Morice Land and Resource Management Plan

Location Analysis

Size of various types of deposits and land requirements for mining and concentrating facilities, tailings ponds and dumps range from 0.5 square kilometres to over 8 square kilometres. Land requirements are dependent upon whether mining operations are underground or open-pit, lateral extent of the ore body, percentage of gangue within the ore that must be discarded as waste, and the topography. At Highland Valley Copper, the largest active open pit metal mine in BC, approximately 6,300 hectares of land have been disturbed. These disturbances can be categorized into five general categories for open mining including:

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  The open pit;
  
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  Waste rock dumps;
  
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  Tailings ponds and dams;
  
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  Roads and pipelines; and,
  

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  Buildings and other structures.
  

Besides the physical land surface over the mineral deposit, there would be several specific infrastructure requirements including:

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  Access to hydroelectricity – Highland Valley Copper is the largest customer of BC Hydro, and electricity represents one of their larger expenses. In 1998 Highland Valley consumed 953,360 Megawatts of electrical power. New heavy transmission lines will need to be developed to the mine site.
  
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  Transportation Infrastructure – New mines are often located away from existing transportation infrastructure. Typically at a minimum, this involves building new road infrastructure. In the case of the coal mines at Tumbler Ridge, it required the development of a BC Rail spur line some distance from existing track.
  

As well, the medium to large open pit mine would need to ensure it had:

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  Skilled Labour Force – An open pit mine could create upwards of 1,000 direct jobs, many of which would be skilled trades people. At Highland Valley Copper, heavy-duty mechanics and electricians alone make up over 16 percent of the total mine workforce. The mine also employs a range of other professionals including engineers, environmental scientists, chemists, accountants, human resources and marketing. The labour force in the Morice Plan area is small and would require considerable effort on the part of the operator to attract and train the appropriate labour force.
  
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  Key Service Providers – Open pit mining requires numerous types of heavy machinery to move waste rock and ore and undertake the ore processing. This equipment needs on-going and timely service and maintenance support. In 2001, Highland Valley Copper spent over $62 million on goods and services on companies from the City of Kamloops. Kamloops service companies like Finning Ltd. and Moly-Cop Canada depend on providing on-going service to Highland Valley Copper, and Highland Valley Copper in turn is dependent on the quick and quality service these businesses provide to them.
  

Environmental Issues

Key environmental concerns associated with open pit mining include acid mine drainage, heavy metal contamination and leaching, processing chemicals pollution, and erosion and sedimentation. Unfortunately for the Morice Plan area, the Equity Silver Mine is a case study of the environmental problems that can be caused by acid mine drainage. The Equity Silver Mine is at the top of two watersheds where streams flow into lakes on either drainage and from there into the Bulkley River. The acid-drainage from the Equity Silver Mine flowed into Buck Creek in 1982 until a partial containment system was constructed.

However, water quality remains a concern to this day with Placer Dome, Equity Mine’s owners, spending $1.5 million on collection and treatment in 1997 alone. Equity was the first mining operation in Canada to be required to post a bond for maintenance of an acid mine drainage problem in perpetuity. The bond now stands at $25 million to guarantee payment of cost for this site and it is anticipated the problem will need to be monitored long into the future.
Acid mine drainage tends to be the most serious environmental problem among the various mining impacts. The first and best line of defence against acid mine drainage is to prevent the potential acid generating material from mixing with air and water. Containing the waste material and runoff (with liners, impervious pads, diversion and collection ditches, etc.) can be used to keep the pollutants from running off the mine site into groundwater or streams. The most reliable strategy for preventing acid mine drainage is to submerge the waste rock under water behind an impoundment to prevent exposure to oxygen. Currently the BC government, industry and conservation groups are working on potential technical guidelines for acid mine drainage.
However, the best preventative measure to mitigate specific potential impacts is to carefully plan and implement processes that will build in effect management regimes for identified problems at the beginning of the mine life.

Market Analysis

Current Production Trends

The known mineral resources in the Morice LRMP area consist primarily of five key metals: copper, zinc, gold, silver, and molybdenum. The following highlights the current world production for key mineral commodities (i.e., copper, zinc and molybdenum) that would most likely be mined in the region by open pit methods.

Copper – The strong growth trend in world mine production that began in 1995 came to an abrupt end in 2002 when producers, primarily in the United States and Chile, instituted cutbacks. The reduced output occurred despite growth of more than 400,000 tonnes annually in world mine capacity. In Canada, production was 633,000 tonnes in 2002, making Canada the seventh largest copper producing country in the world. In recent years copper production reached a peak of 710,000 tonnes in 1998 and has since been trending downward.
Figure 6 outlines the production percentage share for the four largest producers in 2002 and highlights the trend for copper production between 1997 and 2002.
Figure 6. World Share of Copper Production and Production Trend

Copper Share For Largest Producers – 2002	Copper Production Trend – 1997 to 2002

Source: US Geological Survey.
Molybdenum – Molybdenum is a refractory metallic element used principally as an alloying agent in steel, cast iron, and super alloys to enhance hardness, strength, toughness, and wear and corrosion resistance. Distribution of molybdenum reserves and production capacity is concentrated in a few countries. The United States, Chile, China, Peru, Mexico and Canada represent 92 percent of the world’s production. Molybdenum production has been declining in recent years, reaching its lowest production level in 2002 over the past five-year period. Figure 6 outlines the leading molybdenum producing nations and the general trend in recent production.
Figure 7. Molybdenum Producing Countries and World Mine Production

Leading Molybdenum Producing Nations – 2002	World Molybdenum Production – 1997 to 2002

Source: US Geological Survey.
Zinc – Canada is one of the larger zinc producing nations. Over the past five years the production of zinc has steadily climbed before falling in 2002. In 2002, zinc reached its lowest price levels in 15 years. The reaction to the steady decline in prices has been resulted in the closure of several smaller companies and small underground zinc mines, still others have curtailed production recently. As well, several mining companies have deferred plans to bring on new zinc production. Figure 8 outlines the leading zinc producing nations and the general trend in zinc production in recent years.
Figure 8. Leading Zinc Producing Countries and World Mine Production

Leading Zinc Producing Countries – 2002	World Zinc Production – 1997 to 2002

Source: US Geological Survey.

Market Demand and Price Trend

Overall metal prices are coming off a period of historical weakness and are anticipated to see an increase in price levels over the next couple of years. Table 17 outlines the change in key commodities that are mined or are of interest to the Morice LRMP plan area.

Table 17. Mineral Prices for Key Mineral Commodities (1995 to 2004)

	Copper	Zinc	Molybdenum
	(US cents/lb)	(US cents/lb)	(US$/lb)
1995	133.0	46.8	7.42
1996	104.0	46.5	3.61
1997	103.2	59.6	4.18
1998	75.0	46.5	3.31
1999	71.3	48.8	2.65
2000	82.3	51.2	2.51
2001	71.7	40.2
2002	70.6	35.2
2003 F	76.3	36.3
2004 F	81.0	37.7

Source: TD Bank Financial Group Commodities Price Report & BC Ministry of Energy and Mines.

F= forecast
Over the longer term, indexes developed by the US Geological Survey suggest that the long-term constant dollar prices of key metal minerals have declined, even though the need for minerals has increased.¹⁵ For example in 1900 a pound of copper was approximately $3 ($1997) constant dollars and only about 76 cents ($1997) in 2003. Technologies and reduced production costs have allowed mineral production to remain profitable, while, lower priced mineral products from domestic and foreign sources helped fuel growth in other sectors of the economy. Moving forward, it is possible this general long-term downward trend will be broken as Asia becomes more involved in the world economy and continues to increase per capita consumption of metals.

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