Tales of Teck and Cominco

Cominco

Richard Fish retired in 2002 after 20 years in public relations at Cominco’s Trail operations.

The first smelter was started up in Trail, B.C., in 1896 by the Butte, Montana ‘copper baron’ Frits Heinze, to serve the copper and gold mines of nearby Rossland. Heinze sold the smelter to the Canadian Pacific Railway in 1898, mainly for its associated railway rights.

Walter H. Aldridge, who managed the Canadian Smelting Works at Trail for CP, could see a future for the Canadian smelting and refining industry. It took him most of a year to negotiate the combination of the smelter with most of the Rossland mines, the Rossland Power Company and the St. Eugene mine at Moyie, B.C. The Consolidated Mining and Smelting Company of Canada Limited (CM&S) was incorporated in Toronto in 1906, capitalized at $5.5 million.

CM&S went on to pioneer electrolytic zinc refining, differential flotation, synthetic fertilizer production and use in western North America, the use of aircraft for mineral exploration in the North, and many other innovations in smelting and refining.

Bill Armstrong retired in 2006 as Teck Cominco’s general manager of resource evaluation after 41 years with Cominco and Teck Cominco.

With the need to smelt silver ores, the galena-silver veins in the top mine of the Sullivan deposit were discovered in southern B.C. The mine started production under Cominco’s ownership in 1909. There was massive zinc mineralization associated with these veins, but there wasn’t much of a market for zinc and we didn’t know how to separate it anyway.

What enabled the company to grow was the specific application of differential froth flotation to the Sullivan ore [1919]. The rest of the Sullivan orebody could then be exploited, which fed our operation at Trail. It was determined that the Kootenay Arc deposits in carbonate rock (Bluebell, HB, Remak and Pend Oreille) offered the opportunity for additional smelter feed, so they were developed by ourselves and others in the 1950s.

Our exploration group looked at other carbonate areas, and determined that the area around Pine Point on the shore of Great Slave Lake was interesting. What they found there was a barrier reef with the potential for a large number of deposits and lots of tonnage. These were discovered by subsequent exploration, which included the use of IP, a breakthrough allowing for much more efficient and successful exploration. Pine Point went into production in 1965.

Our experience at Pine Point and in the Kootenay Arc allowed us to find and develop carbonate deposits with confidence: Black Angel in Greenland, and Polaris [1982] in the northern Arctic Islands. Our Arctic experience led the Nana Corporation to choose Cominco as its partner for Red Dog.

Teck

Norm Keevil is chairman of Teck Cominco; he has worked for Teck and Teck Cominco for almost 40 years, including as president and CEO from 1981 to 2001.

The company started with the Teck-Hughes gold mine [1913] in Ontario, which operated for 50 years. It then developed the Lamaque mine [1935], which also operated for 50 years in Val d’Or, Que.

But by 1970, Teck was short of reserves at existing operations and we needed to develop new mines to replace these. This led to a concerted exploration and development effort, which resulted in five new mines built over a nine-year period: Newfoundland zinc [1975], Niobec [1975], Afton [1978], Highmont [1981] and Bullmoose [1983]. That was key to the modern-day Teck Corporation.

Mike Lipkewich will retire in 2006 as senior vice-president of mining after working for Teck and Teck Cominco for over 35 years.

When we got involved in the Bullmoose deposit, it was not a very large project, but we were an effective operator. It went into production [1983] under budget by about 20% and ahead of schedule. It was profitable for every one of the 20 years that it operated. The banks realized that, so they gave us an opportunity to become involved in Quintette [1992] and subsequently at Elkview [2003]. In both of these cases we were dealing with turnaround situations where the property had not been performing well, where the banks had exposure and were looking for a different operator.

Teck Cominco

Norm Keevil

In 1986 we bought a 32% controlling interest in Cominco from Canadian Pacific in joint venture with Metallgesellschaft and MIM; our net interest was 16%. We didn’t acquire it all at the start because we couldn’t afford it and because it had pretty severe financial problems at the time; it had a huge debt position. Our CFO David Thompson chaired the financing and restructuring committee to sort out those problems, which he did.

The importance of that acquisition was really to get our hands on the Red Dog mine, which had long-term ore reserves in spades. So we built the Red Dog mine [1989], but there were teething problems. Unrecognized differences in the ore caused metallurgical problems at the start, which took a couple of years to sort out. At the same time the price of zinc was very low. This put Cominco into heavy losses in the early ’90s, and because we were equity accounting, it put Teck into its first loss in probably 80 years. Since the mid-’90s, Red Dog has been reasonably profitable; it’s currently the biggest and most profitable zinc mine in the world.

Gradually we bought out Metall and MIM and acquired more shares over time. We were at about 50% in 2001, by which time Cominco was in fine shape. The street was starting to discount us, looking on us as a holding company, so we took in the minority and merged the two companies to make Teck Cominco [2001]. We probably waited too long because we ended up paying more, but it was a prudent way to do it, over 15 years. That’s why you like long-life orebodies. Things do take time.

In one of the first corporate mission statements ever written, Walter H. Aldridge wrote: “The Consolidated Mining and Smelting Company of Canada Limited is not dependent upon any single mine, nor upon any single mining district; but its interests and business, besides being to an extent industrial, will also be so diversified as to minimize so far as possible, the speculative element.” This would be the underpinning of a hugely successful Canadian mining and smelting company.

---