Large capital spending projects are notorious for delays and cost overruns, but Nickel Rim South is on time and on budget, despite a roller coaster ride through a commodity boom that peaked during the height of construction.
“It’s very unusual for projects of this magnitude to be on time and on budget, particularly given that we have been through a period of extensive construction price escalation,” said Rick Collins, project manager.
“The boom time made it difficult for us to get the skilled trades we needed and to get the level of interest from contractors to hold prices, so we’ve had quite a few challenges.”
Collins, a Hatch employee with years of experience on major tunnelling projects around the world, heads up a Nickel Rim South project team consisting of personnel from a number of companies, including Xstrata Nickel, but all of the project team members have the same Nickel Rim business card. “We set up the team in 2004 with the objective of de-emphasizing corporate employers because most of the roles here are long-term and we needed to establish our identity as a team rather than as a collection of people from different employers,” he remarked.
“This way, we’re all pulling in the same direction and we all have the same version of success. Our contracts are all tied to project objectives, so we can’t have one contractor being successful and the project team failing, or one contractor failing and the project team being successful.”
Nickel Rim South boasts an 18.2 million tonne resource distributed almost equally between two adjacent orebodies: a copper and precious metal-rich footwall zone with copper grades averaging 7% and a contact zone grading 2% nickel.
The top of the contact orebody is roughly 1200 metres below surface and the footwall bottoms out at 1700 metres. The full production capacity is slated for 1.25 million tonnes per year, translating into a 15-year mine life.
The mine is served by two shafts sunk by Cementation Canada: a main shaft extending to the 1735-foot level and a ventilation shaft bottoming out at 1,685 metres.
The project began producing ore in May. By the end of June, it was producing 40,000 tonnes per month, and by October, monthly ore production is expected to reach 90,000 tonnes.
One of the biggest challenges the project had to overcome was the labour shortage caused by the rapid increase in commodity prices, said project director Mike Welch, an Xstrata Nickel employee responsible for ensuring a smooth handover in March from the project team to operations.
“There were more projects than people, so finding the right people for the right positions and trying to retain them was very challenging. At the same time, we were dealing with escalating costs due to consumable price increases for things like steel and cement. There was a procurement lineup. If you didn’t get in line at the right time, your project could be affected.”
Meeting project targets in these challenging circumstances was a major achievement, said Welch. “I don’t know of too many projects that started six years ago and are now being delivered on schedule and on budget.”
Welch singled out controls manager Phil Charbonneau for his efforts in keeping the project on budget. “The control function on this project is probably one of the strongest I have ever seen,” he said. “As controls manager, he would say, ‘This is your budget, this is your scope of work and here’s the time you have to do it.’” Change notices were required if there was a deviation from plan and a decision was made to either dip into the contingency fund or “tighten down the screws.”
The project team had a couple of things going in its favour, including Nickel Rim South’s location.
“It’s not often that you get a big greenfield project like this on the doorstep of a major community,” said Collins. “Mines are often much more remote than this, so we talked up the benefit of being close to Sudbury.”
Proximity to Sudbury had other benefits as well. Xstrata Nickel and the project team were able to tap into the critical mass of mining supply and service companies in the Sudbury-North Bay-Timmins triangle.
“This is the mining capital of Canada here,” said Collins. “We’ve been very fortunate that we have many competent suppliers on our doorstep. One of our declared objectives was to maximize the use of local contractors and suppliers and we’ve been able to do that. Eighty-three per cent of our contracts were local.
We’re quite proud of that because we’ve really been able to put our money where our mouth is and support local industry.”
“From a procurement perspective, there’s no better place to develop a mine,” added Welch.
Cementation Canada, a North Bay mining contractor, sank two shafts and performed the lateral development before handing off to Xstrata crews beginning in June 2008. Two other North Bay companies, the Redpath Group and Boart Longyear, also played prominent roles at Nickel Rim South. The Redpath Group did all of the raises for infrastructure development, while Boart Longyear won the contract for exploration drilling. Collins and Welch also singled out Tesc Contracting, Technica Mining, SCR Mine Technology, Laamanen Construction, Laari Construction and Comstock Canada for their contributions to the project. Atlas-Copco, Toromont CAT and Marcotte Mining Machinery Services supplied the bulk of the underground development fleet, Fisher Wavy supplied shotcrete and Rainbow Concrete Industries Ltd. served as the project’s concrete supplier.
A Hatch-McIntosh alliance brought together two of the world’s top mining engineering firms to oversee the project.
“It’s almost impossible to find a single firm with all of the best-in-class expertise for the many facets of a project of this nature, so in 2003, Hatch and McIntosh formed a joint venture specifically to take on the Nickel Rim work,” said Collins. “The expertise that McIntosh brought in terms of mine design blended very well with the expertise that Hatch brought in terms of infrastructure design, project management skills and electrical and automation work, so we had a good blend of skills.” McIntsoh Engineering was acquired by Stantec in July 2008.
The EPCM project management methodology is more common in other industries than it is in mining, said Collins. “Mining companies, as owners, often like to secure the contractors directly and, in many cases, the work involves expanding a mine with a lot of development and mining activity – the same kind of work that a mining company executes as a core activity, so they tend to believe that they can do it themselves.
“But Falconbridge (which was acquired by Xstrata in August 2006) “took the view that this was an extensive greenfield project requiring $700 million of infrastructure before they could get into the orebody itself and that it needed to be delivered as a project by a group of professionals who understood project delivery as a core activity.”
Being on budget and on schedule is a source of pride for the project team, but equally rewarding is the project’s safety record, which is ten times better than the Ontario industry norm, said Collins. As of July 1, 2009, the project recorded 5.5 million hours of work without a lost-time injury.
“There was an absolute understanding from day one that we could be ahead of schedule and under budget, but if we were hurting people and sending them to hospital, or having accidents, the project wouldn’t be a success.”