findings of the previous PEA completed in June last year. The new PEA was commenced in January 2009.

Announcing completion of the PEA, Northland’s Executive Chairman Anders Hvide commented: “The PEA demonstrates that the Kaunisvaara project stands to be a financially rewarding project with robust operating margins and high rates of return”. Arden (Buck) Morrow, the firm’s president and CEO added, “The findings of the PEA put Northland firmly on the way to becoming a substantial iron ore producer in Europe”. 

Global Financial Crisis resets parameters

Northland suffered almost immediately from the worldwide financial meltdown last year. Major shareholders started selling stock precipitating a price fall that was not compensated by new buyers. The company responded rapidly by trimming spending on less immediate investment targets, including exploration drilling.

However, explained COO Bill Wagener when E&MJ visited the Northland Resources premises in Luleå, Sweden in July 2009, Northland had already decided to refocus its activities earlier in 2008. In response to the PEA carried out earlier last year by Wardell Armstrong International and others, management opted to achieve cash flow from product sales as quickly as possible. To this end Northland would develop the Tapuli deposit in Sweden as quickly as possible.

This led on to the planning of a central processing complex at Kaunisvaara, close to Tapuli and the already evaluated Sahavaara project. To ensure this plant would be viable, Northland decided to mine the Pellivuoma deposit south west of Sahavaara as well. The resulting Kaunisvaara Project was given the go-ahead in December 2008. But activities at the Hannukainen project in Finland would be reduced for the time being.

Meanwhile, in November last year, Northland had signed a Memorandum of Agreement with the Gulf Industrial Investment Company (GIIC) to supply DR pellet grade iron ore concentrate for that company’s pelletization project in Bahrain.

So the first goal Northland set itself for 2009 was completion of a PEA for the Kaunisvaara Complex and the Tapuli, Sahavaara and Pellivuoma deposits. This would help progress the forging of offtake agreements with customers and provide Opex, Capex and IRR/NPV figures to facilitate securing finance for Phase 1 development of the processing complex and the Tapuli mine. In turn progress on these fronts would enable Northland to initiate a Bankable Feasibility Study.

The PEA commenced in January 2009, with Aker Solutions being responsible for overall study management and coordination, acting in consultation with specialist service groups and sub-consultants. These included GeoVista, Micon International, Chlumsky Armbrust & Meyer, Scott Wilson Mining, Metso Minerals and Railize.

The Kaunisvaara project will comprise a single, multi-line processing facility in Sweden treating ores from the Tapuli, Sahavaara and Pellivuoma mines. Metallurgical test work was carried out between December 2008 and March 2009 by GTK (the Geological Survey of Finland) at its mineral processing department in Outokumpu under the supervision of U.S. company Bo Arvidson Consulting. These studies indicated that the plant should yield a concentrate with 69.3% Fe from Tapuli ore and 68.4% from Pellivuoma ore.

Tapuli contains a mineral resource (measured and indicated) of 71.5 million mt at an average grade of 25% Fe with an overall stripping ratio of 2.1:1 (waste to ore). Located 4 km to the south of Tapuli, the Sahavaara open pit contains a mineral resource (measured and indicated) of 91.0 million mt at an average grade of 43% Fe and an inferred resource of 1.8 Million mt at an average grade of 43% Fe, with an overall stripping ratio of 4.6:1 (waste to ore). The third open pit mine, Pellivuoma, is located 15 km to the southwest of Sahavaara and contains an indicated mineral resource of 33.8 million mt at an average grade of 30% Fe and an inferred resource of 37.4 million mt/y at an average grade of 30% Fe. The overall stripping ratio is expected to reach 2.8:1 (waste to ore).

Northland expects to mine all three as conventional loader and truck open pit operations, with Tapuli moving approximately 25 million mt/y, Sahavaara approximately 35 million mt/y and Pellivuoma approximately 20 million mt/y total material per year. For each mine the plan is to haul ROM ore to a pit rim crusher with the product being transported by conveyor to the processing plant.
The Kaunisvaara beneficiation plant is designed to provide the flexibility needed to handle ore feed variations. It includes a primary grinding plant using either AG or SAG mills. There are two lines capable of processing ores from multiple deposits at any given time. The first separation stage consists of wet cobbing with low-intensity magnetic separators (LIMS) to reject a substantial portion as a waste material with minimal loss of iron units. The cobbing magnetic concentrate is then ground by efficient, low-energy mills to a size suitable for final stage magnetic separation, again using LIMS.

Most of the Tapuli feed will not require further processing to yield the required high grade concentrate which will be dewatered and readied for transportation to port. After process water has been recovered the tailing slurry will be pumped to a tailings disposal area, where it will be combined with the cobbing waste and tailings from other ore processing. However, most of the feed from Sahavaara and Pellivuoma does require further upgrading by removing sulphide minerals using simple flotation techniques. 

Cost-effective transport from the production units to the end customer are crucial for the feasibility of this and any second phase projects. That’s why Northland, in close cooperation with Swedish and Finnish transport authorities, has put a lot of effort into finding the best possible solution. Ideally, the company would like to have a cross-border electrified rail link between Kaunisvaara and the Port of Kemi in Finland, a custom-designed and built iron ore loading terminal in the port of Kemi, and regular year-round shipments in up to Handymax size vessels via transloading at sea as well as through one or two hub ports.

However, as the time frame within which the cross-border rail link into Sweden would have to be completed is very tight and not controlled by Northland, the PEA was based on the quicker option of building a pipeline from Kaunisvaara to the railhead at Akasjokisuu, where the concentrate will be dewatered for loading on to trains. The line to the port at Kemi is already being upgraded by the Finnish rail authority to handle up to 3 million mt/y of concentrate. Discussions are ongoing with the Finnish rail authority to increase the rail capacity from Akasjokisuu up to 8–10 million mt/y and so is a study with the Finnish and Swedish rail authorities for an extension to Kaunisvaara. The final decision on rail vs pipeline has to be taken at the latest in the beginning of 2010.

Environmental permitting of the Tapuli mine and the Kaunisvaara mill and any related activities will be the responsibility of the Swedish-Finnish Border River Commission (BRC), which has authority over all water-related projects in the border river’s watershed. A new comprehensive environmental permits application was filed with the BRC in June 2009 and the permitting process is underway. Tapuli has already been granted an Exploitation Concession by the Swedish Mine Inspector. An Exploitation Concession application for the Sahavaara project was to be filed with the Chief Mine Inspector in September. Northland has also completed detailed socio-economic baseline studies for the mines and drafted a Sustainable Development Policy.

Northland accepts that the completed PEA confirms that the Kaunisvaara project is technically feasible and financially positive. The assessment states that, using a discount rate of 8%, the project has a potential Net Present Value (NPV) of $393 million and an Internal Rate of Return (IRR) of 21.1%. Subject to securing all relevant permits and financing, the production of iron ore concentrate is forecast to begin in 2012 at a rate close to 2 million mt/y, increasing to 5 million mt/y in 2014 and the mine should work for 24 years based on present NI 43-101 defined resources. Production of 5 million mt/y of iron ore concentrate will be based on a maximum feed rate of 12.7 million mt/y.

Total capex needed to reach 5 million mt of concentrate capacity is $617 million, but Northland will need to secure financing of only approximately $417 million as capex will be partially funded by project cash flow. The capex figure includes a 15% contingency (excluding mine mobile equipment) and is based on pipeline transportation from the Kaunisvaara process facility in Sweden to the railhead at Akasjokisuu in Finland.

Total opex per metric ton of concentrate delivered FOB at the port of Kemi is estimated to average $38.64/mt for the life of mine and average $34.04/mt over the first 10 years of operation. The opex figure also includes a 15% contingency (excluding royalty and transport). The PEA assumes that the power for the project will be supplied by Finland, although a Swedish alternative is still being considered. A final decision on this matter will be based entirely on the economics for the project. Turner & Townsend were engaged as a peer reviewer to provide an independent review of both the capex and opex figures in the PEA as compiled by Aker Solutions.

The product price forecast used in the Base Case of the PEA is linked to price predictions for Carajas fines delivered to Europe and also includes the freight rate differential that can be expected to be gained by Northland when shipping to the European market (when compared with those producers shipping from Brazil).

Northland immediately presented the results of the Kaunisvaara Project PEA to potential Bahraini trading partner GIIC. Both companies are encouraged by the results and Northland will now consider the best strategy for acquiring funding and moving the Project forward. Discussions between Northland and GIIC will continue to progress towards a final agreement in order to meet part of GIIC’s long-term concentrate requirements. The PEA technical report will be filed on SEDAR and Northland’s website www.northlandresourcesinc.com

Moving On

Despite the ravages of the GFC, Northland emphasizes the company is well-funded, well managed and ready to grow. Project development will commence immediately upon the finalization of the Feasibility Study, which is estimated to be complete during Q2 2010. It is intended that toward the end of the Feasibility Study, the basic engineering will commence, leading on to detailed engineering later in 2010. In order to fast-track the overall development of the project, a number of items will be developed in tandem. The placement of orders for long-lead items is another critical determinant of the overall schedule.

A new comprehensive Environmental permits application was filed in June 2009 and the permitting process is underway. Tapuli has already been granted an Exploitation Concession by the Swedish Mine Inspector and an Exploitation Concession application for the Sahavaara project was to be filed with the Chief Mine Inspector in September. The next permitting step will be the preparation of an Environmental Permit Application for Sahavaara, which contemplates an open pit operation and ore treatment at the Kaunisvaara mill. The goal is to file this application early in 2010. Pellivuoma has been included in a comprehensive environmental baseline study that will be completed by next year. An Exploitation Concession application will be completed as soon as sufficient information on the mineral resource is available.

Northland believes the current timing of first planned production in 2012 could potentially be very good. “More importantly,” said chairman Anders Hyde, “our potential clients expect us to be committed long-term because they will be partially dependent on our products in their planning of future production of pellets or steel.”

LKAB Adds AggloLab, Plumbs New Mining Depths

Steelmaking may have been at a low ebb, but LKAB is still investing in R&D and mine capacity to better meet customers’ future needs.

While Northern Iron and Northland Resources are promoting the suitability of their magnetite concentrates for making iron ore pellets, LKAB is already virtually a 100% pellets producer itself and also the world’s leading supplier of pellets. The company’s long-term strategy is to have the capacity to mine 46 million mt/y of iron ore and make 30 million mt/y of pellets.

Meanwhile, LKAB is developing the world’s best value-adding services in order to assist customers with ongoing development to achieve lowest cost per ton crude iron in their increasingly larger and fewer blast furnaces. Despite the present market problems the company announced it will now complement the Experimental Blast Furnace in Luleå with an agglomeration laboratory in Malmberget. This is the second step in creating an AggloCenter, said acting president Lars-Eric Aaro. Agglomeration, the actual production and balling of an iron ore pellet, is the most important component of the pellet production process and LKAB’s aim is to sell the world’s best “pellet package,” explained Aaro.

The 2300-m² Agglolab will be built directly adjacent to the R&D facility in Malmberget and will be coordinated with existing pilot plant facilities. Construction will begin in the autumn and the lab is expected to be operational at the turn of the year 2010-2011. “At the AggloLab, we will be able to conduct cutting-edge research in a modern facility that includes full-scale equipment for balling,” says Seija Forsmo, research manager and expert in particle technology at LKAB R&D. The lab is very important for process and product development, and it will raise the level of LKAB’s research and pellet expertise. It is essential that newly-won knowledge from research is transferred to those who produce the pellets and here, said Forsmo, AggloLab is a new step towards closer contact between researchers and production personnel.

Research in agglomeration refers to all necessary research in all process stages from mine to finished product and LKAB’s long-term vision is the realization of a so-called AggloCenter. The vision entails the assembly of interdisciplinary research groups with expertise in areas such as mineralogy, chemistry, mineral science, metallurgy, and process control and automation. Research at the AggloCenter will be heavily focused on securing LKAB’s position, as perceived by the customer, as the global leader in pelletizing.

“The first component of the Center was the experimental blast furnace in Luleå built more than 10 years ago, where we and our customers have learned a lot about pellets and the blast furnace process,” said Aaro. The AggloLab will be the second and the third step, an experimental pelletizing plant, is also part of the plan for the future. As yet, it is too soon to say just when it will be built, he said.

LKAB may have a new pellet customer not far from its Narvik terminal in Norway in future. On March 9 this year LKAB, Höganäs ABand StatoilHydro announced they have reached an agreement to conduct a feasibility study for a new ironworks outside Trondheim. The project will investigate the possibility of future DRI iron production in Norway.  This collaboration brings together the partners’ technological know-how—the benefits of LKAB’s iron ore pellets, Höganäs’ usage and sale of metal products and StatoilHydro’s skills in energy generation and gas refining.

The intended location is close to the industrial facility at Tjeldbergodden, south of Trondheim, offering good links to existing infrastructure such as an incoming natural gas pipeline, methanol plant and harbor. CO₂ emissions can be minimized by using natural gas and the partners aim to project manage the world’s most CO₂-neutral DRI plant. The feasibility study is based on yearly production of 1.6 million tons, which should require some 2.2 million tons of DR pellet raw material. The study is scheduled for completion in mid-2010, and will have a total third party cost of NOK12 million.

The new KUJ 1365 main level for Kiruna approved by the LKAB Board last October is expected to cost nearly SEK12.5 billion, the single largest expenditure in the company’s history. Altogether, the new M 1250 main level at Malmberget, KUJ 1365 and the new railway line around Kiruna will require an investment of about SEK20 billion over the five years to 2013-2014, the same as the amount already spent on facilities at surface level. The investment is conditional upon mining concessions, land use permits and environmental permits being granted to LKAB by the Mining Inspectorate of Sweden and the Environmental Court, respectively.

Developing KUJ 1365 will ensure that LKAB’s iron ore mining and processing operations in Kiruna can continue until 2030. The investment includes work in the mine that has been under way since 2006 at a cost of more than SEK1 billion. This includes the construction of infrastructure such as roads, ventilation and hoisting systems, etc. (Work on the ventilation system was discussed by L. Mukka and C. Blomgren at the 12th U.S./North American Mine Ventilation Symposium in 2008.)

The urban transition in Kiruna, which is a direct consequence of mining at the new level, will be a challenge shared by the various stakeholders such as government and local authorities, other companies, property owners and other stakeholders. LKAB is working actively to find joint solutions for the necessary structural transformation which will entail considerable expenditures during the coming years. LKAB will comply with the Minerals Act and will assume responsibly for replacing existing functions.

One of the changes necessary to allow future mining at Kiruna is rerouting the main railway connecting Kiruna, Malmberget and Gallivare with Narvik to the west and Luleå to the south east. In February 2009 LKAB and the Swedish railway authority, Banverket, signed an implementation agreement for an 18 km railway bypass in Kiruna running behind the mine mountain Kiirunavaara. The new track will be operational in October 2012 and LKAB’s investment is estimated at about SEK3 billion. The first phase of construction was to begin in the spring of 2009. Over a four-year period, between 70 and 150 people per year will work on the project.

Under the terms of the implementation agreement, LKAB will finance the new railway at a level corresponding to the function of the existing rail infrastructure. Banverket will assume responsibility for any upgrades needed during construction. Banverket will lay the new track and build bridges and viaducts, while LKAB will be responsible for new roads, dams within its own industrial site, and the company’s own rail access to the new line.

Process plant construction at Kiruna. 

Dannemora Delayed

Not all the iron deposits in the Nordic countries are located above the Arctic Circle. However none of those to the south are still being mined. The Dannemora Mineral group would like to change that.

Dannemora Mineral comprises the parent company Dannemora Mineral AB and the wholly owned subsidiaries Dannemora Magnetit AB and Dannemora Förvaltnings AB. Dannemora Magnetit’s primary aim is to resume operations in the Dannemora iron ore mine and thereafter achieve sound long-term profitability. Dannemora Förvaltnings is responsible for the property portfolio. Since January 1, 2009 a separate division within Dannemora Magnetit has looked after exploration to increase the iron ore reserves in the Dannemora ore field. A further aim is to develop new iron an also base and precious metals prospects into mineable ore deposits. The Dannemora deposit lies in the municipality of Östhammar, about 40 km north of Uppsala and 35 km west of the harbor at Hargshamn, from where the shipment of ore is planned. The nearest town is Österbybruk which is about 2 km east of the mine.

Forging ahead

For much of 2008 the mining project made good progress:

• In January, a feasibility study of the planned operations in the Dannemora mine showed the project has solid financial viability.
• In February, Dannemora Förvaltnings purchased buildings and installations important to mining operations from Östhammar Municipality.
• On 1 April, Staffan Bennerdt took up his position of President and CEO of Dannemora Mineral.
• On 18 June, the Swedish Environmental Court approved the company’s application to engage in mining activities in Dannemora. The ruling has the force of res judicata and cannot be appealed. The environmental permit is for the mining and processing of up to 2.0 million mt/y of lump ore and fines.
• Also in June, Dannemora Mineral completed a private placement which brought the company proceeds of SEK155 million before issue expenses.
• In August, preparations for pumping out the mine began in conjunction with a consortium of ITT Waste & Wastewater AB and Contector AB, [Pumping of the water begins in the second quarter of 2009.]
• A 20-kV power supply line to Dannemora’s operational area was connected in autumn 2008 and a new building was erected with switchgear which will distribute the power supply in the area. A high-voltage cable to the ramp in the northern part of the ore field was laid during 2008. In early 2009, the transformers were installed at the inclined drift, which gave the green light for commencement of the development work.
• In September, Dannemora Magnetit entered into an agreement with Bergteamet AB for ramp development and tunneling work. October saw the start of mobilization of the ramp placement work which will connect the mine’s main level with the existing ramp.
• During the year, following metallurgical test programs which showed that Dannemora’s iron ore products are suitable for the blast furnace processes of future steel customers, Dannemora Mineral had intensive discussions with potential customers from Northern Europe. These culminated in the signing of a letter of intent with four steel companies in the first quarter of 2009.
• Discussions were also held concerning the renovation of the railway infrastructure and resulted in Dannemora Mineral and a number of interested parties signing a declaration of intent with the Swedish Rail Administration in January 2009. In March 2009, Dannemora Magnetit also signed a letter of intent with Hargs Hamn AB regarding the receipt, storage and loading of final products on vessels.
• During December 2008 Dannemora Mineral obtained a “Designation of Land” by the Mining Inspectorate of Sweden for the planned iron ore mining at Dannemora. This permit implies that the land area necessary for the planned mining operation is permitted and approved. Together with current permits according to the Building and Planning Act it is the last major permit necessary for the planned mining operation.

Dannemora Mineral AB engaged Endeavour Financial Ltd as financial adviser for a planned borrowing. To satisfy lenders’ need for an unbiased insight into the mining project, the customary technical, legal, environmental and financial due diligence processes were begun in autumn 2008. Loan financing for the investments in mining operations was conditional on Dannemora Mineral establishing customer relationships which would ensure sale of its iron ore products.

The project continued to progress in early 2009.

• Access ramp placement in the Dannemora iron ore mine began in late January 2009. The development work itself has generated some iron ore but has also enabled the company to mine sufficient Ströms ore to satisfy the need for trial deliveries to some of the potential steel company customers. The crude ore would be refined into lump ore and sintered in a simple temporary separation plant.
• The trial deliveries to the steel companies were scheduled to start in the second quarter of 2009. Much of the equipment used in the temporary separation plant will be used in the planned ore processing plant.
• At this point in time the discussions with various steel companies on long-term delivery agreements were expected to result in signed agreements during the third quarter of 2009, after the steel companies had conducted their full-scale testing. Completion of loan financing agreements consequent upon these delivery deals could thus be expected to be signed in Q3 2009 as well. The operational start for the mine and ore processing plant was now scheduled for autumn 2010, which represented a delay of two quarters.

Grinding to a Halt

Unfortunately, as a result of the steel industry’s reduced production volumes following the global financial crisis, most steel companies had not ordered the iron tonnage agreed with iron ore producers for the contractual period ended March 31, 2009. Some of Dannemora Mineral’s potential customers were anxious to postpone the previously discussed trial deliveries of iron ore.

Consequently long term supply contracts are now not expected to be finalized until the first half of 2010 and loan financing agreements are expected to be signed on the basis of this schedule. As a result the mine and ore processing plant will not be operational until summer 2011, a delay of just over one year on the original plans. However, actual mine drainage started in May after eleven months’ preparation and underground development sufficient to provide the ore required when trial shipments start was completed. But non-time critical investment and activities have been postponed in order to maintain Dannemora Mineral’s good liquidity and sound financial position.

Mine Plan in Place

It is planned that full production, 1.5 million mt/y of iron ore products annually, can be achieved by autumn 2012. As was the case before the mine was shut down in 1992, the mining method to be used is sub-level caving. The ore will be developed and mined with sub-level drifts, but in most cases the wall rock will not cave in. The ore will be transported from different mining points, either directly by truck or via ore chutes to a main level, and then taken to the primary crusher underground. It will then be placed in a storage bin before being hoisted by skip to the surface.

However, in the first two years of operation, the ore will be driven up the ramp and crushed above ground, as deliveries and installations of skips and crushing stations have long lead times. It is planned that the entire ore processing will be dry, by means of repeated crushing, screening and magnetic separation. Dannemora says dry processing has many advantages over the conventional two-stage process previously used, which comprised sorting, followed by wet milling, magnetic separation and dewatering.

 

New Boliden Keeps New Aitik on Track

In July 2009, when E&MJ visited the site in Sweden, New Boliden was still on expecting to complete the Aitik 36 project on schedule in March 2010.

The Aitik open-pit mine near Gällivare is the largest single supplier of copper concentrates to Boliden’s Rönnskär smelter at Skelleftehamn, a 400-km haul by rail. The Aitik 36 project is intended to keep this feed stream cost competitive. The project will extend the mine’s lifespan from 2016 to 2027 and will double the amount of ore mined from 18 to 36 million mt/y. Aitik 36 is by far the largest of the series of expansions Boliden has undertaken since the company started the mine in 1968. It will cut the production cost per ton of metal for the mine and will enable ore with lower grades than at present to be mined profitably. New Aitik is expected to achieve full capacity in 2014. The estimated total investment cost for the project is approximately SEK6 billion.

New Mining Equipment

At present the open pit is 3000 m long, 1100 m wide and 405 m deep. To achieve the necessary increased ore extraction rate, Aitik will cut back the mine boundary in a number of places. In 2007 Boliden decided on the range of additional mining equipment that would be needed and also on which of the older machines in use needed more immediate replacement. Aitik undertook a thorough evaluation of the options for this purchase program in 2007.

The management decided to replace Aitik’s electric-powered Komatsu hydraulic excavators with two new PC 5500 units also from Komatsu, both of which are working together with the mine’s P&H and Bucyrus 43-m^3-capacity electric rope shovels and an older Bucyrus 295B. Boliden also opted to expand the existing fleet of Caterpillar mechanical drive haul trucks by adding five more 793D vehicles to the six acquired from Pon Equipment in 2006. Three of the new 220-mt-capacity 793D haulers were already running at the time of E&MJ’s visit with one being assembled and the fifth on its way. The latest trucks have a new dump body tray design. As well as older 793 series truck the mine is still running three Unit Rig MT 4000s inherited from Los Frailes and has converted some of its Cat 789s to utility vehicles, one to a 130-mt Mega water sprayer. When it came to electric-powered drilling rigs, the evaluation persuaded Boliden to switch from electric to Atlas Copco Drilling Solutions’ hydraulic drive rotary rigs, specifically the 185-mt Pit Viper PV-351E. The four rigs ordered are fitted with joystick controls, programmable automatic drilling modes, GPS-based hole navigation, an operator-friendly cabin, easy raising and lowering of the tower for tramming, and remote rig access. The two already in operation have the ability to drill angled holes. A very significant factor was that the operators participating in the different evaluation tests endorsed the joystick control system, said Mine Manager Patrik Gillerstedt. When E&MJ visited, the third machine was being assembled.

Meanwhile, for its pre-split drilling contract, NCC Roads ordered two new Atlas Copco ROC L8-30 Mk II rigs to replace older rigs. These are currently up and running at the mine.

Orica is contracted to charge each hole with about a ton of Fortis Advantage emulsion explosive. The constituents are stored in Gällivare, mixed at the mine and the explosive delivered and charged by purpose-built truck.Gold-Ore Resources: Transforming Bjorkdal

Gold-Ore Resources is debt-free, unhedged and focused on increasing gold production from the wholly owned Bjorkdal mine—not far from the town of Boliden in Sweden—which it acquired on January 1, 2008. The operations team at the mine is very experienced as is the corporate management team in Vancouver, Canada, says Gold-Ore. Bjorkdal is currently producing gold from both underground and open pit operations at an annualized rate approaching 50,000 oz/year. Gold is also recovered by treating material from surface stockpiles. During December 2008 a total of 3,329 oz of gold were recovered, an annualized production rate of 39,948 oz. At the beginning of 2008 the mine had been producing at the rate of only 20,000 oz/y.

In the past, the Bjorkdal gold mine has paid penalties for exceeding acceptable tellurium and bismuth levels in the gold concentrates. While not onerous, the penalties could be removed with the production and marketing of tellurium and bismuth concentrates. Several end-users have expressed an interest in purchasing any tellurium recovered. In January 2009, Gold-Ore announced positive metallurgical test results for tellurium recovery from gold concentrates at Bjorkdal. The test work was conducted by SGS Minerals Services in Lakefield, Ontario. A second stage of tests at SGS is underway and will address the following points:

• Increasing tellurium and bismuth recovery rates in the leach process
• Reduce leaching times and minimize reagent consumption
• Commence test work for precipitating tellurium and bismuth
• Determine the capital and operating costs for producing tellurium and bismuth byproducts.

In February this year Gold-Ore announced an underground mine expansion plan for Bjorkdal intended to raise gold output levels by approximately 20%. Further staged expansions will be evaluated upon completion of this phase. All underground production had so far come from two levels in the mine. But during January the Company commenced excavation of two ramps to access two new levels. These new levels will provide plant feed for all of 2009 and into 2010. This expansion to four active mining levels will provide adequate working faces for increased tonnages. The mining contractor, Bergteamet AB, has provided additional crew and mining equipment to increase underground production to 1400 mt/d.

The mining schedule for the open pit has also been expanded. During 2008, an average of one blast per month in the pit was achieved. Over the next few months this schedule will be doubled, resulting in approximately 1500 mt/day of plant feed. Gold-Ore is focused on developing a five-year mine plan for a combined underground and open pit operation following exploration that has confirmed the extension of the gold-bearing quartz veins and the potential to expand the orebody in all directions.

During the first quarter of 2009 gold production exceeded 3,300 oz/month for all three months for the first time since Gold-Ore purchased the mine. A new Knelson concentrator was installed and should enhance gold recovery. During March, Gold-Ore was able to purchase the Bjorkdal royalty outright from Achill Resources at a 20% discount to the price first negotiated with Minmet, the previous owner of the operation. At current production levels and gold price, pay-back for the royalty purchase should be less than 16 months production. Shortly afterwards, Gold-Ore announced that underground diamond drilling has commenced at Bjorkdal designed to expand the underground gold resources and thereby extend the mine life. The program is being financed entirely from cash flow from gold sales from the mine.

At the end of April, Gold-Ore included in the consolidated statements of operations, for the first time since the mine was acquired, a profit of $4.43 million for the first quarter 2009 (the period ending February 28, 2009) as a result of the inclusion of $4.64 million in earnings from Bjorkdal. “The mine has been going through a transition for the last two years from a depleted mine suffering from a lack of capital investment to a functioning mine with growing resources/reserves and a strong positive cash flow,” stated Gold-Ore Chairman Glen Dickson, “and the declaration of commercial production is a reflection of the transformation taking place at Bjorkdal.”

During the quarter the plant was fed 35% from underground, 35% from open pit and 30% from stockpiles. During the second quarter all of the ore feed for the Bjorkdal plant will come from the underground and open pit units. The company has targeted an annualized rate of 50,000 oz/y during 2009. Gold-Ore also reported a profit of $1.63 million for the second quarter 2009 (the period ending May 31, 2009), bringing the first six months earnings to over $6.0 million. During the second quarter the plant was shut down for 10 days to complete planned annual maintenance, repairs and the installation of upgrades to the control systems. “The third quarter is expected to demonstrate a considerable improvement in production”, stated Dickson.

Lapland Gold Miners Buys Production to Fund Development

Lappland Goldminers AB is a Swedish mining and exploration company striving for environmentally friendly, “green” solutions. The company’s strategy is to develop centrally located processing plants that can be supplied with ore from one or several mines through the company’s own exploration, or alternatively through acquisitions. Some time ago the company secured a number of gold deposits along the so-called “Gold Line” in Västerbotten, Sweden, in particular Fäboliden; more recently Lappland acquired two recently producing mines—Pahtavaara in Finland and Blaiken in Västerbotten—from the bankrupt Scanmining.

Mining production started at Pahtavaara in Summer 2008 and extraction of gold increased gradually. In December production started from the underground mine. In December production started from the underground mine. At Blaiken, the only mill on the ”Gold Line” to produce a gravity concentrate, maintenance and preparations for production started after the acquisition in August 2008. In February, after a successful directed new share issue, the Board decided to start production at Ersmarksbergets gold mine just beside the Blaiken Mill.

Milling of stockpiled ore started on April 29, 2009.

Despite the delayed start-up at Blaiken the company expected the operations to contribute to the 2009 result. However, problems arose with the mill after start-up, but were solved with supplier help. Parallel to the startup of production the company identified a new mineralized area within the mining concession of Blaiken. Preparations for definition drilling started in order to define the ore reserve. So it may be possible to start mining earlier than originally planned. Also during the first quarter 2009, the company started the work on a prefeasibility study of the Haveri project in Finland.

However, Lappland Goldminers postponed the opening of the Fäboliden mine at their own property. “We are now an exploration company with gold production. The cash flow from operations will fundamentally improve our ability to develop our unique portfolio of gold projects,” said Kjell Larsson, who was appointed CEO early in 2009. New members were elected to the board as well. The Fäboliden project has a secure environmental permit for immediate investment and production start-up of its leach plant. An upgrade of the Feasibility Study will be done in light of recent changes to both the financing situation as well as cost environment.

Agnico Eagle Mines in Production at Kittila

The Kittila open-pit mine and mill in Finland commenced concentrate production in September 2008. The first concentrate was fed into the autoclave in November, first gold poured on January 14, 2009 and commercial production achieved on May 1, 2009. Ramp-up was slower than expected in the second quarter this year as a result of metallurgical problems at the pressure leach stage. Consequently plant commissioning has been extended. Nevertheless Agnico-Eagle says, the mine is on its way to becoming one of Europe’s largest producing gold mines.

Kittila has probable reserves of 3.2 million oz, comprising 21.4 million mt of ore grading 4.7 g/mt gold. The deposit remains open for expansion at depth and along strike. The current mine plan envisages 150,000 oz/y gold production over a 13-year mine life. However, Agnico-Eagle is studying the possibility of extending the operation by sinking a shaft and increasing mill capacity.

In preparation for underground mining, work on the ramp continues and underground development has progressed in several areas (see E&MJ, July/August, p. 20). Ongoing exploration at Kittila continues to be highly encouraging. New inferred gold resources of 1.3 million oz confirm the depth extension of the main gold deposit to approximately 1100 below surface (425 m below the current reserves and resources). Additional drilling suggests that other extensions are possible in three separate zones. Nine drills are working on resource conversion and other exploration programs around the current reserves.

First Quantum Minerals Redefining Options for Kevitsa

Having acquired 100% of Scandinavian Minerals in June 2008 and with it the Kevitsa nickel-copper-PGE project in northern Finland, First Quantum Minerals set about making a detailed conceptual design and capital cost estimate to be completed by Q1 2009. This would refine the development schedule and construction requirements.

Then came the sharp fall in commodity prices and First Quantum initiated a review of all parts of its business to identify prudent measures to protect the core activities, primarily copper production in Africa, and financial resources. The company hoped to improve its operating cost profile through this period of low copper prices and emerge stronger when economic conditions improve. As a result, planned capital expenditure for 2009 was reduced to $190 million from approximately $430 million in 2008. The decision to proceed to full development of the Kevitsa project was deferred pending improvement in market conditions.

The decision on the timing of the development of the Kevitsa project has been deferred until later in 2009 and existing contracts for the supply of equipment have been renegotiated or cancelled. Drilling and geophysics carried out during 2008 and continuing in 2009 have shown that the project has considerably more upside potential than was previously thought and the resource is now being better defined.

Management has curtailed international exploration activities in 2009 to focus on brownfield expansion opportunities and the Kevitsa project.

Drills Stopped, Now Turning

Just as mineral producers in the Nordic countries reacted rapidly to the “credit crunch” so did explorers— possibly even faster

Anders Wangby, working with Västerbotten County in northern Sweden, reports that in the weeks following the financial crisis there were no new applications for exploration permits and many of the junior companies stopped their drilling programs. This had a severe impact on the contract drilling companies, resulting in one bankruptcy. The foreign-based exploration companies were particularly affected, whereas the Swedish mining and exploration companies did not cut their programs as dramatically, and some continued at normal levels with their drilling activities. In Finland, exploration activities did not slow down as much as in Sweden, mainly because GTK, the government geological survey, continued its own drilling program. Throughout the region there has, however, been a clearer focus, with drilling concentrated near to mine sites.

During Spring and Summer 2009 activities generally increased. In Sweden the number of companies, including foreign companies and companies not previously active in Europe, visiting the Swedish GTK core archives is now almost back to normal. So far this year, there have been 125 new applications for drilling permits registered with the Mining Inspectorate of Sweden. Not only are metal prices moving upwards again but the region’s several fundamental competitive advantages for mineral developers still pertain.

The benefits regional resources have for mineral producers and consumers in Europe and elsewhere should be kept in focus. In January 2009 the Geological Survey of Sweden (SGU) addressed the challenges facing the EU in a brochure entitled Metals and Minerals—Sweden’s Contribution to Raw Material Supply in Europe. The text is based on material concerning sustainable extraction of Swedish mineral resources that has been produced by SGU at the request of the Swedish government. Similarly, according to Global Challenge and the Raw Materials Group the time is ripe to launch the Mining for Development (M4D)—a major, long-term project to focus on exploration and mining as levers for social and economic development in developing countries and to cooperate and coordinate with existing scattered initiatives around the world (see E&MJ, September pp. 28,30).

A good indicator of long-term confidence in the region as a significant exploration hub is investment in local analytical services for exploration companies. For example, Bjorkdal drill core will be assayed at the ALS Chemex laboratory located in Piteå, northern Sweden, an hour’s drive from the mine. Piteå specializes in sample preparation and gold analysis. Australia-based ALS also has a full minerals service unit in Luleå as well as a facility for industrial, medical and other sectors in Stockholm. Both the northern labs are handily placed for flying samples out of Luleå airport to company labs elsewhere—for instance, Northland Resources iron-copper samples have been flown to Vancouver. At Lycksele, near the so-called Gold Line prospects, Anders Brundin, a former manager at Dragon Mining, started Laponia Laboratories in 2006 along with Torbjörn Ylven. Recently the lab installed an automated fast inline fire assay (FIFA) ample prep and analytical system from the Australian-South African IMP Group. The robotic system processes 300 geochemical samples for gold and platinum group elements (PGE).

Key Exploration Plays

Two companies recently evident in exploration action are IGE Nordic, a wholly owned subsidiary of the Swedish mining and exploration company International Gold Exploration (IGE), and Beowulf Mining, a British company originally formed as Beowulf Gold. Coincidentally both firms were formed in 1988.

Having established several interesting targets on a number of exploration licences in Sweden and Norway, IGE Nordic’s present strategy is to progress those with the best apparent potential. More specifically, the company is now concentrating on the 100%-owned Rönnbäcken exploration license located in the mountains of northern Sweden, about 25 km to the south of the village Tärnaby in Västerbotten County. This is prospective for nickel, cobalt, gold and platinum group metals.

Essentially Rönnbäcken is a very large, low-grade nickel deposit (mineral resource of 325-375 million mt at a grade of 0.10 to 0.15% nickel in sulphide) that is amenable for open pit mining. A core drilling program of 16,024 m and 98 holes was finished at the end of January 2009 with 41 holes and 7916 m at Vinberget and 57 holes and 8108 m at Rönnbäcksnäset. All the assays have been received, and all the results have been reported.

Scott Wilson RPA, Canada made an independent NI 43-101 compliant mineral resource estimate for the Rönnbäcken nickel project. An indicated resource has been estimated for the Vinberget deposit at 54.9 million mt with an average total nickel content of 0.187%, of which 0.137% is nickel in sulphide (Ni-AC), based on an open-pit strip ratio of 0.46:1 and a nickel price of $7.50/lb. For the Rönnbäcksnäset deposit, located 5 km northwest of Vinberget, an inferred resource is estimated to be 192.9 million mt with an average total nickel content of 0.178%, of which 0.107% is nickel in sulphide (Ni-AC) based on an open-pit strip ratio of 0.80:1 and a nickel price of $7.50/lb. IGE Nordic increased its exploration target to 325–375 million mt grading 0.10 to 0.15% nickel in sulphide from the previous target of 180–220 million mt.

IGE Nordic says the current planned timelines for the Rönnbäcken Project are as follows

• An application for an exploitation concession, including an Environmental Impact Assessment, is expected to be submitted by the end of the fourth quarter of 2009.
• A Pre-Feasibility Study is expected to be finalized by end-2011. An application for an Environmental Permit is to be submitted at the end of the fourth quarter of 2010, with approval expected by mid-2012. A Bankable Feasibility Study is expected to be made by the end of the second quarter of 2012.
• A production decision is expected to be made by the end of the Q2 2012 and commissioning is expected for the end of 2013 with production start-up in early 2014, expected to be a favorable point in the metal price cycle.

A previously prime target is the Bidjovagge exploration license in the western part of Finnmark County in Norway, where IGE Nordic has a 90% stake and Geologiske Tjenester AS. Completed as planned, the 2008 drilling program on the Bidjovagge gold-copper deposits was designed to increase the understanding of the geological structure of the gold-copper mineralization and check for the possible extension of gold-copper mineralization identified in previous drilling. However, further exploration work has been deferred in order to focus on Rönnbäcken.

Among other properties, Solvik is a gold project in Sweden owned 50/50 with Archelon Mineral AB.   The Norrliden polymetallic project, located 47 km west of Gold-Ore’s operating Bjorkdal gold mine in Sweden, is owned 10% by IGE Nordic and 90% by Gold-Ore Resources which acquired this stake from North Atlantic Natural Resources AB, a wholly-owned subsidiary of Lundin Mining Corp. The interest held by IGE Nordic is carried to a production decision. If IGE Nordic declines to fund their 10% share of development costs, then this interest reverts to a 1.5% net smelter royalty.

In the Stekenjokk district of Västerbotten County, Sweden, where the Stekenjokk mine operated between 1976 and 1988, IGE Nordic has a wholly owned exploration license 25 km west of Klimpfjäll.  In March 2007, IGE Nordic announced JORC and NI 43-101 Canadian compliant resource estimates for the adjoining Stekenjokk and Levi deposits of 7.4 million tonnes of measured and indicated resources at a grade of 1.17% copper, 3.01% zinc, 0.45% lead and 47 g/mt silver. But, with the current focus on Rönnbäcken IGE Nordic has decided to postpone further work, including the filing of an application for an exploitation concession regarding the Stekenjokk and Levi deposits, which was originally planned to be submitted by the end of 2007.

Having explored for copper and gold in the Jokkmokk area (at Majves, Tjäula and Kårvo), around Grundträsk and in the Ussalahti areas, Beowulf Mining obtained an exploration permit covering a large iron-titanium ore deposit in Jokkmokk County, Ruoutevara, in 2006. Beowulf also wholly owns the nearby Kallak Magnetite Project with more than 120 million mt mineralization grading 35–42% Fe. Earlier this year, Beowulf Chairman Clive Sinclair-Poulton stated: “Rapid commercialization of our highly prospective iron ore deposits in Northern Sweden is a key priority for the Board. Back in late 2006, Raw Materials Group showed that based on the then available information and financial forecasts and assumptions, initial indications for the economics of Ruoutevare were positive. We are pleased to re-commission them to update their previous work and commence a similar separate study on our Kallak project.”

Ruoutevare is located near Kvikkjokk in Norrbotten County, approximately 150 km southwest of the Kiruna iron ore mine; the Malmberget iron ore mine is located 120 km to the east. Ruoutevare literally translates as “Iron Mountain.” The 2006 RMG study suggested that, based on a simplified cash flow analysis and various price and cost assumptions at that time, an eight-year, 10-million-mt/y open pit operation at Ruoutevare could potentially generate annual cash flows in the order of approximately $50 million from revenues of $218 million. In August 2008, Beowulf announced an Inferred Mineral Resource estimate compliant with JORC standards on Ruoutevare showing 140 million mt grading 39.1% iron (Fe), 5.7% titanium (Ti) and 0.2% vanadium (V) (cut-off grade of 30% Fe).

Also in play is the Lulepotten copper-gold deposit/Ballek JV, which has a JORC-compliant inferred resource estimate for Lulepotten of 5.4 million mt grading 0.8% copper and 0.3 g/mt of gold (cut-off value of 0.3% for copper). MINPRO AB has started initial metallurgical testing on ore grade material from Lulepotten to facilitate quality testing by potential clients, with results anticipated in Q4 2009.

Near-Mine Exploration

Both the established producer New Boliden and recent entrant Gold-Ore Resources are among those companies focused on near mine exploration.

Boliden has continued to develop all of its mineral assets during the fourth quarter, albeit with reduced intensity. The results continue to be favorable, particularly at the Garpenberg and

Renström mines in the Boliden Area. The long-term investigations at Aitik are continuing according to plan, with promising results being achieved in the southern part of Salmijärvi and positive results are also being achieved at the SWEX area in Tara, Ireland.

The company has focused field exploration in Sweden on base metal and gold exploration in the Skellefte field and on base metals in the Dorotea region, Norrbotten and Bergslagen. Some 20 projects are currently being investigated. Exploration activities in all areas were adapted to the current economic climate during fourth quarter 2008. Promising results have been obtained in Rockliden, where a higher potential than that previously inferred has been demonstrated. Concentration trials are now in progress. The exploration team identified interesting new copper mineralization on the edge of the Skellefte field in late 2008 and planned further work during 2009. Boliden added 14 exploration permits to its portfolio during 2008 and now has 156 in Sweden, where it has the majority of current permits, and holds 122 exploration permits in Ireland.

Gold-Ore Resources announced in May 2009 that an initial diamond drill program has commenced on the Ronnberget property located 4 km east of its Bjorkdal gold mine, Sweden. Geologists have re-logged the core from the holes drilled in the 1990s and compiled a database of the results. The gold mineralization is associated with quartz veining and has the same geochemical signature as the Bjorkdal gold deposit with high levels of tungsten, tellurium and bismuth. The objective of this program is to determine the orientation of the structural controls of the gold mineralization. During June and July, 10 core holes totaling 1,027 meters were completed: the style of gold mineralization at Ronnberget is significantly different from Bjorkdal and more drilling will be required in the future to understand the gold resource potential in the Ronnberget area.

After completion of the Ronnberget drilling the drill rig was moved to the Bjorkdal open pit area. Two sub-pits, currently being mined, the SEE Zone and Quartz Mountain Zone, will be drilled over the next few months. This drilling will guide the expansion and mining within these pits. Underground resource expansion drilling continues with an additional diamond drill rig.

 

Time to Master Chess

 Economic forecasting may be fraught with difficulty but thinking several moves ahead has become a necessity for technology providers

Some of the world’s major suppliers of mining and mineral processing technology and equipment owe their existence to the Nordic region’s domestic mining sector. Not neglecting those roots has provided a useful base load of “domestic” business for several companies during the downturn, for example Atlas Copco, Metso, Outotec and Sandvik’s ongoing commitments at Aitik. Neighboring markets in the CIS have also been of some help. Likewise, working with the construction as well as the mining industry has been an advantage; for example, Grindex pumps draining four locks on the Trollhätte canal in south west Sweden and Sandvik’s six LH 410 LHDs with side-tipping bucket working in road tunnels on the new highway connecting Russia’s Olympic winter games village and a ski resort.

At the same time the larger companies have extensive marketing and sales branches throughout the world and also distributed manufacturing facilities and suppliers. These networks presumably feed back valuable market intelligence to the head offices. So it superficially seems surprising that that apparently none of these companies was forewarned of the hugger mugger downturn in customer confidence a year ago. The reason seems to be a disconnect between some parts of the financial sector and companies involved in commerce and industry.

The fall-out from the credit crunch has certainly bitten deep, despite the positive factors. For example both Atlas Copco and Sandvik have seen lower volumes during the last year. Sales were down 35%–40 % in the second quarter of 2009 compared with the same period in 2008, but after-sales have remained quite steady. And these companies have also noticed an increase in activity.

Volvo Construction Equipment, which is much more construction than mining oriented, said the second quarter of 2009 saw demand for heavy, compact and road construction equipment drop to almost half the levels seen in the same period last year, with 48% fewer machines being sold worldwide. The second quarter also saw Volvo CE post an operating loss amounting to SEK1,259 million, compared with an operating profit of SEK1,629 million in the same period of 2008. Order bookings at the end of June were 70% down on the same time in 2008.

The leading mineral processing technology firms Metso and Outotec have suffered similarly. Metso President and CEO Jorma Eloranta said. “There haven’t been significant changes in the markets during the first few months of this year. It is positive to note that during the beginning of the year there were only minor cancellations or postponements of projects in the order backlog”. He added that one of Metso’s main goals this year is to improve cash flow:

Outotec recorded first half sales of €469.2 million in first half 2009 compared with €501 million in January–June 2008. Operating profit declined by a larger fraction to €30.2 million and order intake dropped from €774.2 million in H1 2008 to €245.1 million in January–June 2009, although the order backlog is €966.6 million. Net cash flow from operating activities in the first half this year was €12.6 million but was higher in the second quarter at €23.4 million, though still well below the equivalent 2008 figure of €83.6 million. Newly appointed Chief Operating Oficer Pertti Korhonen, a communication technologist, will take over from retiring president and CEO Tapani Järvinen on January 1, 2010.

On the positive side, technology supply companies are keeping the long term in focus. As reported in the May issue of E&MJ (p. 8), Nordic Rock Tech Center AB (RTC) is running a strong consortium to develop a view of mining beyond 2030. Since then, Poland’s KGHM has joined the consortium, adding its extensive knowledge and experience. KGHM, the eighth largest producer of copper and the third largest producer of silver in the world, joined the mining companies New Boliden and LKAB, the construction and mine development contractor NCC, globally active technology suppliers ABB, Atlas Copco, Metso and Sandvik, the technical consultancy ÅF, the promotion and research organization Georange, and the Luleå University of Technology. “We have found that we share similar challenges for future mining in Sweden and Poland and by joining the Mine of the Future conceptual study, I am sure we will create good solutions together,” stated Henryk Karas, the KGHM representative in the project. The conceptual study of the “Mine of the Future” (MIFU) will focus on green, lean and deep mining to depths of 1500–2000 m.

Alpha Mails

Here are some of the new products and interesting application reports received by E&MJ in recent months, mainly for mining but with one or two interesting, we think, digressions.

In mid-September 2009, Atlas Copco introduced a completely new hydraulic rock drill, the COP 3060MUX, for use in underground long-hole drilling. The company claims the design sets new efficiency standards in this rock drill class. “Our top priority when developing the COP 3060MUX was to optimize the hydraulic efficiency,” said Fredrik Öberg, product portfolio manager at Atlas Copco. “In this rock drill, we utilize the installed power that is fed to the drill in a way that has never before been possible.”

Thanks to a new manufacturing technique, the Atlas Copco designers have been able to minimize losses in the hydraulic flow by optimizing the design of the channels and spool valve. This results in very high efficiency. “We don’t know of any other manufacturer on the market that has managed to reach this high efficiency in a rock drill, said Öberg. “This is state-of-the-art.” Atlas Copco has also managed to increase the service interval to 600 percussion hours and still maintain drilling at high power. The key to this is the design of the hydraulic system which prolongs the service life of the internal seals. In addition, all wear parts have been optimized for longer service life. For example, the splines of the driver and shank adapter have been given a new shape which dramatically reduces wear on the driver, thus saving costs. Another cost saving is the reduced number of internal parts. This, together with the external flushing head, gives high serviceability.

Secoroc TRB is Atlas Copco’s latest drill bit range for soft-rock production drilling. Available in three diameters: 76 mm and 89 mm with T38 and T45 threads; and 102 mm with T38, T45 and T51 threads, the Secoroc TRB drill bit offers a greater penetration rate than most bits that is also sustainable throughout the bit’s service life.

This new drill bit design has full-ballistic buttons and deep vertical grooves. Atlas Copco engineers have digitally simulated the air flow through the bit in order to fine-tune the design to produce rock chips rather than cuttings. There is also more space between the rock face and the bit head, which provides ample room for the large rock chips to be easily flushed out.

Because of the faster penetration rate, Secoroc TRB bits can drill more holes per day, ensuring that contractors working on drill meter contracts save money and potentially increase income as the cost per hole drilled is lower than before.

Atlas Copco has accepted many challenges in Australia—some are really unusual. The Warris Creek open cast coal mine in northern New South Wales is located in a sensitive area where aboriginal artefacts have been found since the early 1900s. Today heritage-listed rock locations create an unusual and technically difficult task for the miners. Atlas Copco was asked to find a method to remove artifacts without damage and store them in a safe place, until they could be placed back in their original locations after restoration of the area. Handheld hydraulic products were seen as key to carrying out this sensitive job successfully.

The open cast operation is located on property that extends over 1500 acres in hilly countryside, 80 km south west from Tamworth. In addition to the Aboriginal artefacts found in the mine area, there are nine occurrences of rock holding rubbing grooves on top of the hill that have also been identified as aboriginal artifacts. Five of them have been firmly attached to the conglomerate rock forming the hill, four of them laid loose on the ground. A considerable volume of coal lies under this hill.

Since land development in classified heritage listed areas is generally prohibited, a potential cultural conflict had to be prevented. Negotiations were difficult, but at the end an agreement was reached between mine managers, an Archaeologist appointed to the project, and four aboriginal tribes which had links to the site. Under very strict controls, permission was given to undertake the project, supervised by an archaeologist with an Aboriginal tribal elder present to ensure adherence to their religious and cultural needs.

The mining contractor, Mopieka Holdings Pty. Ltd., owned by Bruce Garland, excavated and extracted the Aboriginal artifacts using an LP 18 Twin PE power pack to power an LCD 15 core drill for drilling core holes and creating stress lines; an LWP 2 water pump for pumping water from a dam into tanks on a trailer; an LS16 cut-off saw, for cutting stress lines and isolating smaller rocks; and an LH23M rock drill as back up in case water became an issue.

The floating artifacts were removed first by using high-pressure water to clear away roots and subsoil. In the next step, Bruce Garland and his team excavated around the rocks which were firmly connected to the bedrock and carefully lifted the rocks in such a way that natural flaws in the rock would not be stressed. If a rock break was to occur this would create a heritage and cultural disaster.

Once the rock had been excavated around the artifacts to a sufficient depth, Garland´s team stitched a series of 48-mm holes along a line that would create a break line when the splitters were activated. The operators placed the lifting steel rods of 50-mm rebar in the holes going through the rock after it had been split. Extension rods were used on the LCD 15 core drill with a 48 x 450-mm core bit to go through the 1.4-m width of rock. Once the lifting rods were in place, a mobile crane lifted the rock onto a truck with a bed of loose stone chips in order to protect the rock during transportation.

The working conditions were tough since the temperature was in the mid 40°C range, there was no shade and there were large venomous brown snakes in the area. During blasting operations in the mine, the work area had to be abandoned by persons and machinery one hour prior to blasting and up to two hours afterwards. The portability and ease of use made handheld hydraulic products the most effective equipment for this kind of work.

“My original comment to the mine manager on the initial survey is still valid today” said Danny Mitchell, NSW area manager Atlas Copco Construction Tools. “Just because something has never been done before does not make it impossible. Improbable maybe, but thinking outside the square makes anything possible.”

The Neves-Corvo mine in southern Portugal, owned by Lundin Mining, is using DeviDrill, to increase the efficiency of the surface exploration drilling programs. Using the Devico directional core drilling system reduces the total meters drilled and ensures that the boreholes reach their intended coordinates.

The main focus of the directional exploration program has been the Lombador deposit located just outside the present Neves-Corvo mine, where it has led to a significant increase in proven and probable reserves. There has also been some activity at the Aljustrel deposit which will improve the understanding of the ore body and increase the efficiency of the mine.

The geological formations in Neves-Corvo consist of fairly soft and foliated rocks intersected by several severe fault zones. As a result the boreholes are subjected to a strong natural deviation which is difficult to predict. Also, with up to eight drill rigs and three different drilling contractors, it is common that differences in equipment and drilling techniques lead to additional variations in the deviation tendencies. Careful planning and design is therefore necessary to maintain a consistent drill pattern, but the task would be nearly impossible without the use of additional technology to steer the boreholes. For this reason the Devico system has been in constant use at Neves-Corvo since November 2006. It started with one team of engineers, consisting of three men in rotation, and one directional core barrel. By early 2008 the exploration program was intensified with more drill rigs moving in, and a second Devico team became necessary to maintain the high production rate.

The Devico operation here follows a pretty standard procedure. Most of the boreholes are started vertically with HQ or NQ drilling. When the hole deviates out of the planned trajectory, the standard NQ core barrel is replaced with the DeviDrill core barrel, and the borehole is steered back to the specified direction. Such corrections are done at depths ranging from 200 down to 1000 m, and in some cases two to three times per hole. The directional coring performed is usually completed within a short distance, from 10 to 50 m or approximately one to two days of drilling, depending on the required change of direction. On average Devico now performs two to three trajectory corrections per week.

In several holes sidetracking is also performed; i.e., a new hole is created from within an old hole. The sidetracking is done by setting a cement plug at the desired depth for kick-off, usually about halfway down the old hole. When the cement plug has set the DeviDrill can cut out of the cement, to create a new hole pointing towards the second target. The procedure is in most cases much quicker and cheaper than drilling a new hole starting from the surface. Setting the cement plug and cutting out of it with the DeviDrill is on average done in less than one day.

The directional coring gives the geologists control over the borehole trajectory and target. Each borehole is surveyed every 30 m, making it possible to determine where it will hit according to the planned target and thereby when to initiate directional drilling. Until now 150 corrections have been performed in more than 100 boreholes, and the ability to pin-point the holes have made the prospecting both effective and successful. The target area is steadily increasing and it is expected that directional coring will continue out 2009 and well into 2010.

Denmark’s global mineral processing and materials handling group FLSmidth took a further step in developing a significant position in the Indian cement market by agreeing to acquire EEL India Ltd, the country’s leading manufacturer of cement material handling and bagging equipment. The deal is subject to regulatory approvals.

A new talc mine is being created at Gemerska Polona in Slovakia, about 70 km east of Košice, for VSK Mining S.R.O. To speed up development, the main contractor Skanska BS A.S. has been using the complete range of muck loading and transport equipment available from Swedish manufacturer, GIA Industri, to help drive a 4.2km long adit to access the talc orebody. The new talc mine is expected to produce 600mt/day from reserves that are estimated to last 30 years. VSK Mining operates 23 aggregate quarries and an underground gypsum mine in Slovakia, and is 75% owned by the VSK Mining group headquartered in Cyprus.

Skanska had to ensure the tunnel complied with local mining regulations, so 6-m-deep passing bays for twin rail tracks and switching facilities were located at 300 m, 1.5 km, 2.5 km and 3.5 km along the tunnel. The job was delayed by two months at the start in late 2006 because Skanska discovered difficult class B2 and B3 rock formations when they had been expecting easier ground. By early 2009, the contractor had faced five rock classes—A1 and A2 magnetite with a Pascal factor of 150 and fragmented B1, B2 and B3, which contained muds, voids and water—and expected to encounter A1 class granite immediately under the orebody. A 150-m-long section of B3 rock caused most of the delay because it was necessary to redesign the support system to incorporate steel arches, mesh and dry shotcrete. The finished adit was to be 3.2-m wide and a maximum of 3.6-m high in the A1 and A2 class rock, but up to 3.5 m x 3.8 m in the B class sections. Thus the average cross section is only 11.5 m².

The four-cycle-per-day tunnelling operation involved drill, blast, removal and cleaning. Skanska drilled the tunnel using a two-boom Atlas Copco 282 Raildrill. VSK Mining specified the use of the GIA system for spoil removal on the recommendation of project consultant Werner Steck. Steck had worked on a tunneling project in Austria where an advance of 621 m was achieved in 26 working days using the Swedish equipment. Skanska had also regularly used the GIA system previously.

For loading the muckpile, GIA provided a Haggloader, which can be either rail track or crawler mounted and can be fitted with a discharge conveyor which feeds to the haulage system. The haulage train comprized linked shuttle cars with an internal conveyor, which were hauled by a locomotive. At Gemerska Polona, Skanska used three cars, but optionally up to eight can be connected and operated by one person using the remote control system. The locomotive was a GIA DHD20, assisted by a DHD15 shunting loco. Mariân Oravec, project manager, said of the GIA ‘line-up’; “It is a highly cost effective system for a tunnel with this small cross section area.”

The adit profile was close to horizontal, so Skanska was able to use a rented 8HR Haggloader with a dual digging arm system for the excavation. But for the steeper ramp section closer to the orebody, the company ordered the crawler-mounted GIA 9HR-B backhoe Haggloader, which has an 85-liter bucket. The backhoe digging bucket attachment enabled excavation of a narrow drainage ditch along the side of the tunnel. With a gradient of 3 mm/m the ditch allowed water to flow out of the tunnel at up to 50 liters per second. The bucket also allowed the handling of soft rock and cleaning the tunnel floor and walls. When the Haggloader was used with its built-in conveyor, it could continuously load the muck into the GIA shuttle cars smoothly without any spillage on loading and can load up to 3 m³/h.

Three GIA 115 CE shuttle cars with the internal conveyors loading from car to car ensured faster loading as each 1700 mm x 11.2-m-long car has a capacity of 11.5m³, so that when the three cars were connected, Skanska transported up to 34.5 m³ of muck in one trip. The conveyors discharged through the front car and in less than five minutes the waste rock was discharged outside the tunnel. The shuttle car floor was lined with Hardox 500 wear material to ensure long life and each car had specially designed bogies with centre suspension and rubber springs for smooth and safe running. This design reduced the risk of derailing, even on uneven tracks. The centre suspension had a bearing protected with Teflon which needed almost no maintenance.

Once the appropriate support system was implemented, Skanska reported that the team at Gemerska Polona was able to increase the average advance rate above the targeted 6m/day to 8m/d. As a result, explained Mariân Oravec, “We were therefore almost 40 days ahead of the original schedule.”

The Hägglunds Compact range has been extended with yet another new product, the CB1120 motor, which will replace the Marathon MB1150. “We’ll be releasing the CB1120 to sales companies before summer and plan to make the first deliveries in Fall,” said Lars Andrén, Hägglunds’ project manager.

The Compact CA was launched in the mid-1990s and the CB motor, which came out in 2002, replaced the smaller Marathon motors (rated at up to 800 Nm/bar) with excellent results. This spurred on R&D to develop replacements for the remaining, larger Marathon motors known within the company as Magnum. It was this CBM study that led to the development of the CB1120. “During the study we realized we already could take a step to this new motor. The existing CB range went as high as the CB840 and we saw that it was possible to extend it to the CB1120. This we could use to replace our smallest Magnum motor, the MB1150,” said Andrén.

So far, the new motor has been tested for more than 2,900 hours in Hägglunds’ laboratory, with excellent results. The motor is based on proven technology but because it is produced in a larger capacity there are additional piston forces acting on components such as the connection block. So this has been strengthened and a new casting developed to cope with the higher loads the motor is likely to be subjected to. The number of components has been reduced considerably compared with the MB1150, in line with Hägglunds’ commitment to modular motor construction.

Besides the advantages of lower weight and smaller diameter, the new motor is also more versatile, since it can be built with smaller steps in torque capacity. “With the old range of motors there were only two choices of torque—975 and 1150—but now we can offer seven torque levels. This is a big advantage as it makes it easier to adapt the motor to the customer’s requirements and optimize our pump unit.”

The CB1120 will only be produced with a splined output but will also be available with a separate adapter so that the motor can be used in applications where a shaft coupling is required. “The splined output is becoming increasingly common as it provides an easier way to install the motor. Around 40% of the current CB range is manufactured with a spline output,” said Henrik Burström. The CB1120 motor will also have the ability to freewheel, which makes it suitable for more applications.

Lars Andrén and the project team have big expectations of the new CB1120 motor, particularly in the mining, materials handling and pulp and paper sectors. “Because the motor is only half the weight and smaller in diameter than other drives it needs less pace for installation, which of course has economic benefits for machine builders,” Andrén explained.

The project to develop a CBM concept that can replace the rest of the Marathon range continues. “It is a long-term development project that we are working on with a three-year time frame,” said Lars Andrén. The Marathon 1150 will remain available as a product for a few years more and then be transferred to the spare parts list.

ITT Water & Wastewater has introduced Active Seal, a new patented seal technology developed to eliminate the risk of potentially damaging leakage into the dry parts of submersible pumps. The Active Seals were gradually introduced on several Flygt pumps and mixers to further enhance their reliability and to minimize the risk of machine failure and unscheduled maintenance checks.

All mechanical face seals leak to a certain extent. In fact, a certain penetration of liquid between the seal faces is a part of a seal design and is necessary to keep the seal faces lubricated to prevent seizing. However, even minimal leakage in mechanical face seals may cause problems over time, especially for pumps and mixers in continuous operations. Along with a major leakage, such accumulated leakage may cause costly service actions, such as emptying the inspection chamber or the stator housing, or in the worst case, machine failure. Flooding, disruptions to production and potential harm to the environment are other examples of indirect consequences, said Johan Fondelius, manager of seal development at ITT Water & Wastewater.

The Active Seal is a zero leakage seal for the inner position, allowing no liquid to penetrate from the buffer fluid compartment to the stator housing of the pump or mixer. The Active Seal acts as a micro-pump, pumping media from the drive-unit side to the buffer fluid side of the inner seal. The pumping action is achieved by laser-cut grooves in the rotating seal face. This unique design ensures that the net inflow—the actual leakage—is always nil, according to ITT. This function is ideal for pumps and mixers in continuous duty and the new seal technology is to be successively introduced in Flygt pumps and mixers and as spare parts from ITT Water & Wastewater.

After a number of years of pure surface exploration drilling, Kati decided to resume underground work as well. This fall the Finnish company has built a new underground drill rig, based on a Drill Truck 721 model. The four-wheel-steered machine is fitted with a Sandvik DE 130 drilling unit and can drill about 700 m with WL-76 and about 1200 m with WL-46/WL-56 says Matti Rautakoski, Manager Sales and Marketing at Kati.

The Kati Survey department started using the Gyro Smart for deviation surveys in early 2009. The new compact instrument has given reliable results in the company’s quality control experiments. Gyro Smart is handy and cost effective to use when surveying old drill holes, since there is no need to have heavy equipment such as drill rigs on the survey site. KATI Survey engineers work not only for Kati but also for other drilling contractors. In addition to deviation surveys, KATI Survey can also accurately locate and mark new drill holes in the field using Precision GPS.

Having become the first ISO 14001 certified drilling contractor in Scandinavia during 2004, Kati continues to focus on minimizing stress on the environment during a drilling project. The company is now transporting the waste created at a site back to HQ for sorting and, where feasible, recycling.

On 1 September 2009 Finland’s Larox announced it will establish a subsidiary in India with the aim of increasing the company’s market share in the growing Indian market. The new subsidiary will be responsible both for Larox’s aftermarket services and filter sales development.

Larox has been active in the country for over 20 years with the help of local representatives. “India is a very important market for Larox, and strengthening our presence there is part of our growth strategy,” said Topi Karppanen, president and CEO of Larox. “Many of our Indian customers are today among the global leaders in their business sector. With the growth of the mining, metallurgy and chemical process industries, there is a constantly growing demand for filtration equipment and services. In addition, India faces major challenges in energy efficiency, and this also drives demand for more efficient filtration technology”, Mr. Karppanen says. Our aim is to increase our market share of this growing market, and also benefit from the local qualified engineering and manufacturing resources.”

The Larox subsidiary in India will be located in Bangalore and it is expected to be fully operational during the second quarter of 2010 at the latest.

Given new equipment sales have not been that easy to come by in 2009, selling aftermarket services may be one way to boost earnings, though most global technology suppliers have acknowledged the importance of aftermarket business for some years.

Earlier this year, Metso signed a multi-year service agreement with the AngloGold Ashanti Iduapriem mine in Tarkwa in Ghana. The contract includes the supply of maintenance management services and spare and wear parts for AngloGold Ashanti’s new crushing and screening plant delivered by Metso. The agreement was signed in second quarter 2009 and its value exceeds €5 million.

In addition to maintenance management and technical support, Metso will supply hands-on training for staff at the Iduapriem mine. Backed up by the company’s global service functions, an on-site team of six Metso service technicians will support operations at the crushing and screening plant, which has an annual output of 4.3 million tons. Metso is also committed to converting the agreement into a cost per ton-based service over time.

Metso has cooperated closely with AngloGold Ashanti in Ghana for 10 years. “This agreement is a vindication of our strategy of expanding the range of services we offer in this region,” said Seth Quaye, regional manager-Western Africa, mining business line, Metso. “It will leverage new services business by serving as a reference for our capabilities as a total solution provider.”

Although Sandvik seems to have favored organic growth over acquisitions recently in developing the Sandvik Mining and Construction (SM&C) business, it has entered into marketing partnerships. The latest of these is an agreement for global cooperation in the field of tunneling and mining with the BASF Construction Chemicals unit Meyco Equipment, in particular the maintenance of machines for sprayed concrete. The companies said that the full scope of the agreement will be communicated in the latter part of 2009.

SM&C has also extended its core storage and handling product range for the exploration community by signing an exclusive distribution agreement with International Mining Supplies (IMS) for the worldwide supply of “Explorer” plastic core trays and accessories. International Mining, based on the Sunshine Coast, Queensland, Australia, is a leader in the development of core trays and boxes. The core tray was one of the first to offer exceptional strength polypropylene, built-in handles and a labeling facility. UV-stabilized polypropylene gives the core trays longer life, and they do not rust and are non-magnetic.

 

At the site of the former Fintec factory in Ballygawley, Northern Ireland, SM&C is establishing a global product development center for screens and feeders. According to Sandvik, by concentrating the development of screens and feeders, both stationary and mobile, at a single location, the company will be able to utilize the knowledge within this area better. Consolidation should also increase the competence within the group and gain the economies of scale required to develop the next generation of industry leading screens and feeders. The Ballygawley facility was chosen for the center due to the concentration of highly skilled, and experienced screens and feeder design engineers in the area.

The Talvivaara nickel mine in Finland uses, as previously reported, a novel bioheap leaching process suitable for the sub-arctic climatic conditions. This requires accurate process control and speed control for the multiple machines involved in metals production. Talvivaara chose the Finnish specialist supplier Vacon to keep things moving.

Vacon has supplied some 650 AC drives with a total power of 44 MW. Supplied in the power range 0.5 kW to 1500 kW, the Vacon AC drives control AC motors running pumps, fans, screws, conveyors, feeders and mixers. Those units carrying out mineral processing functions are controlled via a Profibus fieldbus, which enables process supervision and control, and they are also connected to the automation and information system installed by Metso Automation. This provides monitoring and control of all the processes and is operated from a single control room.

Some 100 Vacon AC drives control fans for air conditioning in all the buildings on the site. Controlled via a LON fieldbus and connected directly to the building management system (BMS), the Vacon AC drives adjust the speed of fans according to changing needs, which gives energy savings and creates and maintains comfortable air quality and environment. Vacon AC drives connected to the BMS also help keep the air pressure constant, which is essential in facilities where various gases are used in the metals recovery process. In facilities where an excess air pressure is needed, the Vacon AC drives adjust the fans to keep the air pressure at the right level.

Overall, Talvivaara has about 20 km of conveyor lines. The longest line conveys heavy loads over a distance of more than 2 km. A major conveyor like this needs high-performance control, which is handled by 710-kW Vacon NXC 690 V cabinet drives. In conveyor control, the Vacon AC allow the speed and direction of the conveyor operation to be adjusted to changing needs, and an AC drive-controlled conveyor is also energy-efficient, since a partially loaded conveyor with a higher speed than necessary wastes energy and causes unnecessary wear. High-power Vacon NXC drives also control pumps supplying air to the stacked ore in the heap leach pad and to mixers at final precipitation. Three 1500-kW Vacon NXC cabinet drives control ball mills. A complete set of drawings and diagrams for the various combination involving the NXC drives was easily created with the Vacon Documentation Wizard tool.

The main factors which led to Talvivaara choosing Vacon as their AC drives supplier were Vacon’s technical solutions, especially the ATEX-certified temperature supervision of the motors that are placed in potentially hazardous areas (Ex motors). The fully integrated ATEX-certified thermistor input that Vacon has developed gives savings in design and installation costs since it requires no external devices, such as a thermistor relay or a contactor. Almost 100 Vacon AC drives at Talvivaara have a fully integrated ATEX-certified thermistor input.

Another decisive factor was the small physical size of the Vacon AC drives. As they require only a small space for assembly, they give considerable space saving benefits. A broad, uniform I/O configuration for the entire power range brings savings in design and documentation costs. Vacon PC tools for the AC drives are easy to use and available online, free of charge. If needed, Vacon is also able to provide experienced technical support 24/7 in the local language.

Olavi Mikkonen, who is responsible for electrical design and maintenance tasks at Talvivaara Project Ltd, the operational subsidiary of Talvivaara Mining Co., has extensive experience in the field of electrical engineering and project management. “Our experience with Vacon has been very positive. Vacon has delivered a large number of AC drives to a tight schedule, commissioning has been successful, and all minor problems have been handled professionally in a joint effort,” said Mikkonen. “Vacon’s personnel have also trained our personnel so that we will be able to handle maintenance operations ourselves. I am confident that our cooperation with Vacon will also run smoothly in the future, when we reach full production capacity after the ramp-up phase.”

Talvivaara Mining aims to become a major international base metals producer with a primary focus on nickel and zinc. By 2010, the mine is expected to reach the planned annual production of approximately 33,000 mt of nickel and 60,000 mt of zinc. The first shipment of approximately 100 m of nickel product was delivered to the Norilsk Nickel Harjavalta refinery in Finland in February 2009.

After 3.5 years of intensively testing ViVision’s lightweight composite rollers under heavy load factors and in a very contaminated environment at the iron terminal in Narvik, Norway, LKAB placed a three-year contact in June 2009 for the regular delivery of these rollers. As previously reported, during the 3.5-year trial only one out of 130 rollers installed failed and that through no fault of the roller itself.

In March this year, Boliden also started to test the innovative roller, installing five 32-kg return rollers with polyurethane coating to replace 145-kg steel rollers. So far the test is going well and ViVision expects a complete status report by the end of September.

An interesting aspect of the Mineral Deposits Ltd (MDL) Sabodala gold project (E&MJ, June p. 20) is the electrical power supply. In January 2009, a 30-MW, 5+1 engine heavy fuel oil (HFO) power station began providing power to Sabodala. Installation of this power station involved a massive project to relocate three available used Wärtsilä 12 MW power plants from Turkey to Dakar and then the 650km to Sabodala.

MDL took the decision to relocate used engines rather than acquiring brand new equipment for the power plant project was taken by the mine management because of the anticipated comparatively long delivery period for new engines. The three two-engine plants were fairly far away: one of the plants was located at Akteks near Turkey’s border with Syria, the other two on either side of Istanbul. And the running hours on these units varied from 24,000 to 66,000 hours. Even so, said MDL Assets Manager Adam Smits, Wärtsilä’s medium-speed technology made the choice a simple one.

The relocation project was managed by Wärtsilä’s own Project Services team, which dismantled the units in Turkey, shipped them to Senegal and reassembled the three power plants at Sabodala. MDL carried out mine site civil engineering and tank building services using local service providers. The Finnish company refurbished four of the six 5MW Vasa 32 engines to run on HFO because Sabodala is not connected to any existing gas pipeline infrastructure. MDL hopes eventually to run the engines on biofuels such as those that can be recovered from Jatropha seeds. Under normal conditions, Sabodala will require three units working to provide sufficient power to operate at the nominal throughput of 2Mmt/y. However, the plant has been designed to enable significant capacity increases if required.