An Arctic Wonder
Cover Story
Monday, 02 October 2006
smc Teck Cominco Ltd says it continues to aggressively search for more mines while remaining compliant with environmental codes.
Teck Cominco Ltd says it continues to aggressively search for more mines while remaining compliant with environmental codes.
John Knapp has worked for Teck Cominco Ltd for the past 25 years and has no reason to leave anytime soon. After graduating from the University of British Columbia, he went to work for Teck Cominco and has recently been promoted to general manager of Teck Cominco Alaska Inc., a subsidiary of Teck Cominco Ltd “I have been with the company in a number of different positions. I think it’s a great place to work”, Knapp says. “I have worked mostly in Canada but now I am spending most of my time in the U.S. I have been in the U.S. since last January.”

Teck Cominco Ltd is a diversified mining company, headquartered in Vancouver, Canada. The company says it is a world leader in the production of zinc and metallurgical coal and is also a significant producer of copper, gold and specialty metals.

It is a good time for the company, Knapp explains, as commodity prices stay high and the market remains steady. Zinc is a galvanizing agent for coating structural and automotive steel. It has a worldwide market, Knapp says; zinc’s principle buyers are smelters and other consumers. Teck Cominco Ltd’s market is 25 percent British Columbian, 25 percent Asian and the remainder is European. Teck Cominco Ltd does not sell much zinc to the United States.

“The American market lacks the smelting facilities that we find desirable to sell to. But commodity prices are very good right now, so that puts the company in a good position,” Knapp says. “Our zinc mine is the largest in the world and zinc prices are close to reaching historic heights.”

The operation is Red Dog Mine and it is the world’s largest producer of zinc concentrate. Completely owned and operated by Teck Cominco Ltd, under a development agreement with NANA Regional Corp. Inc., a native Alaskan corporation, the mine is located in the DeLong Mountains of Alaska’s Brooks Range. The remote site is approximately 90 miles north of Kotzebue and 55 miles from the Chukchi Sea.

In 1982, Cominco American signed an agreement with NANA regarding development of the deposit. Initial mine development began in 1986 and by November 1989, construction was complete. Operations and production began in December 1989. Facilities were expanded in 1998 and again in 2001.

An open pit, truck/shovel operation, Red Dog has a production capacity of more than 600,000 tons per annum of zinc contained in concentrate, Teck Cominco says. Concentrate from the mill is trucked to a port facility at tidewater where it is stored prior to loading onto vessels. Given its Arctic location, Teck Cominco says, Red Dog has a brief summer shipping season during which its products are shipped to markets in North America, Asia and Europe.

Teck Cominco Ltd has adopted a progressive training program that includes management training, a job shadow program, a scholarship program and aggressive shareholder hire goals, it says. Currently, more than 50 percent of the employees at the mine are NANA shareholders. “They are a good employer and that is the short answer,” Knapp says. “I certainly have no plans to leave. We are probably about the 10th-largest mining company in the world but have the largest zinc mine. We were fortunate enough to discover it and have had the opportunity to exploit it.”

Environmental issues play a major role in the Red Dog Mine. In April 2004, Red Dog joined an elite group of less than half a dozen metal mines in the United States certified under the ISO 14001 Environmental Management System, Teck Cominco Ltd says. Certification was particularly challenging at Red Dog because of the associated non-mining activities necessary for operations at the remote mining site. “We are very proud [of our record],” Knapp says.

In addition to its zinc mine in Alaska, Teck Cominco Ltd recently completed construction of the 40 percent-owned Pogo mine in 2005, which commenced operations in January 2006.

The Pogo gold property is located in eastern Alaska. Teck Cominco Ltd is the operator of the project and subsidiaries of Sumitomo Metal Mining and Sumitomo Corp. hold the remaining 60 percent interest.

Watts Griffis & McOuat Inc., carrying out work for Sumitomo Metal Mining Ltd., discovered the Pogo deposit in 1994. Teck Cominco Ltd became the project operator in 1997. Surface exploration from 1997 to 1999 indicated a major gold resource. Underground exploration took place in 1999 and 2000 to further delineate the resource. Pogo is presently expected to produce an average of 400,000 ounces of gold per annum over a 10-year mine life.

Despite its recent successes, being a mining company means the company always has to be on the lookout for the next mine, it says.

Priority commodities in the company’s planned $70 million exploration budget for 2006 are copper, gold, zinc and nickel. Roughly half of the budget is directed at more than 25 copper projects, with large drill programs planned on multiple projects in Australia, Chile, Mexico and Canada, the company says. Mexico, Brazil, Chile and Argentina account for just more than 50 percent of the planned expenditures.

Expenditures on zinc exploration in 2006 are primarily focused on generating new programs in Ireland, Australia and Peru. The company plans to spend more than $5 million to continue evaluating the Santa Fe/Ipora nickel laterite project in Brazil, it says. “You have to go out and find them,” Knapp says. “It is always a challenge but once you start extracting oar and depleting resources, you have to start looking for fresh minerals.”
 
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