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  Devco's Outlook


Towards the Future
     The Cape Breton Development Corporation is leading the way with the most advanced coal-water fuel (CWF) technology in the world. CWF is produced by mixing coal with water and chemicals. Resulting is a product with capacity to replace oil as fuel, while meeting environmental concerns on sulphur emissions.

     New technology ensures increasing market demands will be realized. As domestic and international markets grow, the corporation must be prepared with ample storage space and coal purification systems. Issues must be addressed as expansion of storage area is limited due to environmental concerns. Through research and development, innovative techniques have been conceived to reduce currently unacceptable levels of sulphur and permit necessary expansion.

     Demand will also be considered in the future of Lingan Colliery. At the present rate of production, the colliery will be mined out in nine years. Feasibility studies are underway and alternatives are being evaluated to lenghten the life of the mine to twenty years.

Operations
     A detailed mine plan was developed based on the 5-year corporate plan incorporating a double-entry development system and contingency coal reserves. The plan was well received by employees, and a contract has been awarded to develop a Yield Pillar Design for a double entry development system.

     This year a number of projects were completed that will result in efficiencies in both operating and administrative areas:
- The installation of a new pumping system has doubled the mine's pumping capacity.
- A major computer system upgrade, providing an office network environment using personal computers for electronic communication.
- The installation of a new underground communication system, providing telephone communications to all underground operating sections. This system will allow access from off-site locations.
- Introduction of a daily planned maintenance system for longwall and cable belt which has resulted in improved equipment availability.
- Completion of the directional drilling program on 3 Slope which confirms the geometry of the lower sandstone unit in this area affecting both outburst and weighting conditions at the Colliery.

Environment
     DEVCO believes it is important that not only are they an environmentally responsible entity, but that all stakeholders recognize us as such.

     To assist in achieving their goal they are pleased to report that work has begun on the development of an Environmental Management System. The proposed system will be modelled after the recent guidelines prepared by the International Organization for Standardization referred to as the ISO 14000 Series. The system, once implemented, will address issues such as organizational structure, planning activities, and the practices and resources necessary to implement and maintain environmental policies.

     DEVCO continues to work actively with community groups and applicable agencies in developing action plans to deal with a variety of environmental issues. The most significant projects included:

     Edwards Pond Restoration - This site enhancement project received community acceptance in October 1996. The scope of the project included capping a portion of the lagoon which had been affected by drainage from abandoned mine workings. This project will transform the area into a greenbelt zone, greatly enhancing its recreational appeal.

     Tailings Basin Closure - This project involves the reprofiling of the tailings deposit, which is located near the Victoria Junction Preparation Plant, so it can be flooded to a minimum depth of one metre of water to prevent oxidation and acid generation. The project, which was developed in consultation with a local Public Monitoring Committee is expected to commence in 1997/98.

     Lime Residue Disposal - The Corporation currently has two active wastewater treatment plants (Prince Colliery and Victoria Junction Coal Preparation Plant). These plants produce about 50,000 cubic metres of low density metal hydroxide precipitate (lime residue) per annum. A nearby abandoned underground mine site has been identified as the most acceptable area for disposal of residue. The disposal concept is supported by the appropriate environmental regulatory agencies. In addition, a series of Public Information Sessions are currently underway with residents in the area of the abandoned workings and we are hopeful this project will proceed by summer/fall 1997.


Corporate Plan

Government Mandate to Devco Management:

Achieve Commercial Viability:
   - To become a profitable coal mining company
- Must be able to compete with private sector companies
- Must be able to compete with alternative fuels

Considerations in Developing the Corporate Plan:
   - Primary customer focus Nova Scotia Power Incorporated (NSPI) - reduced concentration on the export market
- Environmental pressures on NSPI require DEVCO to continue to reduce sulphur content of coal
- Coal has to compete with other fuels, i.e., offshore Sable gas, Pictou methane gas, and strip coal
- Revenue from sales to NSPI is known until 2000, but DEVCO expects further pressure to reduce coal prices in next contract negotiation
- To become profitable, need to reduce cost of operation

Consultative Process recommendations incorporated in the approved plan:
   - Implement multiple entry development at Phalen (Boyd/CBRM)
- $300,000 study on proposed selective mining at Prince (CAW)
- Introduction of a Quality Management program (Employee Union Proposal)
- Continued emphasis on standardization of equipment and consolidation of inventory (Employee Union Proposal)
- On-going pursuit of savings on energy usage (Employee Union Proposal)
- Quarterly progress report on Key Indicators (Community Business Group/Clergy)
- No annual extended shutdown of Prince - Boyd/CBRM/Employee Union Proposal

Highlights

Corporate:
   - A Human Resource Strategy to accommodate a workforce reduction of 658 employees through:
    Normal Attrition121
    Severance154
    Early Retirement (Phase I)230
    Early Retirement (Phase II)153
    Total658
- Maintain a two colliery continuous operation

Phalen Colliery:
   - Production initially at 1.9 million, stabilizing at 2.3 million run-of-mine tonnes per annum.
- Development of 8,000 to 10,000 metres per year for the first three years, then approximately 7,400 metres per annum sustains production level.
- Annual development rates need to substantially improve to be competitive.
- Implement multiple-entry development on 9 East bottom and 10 East top, subject to final design, testing and regulatory approval.

Prince Colliery:
   - 1996/97 - 688,000 tonnes.
- 1997/98 forward - 2 shift operation
      Production - 1.0 million tonnes annually
      Development - 3,800 metres annually
- North/South option - final decision March 1997
- Opportunities to increase Prince production as Phalen costs are reduced.

Surface Operations:
   - Costs minimized, while remaining flexible to react to profit making opportunities.
- Workforce and activities adjusted to reflect production and sales levels.
- Facilities maintained in standby mode when not required.
- Opportunities to increase surface activities as Phalen costs are reduced.


Employee Participation:
   - Develop a positive working relationship between management and unions.
- Full commitment to Quality Management program.
- Each employee must accept responsibility for their pension benefits.
- Develop flexibility in work schedules, including hot seat changes and rostering for vacation schedules.
- Promote cross trades flexibility in the workplace.
- Obtain flexibility for site transfers.
- Restructure pay scales and bonus arrangements.
- Training in the following:
    Management and supervisory skills development program
    Introduction to multiple entry technology and techniques
    Establishing a quality management training program


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