Rising gold prices have seen a global surge in gold mining operations. Todd Roth at Sumitomo Metal Mining tells Andrew Pelis how Japanese experience has been applied to North American reserves.
Alaska’s remote wilderness may seem an unlikely setting for Japanese prosperity, yet beneath the hills and valleys lies that most precious of commodities: gold.
The birth of Sumitomo Metal Mining can be traced back to the 16th century, when Soga Riemon, founder of the Sumitomo Group, developed a copper smelting technique known as Nanban-buki in the Keicho period (1596 to 1614). In succession of the founder’s business, the Sumitomo family has developed itself through the ensuing centuries by creating businesses such as copper smelting and mining.
Today the Tokyo-based company has interests in mining, smelting and refining precious ores including copper, gold, nickel and zinc, and it manufactures semiconductor and advanced materials.
With its prestigious background, it was little surprise when SMM decided to enter the North American gold market roughly a decade ago. Its interest was piqued by the discovery in 1992 of the Pogo Mine in Alaska by Teck Resources.
Teck is Canada’s largestdiversified mining, mineral processing and metallurgical company. Headquartered in Vancouver, the company is a world leader in the production of copper, metallurgical coal and zinc, molybdenum and specialty metals, with interests in several oil sands development assets.
Initially set up as a joint venture between Teck Resources, Sumitomo Metal Mining and Sumitomo Corporation, Pogo became a two-party joint venture when Teck Resources sold its interests in July 2009. A new management team was then recruited, with Todd Roth joining the business in April 2010 as general manager:
“The ore body was discovered in the early 1990s, and the project then went through several years obtaining permits,” Roth explains. Production began in 2005 and the first gold was poured the following February. “We are now producing 385 ounces each year, and last October saw us produce our one-millionth ounce of gold.”
While production has been markedly ramped up since 2005, the location of Pogo led to initial operational challenges, as Roth describes. “The site is located around 130 miles southeast of Fairbanks in a very remote and hilly area. One of the first tasks was to build a 50-mile access road into the site along with power lines. Today we are able to ship gold straight from the mine to a gold refinery.
“Environmental issues were always a concern,” he continues, “but Pogo is an underground drift mine, and we have aimed to create as small an environmental footprint as possible by not using up much space above ground.”
Roth’s arrival has been one of several changes in management, a result of the Teck sale that saw a number of existing superintendents leave Pogo; he sees his responsibility very clearly. “Six of our seven current managers are new in the job,” he admits. “My number one priority is team building, to ensure that the transition runs smoothly, but we also want to build on what has already been accomplished in the past and take Pogo to the next stage.”
That next phase may involve further exploration aimed at extending the mine’s lifespan, as Roth describes, “We are SMM’s first and only overseas operation. While the initial exploration work at Pogo was conducted by Teck Resources, we will continue to explore the area.
“Pogo Mine currently has known reserves lasting into the first quarter of 2017,” he goes on to say, “and in the summer of 2009 we were able to add another year onto the reserves following a $5 million investment in exploration. We will undertake further work to define the outer boundaries of the existing ore body, and we also own a considerable amount of surrounding land that we will explore for further opportunities.”
Roth is adamant that one of the key attributes to the Pogo project has been its people. At present the company employs some 300 staff, with up to another 100 hired as subcontractors from a local mine development company working to scope the mine underground.
“We have a very good mixture of people, with around 60 percent of our workforce coming from Alaska,” he comments. “We aim to hire people with relevant mining skills, and many of our workers live in Fairbanks.”
Training is, of course, an important focus for SMM, and Roth says that the company has sent a half dozen workers down to Tennessee to embark on a maintenance training course as part of the second year of development for its new Reliability Center of Maintenance. He expects the investment to start seeing a return by its third year.
Roth adds that an in-house training course has also been established that serves a wider community. “We run a Mine Rescue Team that incorporates safety and first aid training and supports other mining facilities as far down as Washington State and Idaho. Our safety standards demand the provision of such a service, and our team is affiliated with the Central Mine Rescue operation that provides emergency services underground.”
With 33 miners currently trapped 700 meters underground in Chile, safety is a particularly relevant topic. Roth says that as mining operations progress, gold reserves are located deeper underground, which, aside from those safety issues, also adds complexity to operations, requiring machinery capable of bringing ores back to the surface.
“Our plan is to keep production levels constant, and that requires equipment replacement and maintenance to ensure we operate efficiently. We have invested an average of $10 million in trucks, drills and other machinery over the last couple of years, and it’s essential that we have very good planning in place for our supply chain,” he comments.
“We’re operating in a region that gets very cold, and when it’s 50 degrees below zero, things often don’t operate the way they do somewhere like Arizona. Because of the specialist nature of our equipment and our location, we can’t just get a spare part overnight, and some parts may have a lead time of up to a year.”
Roth’s role is to drive efficiency and cost reduction, and he believes that supply chain plays an important part in that future—a future that could see the Japanese company expand its American interests. “We’re certainly looking to the Americas for expansion on both greenfield and brownfield developments. Our focus here at Pogo is to develop what is already in place, and we’re currently working toward gaining ISO 14001 accreditation—something we are not obliged to do but want to, as we wish to be seen as good neighbors. We’re fortunate to have excellent workers, mining and equipment resources, which will help to ensure we produce a very good revenue stream for the two joint venture partners.” www.smmpogo.com www.smm.co.jp
