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By R. D. Browns

In his Budget Speech on March 31, 1 977, the Honourable Donald S. Macdonald expressed concern about the financing of investments through new equity issues. He mentioned the need to render more attractive participation in the equity market by investors in all in come brackets. One of the measures introduced in the budget to accomplish this goal is the proposal to increase the dividend gross-up and tax credit in respect of most dividends received by an individual from Canadian companies. The following comments and tables serve to illustrate the impact of this particular proposal.

Jan 1, 1977

Chromium, a critical mineral for which the United States is largely dependent on foreign sources, is the subject of a new report just issued by the Interior Department's Bureau of Mines. The report is the first in a new series called "Mineral Commodity Profiles" (MCP's). Designed to give an updated review of important events affecting critical minerals, it also presents a comprehensive description of industry structure, supply-demand relationships, technology, and outlook for the future.

Jan 1, 1977

By Paul Wellman

The energy problem of the U. S; was emphasized by the oil embargo of late 1973 and early 1974 and it seemed for a time that the Federal Government, under pressure from the general public, might take some corrective action. However, this was not the case. With the gasoline lines gone and an apparent plentiful supply of petroleum products, public concern quickly dissipated., This country is more vulnerable to an oil embargo today than we were in 1973-1974 and this fact should be of concern to all our people. Since 1968, we have used oil and natural gas at a much more rapid rate than we have been able to find new domestic sources; thus, there is an increasing gap between domestic production and consumption and we have filled the gap with ever increasing oil' imports. These imports have increased at an alarming rate in the recent past, some 58 percent in 1976 compared with 1975. Imports are nearing 8 million barrels per day. Then, by applying some simple arithmetic, at $12 per barrel, the resulting trade deficit is $96 million per day or $35 billion per year. Obviously, this cannot be tolerated by our economy over a long period of time. Historically, we have shifted from one fuel to another as is shown in this slide. In 1850 about 90 percent of our fuel requirements came from direct combustion of wood, by 1900 we shifted to coal for 70 percent of our fuel, and now about 78 percent of fuel requirements comes from oil and natural gas. The difference is that the previous shifts were voluntary and the one facing us now is of necessity.

Jan 1, 1977

By Martin B. Zimmerman

It is becoming evident that traditional methods of econometric analysis are inadequate in estimating-the long-run supply of minerals. Econometrics is limited to extracting estimates from observations of the theory predicts that the least cost deposits will be exploited first.1 The estimation of parameters from past data then must lead to biased projections of the future. Mining conditions in the future will be worse than in the past and it is the impact of the future conditions on cost that we need to know. In this paper we present a methodology for dealing with this problem. We estimate a "cumulative cost" function that yields the long-run marginal cost of mining as a function of cumulative output produced over time.2 This is relatively easy to do for coal mining in the United States where exploration for new deposits is not a major factor in supply. The first step of the procedure relates cost to the rate of output and to the geological conditions of the mine. The second step combines geological information on remaining deposits with the cost function to yield the cumulative cost function. A central theme of both these steps is the interaction of economics with geology. The best deposits are selected first and in each step of the estimation allowance must be made for this fact. The problem of depletion is part of the general problem of structural change. The change through depletion in the nature of the exploitable mineral stock is only one factor that calls for an analysis sensitive to the changing circumstances of the industry. The factors impinging most heavily on the coal industry today are the strict environmental regulations legislated

Jan 1, 1977

By A. E. Lindquist

This Bureau of Mines publication identifies areas having sufficient coal reserves to support synthetic natural gas (SNG) development and summarizes those areas having the highest potential. Capital requirements, mining and coal cost factors, water availability, and coal-quality data pertinent to SNG production are presented. Evaluation of individual coal reserve blocks was based upon coal and water requirements of the Bureau of Mines Synthane coal gasification process.

Jan 1, 1977

By John S. Carman

Our industry is in trouble. Real trouble. It has never been an easy, secure business. But to-day it is engulfed in revolutionary currents. No longer can there be reliance upon the checks and balances of market forces. Supply and demand largely dictated the economics of business enterprise in simpler days. To-day politics, in particular nationalism become increasingly dominant. And as governments expand and put out tentacles of interference in the direction of the mining industry, far too little understanding is evidenced as to how that industry works. Then there is something which is relatively new -stagflation. As the prices of minerals falls, the capital investment required for new extractive facilities soars at rates which far outdistance those which are cited by governments to indicate the magnitude of inflation. To illustrate; 1) In 1971 it was calculated that $355 million would be required to bring the Cuajone property in Peru into production. Five years later that stage was reached at a cost of $680 million. 2) With the Caridad mine in Mexico, estimated capital investment doubled between 1971 and 1976. 3) The requirements calculated for Cerro Colorado in Panama have risen in two years from $560 to $800. 4) The budget of $240 million for Sar Chesmeh in Iran in 1971 had become $500 million by 1976.

Jan 1, 1977

By Frank C. Stevens

The availability, cost and use of fuel and electricity for the cement industry is difficult to predict with a great degree of accuracy because the historical pattern of factors affecting energy was disrupted during the years 1972, 1973 and 1974. Forecasting is both an art and science and is based on .the premise that the best indicator of the future is the past. Statistical data is used to guide economists and businessmen in their predictions of the future. Even though the energy picture is changing, it is believed that electricity and fuel will be available for the cement industry in the foreseeable future, and this energy will be more costly in relation to the other items that are part of the manufacturing costs for portland cement.

Jan 1, 1977

By Paul R. Wieber

This paper describes the U. S. Energy Research and Development Administration's (ERDA) program to develop in situ coal conversion processes, especially gasification, he potential of this technology, the technical directions being explored, and the program strategy to carry the process concepts toward commercialization are emphasized. The geographic location of the U. S. coal resources and a market analysis are described. Commercially successful in situ coal processes could add over a trillion tons of coal to the U. S. coal reserves. The economics of these processes is compared with surface gasification independent studies show this process to be 25Z cheaper than surface gasification for Western coals. The major projects are briefly described. The Linked Vertical Well process is in the lost advanced stage and shows great promise. The last test produced a low-Btu gas averaging 171 Btu per standard cubic foot for average pro¬duction rates of 5.5 million standard cubic feet per day. The other projects are Packed Bed, Longwall Generator, and Steeply Dipping Beds.

Jan 1, 1977

By Thomas A. Phillips

An economic evaluation of the Bureau of Mines process for the separation of raw urban refuse into its metal, mineral, and energy components is presented. The process recovers ferrous metal, mixed nonferrous metals, aluminum, mixed-color glass cullet, and refuse-derived fuel products from raw refuse. Data for this evaluation were obtained from selected runs at the Bureau's pilot plant in Edmonston, Md. A cost estimate was prepared for a plant capable of processing 1,000 tons per day of raw urban refuse operating two shifts, 6 days per week. The fixed capital cost, based on second quarter 1976 equipment costs, is approximately $14.5 million excluding land and shipping containers. The estimated operating cost is approximately $8 per ton of refuse processed. This does not include credit for the products, transportation of the products, a tipping fee, or a dumping fee for wastes produced. No finance charges or taxes are included in the operating costs.

Jan 1, 1977

By L. A. Conley

This report, covering the period January through December 1976, contains abstracts of articles related to cost engineering and economics for chemical and petroleum plants, mining, and other mineral industries from the following periodicals: 1. Air Pollution Control Association Journal 2. Chemical Engineering 3. Chemical Engineering Journal 4. Chemtech 5. Coal Age 6. Coal Mining and Processing 7. Combustion 8. Drilling-DCW 9. Electrical World 10. Engineering and Mining Journal

Jan 1, 1977

By Enrique Levy

Central America is graduating this year into large scale mining with the start up of Inco's multi-million dollar nickel laterite processing plant in Guatemala. In the other extreme of the Isthmus in Panama Texas Gulf Sulphur is doing check diamond drilling and foundation test drilling at the Cerro Colorado copper porphyry. The higher price of gold and silver has spurred development and exploration of several small precious metal mines. The purpose of this presentation is to make a brief resumé of the most important mines operating in the area and a list of significant exploration projects. Also, tables will be shown to compare mining codes and taxes. Unfortunately these tables lack information on Panama. Before starting I like to express my appreciation to Kennecott Copper who permitted the use of some of the data compiled by the author on their behalf during the year 1975. Other persons which did not want to be named also have my gratitude.

Jan 1, 1977

By Lee M. Manna

This report summarizes the program to design, fabricate, install and preliminary test a pneumatic braking system for 10-ton mine haulage cars. Major arrangement drawings are reproduced, pneumatic schematics, parts list and actual developed costs. Recommendations as to system improvements are made.

Jan 1, 1977

By R. D. Brown

"AbstractOver the past five years, tax rates in the Canadian mining industry have skyrocketed upward across Canada, as both federal and provincial governments have sought to increase their share of mining revenues.However, the past few years have not only brought high tax rates to the industry, but also a number of important new federal and provincial tax incentives.In large part, these incentives ~ special credits or reduction in tax for carrying out specific exploration, processing or other activities - have helped to moderate the adverse effects of the higher tax rates and have provided inducements for exploration and processing activities which might not otherwise have been undertaken.However, the effectiveness of certain of these incentives can be questioned: our over-all tax structure now consists in large part of punitively high marginal rates with some extraordinarily generous but capricious tax reductions for specific activities and may not be in the best long-term interest of either the industry or the nation.A rational tax structure, with moderate and stable tax rates, together with reasonable incentives confined to activities specifically requiring them, could be a more effective spur to investment than the present tax and incentive jungleIntroductionIN THE YEARS since federal tax reform, the mining industry in Canada has faced a continued escalation in its tax burdens as federal and provincial governments have leapfrogged each other in imposing new and higher taxes on the industry. The result has been that marginal tax rates imposed on mining and processing activities throughout Canada have jumped to hitherto unparalleled levels."

Jan 1, 1977

By R. D. Brown

In his March 31, 1977 budget, Finance Minister Macdonald has attempted the delicate balancing act of stimulating the economy without reinforcing the inflationary pressures which Canada is continuing to experience. Several tax changes of benefit to the mining industry, as well as measures designed to encourage oil exploration in frontier areas, are among the budget proposals. Additional earned depletion of 66- 2 /3 %, which may be offset against income from any source, will be available on drilling costs in excess of $5 million incurred between March 31, 1977 and April 1, 1980 in connection with an exploratory well in Canada, including the continental shelf . Other changes include more favourable treatment of resource property dispositions, less restrictive rules r elating to "successor corporations" , increased capital-cost allowance on railway spur lines, the inclusion of certain production royalties in Canadian development expenses and the application of the lower "manufacturing and processing" tax rate to sulphur production. To encourage business capital spending, the 5% federal investment tax credit it to be extended an additional three years to mid 1980 and broadened to include spending on scientific research and development. The rate of credit will also be selectively increased on a regional basis, to 7.5 % in certain designated areas in Saskatchewan, Manitoba. Northern. Ontario and Quebec, and to 10% in the Atlantic provinces and the Gaspe.

Jan 1, 1977

By Edward R. Lauer

Energy conservation is an integral part of Canada's energy strategy. We must pursue conservation and energy management vigorously if we are to remain competitive in domestic and world markets, and minimize our reliance on external energy sources. Energy management in industry is discussed from three viewpoints: (l) as a means of directly improving profitability; (2) as a major factor in the supply picture; and (3) as a significant influence on Canada's balance of payments and over-all economic well-being. The Federal role in promoting a voluntary industrial energy conservation program is described.

Jan 1, 1977

By Dennis D. Fischer

The second underground coal gasification experiment conducted by ERDA's Laramie Energy Research Center at a site near Hanna, Wyoming, was completed on July 30, 1976. During the experiment production reached 0.32 Mm 3/d (12 Mft3/d) of 6.9 MJ/m3 gas (175 Btu/ft 3 ). Approximately 6100 tonne (6700 ton) of coal were gasified during the experiment. Energy return ratios of 4.5 to 5.3, cold gas - thermal efficiencies of 76 to 89 percent, and overall process efficiencies of 65 to 74 percent were achieved during the second Hanna experiment. This paper describes the experiment and the results obtained with emphasis given to the determination of the energy recovered relative to energy consumed in conducting the test. Data from this determination are compared with previously published data from the first test conducted at Hanna during 1973-1974.

Jan 1, 1977

By K. Duckworth

"AbstractA new electromagnetic depth sounding technique was applied to the measurement of salt thickness above the workings in the Central Canada Potash Mine at Colonsay, Saskatchewan. The initial tests indicate that this new technique can measure salt thickness and that the technique possesses operational feature s which make it possible to monitor trends in salt thickness throughout the mine. The technique can be applied using existing equipment, but the tests do indicate the desirability of developing equipment with features specially suited to the mine environment.IntroductionTESTS were conducted in the Central Canada Potash Mine at Colonsay, Saskatchewan during 1974 and 1975 to determine if a new technique in electromagnetic depth sounding could provide a convenient means of measuring salt thickness above the workings. This new technique, which was described by Duckworth (1975), offers operational features which appear to be advantageous in this particular situation.The problem requires that soundings be made upward from the mine workings to the base of the second red shale. This shale forms an impermeable seal on top of the Prairie Evaporite. A knowledge of this salt thickness is of interest due to the need to avoid any possibility of the workings rising to cut the red shale. Another desirable objective is the detection of any disruptions of the red shale. Ideally, this should be done ahead of the workings in order that such areas of disruption may be avoided."

Jan 1, 1977

Wildcat strikes in the Appalachian coal fields, primarily in West Virginia, have resulted in an estimated 4.5 million ton loss in coal production during July and through the first week in August. Since then, the strike intensified further, and on August 9, nearly all of West Virginia's 60,000 miners were off the job with another 10,000 miners on strike in eastern Kentucky. The Bureau of Mines estimates that West Virginia's coal output is currently (8/9) eight million tons below last year when the state produced 108 million tons. West Virginia, the Nation's second largest coal producer of coal behind Kentucky, has not failed to mine over 100 million tons a year since 1938. At the end of the second week in August, nearly all coal miners in West Virginia remained out. The strike is a protest against a cutback in union health and retirement benefits. An announcement June 23 about the United Mine Worker's health and retirement fund precipitated the strike, Fund directors said that because of inflation and production losses caused by earlier wildcat strikes and the severe winter, miners would have to pay the first $250 of hospital costs and 40 percent of doctor bills, up to $500 a year. Previously, the funds paid all hospital and doctor bills. According to the West Virginia Coal Association each day of the strike in West Virginia results in a loss of coal production of 500,000 tons, a loss of $3.8 million in miners wages and $1 million in contributions to the UMWA's health and retirement fund.

Jan 1, 1977

By Michael Rieber

A new mode of coal transportation based on the principles of pneumatic conveying has been recently, proposed by Soo, et al. [5]. Pneumatic transport is not a novel concept and commercial experience with pneumatic pipelines for short haul distances is plentiful. The list of applications is long and includes transporting ores, chemicals and pharmaceutical products, agricultural products, and domestic and industrial wastes. The study by Soo, et al. [5] updated an earlier one [l0] and presented the most recent economic evaluation of pneumatic transportation of coal. Their preliminary study concluded that there are immediate advantages for short-distance transport (less than 100 miles) and that it is both technologically and economically feasible. That study also concludes that pneumatic transport has a higher potential and more promising profitability in long-distance applications than rail if new track and roadbed must be built. Some of the advantages of long and short distance pneumatic pipeline transport of coal compared to rail and slurry transport are: 1) Replacement of diesel fuel consumed by unit trains, as the pipeline can be powered by coal-generated electricity; 2) Reduction of the skilled-labor costs required for upgrading and maintaining railroads; 3) Elimination of signaling, rerouting and overpass costs due to increased rail traffic on' mainline trackage;

Jan 1, 1977

By Marline J. Veesaert

Urban quarries offer one of the greatest opportunities for profit in non-metallic mining with limited financial risk IF properly evaluated, planned and developed to meet market needs. Location, with respect to market, is the prime consideration. Geologic considerations and quality of rock are nearly as important. Cost factors and return on investment (ROI) are the principal financial considerations. Risk of capital is determined by weighing all factors that should be considered and how well judgements are based on information acquired. It is a simple, true axiom of business that an investment must be founded on amount of capital required with its expected return plus profit, expertise required to operate and time involved. Urban quarries generally offer excellent stone product market opportunities. Costs of land with mineral containment and processing operations are much greater than in rural areas. Environmental problems have become increasingly severe. Competition from other quarries in the market area is usually directly proportional to the profit attractiveness. Risk of capital (initial, developmental and operational) can be evaluated and reduced only by thorough analysis of the entire situation. Time and money expended on planning and preliminary investigations probably represent the most productive investment of available company resources.

Jan 1, 1977