The Global Commodities Report Q3

Issue 03 | July 2011

Golden Gecko Environmental Awards filler filler

GOLDEN

GECKO AWARD

E N V I R O N M E N T A L

E X C E L L E N C E

+00 Other Features » A Trio of Top TSX Junior Miners • Energy Hedging Tips for CFOsAg Minister Interview • Mexico & Montana Momentum • New Analyst Investor Scorecard

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Issue 03 3

30 Golden Gecko Turns 20 Company Profile: xxxxx

32 The Business Case for Respect Company Profile: Pluon Resources Limited

40 The Long Term View Company Profile: Woodside Energy Limited

C nTenTs

06 Better is More From the Editor

Mining08 Knowing the end From the Beginning Company Profile: Mt. Milligan

16 second Life for a Mine Company Profile: Rambler Metals and Mining

24 Tax Tempest Exclusive Interview: AMEC

08


4 The Global CommodITIes reporT

GOLDEN

GECKO AWARD

E N V I R O N M E N T A L E X C E L L E N C E

40 The Long Term View Company Profile: Woodside Energy Limited

EnErgy40

55 Investor scorecard from TMX equicom Scorecard: xxxxxxx

AgriculturE48 high Rise Farming Interview: Valcent Product Inc.

48

Cover sTory – page 10

Coal: Ancient Fuel, new opportunities

How Calgary-based China Coal Corporation became the first and only North American coal producer in China’s richest coal-bearing province, which also happens to be the fastest-growing region on earth.

Issue 03 5

From the Editor

bEttEr iS

It’s been both fun and educational to inter-view and write about a number of australian organizations this time out. as our cover pro-claims, it’s a jurisdiction where boldness and good sense are proving imminently scalable. and paying off with opportunities as big as their imaginations.

modern cynicism might trigger at first hearing of the Western australian government’s an-nual Golden Gecko environmental excellence awards. but as you’ll see from our introduc-tory article, this is not just an exercise in mu-tual admiration. The sponsoring state ministry responsible for overseeing resource develop-ment is only one of a range of stakeholders

Decades ago, designers discovered that “Less is more.” Innovative resource companies are now demonstrating that it pays to pry open those paradigms again and apply more humane values to our technologies and efficiencies. Personally, I think we’ve moved into the era of “Better is more.”

morescrutinizing the companies, projects and in-dividuals nominated for these prestigious accolades.

We’re pleased to have the privilege of announc-ing the shortlist of Golden Gecko nominees for 2011.

PRINCIPLES PAYWe’re also profiling two past Golden Gecko winners. pluton resources’ win in 2010 af-firms how respect and collaboration lead to opportunity. even technological innovation. Well-deserved.

and who says the majors are too big to care? Woodside energy is scaling their approach to the environment and indigenous peoples to the enormous proportions of their browse offshore lNG mega project. It landed them a Golden Gecko in 2009. and it’s still going to be years before the multi-billion-dollar complex goes into production.

also on the left coast of australia, i.e. perth, the association of mining and exploration Companies, isn’t mincing words about their objections to the lack of collaboration in the national government’s proposed Coal and Iron ore Tax… sorry, mineral resources rent Tax. our exclusive interview exhibits that famed aussie directness.


Keep digging, david hickseditor

RE-SOURCE, RE-VIVENot to be entirely outdone by a Commonwealth sibling, Canada is working along similar lines. half a world and half a day away, the regulato-ry strictures of opening the first major metals mine in 15 years in british Columbia, pressed the operators of the mt. milligan copper-gold project, Thompson Creek minerals, to think half a century ahead as to how to minimize the mine’s environmental impact and maximize local engagement. so they designed it back-wards, starting with the end of the mine’s life.

on the far eastern side of Canada, i.e. our beloved Newfoundland, rambler metals & mining is reopening and expanding a long-shut copper-gold property that has languished 25 years. and at the same time, revivifying what’s left of the local mining town, baie verte.

moving from mining and energy to agricul-ture, here’s a resource crisis coming to a city near you: food. The world’s population reaches 7billion this year. most of it urban. so one way or another we’ll all be seeing and feeling the pressure for another agricultural revolution. or better, reformation. vancouver’s valcent products has a futuristic solution that can help us make it through: vertical, indoor, intensive farming. It’s the chemical-free salad of the future.

TALE OF TWO SEASONSso, welcome to our summer/Winter Issue. No, we’re not splitting personalities, or doubling identities. It simply dawned on us as this June/July issue took shape that we couldn’t get away with calling this our summer Issue. No doubt our aussie readers would have shrugged off such an oversight with a good-humoured one-liner like, “No worries, we opted out of winter a couple of centuries ago.”

Next issue: mine-life Crisis, The Case for ethanol, redeeming Gas Wells, diamonds for Iron, and more. and better.

Thanks for the great feedback on our last issue!

It’s a great feeling when we introduce The Global Commodities report to someone new and the first impression is so positive. every. Time.

It’s also a pleasure to be working with Kate shaw as our interim designer – she brings a touch that is both lively and refined. meanwhile, our Creative director, Jay Wall, is off leading a group of backpackers around the hills of Guatemala, raising awareness of development issues. and yes, we’re jealous.

If you like this magazine and our approach to promoting the successes and advances happening in the mining, energy and agriculture sectors, we hope you’ll share what you’re seeing with your colleagues.

aaron Weafer,publisher

Winter

Issue 03 7

Slated to be the first major metals mine opening in British Columbia in 15 years, Thompson Creek Metals’ copper-gold

project at Mount Milligan was designed back-to-front, beginning with its closure. It’s part of their forward-looking approach to

minimizing environmental impact.

Would it be overdoing things to have a fifty-year exit strategy? In most cases, probably. but that is what Thompson Creek metals Company has put in place for its mount milligan copper-gold mine in northern british Columbia. “We began the design for mount milligan with the mine closure and reclamation plan,” says Wes Carson, the manager of operations development. “and then we worked back through the production and construction phases.”

old-school thinking would be for a mining company to find the resource, take the most direct and cost-effective (read, convenient and cheap) way to extract it for sale, and then figure out how to deal with the after-

math. Instead, the opening of mt. milligan is planned with the end in mind: to minimize the operation’s footprint during production, maintain high standards of environmental care, and leave behind a natural-looking site worthy of northern british Columbia’s envi-ronmental birthright.

“We have a lot of very experienced people working on this project, and by taking this route the resulting plans are drawing very positive feedback, both from the local commu-nities and the regulators,” says Carson. as a 15-year mining operations veteran with well-known majors, he has seen from the inside that doing the right thing is also a business decision. “This is an area where the industry

KNOWINGTHE END

FROM THEBEGINNING


has been making big changes. and has needed to change. That’s born out by the fact that it hasn’t been easy to get permits in bC for some years.”

bC, a Canadian province founded and built on resource development (the acceptable word used to be ‘exploitation’) is emerging from a development-averse political climate with lessons learned – both in terms of what it takes to engender economic activity, and how to watch out for its signature wilderness heritage. mt. milligan will be the first project out of the mine gate in years to get it right on both counts.

The resource in question is a single copper-gold ore body, but in four zones with a saddle in the middle necessitating two open pits. The reserve is 482million tonnes of ore at 0.2% copper and 0.4 oz/t of gold, using prices of $1.60/lb and $690/oz, respectively. “The reserve grows from 2.1billion lbs of copper and 6million oz of gold, to 2.8billion lbs and 7.7million oz, if we adjust the model with prices of $2/lb and $800/oz, which I think is reasonable,” says Carson, who has been working on this project since 2007 under the mine’s previous banner, Terrane metals.“at this point, we’re looking at a 22-year mine life, but there is also growth potential because the zones are all open at depth. We’ve drilled a thousand drillholes, but we haven’t found the bottom yet.”

Those are attractive numbers for a seller’s market, but what sets mt. milligan apart is the creative approach to the mine’s design, production and environmental and reclama-tion programs which will minimize the mine’s footprint and eventually leave native flora and a manmade freshwater lake in its place.

Constraining the size of the project was an important exercise to the company’s manage-ment. “The short version is that the tailings slurry will be contained, it’ll dry out on its own, and then be covered with natural soil and native vegetation. and the two open pits will become one stream-fed lake,” says Thompson Creek Ceo and Chairman, Kevin loughrey. “mine reclamations can wind up looking very artificial and obtrusive. at mt. milligan, the results will be much more natural looking and usable.”

Tucked between the open pits and single ore crushing/processing/shipping plant, the mine tailings pond will reach 10km in circumfer-ence contained by a large berm built with waste materials from the plant and fed by a small rivulet. as the pits are dug deeper, that dyke will rise in height for the tailings, reaching as high as 100m at the downstream end. The pond will be sectioned off to speed evaporation, filled in, dressed with reserved topsoil, and planted with native vegetation from the mine’s nursery area during years 5-10 of the mine life.

SMALL IS BIG

DESIGN & CONSTRUCTION


Then, when the pits are mined out after 22 or more years, the stream feeding the tailings pond will be diverted into the pits to create a lake, which will take about 25 years to fill.

speaking from his denver office, loughrey explains that keeping the pits, plant and tail-ings in close quarters is both an opportunity and challenge. “From a mining perspective, the easiest thing to do is spread out and make use of space. you know, if you ask the mining engineers what they want, they’ll spread things out – it’s just easier. but there are advantages to a tighter configuration.

“mt. milligan is a relatively low-grade copper deposit with a very nice gold credit to it. so one of the things you have to be careful of is containing cost. It is a huge plus to have a small-surface facility because your truck fleet can be smaller, with less hauling, less overburden, less energy and less carbon foot-print. but it does require more engineering to make sure you can do that with minimal waste and without tripping over yourself.”

In fact, the operation is almost totally self-contained. “The materials we make as we build the mine, dig the pits, process the ore and create waste will be used to excavate the tailings berm. We will also re-use all the process water so we don’t disperse water out into the local environment. With the nature of the deposits, the low amount of overburden and so on, the waste ratio at mt. milligan will be 0.8:1 for the life of the mine, which is exceedingly low.”

loughrey joined denver-based molybdenum producer Thompson Creek in 1998, on the corporate legal side of management, and became Ceo in 2006. The company listed on the Nyse in 2007 and diversified by acquiring Terrane and the mt. milligan project in 2010. “We recognized in late 2007 that the marketwas not giving us any kind of premium forbeing a single-commodity ‘moly’ producer. Copper was the logical fit because copper and moly are closely associated, i.e. 50% of the moly in the world comes from copper mines and the mining meth-odology is virtually indistinguishable.

“and although we are just now hitting our peak production from our original Thompson Creek operations, we know the years when we make 20million lbs or more of moly are behind us. When mt. milligan comes online in Q4 2013, we’ll begin to see a significant revenue increase.”

.“Keeping the pits, plant

and tailings in such close quarters is both an opportunity and

challenge.”

GOING COPPER

Issue 03 11

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Ledcor recently established the fi rst research chair in Oil Sands Environmental Sustainability at the Northern Alberta Institute of Technology. This is part of our commitment to staying at the forefront of environmental solutions, which we bring to every project.

Mine Construction ServicesPre-Construction Services • Mine Development • Leach Pad Construction • Site Reclamation • Tailings Dam Construction

MiningContract Mining • Turnkey Mine Operation and Management

Congratulations, Thompson Creek Metals on the Mt.Milligan Project.

What about the gold at mt. milligan? “It’s a good-to-have, but 200,000 oz/yr of gold won’t make us a gold company. We look at this as a copper mine with gold byproduct. on that basis the cost of operating the copper mine is reduced by the revenue generated by the gold, in fact significantly negative. even at prices far lower than today’s numbers the gold revenue at mt. milligan will more than pay for the cost of operating the mine. so the copper has a negative cost.”

The plant will produce 500-600 t/day of concentrate, most likely for the asian market. “We expect the concentrate will be easy to market because it is very clean, with low levels of problematic elements such as arsenic,” says Carson.

“you don’t want to get carried away with your own brilliance, because in part we’ve just been blessed with some good facts on the ground, but mt. milligan is setting the bar high for environmental performance,” says loughrey. “The mine has really been designed to mini-mize environmental impact. I think we’ll have a facility others can point to and say this is how it should be done.”Carson also cites the project’s extensive environmental baseline and monitoring programs, and their measurement of green-house gas emissions by the diesel fleet and use of Gps technologies for hauling efficien-cies. “The plant, shovels and such are all elec-tric, but Gps technology enables us to track equipment, deliver remote instructions via computer, track loading, and so on. similar pieces are done elsewhere, but the beauty is we’re integrating this from the inception of the project, versus retrofitting.”

loughrey acknowledges that reaching envi-ronmental compliance can require a lot of

work, and leadership takes more effort than compliance, “but we feel the business case for doing better is self-evident. at the end we want to have an operation we are proud of, that the people of the community will point to with pride, and that will be clearly compliant – in many ways much better.”

The proactive stance also extends to engaging with the local First Nations peoples, commu-nity relations, training and education and health & safety. “safety is paramount,” says loughrey, ”because no-one should have to come to work and take on undue risk.”

To that end, Carson explains their use of toolbox meetings. “We have toolbox meetings at the beginning of each shift, sit down with our crews, do a run-through of the day’s tasks, get feedback on what’s happening around theproperty – we have employees with 30-35 years of experience and we value their input.

on the other hand, we also promote safety practices because of the number of our employees who are new to mining.”

There are primarily two First Nations bands associated with the mt. milligan property. “We have a very good relationship with the Chief and Council of the mcleod lake Indian band,” says loughrey. “They have repre-sented their band zealously and were just re-elected by a very large majority. so I think that indicates that the band is supportive of

ENVIRONMENTAL PERFORMANCE

.“The gold at Mt.

Milligan will more than pay for the cost of

operating the mine.”

COMMUNITIES ONSIDE

Issue 03 13

the manner of which they have been dealing with us and we have been dealing with them. We are also working on a similar agreement with the Nak’azdhli band.”

mt. milligan already has First Nations employees working in excavation, environ-mental and support services, and more are coming onboard. “The local First Nations people have availed themselves of training and we continue to work with each other. They are big supporters of the project, they want to see us succeed, we want to see them succeed… it is a very mutually beneficial rela-tionship.”

“We are also working very closely with the College of New Caledonia, to help them understand what our personnel needs are, and work with them to devise programs, courses of study and individual classes that will train people and give them the tools they need to qualify them for positions within our company,” says loughrey.

In the four local towns, the mining team is into their second round of semi-annual community meetings, says Carson. “We also just had our first community tour of the oper-ation with 15 people coming out to the site. We find you can show people pictures, but there’s just nothing like being there to grasp the scale and what 350 people have already accomplished in a very short period of time.”

so given four years of construction, a mine life of 22+ years, followed by a 25-year recla-mation plan, what would a mining guy say to a local community about their own long term thinking for the coming half-century?

“a few things,” says loughrey. “First of all, this is obviously a finite resource, and while it is 22 years today, things change and reserves tend to grow – the opportunity exists for the mine life to be considerably greater. second, you take that period to develop your infra-structure.

“also, unlike some businesses where suddenly they hit economical troubles and stop oper-ating, most mines go out of business some-what predictably. It has the disadvantage that when it does end you have a significant work force coming to end within a two or three year period. The advantage is knowing that well in advance. so there’s an opportunity to plan and cultivate new business opportuni-ties in the meantime.”

one of the corporate values touted by the company is to “deliver value”, which loughrey explains is about more than share-holder value. “It is that and more than that,” he says. “all of us have to be delivering value in everything we do, so that it causes you to think through your workday.

LOCAL LONGEVITY

Duz Cho Construction L.P. is a legal entity that is 100% owned by the McLeod Lake Indian Band, DCCLP’s o�ce is located in Chetwynd B.C., the Northeastern B.C. Region (the Peace Region). Duz Cho Construction L.P. is an earth works construction company doing site development, road access, and reclamation for the oil and gas, wind energy, and mining industries, and other

civil works construction within the Traditional Territory of McLeod Lake Indian Band.

4821 South Access Road, Box 28, Chetwynd, B.C. V0C 1J0Tele: 250-788-3120 Fax: 250-788-3188 www.duzcho.com

ALLNORTHCONSULTANTS LIMITED

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“It’s not just a financial attribute, it is a busi-ness philosophy that we want to have a place of employment where everyone feels good about coming to work in the morning. They feel safe, they know that their opinions are respected and their persons are respected, it is open, fair and friendly. We think that by doing that we will not only increase share-holder value, but we will be able to attract, retain and motivate good people because it’s a good place to work.” $

Mount Milligan, owned and operated byThompson Creek Metals Company Inc.denver, Colorado(303) 761-8801mtmilligan.com

15 | Issue 02

SEcOnD liFEFOr A MinESEcOnD liFEFOr A MinE

Rambler Metals and Mining is bringing a copper, gold and silver mine back to life after

languishing for 25 years. And with it, the prospects of Baie Verte, Newfoundland.

Talk about a comeback. Not only is rambler metals & mining bringing the ming mine near baie verte, Newfoundland, back from a quarter century of dormancy, this time they’ll have three, perhaps four, lines of production instead of one. For the past several years, rambler has been exploring, re-exploring, re-evaluating deposits and refurbishing operations at the long-shut mine site, slated to re-start production this autumn.

between 1972 and 1982, the mine produced copper, gold and silver until reaching a property line which forced the closure. George ogilvie, rambler’s president & Ceo, explains, “The Irving Group, which is an oil and gas conglomerate in eastern Canada, was operating the ming mine through their mining divi-sion, and the mineral rights on the other side of the property boundary were controlled by bp’s mining division, bp selco.

Issue 03 17

“so we had two oil and gas conglomerates who were fiercely competitive, trying to do a deal in mining, which neither really cared about or understood. and both of which subsequently got out of mining. In the end, bp would not allow Irving to mine through the property boundary.”

Thus stymied, the mine closed, lay dormant for the next 25 years and contributed to the decline of nearby baie verte, a mining town of five or six thousand that over the ensuing years shrank by three quarters. “It’s now a town of about 1,300 people,” ogilvie estimates.

Fast forward to the 21st century and rambler is taking this dormant massive sulfide mine back online, plus another larger disseminated sulfide formation 100m deeper, and repro-cessing the old tailings from the ’70s and ’80s. ogilvie estimates future production from the

property will total another 50,000tonnes of copper metal, 120,000oz of gold and 400,000oz of silver. “and all of the deposits are open in every direction, so the true potential of the property has not yet been defined.”

GeTTInG PAsT The PAsT

“The main massive sulfide was exceptionally high-grade by today’s underground mine stan-dards running 3.5% copper and 2.5g/t gold,” says ogilvie. “also, 100 meters directly below the massive sulfide was a larger deposit that the previous owners knew about but it was much lower grade – although they estimated there was an additional 21million tonnes of ore, it was at only 1% copper and 0.1g/t of gold. so in ’82, when they were stopped by the prop-erty line and copper was 35 cents a pound, they walked away.

“another company, ming minerals, then

Drill road reclamation Photo: Rambler Metals

sTuCK In The MIddLe


discovered the main West open pit in 1995 some hundred meters away from the mine por-tal, mined it for 18 months, and went out of business. so the property went dormant again until 2002 when a mining royalty company, altius minerals (TsX: als), consolidated the leases into one 1,600-hectare package.

“They put a couple of diamond drills beyond the historical property boundary. Not surpris-ingly, they found more copper at over 3.5% concentration, 2.5g/t gold and 10g/t silver. but they’re a royalty company and were looking for somebody who could take it from explora-tion into production. The deal essentially hap-pened during a conversation across the aisle at a pdaC show (prospectors and developers association of Canada) and rambler was cre-ated as a result.”

rambler was listed on london’s aIm exchange in 2005 and the TsX-venture exchange in ’07. ogilvie joined in 2006 as Ceo with the man-date of taking the company from a grassroots explorer (notwithstanding the previous pro-duction) to a mid-tier mining company. “We are now coming up on our fifth year and we are just months away from first production from our first mine – we should be selling our first concentrates by september of this year.”

born a Glaswegian, ogilvie comes from gen-erations of scottish coalminers. he worked for anglo Gold in south africa, transferred to Northern manitoba (“That was a shock, espe-cially for my south african wife, when we went from 35°C to -35° in 24 hours.”) then Northern ontario, and now st. John’s, Newfoundland, where he works with his CFo, Norman Williams, and peter mercer, vp Corporate development.

“In its heyday, the original mining company

“EvEry jOb WE crEAtE ADDS AnOthEr tWO

tO thrEE jObS in thE SuPPOrting EcOnOMy,

Which MEAnS A lOt tO A cOMMunity

thiS SizE.”

was called Consolidated rambler, so we kept the ‘rambler’ part to help with community support,” ogilvie says. “and we are definitely seeing signs of an economic turnaround in the town. as we go into production this year, we will increase our personnel count from the current 80 to about 120 people. Which, when you reckon every job we create adds another two to three jobs in the supporting economy, means a lot to a community this size.”

Underground drilling station Photo: Rambler Metals

Issue 03 19

nuGGeT Pond MILL

In addition to the paved roads, power and town infrastructure already at hand, rambler also bought a mothballed processing mill nearby. The Nugget pond mill was built for gold, but rambler is augmenting it with a separate cop-per flotation building.

“From the get-go we have always been a base metal company that would mine base metals – and secondarily if there was gold and silver, all the better. We purchased the Nugget pond gold processing mill because most of the compo-nents, particularly the crushing and grinding circuit, would also work for our copper appli-cation. and it was only 40km away from our

mines with a permitted tailings pond in place. so it would minimize our capital expenditures and allow us to get to production sooner with a simpler permitting process in reactivating an existing facility, versus building something new.”

The old tailings pond that Consolidated rambler would have used also has substan-tial gold and silver content that rambler can now re-process for additional cashflow. “back in the 1970s and ’80s the remaining gold from processing went to the tailings pond in the form of free gold. In the laboratory we have been able to get precious metal recovery from samples up to 85%. This would add about an extra 3,000oz of gold annually. at a conser-vative $1,000/oz that would add $3million in

1600 Dr.

1700 Dr.

Historic StoppingLimits

RMM DDH4.67 g/t Au over 7.6m

Development FaceNative Gold227 g/t (4.50m)

Historic MiningLimits

1800 Dr.

Visible gold veinlets recently discovered in the 1700 lv development face.

Historic MiningLimits


additional revenue – not bad, though we need to get some operating experience under our belt before we proceed with it next year.”

In addition, while exploring the mine prop-erty, rambler encountered veinlets showing 7-10oz/t of visible gold. so the story just keeps getting better. This announcement, made on may 10th, will put rambler back into explora-tion mode and it won’t be long before the mill is pressed into service on that front as well.

The LonG Run

While the base-case plan from rambler’s feasibility study shows a mine life of only six years, ogilvie believes that will be extended to at least 15 years once the deeper footwall deposit and upgraded shaft facilities are fac-tored in. “plus, the zones are open in multiple directions, including at depth. Nothing has been cut off,” he says. “so as soon as we have cash flowing, we’ll invest in more exploration to find the extent of that visible gold we just found and extend the massive sulfide and the footwall at depth.

“on the milling side we should be produc-ing about 5,000 tonnes of concentrate every 3 months at 29% copper concentrate grade, 10-15g/t gold and 90-110g/t silver.”

There are some historical, and minor, environ-mental issues across the road from the mill and tailings site that the province of Newfoundland is responsible for. “Not that the original opera-tors were irresponsible, but I’m sure you can appreciate that requirements have changed dramatically since the mine first opened,” says ogilvie. “Those bars have been raised for good reason. The previous owners did a good job there but by today’s standards you wouldn’t be able to operate in that manner.’

“WhilE ExPlOring, rAMblEr

EncOuntErED vEinlEtS ShOWing 7-10 /t OF viSiblE

gOlD. SO thE StOry juSt KEEPS gEtting

bEttEr”

Mining activity for the crown pillar open pit. Photo: Rambler Metals

oz

Issue 03 21

does that go for the mill as well? “No, it is a very efficient, well run operating mill that received environmental awards for the previ-ous owner. We have dealt with some minor issues and housekeeping, such as an old, dis-used electrical transformer, but now we have a clean site.

“I should also mention we are well over three years of operating the mine site with no ac-cidents, which for an underground mining op-eration is very, very good.”

With a location facing the atlantic ocean, rambler has a lot of marketing options, in-cluding Quebec, europe and asia, with China and India being the stand-out destinations.

While many are eyeing the bull run in copper prices with some apprehension, ogilvie is con-vinced about the long term. “In the western-ized world, the consumption of copper is about 8-10kg per capita. It is going to take China ten years and almost a doubling of their per capita copper consumption to catch up.

“India is barely on the chart in terms of con-sumption. They are around 1kg per capita and we will see India emerge over the next decade. also, where China has their ‘one child’ popula-tion control policy, in India there is no popula-tion control so we see their demand rising for commodities across the board.”

meanwhile, many established copper mines are in decline. “although there are new mines coming on line, most of them are in areas of the world which carry more risk in terms of legislation, tax regimes and govern-ment stability, such as sub-saharan africa or mongolia which have unproven mines or min-ing legislation.

“We forecast a deficit as the supply side strug-gles to keep up with worldwide demand, with pretty predictable upward pressure on prices.” $

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“The minerals resource rent Tax (mrrT) is the result of intense consultation and negotiation with the resources industry.” at least that’s the way the australian government portrays things in a recent press release.

but apparently not everyone feels that way about this proposed resources tax, which boils down to an additional 30% tax on annual profits of more than $50million(aus) at the mine gate, tempered with a 25% extraction allowance.

“ameC is of the opinion that the Government should have developed a long term strategic reform program based on sound and sustainable economic policies that address macroeconomic issues and promote national growth; rather than propose a short term tax grab from the resources sector based on an apparent ‘resources boom’, which has been caused by a cyclical increase in demand and higher commodity prices.”

TAXTEMPESTA proposed national mining tax has raised the hackles of Australia’s 320-member Association of Mining and Exploration Companies. Having

recently bowled over a similar tax, AMEC is pushing back again

Issue 03 25

moreover, the association of mining and exploration Companies (ameC), based in perth, Western australia, is often even more pointed in its criticism, framing the tax as a backroom deal cut with the country’s three largest mining companies.

so we contacted ameC’s Ceo, simon bennison, to get his perspective on the poten-tial impact of the mrrT. mr. bennison has been with ameC since december 2008, and has 30 years of experience in environ-mental management, government relations and policy for companies and associations in mining and other primary resource sectors.

The Global Commodities Report: your opposi-tion to the proposed mrrT is quite vehe-ment. What happened?

simon bennison: at the end of June 2010, the australian government consulted exclusively with three major mining companies, and only those three, on how a new resources tax should be implemented, and announced their intentions on July 2nd.

GCr: What is the coincidence between these three majors that were consulted and members of ameC who were not consulted?

sb: They’re the three largest taxpayers in australia in the iron ore and coal sector, and that’s basically why they were selected. so the government said, ‘right, we’ll change this tax reform into a different sort of policy arrangement: We’ll confine it to two commodities, iron ore and coal, we’ll get the

major taxpayers in iron ore and coal into a room, and redesign the tax in a way that will get their support.’ effectively those companies designed it, convinced the government that it was a good deal, and away they went. and that happened without consultation with anyone else in the industry. so that’s why a lot of emerging companies believe this is a tax designed to suit the larger operators.

GCr: did other ameC not know about it? even other large companies?

sb: No, they were unaware of the situation until it actually happened, until they were locked away in a room having the discussions. Then we found out how that was the way the government wanted to consult. That’s why our members were very cross about the way things happened.

GCr: you underscore that those three companies aren’t members of ameC. Why are they not members?

sb: They could be. We have about 320 companies that are part of ameC. our orga-nization has a national and international approach to membership, not exclusive in any way. When ameC came about in 1981, a lot of the smaller companies were feeling disen-franchised from the policy setting that was going on, i.e. that policy was designed around larger companies. and that sort of environ-ment has persisted. often when policy and legislation for the industry is set, it’s without much consideration for how it might impact smaller companies. so ameC [was formed] to bat for them.


but we now have major companies like hancock prospecting, Fortescue metals Group, and paladin energy, so we’ve grown quite significantly. a lot of the companies that have been on board since day one have grown and stayed with us. GCr: so it isn’t just your smaller compa-nies that are miffed about this. What are the broader implications?

sb: across the board, our members have been extremely vocal about the way the govern-ment has conducted itself. There is a strong view that this legislation, if it is drafted, will ultimately bridge across all commodities, not just iron ore and coal, and it will transition from being the mrrT in its current design to ultimately look more like the rspT [the repudiated resources super profits Tax]. and political influences within parliament, e.g. the Greens, will have the power to make that happen.

GCr: you succeeded in stopping the rspT with a hue and cry.

sb: True. once the rspT was introduced may 2, 2010, there was a universal outcry across the industry, we ran a campaign to have the decision overthrown. That’s when the Government invited the other three

companies into the other room and negoti-ated the deal.

Then when they came out with this next [version], because three major companies had been involved in the negotiations, some organizations were comfortable with what was on the table. but our organization, which represents basically the other smaller and emerging companies, was not in agreement with the deal.

GCr: This starts to sound conspiratorial, to only consult three companies, and the three largest. Is this a pattern?

sb: It’s called ‘divide and conquer’ – an old strategy but a very good one. We don’t under-stand how, legally under our laws in australia, through competition policy and collusion, that it’s legally possible for the government to negotiate something with three companies without the inclusion of others who will be

ultimately disadvantaged by the final deal. It astounds me that someone hasn’t raised a legal challenge to how the government achieved this.

We found out when the prime minister had decided to pull the three large companies into a room – it

was public knowledge, so we knew what was going on. bhp, rIo and Xstrata were simply acting in the best interests of the share-holders of their companies – they were in there doing a deal that would advantage their organizations. It’s a very competitive world we’re in and they won’t hesitate in getting advantage over small operators.

“oFTen when PoLICy And LeGIsLATIon Is seT, IT’s wIThouT

ConsIdeRATIon FoR how IT IMPACTs sMALLeR CoMPAnIes.”

Issue 02 | 27

GCr: so do you see small, medium and large companies all disadvantaged by this? What are you asking instead?

sb: yes. The tax threshold of $50million in annual profits at the mine gate seems arbi-trary and unrealistically low for companies who need to build up infrastructure. ameC is advocating a $250million threshold for mrrT to kick in because $50million does not allow a reasonable amount of time to pay back your shareholders and develop neces-sary infrastructure.

We’re also asking the government to change the taxable threshold with a phased in approach over several years.

GCr: how is government responding?

sb: limited response. basically they’ve accommodated the three they consulted and any noise from the rest of the industry has been essentially ignored despite numerous letters to the prime minister, Treasurer, etc.

GCr: What do you do with no response from the government?

sb: We persevere. understand that we have a hung government that is in power at the will of a number of independent politicians who have formed the government with them. so we have to work hard to convince a number of politicians that the tax is flawed in design and it won’t achieve what they’re trying to accomplish.

GCr: do you think it’ll be stopped entirely, heavily modified or tweaked to go through?

sb: We’re hoping that once the legislation is drafted that it won’t see the light of day. and there is also a very strong chance that it will be constitutionally challenged down the track.

GCr: What do you think the core problem is?

sb: one of the problems is that people don’t understand the resource sector, and that’s something we’ve got to work on. even the large accounting firms here struggle to understand how this tax would apply.

This is a very cyclical industry that is strong right now, with demand out of China in particular driving very healthy commodity prices. and this is an opportunity for the government to politicize the revenue gener-ated by the industry for budgets that they believe will manoeuvre a greater return back to the community.

but they don’t fully appreciate that the design

“one oF The PRoBLeMs Is ThAT PeoPLe don’T

undeRsTAnd The ResouRCe seCToR, And

ThAT’s soMeThInG we’Ve GoT To woRK on.”


of the tax will not achieve the revenue gener-ation that they want. so we think that the whole thing has been politicized, coming into an election last year, with a lot of spending estimates and budgets dependent on that hypothetical revenue. so unfortunately the politics have overridden better financial management.

GCr: or perhaps integrity, looking from the outside.

sb: you’re quite right. It puts into question the government’s ability to properly manage the economy, because when commodities finally do another cycle, and your economy is based on the revenue you’re expecting from a tax, and it isn’t there, then what do you do with those programs?

GCr: you have your major mining confer-ence in late June that will be addressing a number of these issues.

sG: yes, June 28th. We’ll have a number of high profile speakers, talking about climate change and carbon tax. There will be a panel discussion around this proposed tax. We also have one of the key Independent govern-ment representatives in hon. rob oakeshott attending.

GCr: ameC is also addressing policy on Indigenous issues. What is your approach?

sb: We have a process to identify what the issues are and how to solve them. and we hold forums of our membership to develop strategies that are going to be most effec-

tive in working with government to arrive at effective solutions.

We’re just about to embark on a series of consultations with the Native Title represen-tative bodies and the traditional owners to reinforce our desire to build further relation-ship and get benefits for all parties. In fact, we’ll be attending a forum in a couple weeks’ time that will be put on by the government. but we’ll be doing that externally as well. We want to build more relationship, help stakeholders understand exploration, mining and their different impacts on traditional owners’ land. $

Association of Mining and exploration CompaniesWest perth, Western australia+61 8 9320 5100amec.org.au

Issue 03 29


5 Western Australia’s prestigious environmental awards program is marking two decades of innovation and leadership.

5 In this issue of The Global Commodities Report, we’re pleased to profile a Golden Gecko winner for 2010, Pluton Resources, plus Woodside Petroleum’s Browse offshore natural gas project, which landed them a Gecko in 2009.

5 Here are a few things you should know about the awards program and the nominees for 2011.

GOLDEN GECKO AWARD

E N V I R O N M E N T A L

E X C E L L E N C ETHE GOLDEN GECKO TURNS 20

This september, a special ceremony in perth, Western australia, marks the 20th annu-al Golden Gecko environmental awards, presented by the minister for mines and petroleum for the government of the resource-rich state. The awards were instituted by the government to recognize and encourage indi-viduals, companies and organizations who are not just complying with environmental regula-tory standards but intentionally, actively find-ing ways to exceed requirements and establish new standards for themselves, and lead among their colleagues.

The awards are also a way to communicate and maintain support among the broader community that the mining and energy sec-tors are doing their part to improve their own practices, lower their ecological impact and enhance the balance between environmental, social and economic benefits.

Issue 03 31

SERIOUS STANDARDSTo ward off skepticism that the Golden Geckos are gratuitous plugs for the industry, the submissions are assessed according to strict criteria and verified by representatives from the departments of agriculture and Food, environment and Conservation, mines and petroleum, and the environmental protection authority’s department of Water.

each year, an assessment panel combs the nominations, shortlists the candidates and visits the nominated operations to verify the submissions’ contents and observe their tan-gible results. They report their findings to a selection Committee who review the results. The award recipients are selected in august and the awards are presented at the Golden Gecko awards Night, this year on september 8th.

RANGE OF IMPROVEMENTSThe department has handed out 52 Golden Geckos and 42 Certificates of merit since the inception of the program in 1992. but the awards aren’t just about avoiding spills or pre-serving wildlife populations, but include biolog-ical, physical, social and economic development factors. according to the state’s published guidelines, there is a wide range of activities and results that qualify for consideration: 5 Community participation5 energy conservation5 exploration5 petroleum production and pipelines5 pollution prevention5 rehabilitation5 Technical development5 decommissioning and mine closure

5 environmental engineering5 mining and/or mineral processing5 planning5 prospecting5 scientific research5 Training and education5 environmental offset programs5 Carbon neutral programs5 Waste minimization and recycling

The gecko was chosen as the awards’ sym-bol because they are among the last species to return to an area after a land disturbance such as mining, and their presence indicates a return to a healthy functioning ecosystem. The award sulpture was created by Western australian artist George Kosturkov.

THIS YEAR’S SHORTLISTThe Global Commodities Report is happy to list the 11 shortlisted entrants for this year’s awards:5 apache energy5 argyle diamond mine (2 entries)5 bhp billiton Iron ore5 Cliffs asia pacific Iron ore5 Compass Group5 Golder associates5 searcher seismic5 Wa Gas Network5 Western areas Nl & aTmos australia5 Worleyparsons & port hedland port authority

In a very real sense, they are already win-ners and should be applauded for their work in finding creative, concrete means of improving industry practices and lightening the impact of our lifestyles on the environment. $

With an innovative zero-impact exploration program and a partnership with the indigenous Mayala people, Australia’s Pluton Resources landed both a prestigious environmental award and an iron ore mining agreement where others had failed: on an uninhabited, culturally significant, island off the northwest Australian coast.

THE BUSINESS CASE FOR RESPECT

picture a miner out in a boat fishing off the northwest coast of australia in The Kimberley region, scanning the iron-red shoreline of uninhabited Irvine Island, knowing that historic mistrust of the mining industry keeps its resources out of reach, and wondering to himself, “how can we make this work?”

pluton resources limited’s managing director, Tony schoer, had already worked on two nearby mining projects. “I knew this area well because I had worked on Koolan Island in the 1980’s and I was the joint venture representative for Cock-atoo Island, so I knew of Irvine Island. We used to go fishing close by and you can see iron concentrations in the cliffs.”

bhp billiton previously held the exploration license for Irvine with no real success in dealing with the indigenous people and had moved on. but schoer decided to give it a go. “It was a huge opportunity but the key was involving the mayala people, which was where other companies had failed.”

1

Issue 03 33

ENVIRONMENT + CULTUREGiven the relationship indigenous peoples around the world typically have with their traditional lands, it’s not a great leap in logic that environmental considerations could work hand and glove with Native Title agreements. respectful treatment of the local environment and the mayala people’s traditional ownership of the land, along with the cultural significance of the island, led to pluton’s double win: the Western austra-lian government’s Golden Gecko environ-mental excellence award in september 2010, and advancing their exploration license to a mining lease application that december.

The mayala people are australian Indigenous people in the northwestern Kimberley region. Their traditional lands are the islands around King sound in the West Kimberley – Irvine Island is uninhabited and most of the mayala people live on the mainland 15 minutes away by small plane. “I’m from darwin, further along the coast, and grew up around Indig-enous people,” says schoer. “The mayala are a particularly disadvantaged group with very high unemployment, few opportunities and the resulting struggles – in my opinion they just haven’t had a fair deal in life. my experi-ence with Indigenous people is that they are simply looking for respect and the right to have a say.

“but resource companies generally would sort of walk all over Indigenous people and only deal with them because they had to, rather than wanted to. so we went to the mayala acknowledging up front that it is their land, no-one else’s land, and that if we wanted to get a mine up we had to work in partner-ship with them to do it. They had never been treated like that before.”


pluton was listed in 2006 essentially to explore for minerals in the states of Tasmania and Western australia. Today the company is working to make a project of Irvine Island. but schoer has been loathe to either over-promise or inadvertently offend the mayala, so he stacked the nine-employee company with people qualified to navigate those cultural waters. he hired pamela Kaye, whom he considered the country’s best Native Title lawyer for having worked for both mining companies and Indigenous groups. “she knows the thinking of both sides,” says schoer.

he also contracted the former premier of Western australia, peter dowding. “he knows the mayala people well and guided us through the sensitivities to ensure we didn’t insult them. and he was personally moti-vated to make sure that we were looking out for them.”

schoer also hired pluton’s logistics and Community officer, Johari bin demin. “he’s an Indigenous guy from [nearby] broome, helping us to make sure that our relationship with the mayala stays strong.”

TAKING CAREThe next task was to see whether iron mining on the island and the heritage values could co-exist. “We started to build confidence that we weren’t going to destroy their island. one of the keys to earning their trust was that before doing any major work on the island we gave them the right to say yes or no in decisions on where we could operate. so they are genuinely part of the decision making process.”

Irvine Island is spiritually important to the mayala. It is men-only, no women go there, with a number of sacred sites, so pluton had to work out how to protect those while exploring. “so we looked into all the [geolog-ical] databases. We found out where their sacred sites were and they turned out to be away from where our exploration would be.”

pluton has also been doing environmental work for several years now. There were no endangered species on the island “but in the tropical waters there are,” says schoer. “There are reefs, sea grasses, whales and all sorts of things so we need to be particularly careful. however, having said that, Koolan and Cockatoo have been mined for the past fifty years without creating any problems for the marine life, so we just need to be very careful with our environmental plan.”

“If we wanted to get a mine up we had to work in partnership with the Mayala to do it. They had never been treated like that before.”

Issue 03 35

INVESTING IN INNOVATIONpluton’s corporate responsibility convictions also led to creating a new piece of world-leading technology, the universal drilling platform (udp). It’s a mobile exploration drilling platform that can be helicoptered into place, settled on hydraulic legs, set up in hours by two men, and rotated 360° to drill in multiple directions. The full-size rig was designed and built to pluton’s specifications by venture Consultants, a Western austra-lian technology firm.

pluton holds the worldwide rights to the udp and is looking into commercialization. “The beauty of the rig is that it can be set up on virtually any terrain, however remote, diamond drill to normal depths and disturb less than 5m2 of ground, versus the typical

30m2 plus benches and access roads. after the rig is lifted out, within months it’s virtu-ally impossible to tell where it was. any place you can reach by helicopter, you can explore using this platform.

“and our mayala exploration personnel have been trained to assemble the platforms and support exploration – they’ve been a key part of our success.”

The udp was a significant reason for winning the Golden Gecko, but not the only piece. pluton is also using self-contained antarctic living and workspace ‘pods’ that are set in place, linked and later removed, again with negligible impact on the terrain. “We haven’t bulldozed anything – everything is built just above the ground so when we remove it all, you wouldn’t even know there


was a camp there,” says schoer. “In terms of disturbing the terrain, our footprint is 1% of what’s often legally permitted. We also have very strong quarantine rules that are self-imposed – everything that goes on the island comes off the island. so really it wasn’t just the platform, it was the whole environmental program that won the Golden Gecko.

“This award is huge for us because it formally recognizes that environmentally we do it better than anyone else. and it really shows that the promises we made – that we would use best-practice exploration techniques – was a promise that we could deliver on.

“It was also important for us to leave the island as pristine as possible, because when you explore there is no guarantee of success – if we didn’t find enough iron ore we’d have to leave the island looking exactly the way we found it.”

OPEN PIT REALITYstill, you can’t have an open pit iron mine without having noticeable impact, raising the question of whether the mayala are

comfortable with that eventuality. “yes. yes, they are,” says schoer. “They are confident because they have a say and we will use our best-in-class environmental techniques.”

“obviously, when you mine you build ship loaders and you build processing plants and you make big holes in the ground. but our exploration program validates our commit-ment to the environment and that we’re in a good position to leave the island in a better condition than anyone else. We will be back-filling as we mine into the pits and making sure nothing gets into the marine environ-ment.”

happily, it turns out the minerals are there. The exploration program revealed a resource with the potential to produce an average 69.85% iron concentrate from the hardstaff peninsula, a promontory on the south side of the island. pluton has identified a total resource of 547million tonnes. “our pre-feasibility study will be finished mid-year,” says schoer. “We are looking at a variety of options, everything from shipping ore as-is, to processing everything onsite, to making a

Issue 03 37

high quality concentrate and sending it into asia to be turned into final product.”

With the mine located on the southern edge of the Timor sea, asia will be the Irvine Island project’s logical market, e.g. India, China and Japan. being on the water’s edge, pluton can ship from the mine with no rail or road construction – shipping is as important to the project’s feasibility as mineral grade for a bulk commodity like iron. “The water is 54m deep right off the edge of the island at low tide. so we won’t need a big port, just a ship loader. so we can park ships right along the edge of the island, load them up and ship.”

FEEL-GOOD ADVANTAGEIn the past, matters of corporate responsi-bility were seen as regulatory burdens and compromises to business pragmatism and bottom-line returns, leaving it to the largest companies with deep pockets to indulge in progressive, ‘soft’ values. but by aiming higher than compliance, pluton, an emerging company, has freed up a resource opportu-nity. “The vast majority of our shareholders are very proud of what we’re doing,” says schoer. “In fact we have some ethical mutual funds on our register that would not be there if not for our Native Title and environmental record.”

but this is more than means to an end – pluton is setting a high standard for the

mining industry. “yes, we are, and we don’t apologize for doing that. I don’t think it hurts to raise the bar.

“The mining industry is, and needs to be, getting better at these things, particularly on the Native Title issue. you can go into a project thinking, ‘Native Title is something I just have to get through,’ but at the end of the day the land is owned by the Indigenous people. If you can accept that, particularly at the exploration stage, and do as minimal damage as possible, then I think you get a better outcome for everybody.”

and pluton’s role in that change is causing ripples in the mining sector internationally. “We presented at the pdaC (prospectors & developers association of Canada) confer-ence in Toronto in march and the pdaC orga-nizers told us that for corporate and social responsibility pluton is as good as it gets. and since then I have had mining companies contact me to find out how we did this.” $

“The mining industry is, and needs to be, getting better at these things, particularly on the Native Title issue.”

Pluton Resources Limitedmelbourne, australia(03) 9820 3802plutonresources.comstock symbol: ase:plv

Issue 03 39

It’s not every day, not even every year, that you hear of a major oil & gas company receiving environmental laurels for an offshore devel-opment project.

but Woodside energy ltd., australia’s largest homegrown explora-tion and production company, headquartered in perth, is the proud possessor of a Golden Gecko environmental award, presented by the Western australia state government in 2009. The company, with its partners, was credited for the extensive preliminary work they undertook in environmental and community relations in advance of the browse lNG development (liquefied natural gas).

browse will tap more than 13 Tcf of gas (yes, trillion cubic feet) and 360million barrels (equivalent) of gas condensates from the Torosa, brecknock and Calliance fields, located 400 km off the northwest coast of australia. With production still another six years away, the company and its partners are currently finalizing their design and construction proposal. and still, two years after receiving the award, the accolade resonates.

A progressive and proactive approach to environmental care, indigenous community interests and economic sustainability landed a Golden Gecko Award for Woodside Energy’s ‘Browse’ offshore LNG mega-project.

The LonGTeRM VIew

Issue 03 41

“The value in the Golden Gecko award is firstly that it provides great recognition for the people who lead and implement our envi-ronmental studies and planning,” says michael hession, Woodside’s senior vice president browse. “We have a large and dedicated team of environmental scientists and researchers who not only help us with our environmental management systems and strategies, but who also contribute to the broader community’s understanding of the environments in which we operate.

“The Golden Gecko also highlights to the broader public the quality of the environ-mental work undertaken by Woodside, and the resources industry generally.”

Woodside has been active in the Kimberley region for decades beginning with offshore exploration in the browse basin in 1967. Their efforts started to pay off in 1971 with discoveries of “wet” natural gas, i.e. rich in light, hydrocarbon liquids such as butane and propane.

The magnitude of the gas deposits at Torosa, brecknock and Calliance, and the onshore production facilities, will make the browse lNG development australia’s third lNG hub – extracting, drying and chilling the gas to liquefy at -162°C, and shipping it to markets around the world. “browse is a significant

SIZE & SCOPE


project for Woodside and australia,” says hession. “The project will almost double Woodside’s lNG production and it is estimated the development will contribute aus$50billion to the country’s Gdp.

“This is also a greenfields project that will set new standards for energy efficiency and green-house gas emissions for lNG production.”

Just getting this project to ‘yea’ or ‘nay’ for construction is a long and expensive process in itself. Woodside has the largest working interest the partnership at 46%, with compa-triots bhp billiton and the australian divi-sions of bp, Chevron and shell. Collectively, they are spending $350million in engineering, environmental and social impact studies. “This year we are working on completing our Front end engineering and design studies, securing environmental approvals, signing marketing agreements for lNG, and preparing the case for the partners’ formal Financial Investment decision in mid-2012,” says hession.

meaning: everything is still preliminary. production isn’t expected until 2017. realizing that it’s all about forethought, Woodside deter-mined to make browse an exemplary project. “We are committed to sustainable develop-ment through our long-term economic perfor-mance, social contribution to the communi-ties where we operate and have a presence, environmental responsibility, and most impor-tantly, continued focus on safety,” hession says.

To wit, as far back as the exploration stage, Woodside spent $10million on a marine life research project to determine if the tropical fish living in and around coral atolls atop the Torosa gas field would be adversely affected by exploration seismic surveys. The study became a showcase example of corporate/academic collaboration.

according to company documents, Woodside and partners also commissioned the most comprehensive study to date of humpback whales off the Western australia coast. In 2009 more than 18,000 km of transects were flown, 1,600 km sailed and 153 whale groups observed, including the first large-scale deployment of satellite tags on Western australian hump-back whales. over 23,000 km of tracks were recorded from 23 radio-enabled tags, which provided detailed data on migratory behaviour starting from the Kimberley.

A WAYS OFF YETSEISMIC MATTERS

“A MARIne LIFe enVIRonMenTAL ReseARCh PRojeCT… BeCAMe A showCAse eXAMPLe oF CoRPoRATe/ACAdeMIC CoLLABoRATIon.”

Issue 03 43

CentralProcessing

Facility

Torosa

Calliance

Brecknock

Browse LNG Development

UPSTREAM CONCEPT Water Depth450 - 500m

Water Depth590m

Water Depth590m

Water Depth~ 1500m

Water Depth100m

JamesPrice Point

UPSTREAM FULL FIELD CONCEPT

GasLiquidsMEGPowerOptic Fibre

RFSU Future

BROWSE LNG DEVELOPMENT

S h e l f

Co

nt i n

e n t al

Indicative schematic only - not to scale J.Chai / October 2010 / DRIMS#5882918 v4

LNG TanksMEG

Browse LNG Development

DOWNSTREAM LAYOUTIndicative schematic only - not to scale

L.Kemp / March 2011 / DRIMS#7278226 v2

CondensateTanks

CondensateTanks

LNG Tanks

EffluentTreatmentEffluent

Treatment

MEG

EmergencyFlare

EmergencyFlare

MarineFlare

MarineFlare

LNG TrainsLNG Trains

Potential ExpansionFacilities

PowerGenerationand Utilities

PowerGenerationand Utilities

BuildingsBuildings

2500 Ha LNG Precinct

Note : Expansion increases LNG capacity from 12 to 25 Mtpa.

Road Corridor

Road Corridor

1000 Ha Marine PrecinctIntegratedMarine Facility

IntegratedMarine Facility

ConstructionVillage

ConstructionVillage

2500 Ha LNG Precinct

1000 Ha Marine Precinct

James Price PointJames Price Point

Potential ExpansionFacilities

DOWNSTREAM LAYOUTBROWSE LNG DEVELOPMENT

Jetty andBerths

Jetty andBerths


The company also commissioned monthly surveys of potential turtle nesting sites as part of the baseline environmental information for the project’s environmental management plans.

The company’s 40-year presence in the Kimberley underpins their knowledge and appreciation of the environmental and cultural significance of the region to local indigenous people and the wider community. but how does a multinational oil & gas company frame a business case for such liberal initiatives as the Torosa marine life study?

“There is certainly a matter of scale, but our approach to the Torosa study is consistent with the company’s overall strategy for respecting the environment,” says hession. “The envi-ronment strategy is based on six strategic imperatives:5 maximize resource efficiency5 design to minimize lifecycle costs5 Control environment impacts5 Facilitate effective environmental approvals5 maintain compliance and integrity, and 5 Work with stakeholders.

“The browse Joint venture participants are aligned with Woodside on our approach to understanding and minimizing the environ-mental impacts of our work. The [Torosa] study provided us with valuable information that enables us to continue our assessment of the resources near scott reef while mini-mizing our environmental footprint.”

The scale of the browse project will also exert significant, and surely disruptive, economic gravity on the nearby city of broome, and on James price point 60 km away where the onshore production facilities will be located. The indigenous peoples, legally referred to in this context as Traditional owners, will be coming into a massive $1billion economic package over the life of the development. This package includes “milestone and annual payments to the claim group, regional benefit payments, job targets, education, employment and training initiatives, support for indige-nous rangers, contracting opportunities and capacity building support,” and is believed to be one of the largest and most comprehensive benefits packages between a resource company and Native Title claimants.

Woodside took the progressive position of making the Goolarabooloo Jabirr Jabirr people major stakeholders in browse. “Woodside takes the view that we need to be involved and engaged in the communities in which we operate,” says hession. “We believe there is a responsibility to make a positive difference where we have the capability to do so, and we believe the agreement we have reached will achieve this.”

still, how can such a monolithic economic surge be stewarded effectively? “The Traditional owners have a clear understanding of how the opportunities arising from lNG develop-ment can be applied to generate the greatest economic and social benefits for Kimberley indigenous people,” hession says. “This is reflected in both the way the benefits package has been structured – targeted to areas of need such as training, business opportunities, employment and culture; and in the

“TRAdITIonAL owneRs wILL Be CoMInG InTo A MAssIVe $1BILLIon eConoMIC PACKAGe.”

NATIVE TITLE

Issue 03 45

governance structures to manage the delivery of the initiatives in the package.”

The development concept includes 900 km of pipeline tying in 53 wells on the ocean floor, 3 floating gas and liquids platforms, a central processing facility in shallower water where most of the liquids will be separated out, and onshore lNG production and export facilities.

annual production is projected at 12 mt/yr of lNG (though the design allows for a doubling of capacity to 25 mt/yr), with onsite storage and a dedicated port facilities. during construction, the workforce should peak at around 6,000 onshore and perhaps 2,000 offshore. “There were a number of project concepts evaluated, including offshore and floating lNG, trans-port of gas to existing facilities, and more than

40 locations in the Kimberley. The develop-ment concept that was selected stood out on technical, environmental, social and economic criteria,” says hession.

although this would be a long arc of time for any business project to reach fruition, the market conditions and engineering expertise have caught up to browse’s potential. “The development of these reserves was initially passed over in favour of those at the North West shelf, which were closer to the coast and easier to develop,” hession explains. “however, advances in technology and the growing world-wide demand for lNG have combined to create favourable conditions for browse to proceed.”

In terms of business relationships, that’s also a long time to keep partners focused and onboard. how has Woodside managed their relationships with its partners along the way?

desIGN & CoNsTruCTIoN


“essentially, you build that into the planning,” says hession. “Woodside and the browse joint venture participants have developed a rigorous quality assurance process to help the Jv eval-uate the ongoing engineering work and busi-ness case for the development. The partici-pants are very supportive of Woodside’s work as operator of browse, and earlier this year we all committed to move the project into the Front end engineering and design phase.” $

Proudly delivering Brownfield Project and Maintenance Services to Woodside Energy Limited over the past 16 years, including:

5 Engineering5 Procurement5 Fabrication

Woodside Plaza, 240 St Georges Terrace, PERTH, WA 6000Ph. 08 9338 7777 • Fx. 08 9338 7788 • [email protected]

5 Construction / Implementation5 Project Management5 Maintenance and Shutdown Services

woodside energy Ltd.perth, australiawoodside.com.austock symbol: asX:Wpl

HIGH-RISEFARMINGAs cities explode and farmland shrinks, Vancouver’s Valcent Products introduces a high-rise solution to the looming global need for local, healthy food: indoor, vertical, hydroponic farming.

bathed in the diffused light and oxygen-rich smell of a greenhouse, the faint trickle of nutrient-primed water mixes with the hum and click of a conveyor as a hundred hang-ing racks of white plastic trays, stacked 12 high and tufted with thousands of leafy green plants, glide around the room. a couple of technicians check the logic control centre’s climate readings for the bar-coded flora, nearly ready for harvest. banks of led lights slowly brighten to augment the dwindling natural light for an optimal 18-hour growing day.

Issue 03 49

and packing as many as 10,000 plants every three days. With this base system, a space the size of a decent residential lot can produce as much as a 16-acre farm. Free of pesticides and herbicides.

With its small footprint, minimal water requirements and low energy needs, an auto-mated unit can be located in climates ranging from an arid desert to the remote arctic; or in urban settings like rooftops and brown field sites – even inside a disused warehouse with the system’s optional supplementary lighting units.

applying henry Ford’s assembly line revolu-tion to vertical farming is a compelling concept on the cusp of international acceptance, with Western cities, middle eastern governments and asian urban planners poised to place their orders for the technology.

as the Chief supply Chain officer for the ath-letic apparel phenomenon lululemon, Ng was responsible for that company’s supply chain, manufacturing, distribution logistics and tech-nology. Now he says he moved from yoga and

sounds like the opening scene of a sci-fi movie or futuristic paperback, but this is non-fiction. vancouver-based valcent products is out to revolutionize agriculture with a mechanized, self-contained, high-density, vertical grow-op system for vegetables and herbs that uses only 8% of the normal amount of water and 5% of the usual space. practically any space.

“This is what farming has to develop into,” says Christopher Ng, valcent’s Chief operating officer. “much as high-density, high-rise apartments came about, we have to go verti-cal with food production too. Given that the world’s population will be 9billion in 2050, and mostly in dense urban centres, how else are we going to grow the amount of food we’ll need?”

The key is vertical, high-density growing. With a base vertiCrop commercial growing system of 123 hanging racks of hydroponic trays mea-suring 12ft high, two or three people can run a 4,000ft2 growing space, with another 2,000ft2 for germinating, transplanting, harvesting

GROWING UP


“A space the size of a decent resi-dential lot can produce as much as a 16-acre farm. Free of pesticides and herbicides.”

running outfits to hydroponic lettuce on the strength of the idea. “I heard the story of what valcent was up to and I thought it was some-thing I’d like to do for my own satisfaction, and for my kids and future generations. I saw this and thought, here’s something that’s going to make a difference in the world.”

The need is looming. Consider the imploding us cities where grocery chains no longer oper-ate and obesity and diabetes are rampant. or northern communities with sky-high grocery prices and resulting nutritional imbalances. or arid regions with water shortages or food security issues. or the world’s sprawling and expanding mega-cities where there isn’t a green space for miles on end.

“With high-density vertical hydroponics, you’re not wasting water, polluting land or streams with agri-chemicals, and you’re using way less space. With the abundance of brown field sites and user-abandoned facilities in cen-tres such as detroit, phoenix and just about any large city in North america right now, there are warehouses available for next-to-nothing, this is a great re-use strategy for those facilities.”

Issue 03 51

“With our technology, you can locate right in the midst of your market and cut out a lot of middlemen, time, energy and expense. and the availability, quality and freshness can be guaranteed.”

The other side is that the self-contained sys-tem can guarantee supply and price. We all know what happens to prices when there’s a freeze in Florida or a dry season in California. and alternating droughts and floods have been disrupting farms from adelaide to Winnipeg.

The system is also more efficient in terms of workflow. because the conveyor brings the plants to the workers, water and light, the base configuration can be run by as few as one hor-ticulturist and two “green collar” assistants.

The vertiCrop system looks like a viable solu-tion to a growing global problem, but innova-tive systems are typically expensive to imple-ment – it still comes down to economics, markets and feasibility. Fortunately, according to Ng, the numbers are there. “actually, the economics are unbelievable: With roughly a million-dollar investment, $1.1million at best, a single unit can provide up to 190,000 lbs of leafy greens in a year, yielding $1.3million in revenue,” says Ng. “We calculate annual earn-ings, before interest, taxes and amortization, of about $600,000.”

The vertiCrop system represents a paradigm shift, and those don’t come easy. Ng concedes that moving vertical farming from intriguing concept to commercial acceptance has been a challenge. “This isn’t just a novel growing method though – we believe this is the way farming must go.

For Ng, this isn’t just hyperbole or rarefied futurecasting. “Think about the food-miles, the energy and carbon with reefer trucks haul-ing heads of lettuce thousands of kilometres. Then there’s the sorting, handling, distribu-tion, re-distribution and stocking before it reaches consumers. We know from research at the university of California, davis, that let-tuce loses roughly half its nutritional value in 96 hours at 20˚C. so there’s a legitimate issue of food quality, taste and nutrition. local, high-density, vertical farming can greatly improve freshness and food quality when you’re talking about one day versus one week.

THE NEXT FARM?

VIABLE + FEASIBLE

“Lettuce loses roughly half its nutritional value in 96 hours at 20˚C. So there’s a legitimate issue of food quality, taste and nutrition. Local, high-density, ver-tical farming can greatly improve freshness and food quality.”


“We have a lot of middle eastern countries very interested in our technology from a water and food security point of view, and many large western cities for health policy and general sustainability – the biggest challenge is get-ting the first one out there. and we’re on the cusp of a number of significant sales. Then the floodgates will open for sales.”

valcent’s first, and high-profile, pilot project was installing a vertiCrop system to produce food for animals at the paignton Zoo in devon, england – europe’s first commercial vertical farming operation. since then, an unnamed uK food processing company has been run-ning trials with the system and “they are very pleased with the results, which will lead to an unknown number of vertiCrop system pur-chases,” says Ng.

The vertical farming concept, including research and design, and proof of concept, was undertaken in the uK. development and commercialization evolved and valcent’s uK subsidiary continues to refine various aspects of the system, such as tray design, lighting sources, irrigation filtration, nutritional inputs (including organic) and crop types – they now have demonstrable success with nearly 70 vari-eties of vegetables and herbs.

Ng points out that vertical hydroponics are not going to replace all farming techniques – it doesn’t work well for root vegetables, vines or grains. “you’re still going to see miles of wheat and acres of strawberries, but high-quality leafy greens are a much-needed, high-growth sector. as things stand, it looks like the first commercial crop to come off the system will be basil.” $

Valcent Products Inc.vancouver bC604-535-5474valcent.netstock symbol: oTCFF – vCTZF

INTERNATIONAL REACH

Issue 03 53

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IT’s TheGood news In ResouRCes

In a sea of information, how do you get to the core investment data you need?

at The Global Commodities Report, we’re all about the stories surrounding companies and projects that are generating economic opportunities and activities around the world. Their passion for their respective industries are inspiring. but a great story alone isn’t enough for making investment decisions.

so we’re excited to present the Investor Scorecard, a new personal investment tool created through a part-nership between TmX equicom, the investor relations arm of the TmX group that includes the Toronto stock exchange, and Financial science & art, an in-vestment metrics firm known for analyzing publicly listed companies from the perspective of cash flow.

We’re proud to debut the Investor Scorecard here in our magazine, and trust you’ll quickly see the value in its clear, concise summary of financial information and investment prospects for a selection of exciting companies.

InVesToRsCoReCARd

pages 00–00

scorecard: XXXXXXXX

Issue 02 | 55

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