TECK CORP. A Jackpot in the Arctic

When, in 1968, bush pilot and prospector Bob Baker spotted a mineral-stained creek in northwestern Alaska, he reported the unusual observation to the U.S. Geological Survey. Little did he know he had identified one of the prizes in a corporate takeover to occur 18 years later. As Cominco Chairman Norman Keevil Jr later put it, Baker had discovered “a company-building orebody.” The Red Dog zinc-lead-silver deposit, near the Chukchi Sea inside the Arctic Circle, is in a class by itself. Red Dog will be the largest and among the lowest-cost zinc-producing mines in the Western world — and it will produce for 50 years. Mining 2.1 million short tons per year to produce 700,000 short tons of lead and zinc concentrates, Red Dog will meet more than 5% of the Western world’s zinc needs.

According to Cominco Alaska President H. M. Giegerich, “the deposit is a unique combination of large size, high grade and low waste-to-ore ratio.”

It has reserves of 85 million short tons grading 17.1% zinc, 5% lead and 2.4 oz silver per ton. Among zinc deposits, only the original Broken Hill deposit in Australia is larger. Cominco’s Sullivan mine at Kimberley, B.C., ranks third. (Economic ore remaining at Sullivan totals 36 million tons grading 6.3% zinc, 4.3% lead and 1.0 oz silver per ton.)

Indeed, the exhaustion of the Sullivan mine in the late 1990s and the closure this year of Cominco’s Pine Point mine in the Northwest Territories are adding to Cominco’s enthusiasm for Red Dog. Cominco studies show that with depletion of other zinc mines and continued low base-metal prices, world mined zinc capacity will fall 25% in the next 5-7 years.

Cominco became interested in Red Dog — named after Baker’s mining company — in the mid-1970s. By then, the site had been withdrawn by the 1971 Alaska Native Claims Settlement Act (ansca). After several years of talks, the nana Regional Corp., one of 12 native corporations created by ansca, leased Red Dog to Cominco in 1982 in return for royalties and a net profit interest.

One of Teck’s first moves after it led a consortium that purchased the control block of Cominco from Canadian Pacific Enterprises was to approve Red Dog’s development, with production scheduled to start in 1991. Total expenditures are estimated at $420 million(US) for site development, exploration and feasibility studies as well as mine, plant, power, services, road and port costs. Cominco’s commitment is $270 million(US).

Some components are already in place, such as an airstrip and camp at the site. A shallow-water dock and a staging area were completed last fall on the coast. The 84-km (52-mile) road, to be financed by a state agency, will start from the coast this year and reach Red Dog in August, 1988.

At the mine site, construction over three years will gradually transform the treeless, rolling hills. Ore will be mined by open-pit methods since mineralization is virtually at surface. Waste-to-ore ratio will be less than 1:1. Plans call for loaders to carry broken ore from benches, 7.6 m wide, to trucks for a short haul to the crushing plant.

Since mineralization consists of fine-grained sulphides of lead, zinc, and iron closely associated with silica and barite, hosted by a black shale, a very fine grind is necessary for maximum recovery. After a jaw crusher reduces ore to –200 mm three-stage wet grinding and tower milling will reduce it to such fineness that 80%-90% passes through screens of 325 mesh. Differential lead and zinc flotation will be carried out in tank cells. Filtered concentrate will then be conveyed to a storage building.

The mill, accommodations and power plant will be constructed offsite in large modules, barged to the Red Dog port site, and trucked to the mine for final assembly. Offices, warehouses, vehicle-servicing depot and the concentrate storage building will be built on site.

Cominco’s experience with Arctic mines has proved important in solving transportation problems. Since the shipping season on the Chukchi Sea averages 100 days, the port site includes storage for nine months’ production, an oil tank farm to hold a year’s supply of fuel, storage area for mine supplies, and personnel accommodations.

Chukchi Sea is also shallow — 3.2 km (2 mi) offshore, water is only 15 m (50 ft) deep. So lighter craft will shuttle to ships anchored 5-6 km (4-5 mi) offshore. With capacities up to 55 kt (60,000 short tons), only 15 ships will call each season. More than half of Red Dog’s production is earmarked for Cominco’s Trail smelter; the remainder will be split between European and Far Eastern markets.

Cominco officials believe that, despite Red Dog’s capital costs and transportation logistics, it will earn money even during low periods of the world’s metal cycles. While financing details remain unclear, Keevil told European financial leaders in February: “We are prepared to see Cominco take on new debt, carefully financed, to develop new income sources such as Red Dog.”

The significance of Red Dog to Cominco, he suggested, ranks with the importance of the Rand to Anglo American, or Sudbury to Falconbridge and Inco. With that confidence, favorable financial support should not be difficult.