New projects mean new challenges for Cominco

The challenges involved in starting several new operations dominated the recent annual meeting of Cominco (TSE). President Robert Hallbauer told shareholders that the company was applying its considerable resources to meet challenges at the Red Dog mine in Alaska, and the company’s new lead smelter at Trail, B.C. Cominco completed construction of the Red Dog mine in November, 1989, and Hallbauer said he expected the first concentrate would be shipped out as scheduled in July.

But he conceded the challenge of starting a new open pit mine and mill with largely untrained personnel in the middle of winter some 130 miles north of the Arctic Circle was a “daunting task.”

But he also said the company was “fortunate” to have many new projects to present challenges to employees and opportunities for shareholders.

“It is better to have problems in starting new operations and in planning new developments than to have nothing new to work on,” he added.

Sized at 6,000 tons per day, the Red Dog mining operation has reserves totalling 85 million tons grading 17.1% zinc, 5.0% lead and 2.4 oz. silver per ton, sufficient for more than 50 years.

Hallbauer said most of the problems involve the handling of frozen ore through the crusher and into the mills, and in drying concentrate.

With the concentrate drying problem largely resolved, Hallbauer noted that the ore handling problem still requires some modifications.

“The one problem we haven’t had that has plagued many new mines is ore grade,” he emphasized. “Ore grade to the mill to date has averaged 25.7% zinc and 10.5% lead, considerably above forecast.”

Cominco recently reported that the very high-grade ore being encountered in the initial mining means that full tonnage cannot be put through the concentrator as flotation and filter capacity becomes a bottleneck.

Shareholders were also told that some metallurgical difficulties were encountered because much of the lead mineralization near surface is oxidized and cannot be recovered. This problem is expected to moderate with the deepening of the pit.

Zinc metallurgy — reported to be relatively good with acceptable recoveries and concentrate specifications — is expected to improve even further as the lead oxide problem diminishes.

Outside of a short shutdown to improve the ore feed system, Hallbauer said he expects the Red Dog plant will operate at capacity for the remainder of the year.

Meanwhile, Cominco is still working toward a second or third quarter 1990 startup for its new QSL lead smelter at Trail which was completed last year.

The company encountered difficulties starting the plant. The problems led to a shutdown earlier this year for mechanical repairs and some process modifications. Fortunately, the problems were foreseen and the old plant was kept in a partial state of readiness.

Cominco is projecting that a production rate “below plant capacity” for both zinc and lead will continue as zinc smelter changes are made to accommodate ore from the Red Dog mine.

(On May 9, a minor explosion occurred in a leach tank at the zinc plant. No injuries or damages were sustained, except for the loss of about 1,000 tons worth of production from a temporary 16-hour shutdown.)

Hallbauer also outlined progress on a number of diversified international mineral projects, some of which involved 60% owned subsidiary, Cominco Resources International (TSE).

Closer to home, it was announced that the Snip property in northwestern British Columbia had sufficient reserves (1.03 million tons grading 0.87 oz. gold) to justify placing the mine into production. Startup is expected by year-end and the company plans to service the mine by hovercraft from Wrangell, Alaska.

Hallbauer did not appear optimistic that the Sullivan base metal mine near Kimberley, B.C., would reopen in the short term, although he noted discussions are continuing with the union and underground contract miners.

Cominco reported healthy earnings in 1989, but first-quarter 1990 earnings showed a significant decline largely due to lower zinc and copper prices and lower production of both zinc and lead metal. Earnings were $17.1 million compared with $70.5 million in the comparable period in 1988.