by Elliot Smith
Cameco Corp., the world's largest uranium producer, said the ``deficient'' development of its Cigar Lake mine in Canada contributed to a flood that will delay the project by three years and help double construction costs.
Contract workers performed underground blasting with the wrong equipment and inadequate safeguards, producing a greater rupture than engineers specified and allowing the mine to flood on Oct. 22, Saskatoon, Saskatchewan-based Cameco said today in disclosing the results of a company-commissioned investigation.
The 96-page investigative report provides a critical account of how groundwater inundated the Saskatchewan mine, which contains an estimated $25.5 billion of ore. Since the accident, the price of uranium, a radioactive mineral used as fuel in nuclear weapons and power plants, has more than doubled.
``I'm disappointed to tell you: We made mistakes,'' said Cameco Chief Executive Officer Gerald W. Grandey said today on a conference call with investors. ``Our performance did not meet expectations. We did not adequately assess the risk, and did not have sufficient controls to deal with a severe water inflow.''
The flood forced the company to halt work on the mine and delay the start of production that was slated for this year. The accident and a lesser flood at Cigar Lake in April 2006 have raised the cost of developing the deposit to C$1 billion ($903 million) from an estimated C$450 million in December 2004.
Response Lapses
Lapses by Cameco and a contractor included ``insufficient assessment of the ongoing development, lack of quality control of the excavation and slow installation of ground support'' used to secure the earth for blasting, Chief Operating Officer Tim Gitzel said in a May 2 letter to federal and provincial nuclear regulators that accompanied the report.
Bloomberg, citing company records and interviews with government authorities, reported April 20 that blasting by Cameco workers may have triggered the flood and that the company couldn't control the water because it didn't fulfill repeated pledges to regulators to install more underground pumps there.
Cameco's own report, performed by independent consultant Brian J. Locker of KnoW Problem Inc., elaborated on those findings. The investigation identified lapses in the company's ``entire mine development cycle, which starts with drilling and blasting and ends with completed ground support.'' It cited inadequate standards and controls for engineering, water pumping capacity and ground control at Cigar Lake.
Poor Supervision
The report also found ``no reasonable level of supervision'' by Cameco of its contractor, Mudjatik Thyssen Mining. Mudjatik employed oversized drilling equipment and failed to install adequate ground support when blasting, contributing directly to the accident, the Locker report concluded.
Rene Scheepers, president of Thyssen Mining Construction of Canada, 50 percent owner of the contractor, had no comment.
The report also held Cameco accountable for failing to specify what drilling equipment Mudjatik should employ at the site. The intended instruction ``was inadvertently omitted from the design drawing and contributed to this incident,'' Cameco acknowledged in a reply to the consultant's report.
The probe also found that ``two relatively senior Cameco individuals interviewed expressed surprise to hear of construction'' at the blasting site ``without additional pumping capacity being in place, since water inflow was pinpointed as a high-risk area.''
Shares Rise
Shares of Cameco rose C$1.05, or 1.9 percent, to C$55.58 at 3:30 p.m. in Toronto Stock Exchange trading. They have risen 19 percent in the past year.
The investigative report portrays a far more chaotic situation in the mine, after the accident, than company officials previously have told regulators or the public.
Miners' preparations to close two 10,000-pound bulkhead doors -- designed to prevent the entire mine from flooding -- required seven hours and 25 minutes rather than the envisioned two hours, and then one of the doors failed to seal after a gasket fell off. Available maintenance records indicate that the last time this door was fully closed as part of preventive maintenance efforts was in 2004, the investigation found.
``There was no good understanding of how to actually close the doors,'' the investigative report stated, quoting an unidentified mine worker it described as experienced.
Worker Submerged
Just before a company official ordered the mine to be evacuated, ``a large rush of water came through the door, and one of the workers lost his footing and was temporarily submerged before regaining his footing,'' the report said.
The last worker to retreat from the disabled door ``was struck with large debris -- toolboxes, timbers, etc. -- and had water coming over his shoulders,'' the report states.
In the company's statement accompanying the investigative report, it says it will in the future separate the management of major developments such as Cigar Lake from its existing operations. Bob Steane, head of nuclear-fuel service operations in Ontario, will fill the new position of vice president of major projects, overseeing the Cigar Lake mine, Cameco said.
Cameco Corp., the world's largest uranium producer, said the ``deficient'' development of its Cigar Lake mine in Canada contributed to a flood that will delay the project by three years and help double construction costs.
Contract workers performed underground blasting with the wrong equipment and inadequate safeguards, producing a greater rupture than engineers specified and allowing the mine to flood on Oct. 22, Saskatoon, Saskatchewan-based Cameco said today in disclosing the results of a company-commissioned investigation.
The 96-page investigative report provides a critical account of how groundwater inundated the Saskatchewan mine, which contains an estimated $25.5 billion of ore. Since the accident, the price of uranium, a radioactive mineral used as fuel in nuclear weapons and power plants, has more than doubled.
``I'm disappointed to tell you: We made mistakes,'' said Cameco Chief Executive Officer Gerald W. Grandey said today on a conference call with investors. ``Our performance did not meet expectations. We did not adequately assess the risk, and did not have sufficient controls to deal with a severe water inflow.''
The flood forced the company to halt work on the mine and delay the start of production that was slated for this year. The accident and a lesser flood at Cigar Lake in April 2006 have raised the cost of developing the deposit to C$1 billion ($903 million) from an estimated C$450 million in December 2004.
Response Lapses
Lapses by Cameco and a contractor included ``insufficient assessment of the ongoing development, lack of quality control of the excavation and slow installation of ground support'' used to secure the earth for blasting, Chief Operating Officer Tim Gitzel said in a May 2 letter to federal and provincial nuclear regulators that accompanied the report.
Bloomberg, citing company records and interviews with government authorities, reported April 20 that blasting by Cameco workers may have triggered the flood and that the company couldn't control the water because it didn't fulfill repeated pledges to regulators to install more underground pumps there.
Cameco's own report, performed by independent consultant Brian J. Locker of KnoW Problem Inc., elaborated on those findings. The investigation identified lapses in the company's ``entire mine development cycle, which starts with drilling and blasting and ends with completed ground support.'' It cited inadequate standards and controls for engineering, water pumping capacity and ground control at Cigar Lake.
Poor Supervision
The report also found ``no reasonable level of supervision'' by Cameco of its contractor, Mudjatik Thyssen Mining. Mudjatik employed oversized drilling equipment and failed to install adequate ground support when blasting, contributing directly to the accident, the Locker report concluded.
Rene Scheepers, president of Thyssen Mining Construction of Canada, 50 percent owner of the contractor, had no comment.
The report also held Cameco accountable for failing to specify what drilling equipment Mudjatik should employ at the site. The intended instruction ``was inadvertently omitted from the design drawing and contributed to this incident,'' Cameco acknowledged in a reply to the consultant's report.
The probe also found that ``two relatively senior Cameco individuals interviewed expressed surprise to hear of construction'' at the blasting site ``without additional pumping capacity being in place, since water inflow was pinpointed as a high-risk area.''
Shares Rise
Shares of Cameco rose C$1.05, or 1.9 percent, to C$55.58 at 3:30 p.m. in Toronto Stock Exchange trading. They have risen 19 percent in the past year.
The investigative report portrays a far more chaotic situation in the mine, after the accident, than company officials previously have told regulators or the public.
Miners' preparations to close two 10,000-pound bulkhead doors -- designed to prevent the entire mine from flooding -- required seven hours and 25 minutes rather than the envisioned two hours, and then one of the doors failed to seal after a gasket fell off. Available maintenance records indicate that the last time this door was fully closed as part of preventive maintenance efforts was in 2004, the investigation found.
``There was no good understanding of how to actually close the doors,'' the investigative report stated, quoting an unidentified mine worker it described as experienced.
Worker Submerged
Just before a company official ordered the mine to be evacuated, ``a large rush of water came through the door, and one of the workers lost his footing and was temporarily submerged before regaining his footing,'' the report said.
The last worker to retreat from the disabled door ``was struck with large debris -- toolboxes, timbers, etc. -- and had water coming over his shoulders,'' the report states.
In the company's statement accompanying the investigative report, it says it will in the future separate the management of major developments such as Cigar Lake from its existing operations. Bob Steane, head of nuclear-fuel service operations in Ontario, will fill the new position of vice president of major projects, overseeing the Cigar Lake mine, Cameco said.
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