Digging Together
Contracting and collaboration
Ontario’s mine owners are facing a dilemma: whether to rely on experienced contractors to build and operate their mines and pay a premium or develop their own in-house talent pool to rely on. The reliance on contractors and service providers is complicated by the sector’s cyclical nature and the fact that projects like Agnico Eagle’s Detour Lake can reach gargantuan sizes, requiring thousands of skilled laborers from an already stretched talent pool. “I have observed a significant shortage of expertise in the industry, which is not a revelation but rather a recognized issue over the past several years. Clients are increasingly asking contractors like Redpath Mining to take a more involved role in their projects instead of merely handing off a scope of work,” said Paul Healy, president Americas, Redpath Mining.
Indeed, as mining projects continue to grow in sophistication and complexity, there is increasing pressure on service providers to cater to the growing list of challenges that need solving. Being able to cater to many, or all, of a client’s demands can provide a downward pressure on costs and simplify clients’ logistical and administrative burdens as they can deal with a smaller number of contractors and consultancies. “One of the trends we are seeing at Sussex is providing clients with a whole suite of services because the reality of being a mining company has changed. Gone are the days when the industry was simply extracting minerals from the ground – things have become far more complex,” said Bliss Baker, vice chair, Sussex Strategy Group.
Marz Kord, president of BESTECH, a Sudbury-based engineering project management consultancy, concurred: “BESTECH has seen a shift in demand from clients looking for more comprehensive mining project support. Clients increasingly prefer to work with a single consultant from start to finish, which fosters accountability and ensures projects stay on track.”
Ontario’s rich ecosystem of mining contractors and engineers has a long history of delivering the most technically challenging projects. Contractors and consultancies are now being challenged with minimizing costs for clients while having to adhere to new safety regulations, such as the seismic risk management regulations introduced in 2023 by Ontario’s Ministry of Labour, Immigration, Training and Skills Development. This has forced contractors to implement cost-saving measures in order to remain competitive in Ontario’s highly competitive mining services sector. “The mining industry’s emphasis on cost reduction and productivity has significantly affected the drilling sector. To stay competitive, we have adopted cost-effective strategies such as performing in-house rebuilds on critical spare parts like rotational heads, pumps and motors, and sourcing parts locally,” said Mark Fulcher, general manager, Andean Drilling Services.
However, cost control is not the only priority for mine owners and is being balanced with the need to keep up with Ontario’s rapidly evolving regulatory requirements. “While cost is an important factor, I would say it is the speed of turnaround to assist with projects that is very important. With the Ministry of Mines cracking down on different things in the health and safety space, more paperwork and inspections are needed that require help from engineers and thus a quick turnaround is important,” shared Patrick Pilon, general manager of Black Rock Engineering.
As the cost of mining continues to rise, with elevated labor costs being a main driver, mine owners must think carefully about how they approach contracting, particularly given recent global events such as the war in Ukraine and the Covid pandemic, which de-stabilized supply chains and derailed project plans. “When risks do materialize, we maintain open communication with our clients to determine the best approach for addressing them. Although this approach may involve difficult conversations early on, it ultimately proves more effective than scrambling to resolve issues mid-project,” said Eric Smith, managing director, Cementation Americas.
Ontario’s slow permitting process and the uncertain macroeconomic environment mean a project’s scope and feasibility can change significantly even after a contractor is engaged on a project. Managing risk appropriately from the get-go is paramount, especially when the pressure on mine owners to reduce costs is mounting, making the unrealistically low bids from contractors all the more attractive. With large mining projects requiring dozens of contractors and sub-contractors, ensuring all stakeholders are on the same page from the get-go is paramount. “We need to work together as creating sustainability and predictability in a pipeline of projects, especially in an environment where the industry is faced with talent shortages, is extremely important. There has to be an open dialog between mining companies, design engineers, and contractors to build trusting relationships,” said Julie Zulich, president and CEO, TESC Contracting Company.
Some Ontario ecosystems have adopted integrated approaches to their work, looking not just at their KPIs, but focusing on integrating their own teams with other contractors working on a shared project. Chris Dougherty, president and chairman of Nordmin Engineering, shared how his firm approached collaboration on large-scale project in Arizona with contractors such as Redpath Mining and their client South32: “The traditional adversarial project approach, where clients view others with suspicion, is no longer successful. Given the industry’s challenges, including cost increases and procurement delays, working as a team is essential. Open communication allows us to address issues in real time and find reasonable solutions that work for everyone. Many overruns occur because the focus is on accounting rather than actual project management.”
Furthermore, the nature of mining means there are always uncontrollable unknowns such as unexpected geology, freak workplace accidents or rapid fluctuations in material and equipment availability that can derail a project at any given moment. When things go wrong – disputes can arise. Mine owners and contractors can often end up facing off in court, particularly in the case of EPC fixed-price contracts, leading to further delays and steep legal fees for both parties. “As an industry, we need to develop contracting models that drive collaboration and align the interests of the mining company and the contractors. Currently, a primary risk mitigation tactic has been to try and transfer the risk from mine owners to contractors through legal contracts. At the end of the day, the owner owns the risk and paper-based risk mitigation has not led to better outcomes,” said Pierre Julien, executive vice president at DRA Global.
DRA Global participated in the Canadian Institute of Mining, Metallurgy and Petroleum’s ‘Capital Projects Symposium’ in Toronto, which brought together technical professionals, the legal sector, financiers and contractors to collaborate and develop solutions to this problem. Collaborative initiatives like these will be crucial for Ontario’s sector to overcome issues with project execution, talent acquisition and perhaps most importantly, the public perception of mining. “I think we are missing an opportunity due to a lack of collaboration. When you look at other industries facing similar challenges there is a spirit of community and collaboration, something which the mining industry could engage in more often. Certain companies have institutional rivalries where they are unwilling to share information, and this impacts the sector’s relationship with the public as well as its overall progress,” said James Siddorn, president (Canada) and executive chair (North America), SRK Consulting.
Reluctance to collaborate sometimes stems from stringent rules around confidentiality or to prevent giving competitors a leg up. However, when companies across the mining value chain come together, they can have an outsized impact on their industry’s public perception, as seen recently with the World Gold Council’s documentary ‘GOLD: A Journey with Idris Elba’ which garnered millions of views on YouTube.
Mine owners are inherently more inclined to share data in cases of a successful operation or project, thus enabling the industry to learn from their success. However, data is often tightly restrained in cases of failure, making it harder for third parties to avoid making the same mistakes. This lack of collaboration can be particularly problematic, particularly for safety-critical applications. “Mine owners are inherently more resistant to sharing geotechnical failures. However, while not all details can be shared publicly, communicating engineering lessons is extremely beneficial to the industry. The key is to ensure that we frame information in a way that conveys lessons learned without revealing sensitive details,” shared Kathy Kalenchuk, president and principal consultant, RockEng.
Furthermore, as miner owners rely on increasingly data-hungry technologies and solutions, the sharing of data will begin to play an even more important role in their success. “Future success in mining and other industries will rely on collaboration, as few companies can offer complete solutions on their own. As AI and machine learning evolve, data sharing will become even more crucial for innovation, and companies must embrace collaboration for comprehensive solutions,” said Rey Boucher, president, Jannatec Technologies.
However, as contractors and consultants take more active and involved roles in projects, there are signs that this could naturally lead to more collaboration by sharing of data and clarity on project timelines and scope from the onset: “The contractors of the past were often brought in to do jobs that mining companies felt were unsafe or at higher risk. Now there seems to be a more measured focus on larger projects involving a contractor right through the process of moving from feasibility to execution. More and more, companies are leaning on one contractor or engineer from start to finish,” said Scott Rienguette, general manager, Legend Mining Contracting.
“A major challenge laboratories face, especially during the surge in demand in recent years, has been the depleted labor market in Canada, with low unemployment and high job vacancy rates. Laboratories, being labor intensive, have struggled to scale up effectively.”
Michael Hoffman, CFO, Actlabs
Ontario’s mining sector is perhaps missing an opportunity to highlight its role in the energy transition via critical minerals such as lithium and copper. In 2023, Canada’s energy sector accounted for 10.3% of the nation’s GDP – double that of the mining sector – making it an obvious choice for public outreach initiatives. “Achieving net-zero targets relies on the mineral sector, which is crucial for sourcing minerals for renewable technologies. Yet the mining industry faces challenges in securing public approval and stakeholder acceptance. This highlights the need for better education and collaboration among industries to inform the public about the relationship between mining and sustainability, ultimately aligning goals with actionable pathways,” said Marissa Reckmann, CEO, AGAT Laboratories.
Collaboration can extend beyond industry and into academia, allowing aspiring mining professionals to get hands-on experience. For example, Lakehead University was able to give its students a taste of the region’s geology with field trips to Generation Mining’s Marathon project and has been conducting industry-focused research supported through the Natural Sciences and Engineering Research Council’s (NSERC’s) Alliance grants, which match industry contributions two-for-one. “Stable relationships with industry partners are critical, and we are encouraged to see industry mindsets shifting and companies wanting to foster longer-term partnerships to maintain a steady supply of the next generation of geology talent,” said Peter Hollings, director – CESME, Lakehead University.
The synergies unlocked by longer-term partnerships like these transcend the immediate benefits of having aspiring graduates help solve a company’s challenges: “These partnerships allow us to connect with graduates early on, developing long-term relationships. It also helps us ensure the curriculum aligns with industry needs, making it easier to recruit top talent for internships and careers at Ausenco,” said Yan Jin, vice president, minerals and metals, GTA, Ausenco.
Laurentian University is another institution that has taken advantage of NSERC’s two-for-one grants, in partnership with Agnico Eagle, allowing researchers to study the geochemical, structural and stratigraphic footprint of the Macassa mine and the Kirkland Lake gold camp, to the benefit of both parties. “This model is highly effective in leveraging industry funds for research, making Canada competitive globally as many jurisdictions do not have such favorable conditions for industry-government collaboration. Additionally, the overhead from these projects goes directly to the university, reducing the financial burden on our research grants,” shared Ross Sherlock, director of MERC and Metal Earth, chair in exploration targeting, Laurentian University.
In addition to contributing to boosting talent development and research, industry-academia partnerships offer an opportunity to give back to their surrounding communities, as recently seen with Vale’s C$750,000 donation to Cambrian College in Sudbury. “The Vale Electric Vehicle lab, in the Glencore Centre for Innovation, highlights the collaboration between major mining companies and our institution. Ongoing projects include converting a diesel-powered vehicle to fully electric, offering students hands-on experience,” shared Mike Commito, director of research & innovation at Cambrian College.
Daniel Pop, chair of Outliers Mining Solutions, a consultancy specializing in using data to boost mine productivity, explained that the problem of insufficient knowledge sharing can even impact an organization internally: “A common challenge we see across the industry is capturing and transferring knowledge from one generation of leaders and mining professionals to the next. The systems we promote help facilitate this knowledge transfer, as much of the essential expertise may already exist within organizations but is not effectively utilized.”
This is particularly pertinent in Ontario today, given the ‘grey tsunami’ afflicting the sector. “There is a growing number of new supervisors, first-time superintendents, and first-time managers in the industry, especially as many experienced senior professionals are starting to retire,” said Adam Hewitt, co-founder and CGO, Outliers Mining Solutions.
Competition breeds innovation and pushes companies to improve or get left behind. However, challenges like the talent shortage impact the entire regional sector, while others like climate change and sustainability are a global problem. Some battles may be too great for one individual, organization, or even sector to fight alone.
Article header image courtesy of Redpath Mining