2 Opportunities in the Saskatchewan Mining Supply Chain Northern Opportunities ForumLa Ronge, SKNovember 21, 2013Monique LischynskiManager, Supply Chain DevelopmentMinistry of the EconomyGood morning: ladies and gentlemen:Thanks to ABMEC, the organizerVery excited to be back to England and to tell the opportunities in SKYou may wonder why this Chinese guy was sent here, but not a native English-speaking person?No one else in the office have lived in England longer than me although some of them are British.My personal link with the UK: Southampton , 1st return trip since 1996My roots in mining: Daye County, Hubei Province, my ancestor land, mined iron ore 226 AD (1780 yrs history), with the largest open mine pit in Asia.My ancestor home village is located right above iron ore mine.Minerals are in my blood, and give me passion for my job.
4 Ministry of the Economy Mission to: “advance economic growth to generate wealth and opportunity in Saskatchewan.”It has three core lines of business:To advance and regulate responsible resource developmentTo develop, attract and retain skilled workersTo enhance economic growth and competitiveness in the province.Provide a more integrated approach to the province's economic growth.
5 Economy – Supply Chain Overall: To increase local goods and services content in resource industries including mining, energy and value added agriculture industry.To assist local companies to understand supply opportunitiesTeam of three: Michele Grella, Shelley Kent, Monique Lischynski
6 Outline Overview of minerals exploration and production Overview of supply chain opportunitiesExamples of goods and services requiredWhat is important to buyersStrategies for market entryResourcesECON’s roles and services
7 OverviewBetween , mining companies in SK will have invested over $15 B in projectsFrom 2008 – mining companies in SK will invest over $50 B in new projects>30,500 employed in industryOver $2.5 billion annually on wages, goods, services
8 Overview Industry Drivers: Expanding global population Growing middle class in developing countriesIncrease need for food quality, power and industryIncreased energy consumptionIncreased crop production
9 Saskatchewan Rich Endowment of Minerals REESaskatchewan Rich Endowment of MineralsAthabasca BasinUraniumGold & base metalsWorld’s largest potash producer and 2nd largest uranium producerCanada’s 2nd largest oil producer and 3rd largest natural gas producerOil SandsPrecambrian Shield651,036 km2DiamondsOilWestern Canada Sedimentary BasinNatural GasWhen it comes to mineral endowment Saskatchewan has truly been blessed geologically with a rich and diverse mineral endowment.The northern 1/3 of Saskatchewan, which is underlain by rocks of the ancient Precambrian Shield includes the Athabasca Basin, which contains the largest, highest grade uranium deposits in the world.Also in the Precambrian shield ancient volcanic belts, shown in green, contain base metals and gold (cross hatched pattern).There is also significant rare earth element potential in the Precambrian Shield, particularly to the north of the Athabasca Basinlarge potash deposits which account for account for about 45% of the world’s potash reserves.southern part of the province as deposits of diamonds, coal, clays and sodium sulphate.The rocks in the southern part of the province also host substantial resources of oil and natural gas. Saskatchewan is second in oil and third in natural gas production in Canada.In terms of mineral potential, assuming the current regulatory environment and current land use restrictions, which is considered the best measure of investment attractiveness, Saskatchewan ranked 5th out of 96 jurisdictions surveyed and first out of Canadian jurisdictions in the Fraser Institute’s survey of mining companies.PotashOilClayCoalRanked 1st in Canada and 5th overall out of 96 jurisdictions in terms of Mineral Potential, assuming current regulations and land use restrictions (ie investment attractiveness ) in 2012/13 Fraser Institute Mining Survey.
10 Saskatchewan Value of Mineral Production 2012Production: Potash, uranium, coal, gold, silver, salt, sodium sulphate, potassium sulphate, bentonite, silica sand and kaolin;Position in Canada (value of production):In top 31 in 2008;3 in 2012Value of mineral production:2012: ~ $7.4 B, largely from potash and uraniumdown from $ 8.1 in 2011 valuebetter than 2009 and financial crisisnear record $9.5B realized in 2008.$ Cdn Billion
11 Mineral Exploration: 1984 – 2013 SaskatchewanMineral Exploration: 1984 – 2013Exploration spending:record $474 M in 2008range of between $275M and $323M.~$2.8 B spent has been spent between 2004 and 2011.~$1.2 B on uranium ref in later in the presentation.new discoveries have been made; and several projects are advancing towards production,bodes well for the future of our mining sector.Of the just under $300M in exploration in 2012 about 50% ($150 M) would have been spent in the North.Overall $1.2 B in overall spend in Northern Goods and Services of which 30% is goods and 70% servicesOf this overall spend of only $150 is Exploration*2013 Expenditures are a preliminary estimate
12 Saskatchewan Uranium: Exploration and Development Activity 2014:Mining of high grade Cigar Lake deposit begins2013:McClean Lake Mill restarts3 Projects at Feasibility/Prefeasibility7+ Advanced Stage ProjectsExploration :$1.2 Billion spent16+ new discoveries from 100’s of projectsProduction by 2017 couldclimb to 17,000 t/Ushort to mid term prospects for uranium look very gooda number of projects in development, feasibility/prefeasibility and at the advanced stage of exploration.estimate that by 2017 production could be at 17,000 t/U
14 Saskatchewan Potash Production 8 conventional underground mines2 Solution minesEach of the potash mines have recently increased, or plan to increase their production capacity.Planned expansions of 15.9 Mt KCl by 2020This represents a 90% increase over 2004Total estimated cost of expansions: $13.9 BSome work from the Potash Mining Supply Chain Requirement Guide2 MTPY Conventional about $4B while Solution $3.2 B – prices have elevated from here (recent quote is K+S for 2 MTPY solution mine is $4.1 B)Annual operations and repair:$160 M for conventional$234 for solution.
15 Saskatchewan Gold~1.63 M oz Au produced since 1986 from 7 gold mines (primary) in LaRonge Gold BeltCurrent Operations :Seabee Gold Operation (Claude Resources)2 mines (Seabee, Santoy 8,)produced 1 millionth oz in August 20122012: 49,570 oz AuLa Ronge Gold Project (Golden Band Resources):production at three mines over past year (Roy Lloyd, EP, Komis) at Jolu Mill41,932 oz Au produced in 2012 fiscal year (year ended April 30, 2012;After operational restructuring production has recently resumedKomisLa Ronge Gold Belt)Jolu MillRoy LloydSeabeeGold Production:Claude Resources Seabee Operation (Seabee and Santoy 8 deposits)1 M ounce last AugustGolden Band’s 3 mines over last year Roy Lolyd, EP and KomisThe Seabee Gold Operation currently has a Proven & Probable reserve of 311,100 ounces of gold, an Indicated resource of 344,200 ounces and an Inferred resource of 603,400 ounces in National Instrument category. Current exploration programs are focused on near mine targets at Seabee and Santoy.
16 GoldDeveloper:Brigus Gold Corp. Goldfields Project, Uranium City areaOthers:Wescan GoldfieldsFuhua MiningBrigus: production in SK in 2013 (?)
17 Saskatchewan Coal Mining and Exploration 2012 (2011) Coal Production in Mt, Sherritt InternationalBienfait: 0.5 (0.6)Boundary: 5.6 (5.8)Poplar River (3.5)Total = 9.7 Mt:2011 Production = 9.9 MtCoal ExplorationHudson Bay areaDispositionsMineralPotashCoal (Issued/ Applied For)Hudson Bay areaLast year, Saskatchewan lignite coal production was 9.9 Million tonnes from Sherritt International’s 3 mines in the south and southeast part of the province near the American border.Limited exploration for sub-bituminous coal continued in the Hudson Bay area along the east central side of the province.Producing Mines
18 Other Mineral Production SaskatchewanOther Mineral Productionand ExplorationProduction:sodium sulphatehigh-value silica sandpotassium sulphatelimestonesaltbentonite and other clay productsaggregate.Exploration:base metalsdiamondsrare earth elementsgraphiteSaskatchewan also had production of a variety of industrial minerals as listed on this slide; in addition there was exploration for diamonds, rare earth elements and graphite.Sask Minerals Chaplin Sodium Sulphate Mine – photo by Lilypon (Google Earth post).
19 Saskatchewan Mineral Sector in Fall 2013 Outlook is fairly positive, however, still uncertainties:direction of global marketspace and scope of uranium recoveryCommodity prices are downMany mining companies are in cost control modeNeed to appreciate how that impacts current procurement focuscompanies have existing supply chainswill be working with them to reduce costsextra challenge for new suppliers and/or start-up suppliers
20 Supply Chain Opportunities ExplorationProjects (new mines/expansions)Establish InfrastructureConstruct UndergroundConstruct SurfaceOperations
21 Exploration Supply Chain Opportunities Geology (geologists, technicians, prospectors)TransportationCamp/lodgingDrillingGeochem AnalysisField Supplies and EquipmentCommunication and Freight
22 Projects Supply Chain Opportunities Opportunities exist in both new mine and mine expansion developmentKey manufactured goods required:ConcreteSteel and fabricationElectricalPumps and pipingValves and fittingsEquipmentMiscellaneous
23 Surface Construction Overhead cranes Compressors Agitators Belt scales Heavy civil constructionMechanical rotating equipmentMill/product storage/flotation buildingsElectric, instrumentation, controlsConcreteScaffoldingCyclonesGrinding equipmentScrubbersPumps & pipingDryersThickenersTanks and storage binsConveyorsBucket elevatorsBoilersCentrifugesOverhead cranesCompressorsAgitatorsBelt scalesTransformersFire protection systemsProcess control equipmentProcess chemicalsHVAC equipmentFeel free to mention just a few – they will get the presentations which will provide them with the detal.
24 Underground Construction Walking/drill rigs and drill bitsUltrasound measurement equipmentHoist rope/wire ropeWinchPumpsElectrical equipmentHydraulic motorConveyor and conveyor componentsFansScoop tramsLimit switchesCranesCrushersScreensRock drill liftsInstrumentationsShovelsLoad and hauling machineryRaise bore systemsSpecialized mine vehiclesRock toolsExplosives and suppliersRock drills
25 Operating Mines (Potash) Chemicals – potash flotation, water conditioning for heating systemsFuels and LubesDedust oil for potashMobile equipment-trucks, dozers, front end loaders, etc.Conveyor belting for undergroundBearings, seals and power transmission partsElectrical consumables such as breakers, fuses, switches and fixturesPipes, valves and related fittings (ie. steel, PVC, copper)List of examples of materials and equipment required in a operating potash mine.
26 Operating Mines (Uranium) Computing and telecom (hardware, software and services)Nuclear materials and process equipment, mechanical components, tooling, maintenance componentsBoilers, piping, forged componentsElectronics and instrumentationLogistics, handling and storageReagents and environmentProduction services (waste management and cleaning, decommissioning)General serviceList of examples of materials and equipment required in a operating uranium.
27 Site Services Water Security on site Waste disposal Medical on site CateringCamp AccommodationJanitorial ServicesPest ControlSecurity on siteMedical on siteTransportationInternet and phoneStorage shelters
29 Project Supply Chain EPC Example Mining CompanyEPCTier 1Tier 2Tier 3CustomerProjectSuppliers(OEM)(Parts or Service Provider)(Raw Material)This is a graph of the supply chain in the case of a new project – the Project folks are the EPC – Engineering Procurement Consulting company (Engineers) In this case the Engineering company may be buying the equipment for the project. In other cases (EPCM ) the engineering company will make a recommendation but the Mining Company actually purchases the equipment.EPC – Consulting company which provides engineering, procurement and construction support to mining company. Used extensively in new projects/expansions.
30 Project Perspective Engineering view: On-time, on-budget, reduced risk Prequalification systemsSupplier experience and know-how criticalNew Supplier:Not long termProjects in different locations
31 Operations Supply Chain Mining CompanyTier 1Tier 2Tier 3CustomerSuppliers(OEM or Established Vendor)(Parts or Service Provider)(Raw Material)This is just an example of a supply chain with the Mining Company as the customerOEM is an Original Equipment Manufacturer for example Prairie Machine who makes boring miners.Suppliers would supply directly to him and so on.
32 Operations Perspective Mining view:Long termWhat do you offer that adds valueNew Supplier View:Consistent locationPotential for market growth
33 Strategies for Market Entry Direct to mining companiesPartnering with other suppliers of goods and servicesWork with existing OEM or suppliers to mining companies – supply to the supplierSaskatchewan Manufacturers GuideCompanies often want to sell direct to mining companies and that is certainly possible depending on the project/service you have.It is important to understand the mining companies have well established relationships with suppliers and your will need to demonstrate value added to be considered.Mining companies also prefer to work with local suppliers when possible. That can be one of the advantages of developing a Join Venture or project or a supply agreement with a local company.
34 Preparing for the Market Do your homework:market research – understand your potential customerUnderstand what your good at (core competency)Think through the 4 P’sproduct, place, price, promo
35 Practical Advice Know your customer Know your competition Know your product
36 Making the Pitch Review procurement policies and procedures Make an appointmentConduct a “lunch & learn”Provide product literature, catalogs (electronically), web site addressRequest to be added to the bidders listComplete prequalification processIf not added to the bidders list, ask why, constructive feedback and adjust
37 Making the Pitch What buyers like: Become a qualified bidder Tailor your offering to the businessAsk customer what they are interested inOffer how your product is different from your competitors
38 You Get the Order Now What? Supplier evaluations: Product quality DeliveryPriceHealth, Safety, EnvironmentExperienceSpec complianceTurnover packagesA
39 Becoming a Preferred Supplier For the long term:SafetyServiceQualityTechnical competencyRelationships
40 Resources used in this presentation How to Successfully Access the Mining Supply Chain - Source of information for this presentation. Detail on potash and uranium including company background, contracts, existing supply chains, procurement methods, contactsPotash Mining Supply Chain Requirement Guide - goods and services required to support the development/ operation for conventional and solution mine.Mining Supply Chain Forum - Presentations frommining and engineering companies.
41 Other Events 44th Annual Saskatchewan Geological Survey Open House December 2-4, 2013, SaskatoonPDAC 2014 – Prospectors and Developers Association of Canada (PDAC)March 2-5, 2014 TorontoCanadian Institute of Mining (CIM)May 11-14, 2014, Vancouver
42 How we can help…Information on the mining industry and supply chain opportunitiesInformation on the Saskatchewan business environment and related business costs tailored to individual business caseConnections to mining and supply companies
43 Saskatchewan Industrial and Mining Suppliers Association (SIMSA) Promoting Saskatchewan solutions for the global resource industryPhone:Web site: simsa.ca