Utilizing a MARC to start-up Muskeg River Mine

The construction and startup of a new mine is a daunting task. To successfully locate, design, build and startup an immense human endeavour like a new mine, takes perseverance, planning, dedication and significant capital. The application of capital requires a thorough evaluation of risk and where that risk is most properly limited to create the risk/return profile. One area of significant capital and thus, significant risk is the selection and maintenance of the very machinery needed to deliver the creation of investor wealth. Albian Sands Energy is the operator of the new Muskeg River Mine located north of Fort McMurray in Alberta?s oilsands. The Muskeg River Mine is owned by a joint venture of three companies: Shell Canada, Chevron Canada Ltd.and Western Oil Sands. The mine is designed to run 400,000 tons per day, 365 days per year. The mine conditions vary from material as hard and of similar consistency to pavement to underfoot conditions as soft as saturated sands. Water cannot be drained below surface conditions, shovel teeth can disappear in less than 24 hours and the primary business is often constructing large civil structures that have little to do with the delivery of ore. The mine starts with the deposit (if it doesn?t exist, nothing else matters), moves into the design, the feasibility study and the approval. The evaluation of risk and the strategies surrounding the control of that risk truly lie after these stages are complete. The strategy and execution stage is where risk is eliminated or accommodated. The point at which the investors money is being spent is the point at which the decisions made cannot be reversed. It is of absolute importance that the execution of the decisions are consistent with the strategy agreed to, lest the investors need to be asked for more money. The key sources of risk identified for the Muskeg River Mine were recruitment of trained and experienced personnel and the delivery of ore to maximize early (<2yr) cash flow. The Muskeg River Mine personnel determined that to minimize risk, personnel would be recruited to operate the mine equipment yet, the requirements for maintaining the equipment would best be held by the manufacturer. The strategy was to obtain the correct equipment for the operation of the mine and leverage the supplier?s expertise to ensure the mine wasn?t training a maintenance organization at the same time as a mining organization. In essence the key strategy for the mine start up and early operation was to leverage the equipment suppliers to maintain and repair the equipment. Albian Sands would maximize the utilization of Maintain And Repair Contract?s.