Damage to a critical piece of equipment has forced Huckleberry Mines Ltd. to temporarily suspend milling operations at its open pit copper mine southwest of Houston, but company officials say it’s too early to speculate on the length of the shutdown or how it might affect employees.
Imperial Metals, which owns a 50-per-cent stake in Huckleberry, announced last week that a physical failure in the mine’s Semi-Autogenous Grinding (SAG) mill was discovered Feb. 26. Subsequent investigation revealed that a tooth had broken off the mill’s bull gear (a giant ring gear that drives the SAG), forcing the company to suspend milling operations indefinitely.
In its March 5 media release, Imperial Metals suggested the SAG mill might not be operation for as long as four months. However, Randall Thompson, vice-president of operations for Huckleberry Mines Ltd., says it’s too soon to say how long it might take to repair the damaged equipment.
Thompson said in an interview March 8 that efforts to correct the problem are hampered by a shortage of spare parts. While several companies worldwide make bull gears, the massive parts aren’t ‘off-the-shelf’ items.
“You can get parts,” he explained. “However, we’re finding it difficult getting parts in the timelines that we want.
The bottom line is that there are no parts of that nature on inventory in any foundry. You have to get one made.”
The SAG mill is a critical piece of the copper extraction process, and Thompson concedes that it could take many months to manufacture and replace the bull gear. In an effort to bring the SAG mill back online sooner, Huckleberry Mines Ltd. is “vigorously” investigating the possibility of a short-term fix.
“We’re looking at every possible option to repair the gear in the short term,” Thompson said. “We’re going through that process right now, subject to technical assessments of the gear and its status, and risks associated with operating the gear through a repair scenario. Repair would be a first step, with replacement being the ultimate step.”
Thompson said the company should know in one or two weeks if the bull gear and associated equipment can be repaired well enough to allow milling to resume. If the repair option is viable, it could take another one or two months to complete necessary work and bring the SAG mill back into production.
“The assessment of whether we can repair the gear should be relatively short,” he said. “That could take upwards of two weeks, in terms of where we’re at, based on information I have. That will tell us whether the repair work is viable. (If it is), we could be back in a position of repair, based on where we’re at now, we believe anywhere from one to two months… It definitely looks better than it did a week ago in terms of whether there is a repair, and it definitely could shorten the timeline the mill would be down. We’re optimistic we’re going to improve upon those dates if the assessment comes back with repair as a viable option.”
Huckleberry mine employs approximately 260 people. Thompson stressed that as of March 8, none of them had been laid off.
“Right now, all operations are normal in terms of employment. We’re still operating in the pit, and we’re doing maintenance in the mill supporting the assessment work that’s ongoing.”
Huckleberry’s vice-president of operations said the company will re-evaluate its labour requirements after learning if temporary repair of the SAG mill is feasible.
“We’ll do our internal assessment and follow the proper course of action in terms of what’s best for everybody involved,” he said. “It’s a step process, and in fairness to everybody, that’s the communications we have with everyone at the mine. I can imagine it’s extremely frustrating for everybody. But our goal is to work safely and keep calm. Once we have an understanding of the repair works that are needed, then we’ll understand what needs to be done (in terms of employment).”
The shutdown is having a significant impact on Huckleberry’s revenues. Thompson wouldn’t say how much it is costing the company, but noted that the mine normally operates round-the-clock 365 days of the year and produces between 35 million and 40 million pounds of copper annually. It also produces smaller amounts of gold, silver, and molybdenum.
“I’m not prepared to answer that question at this time with regards to our bottom line,” he said. “Again, I’d be making assumptions. The SAG mill is our primary grinding mill, though. If it’s not operating, we’re not creating the products our business model dictates. Right now, there’s zero income.”
The fact that the company carries business interruption insurance should help reduce the financial impact of any extended shutdown. Imperial Metals has indicated that Huckleberry will file a claim, but indicated “there can be no assurance that its insurance provider will pay on such claim.
“Huckleberry’s property insurance covers mill repair costs such as equipment purchases, installation, commissioning, and testing,” stated Imperial’s media release. “Huckleberry’s business interruption insurance also covers certain standing charges, but does not cover lost profits.”
Huckleberry’s financial position is such that it shouldn’t require added investment from Imperial Metals or the mine’s other shareholder, the Japan Group (a consortium of Mitsubishi Materials Corporation, Dowa Mining Co. Ltd., and Furukawa Co.).
Huckleberry Mines Ltd., located 123 km southwest of Houston, opened in 1997. When in operation, the company’s mill processes approximately 16,000 tonnes of ore daily. Copper concentrates are trucked to the Port of Stewart for shipment overseas, while molybdenum is sent to a facility in Vancouver.
The company’s current ore reserves are expected to last until 2021.