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By R. J. Balfour, T. L. Papucciyan

"INTRODUCTIONCapital Cost considerations are basic to feasibility in the achievement of success for Mineral Processing Projects as much as or more than in many other industries. Capital cost is an important factor ae it 1R the unit of measurement for process engineering economic decisions. As a result of ever increasing complexity, alternatives of process and remoteness of site, there is an ever increasing emphasis on accurate estimating and the attendant cost control systems in the international market of today for the Mineral Industry where initial plant costs are becoming a more important factor than operating costs. An undervaluation means trouble ahead. An over-cautious assessment may bring an unnecessary abandonment of a project. Consequently, the ultimate cost must be predicted early and accurately and must be controlled to this parameter during the design and construction phases. Cost Est!~ mating is one of a variety of project management tools used to assist in planning and achieving the optimum balance between Quality, Cost and Time, the eternal triangle of evaluation, namely obtaining a project of acceptable quality at minimum cost and on time. In order to attain these established objectives, proper planning, organizing, coordinating, monitoring, adjusting and controlling the design, procurement and construction elements of the project are essential.This project management approach based upon the principle of a Task Force under single management, comprising a complete service organization, requires a substantial number of qualified individuals specialized in their own field and capable of working together as a team to perform their various functions effectively. The Task Force is supported by their chiefs of discipline and performs in accordance with established procedures and standards under the leadership of a Project Manager.General Engineering Company Limited with the backing of the full resources of Surveyer, Nenniger & Chenevert and its total staff of approximately 1,0009 offers the complete project management service to the Mineral Processing Industry of North America and the rest of the world. As mine sites become more remote and difficult of access, the need for an experienced team of specialists who work under the Task Force principle, with well established standards and procedures becomes even more important. Our long history of successful pro1ecta in this field has been our training ground for the fulfillment of this need."

Jan 1, 1972

By Frederick G. Coqueron, Joseph E. Pogue

FOR a number of years, the Department of Petroleum Economics of The Chase National Bank has been conducting a study of the capital employed in the petroleum industry. The technique followed is that of combining and summarizing the available financial and operating data for a group of thirty representative oil companies, doing about two thirds of the domestic business of the entire industry. This paper presents the results of the findings for the year 1943, and supplements the survey, "Sources, Disposition, and Characteristics of the Capital Employed by Thirty Oil Companies During the Nine-Year Period, 1934-1942," presented before the Petroleum Division of the American Institute of Mining and Metallurgical Engineers on Feb. 24, 1944, and also published as a pamphlet by The Chase National Bank.

Jan 1, 1944

By L Blackwell

Strategic mine scheduling is an industry best practice for increasing the long-term value of mining operations and supply chains. The application of optimisation technology such as mixed integer linear programming (MILP) is able to achieve a mathematically optimal result for a given scheduling model. Such a model will typically define the available source material, processing options and desired constraints for accessing and processing the material. Most strategic scheduling models, however, do not include a sufficiently detailed model of capital expenditure options related to capacity expansion.Typical strategic schedule models do not include important capital expenditure features such as capacity decay or expiration (limited lifespan of trucks), precedence relationships over time (rail construction before a new plant or non-linear expansions due to economies of scale) or mutually exclusive option sets (choices of plant size). By not including these features, a strategic mine scheduling model for a capital-sensitive operation is unable to be optimised to deliver maximum value or profitability.This paper presents several results of MILP optimisation using advanced capital expenditure modelling for mining operations and supply chains. Results of the study demonstrate that optimising capital expenditure at the same time as optimising the mining schedule allows for minimisation of capital purchasing, optimal timing for those purchases and optimal scheduling around them. Overall, this results in an increase in net present value.CITATION:Blackwell, L, 2014. Capital expenditure modelling for strategic mine scheduling, in Proceedings Orebody Modelling and Strategic Mine Planning Symposium 2014 , pp 315–322 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Nov 24, 2014

By Christian F. III Baiz

Introduction A new mining agenda is before us. Born of government policies and world economies, the years ahead will show reduced growth. Metals, mining, and most other natural resource industries are inflation dependant and capital intensive. For these, a long period of contraction of outmoded and costly capacity will evolve. In some cases, this will be supplanted by new, lower cost capacity. But this will occur only if the cost of production - including cash operating and debt service costs - comes in at or below current market conditions. The industrial outlook for metals mining can be characterized as bearish. A US bank economist said mining companies planning their five-year forecasts should take current market conditions and straight-line them to the end of the decade. With low growth and low inflation, the real price of metals will remain flat or decline slightly. As a result, capital funding will be problematic. The low-cost producer will succeed. That means only the producer with low cash costs and low principal and interest costs per unit of production, will succeed. Gaining a perspective One must look back 30 years to see the evolution of the capital markets, for metal mine financing. This period can be divided into two economic periods. The 1950s were a time of stable economics. Mining companies earned and reported good profits. They had good corporate creditworthiness. In essence, mining companies of the 1950s were highly self-reliant. When equity infusions were needed, they were easily obtained. Financial management kept long-term debt low. Fixed rate, long-term financing was readily available in the long-term bond markets. The commercial banks of the 1950s were rarely used by the mining industry. When necessary, mining companies went to the banks for short-term financing - the kind that was needed for working capital requirements. Changing rhythms In the old rhythm there was an orderly market. Even into the mid-1960s, 75% of world annual copper production was controlled by eight companies: two in the UK, one in Belgium, and five in the US. During times of poor market demand, these producers would control supplies to the market. They took their losses out of retained earnings. Capital was easily restored during the ensuing good times. The new rhythm called for copper to be an economic means to a political end. Third World copper producers brushed aside the market fundamentals of commodity economics. Yet, the political solutions of these countries - their lack of response to the market - have seldom achieved their original objectives. Each commodity has its own old and new rhythm. Aluminum may have a similar rhythm, coming 10 to 20 years later than copper. By the late 1960s, changes were occurring. Inflation was on the rise. Ore reserve quality was falling. As a result, capital expenditures were necessary to maintain existing output. These costs created an increase in corporate leverage, thus adding to inflation and rising interest rates. Indicators A comparison of the gross national product (GNP) deflator index, consumer price index, and the metal mining deflator index is instructive. (Fig. 1 and Table 1). With 1972 equal to 1, note that the metal mining deflator reached its lowest point in 1967. From that point, the metal mining deflator has accelerated severely for 16 years. Only two minor downturns occurred during the business recessions of the mid-1970s and the early 1980s. In essence, Fig. 1 shows that while GNP has grown modestly, a miner's dollar in 1972 would require $3.48 in 1980. This is an almost 17% compounded growth rate over that eight-year period. Beginning in the late 1960s, for the first time in mine financing, the risk of success shifted from the corporate balance sheet to third parties. Limited-resource financings were taken up by banking syndicates that accepted certain of these risks. The lender needed to be well acquainted with the types of risks to be evaluated. These include resource quality and quantity, construction and completion, capital and operations costs, market risks, force majeure, and political and exchange rate risks. Project financings became the basis whereby mining companies were able to maintain their borrowing capacities. In essence, the lender was willing to share some of the project risk while only receiving lenders' returns on these investments. Over the last two decades, mineral project financings have become highly complex transactions involving multicurrency, multi-

Jan 8, 1985

This paper is directed at the problems flowing from Australia's capital gains tax (CGT) on the disposal of exploration and mining tenements both in Australia and overseas. It will seek to identify the issues and give some idea of the dollar consequences of decisions lacking forethought. The paper should not only be seen in the context of Australian tenements. CGT applies to the disposal of any assets by an Australian resident anywhere in the world. Offshore incorporated companies are not necessarily free from CGT risk where it can be shown that control management and control of the relevant company is in Australia. Also the disposal by non residents of Australian tenements are potentially caught by CGT. Some will ask what has taxation got to do with a valuer who merely determines the value of assets. These days no determination can be blind to the consequences. Whether the consequences can encourage a movement in value is another thing dependent upon the circumstances; but? A role of an experienced taxation consultant is to point out parameters within which associated professionals can work. The parameters will vary from case to case, but these when clearly indicated may be of help to persons such as valuers. When one comes down to it real estate salesmen are never wrong. They have a feel for the market and almost through self fulfilling prophesies achieve sales at their guestimates. Whether they could have achieved higher considerations become virtually academic in the process. Of course I am not suggesting that tenement valuers can be compared to real estate salesmen, or am I? What is the value of a tenement? Is it the DCF/NPV type of generated value based on a large number of variable factors (ie what one may call the fundamental value)? Or is it what another may pay to purchase that tenement if it were on the market at an instant point in time? How big is the market, the quality of the bidders, the size of their purses, the needs of the buyer for comfortable fit, the premiums for foreigners, the standard of the marketing, the industry intelligence level of the bidders, the obligation to farm/sell down? The list goes on endlessly. One question must be.asked-"Is a range of values acceptable for tax purposes". ie Would any tax consultant ever provide a valuation to the Australian Taxation Office that indicates three or more possible values ie

Jan 1, 1987

By Sergio G. Jarpa

A mining project is, at one and the same time, capital intensive and highly risky. Besides, because of its usual long projected life, the operating cost is more difficult to predict and offtentimes exceed, during the life of the project, the first investment manifold. The objective of this study was to evaluate the applicability of cost-capacity relationships as used in the chemical industry to mining operations and, when necessary, to develop new ones. With the aid of a computer library program available at the Computation Center of the Pennsylvania State University, the total investment in mining equipment was determined to vary exponentially with production capacity, and the scaling exponents for each class of equipment, i.e., drills, shovels, trucks and earth moving equipment, as well as for the total operation were calculated. Since the scaling exponent for the whole mining operation happened to be equal to 0.94, it was concluded that more significant economies of scale are achievable in processing plants than in mining operations. From the operating cost point of view, unit material cost was found to decrease more rapidly than unit labor for the same increases in production capacity. The analysis of cost centers revealed that drilling and blasting, which are materials-intensive operational stages, were the most favorable in achieving significant economies of scale. Hauling unit cost, on the other hand, decreased only slightly when production capacity increased.

Jan 1, 1977

By Jan H. Hommen

TRENDS IN MINE FINANCE Reviewing historical trends may help in dealing with future funding strategies. The first trend is the increase in the use of debt to fund corporate America. Surprisingly, when comparing that with other corporates in the global marketplace, the U.S. does not look too poorly. Japanese, in particular, but also German companies, are much more leveraged than their U.S. counterparts. Note that in Japan and Germany the government and the consumer have shown substantial restraints when it comes to credit. Not so in the U.S. where the savings rate (4%) is much lower than that in Japan (20%) and in Germany (14%). As a result, the cost of leverage is substantially lower in Japan and in Germany than in the U.S. Lower debt costs in these countries allows one to obtain more of it for the same price. The close relationships between financial institutions, corporations and governments in Japan and Germany also make the risk of leverage more bearable and understandable. Also note that interest rate volatility in these countries is more subdued. The investor base in common stock is also changing. Private pension funds have been net sellers of equities during the last few years while public pension funds have been net buyers. Individuals are basically out of the market. It is estimated that over $330 billion of equity was retired in the U.S. through 1986-1988. The reasons are well known: restructurings, buy-backs, takeovers, mergers, and buy-outs. This de-equitization is likely to continue as the cost of equity capital is higher than the cost of debt capital, even on a before-tax basis. Because there has been no market for equity since October 19, 1987, junk bonds have replaced equity capital in the corporate finance structure. The non-investor-grade borrower has access to the public markets through high-yielding debt securities that often look like senior equity. Deregulation has also provided 24-hour markets; securitization can now liquify assets that before were rusting on balance sheets; information processing and communication tools give facts that are instantaneously available, creating the need for products to cover risk and exposures unknown before the start of the information and technology explosion. Thus we now have swaps, options, futures, options on futures, caps, as well as program trading, portfolio insurance, index funds, etc. Globalization will be unstoppable. Today's environment demands it. Corporations are now global competitors, even though they may have never shipped a product off-shore. Boundaries are disappearing and impediments have been removed. Stocks can be issued in a global offering with distribution in all major financial centers of the world. The high leverage of Japanese companies has made common stocks very scarce, which with the high savings rate, makes equity capital inexpensive in Japan. If markets were perfect everyone would issue stock in Tokyo and buy it back in New York. This would certainly stop the bleeding on the balance of payments. With the deficit balance of payments in America, it is no surprise that the cost of money is expensive here. The risk-return relationship on U.S. equity is not favorable enough to appeal to Japanese equity investors. The Tokyo-market, helped by a stronger yen, surpassed New York as the most important equity market in the world. The question is, will the Tokyo market hold up when Japanese domestic consumption increases at the expense of savings? In the U.S. debt markets, the plain vanilla debenture is making a comeback after a period of absence. Commercial paper has replaced short term bank borrowings for working capital funding by larger corporations. The banks have made an interesting comeback with loan sale programs that will continue to attract borrowers. There will be a continuing

Jan 1, 1990

The optimisation of capital in the total planning context has broadly two components: ò maximising the efficient utilisation of capital against competing capital demands; and ò maximising the efficiency with which the industry's capital requirements are sourced. This paper focuses on the latter of these two concepts, as I wish to highlight that within the coal industry the inefficient sourcing of capital has resulted in the inefficient utilisation of capital. In discussing the optimisation of capital within the coal industry I would like to outline three fundamental issues which currently impact the industry and its application of capital: Initially, from the perspective of an independent investor, the perceived risk associated with investing in a volatile industry cycle has not permitted appropriate funding structures to be created thus leading to an inefficient utilisation of capital. Secondly, investors seeking out a windfall gain have established a practice of trading in the assets rather than encouraging recapitalisation. And lastly the mismatch of supply and demand leading to the establishment of new projects which include a percentage of offshore investment has fostered an environment of lower returns and subsequently a dilution of capital.

Jan 1, 1991

By Thomas R

The successful `marriage' between a company seeking to raise funds to develop a project and their financiers calls for a strong mutual understanding of each other's needs. For a company attempting to raise funding, the alternative methods are ever expanding. The optimum method will vary depending on the financial position, risk/reward outlook of the company and the strength of the project for which development capital is being sought. It is likely that small mining companies will need to raise equity funds for advancing projects to the development stage. At that time, they will probably still require a reasonable level of shareholder equity to meet the requirements of banks and other parties to cover potential cost over-runs on the project and feasibility costs. Larger companies, however, are likely to find it much easier and cheaper to raise debt from banks. When evaluating companies and projects for funding, banks will pay particular attention to the quality and experience of management in developing similar projects and it may be necessary for some companies to retain the services of outside consultants. Before a project needs funding, companies should meet with potential financiers to develop relationships to select and ensure a smooth transaction to funding in the future.

Jan 1, 1997

By Joseph E. Pogue

FOR a number of years the petroleum department of The Chase National Bank has been making a continuing study of the financial aspects of thirty oil companies. (See Pogue and Coqueron, "Financial Analysis of Thirty Oil Companies," pamphlet, The Chase National Bank, November 1945, for data covering eleven years, 1934-1944, and the list of the companies making up the group. See also "Capital Employed in the Petroleum Industry," by the same authors, M&M, November 1944.1 This group represents a large sample of theAmerican petroleum industry, covering about two thirds of the business. Certain aspects of this study concern the capital employed in crude oil production, the main features of which arc presented in this paper.

Jan 1, 1946

By G. S. Barry

INVESTIGATIONS to date have shown that, should there be the need or the appropriate economic stimulus, Canada's mineral resources are sufficiently extensive to allow considerable expansion of its non-fuel mineral industry, during the remaining part of this century and possibly beyond (1, 2). The availability of sufficient capital will be one of the critical factors which will determine whether this potential will be fulfilled. The following analysis centers on the capital requirements of the Canadian non-fuel mineral industry under one set of basic assumptions of capacity growth, cost of new and replacement capacity, rates of depletion and depreciation of mines and plant, and the cost of exploration and infrastructure. Mindful of the fact that exploration and development will not thrive in Canada unless a very positive approach is taken, the writers make no apologies for being "optimistic" about long-term production prospects. Furthermore, in the event that world demand does escalate as anticipated and the forecast realistically attainable levels of Canadian production are not reached, then Canada will not have reaped the full range of economic benefits available, and opportunities will have been lost. Projections for Canadian production between 1976 and 2000 are essentially based on the forecast published in the 1974 paper, "Towards a Mineral Policy for Canada - Opportunities for Choice (3), with some updating on the basis of recent developments.

Jan 1, 1977

By Simon D. Strauss

INTRODUCTION The changes in ownership, management, and operation of the non-fuel minerals industry since the Second World War have been dramatic. World-leading enterprises have lost their identity; host countries have taken over operations from multi-national firms; marketing practices have been drastically altered - and yet the world industry is supplying minerals on a scale far greater than had been anticipated in projections made at mid-century. The world's known mineral resources have been enormously expanded, despite the doom sayers who for decades have been predicting that depletion of non-renewable resources would impose limits to growth. PALEY REPORT One can set the stage by reviewing how the minerals outlook was regarded in a thoughtful and comprehensive analysis made in the years 1950 and 1951. During the War years, President Harry Truman of the United States had come to appreciate the decisive role played by minerals resources through his chairmanship as a U.S Senator of a committee that investigated the procurement and allocation of natural resources. In 1950, in the Cold War era that resulted in actual military conflict in Korea, he appointed a prestigious five-man commission to study the problems of Materials Policy over the following quarter century. Their findings, published in five impressive volumes in early 1952, became known as the Paley report. The text was prepared by expert scientists and economists who spent 18 months assembling statistics, making projections of future demand, and interviewing leaders in industry, academia, and government. [ ] The Commission had correctly foreseen that aluminum would replace copper as the largest volume non-ferrous metal, but it had fallen short of reality by a wide margin indeed for all three materials. Even though the Commission's expectations for growth proved to be extremely understated, it had concluded its report with grave foreboding about the effect of its estimates of demand in relation to supply, as follows: "Consumption of almost all materials is expanding at compound rates and is thus pressing harder and harder against resources which, whatever else they may be doing, are not similarly expanding. This materials problem is thus not the kind of 'shortage' problem, local and transient, which in the past has found its solution in price changes which have brought supply and demand back into balance. The terms of the materials problem we face today are larger and more pervasive." With respect to some minerals, the Paley Report expressed scepticism that, in fact, supplies would be forthcoming regardless of price. Because the Paley demand forecasts understated the actual growth in demand for virtually every mineral, one could logically have expected frequent and protracted shortages in the years since 1950.

Jan 1, 1985

By William P. Blacutt

This paper describes the strategy, the struggles, and the obstacles encountered during the last two years in the ongoing process to capitalize Vinto. The effort involves the offering of a vertically integrated business package composed of the tin and antimony smelters along with the two principal tin mines of the country. Capitalization: Bolivia's Innovative Approach for Privatization, the Vinto Case provides a summary of hard-earned lessons. These experiences can be success- fully implemented in other nations committed to transforming their state natural resource sector.

Jan 1, 1998

By Brian R. Zuckerman

The Capitol Area East End Complex is currently being constructed under contract with the State of California Department of General Services on two sites adjacent to the grounds of the California State Capitol Building in downtown Sacramento. The complex will consolidate the headquarters of the Departments of Health Services and Education, which currently occupy several facilities located throughout Sacramento. When completed in 2003, the complex will be the largest civic office project in California history, with approximately 1.5 million square feet of office space and housing nearly 6,300 state workers. The total project is being constructed on five separate blocks in downtown Sacramento, Blocks 171 through 174 and 225. Separate design/build contracts were executed for the construction on Blocks 171 through 174 and the construction on Block 225. The scope of this paper is limited to construction on Blocks 171 through 174, which comprise a square, two blocks on a side, bounded by 15th, 17th, L, and N streets, located immediately to the east of Capitol Park and the State Capitol Building, as pictured in the image shown below.

Jan 1, 2002

By Eric S. Lindquist, Charles A. Luxford

The State of Texas recently adopted a master plan to expand the existing Capitol Complex in Austin. Phase 1 of this expansion will add two new State office buildings and five levels of underground parking to the existing Complex. Additionally, a landscaped pedestrian mall will be built atop a portion of the underground parking to enhance the area as a cultural destination. Capitol Complex website: https://www.tfc-ccp.org/ Brierley Associates was selected to provide detailed design of the entire Phase 1 earth retention system for an approximately 40-65 ft (12-20 m) deep, 500,000+ yd3 (380,000+ m3) excavation through overburden soils and limestone bedrock. To facilitate overall project coordination, all design packages were required to develop Revit models, including the retention system package. With the project located in an urban setting, this 3D model also facilitated coordination of the retention system with adjacent major structures and utilities. The retention system is a combination of soil nails, soldier piling with tiebacks and rock anchors with a shotcrete facing as a substrate for the below-grade blindside waterproofing system. Due to the substantial scope of excavation, a significant number of utilities had to be routed on a temporary span over the excavation. Brierley Associates designed this utility support structure, which required extensive coordination with the excavation support and existing utilities located directly underneath the structure’s foundations. Preconstruction geotechnical work identified a fault zone that might be encountered within the excavation; however, the fault feature was found to have a more adverse location and orientation than originally anticipated. This observation required that a portion of the temporary anchors be converted to higher-capacity, corrosion-protected permanent anchors.

By M. Maleki

Variogram analysis and kriging lack robustness in the presence of outliers and data with long-tailed distributions, which often arises when estimating grades in precious metal deposits. The capping technique, consisting of truncating the data to some top-cut grade, is widely used in order to mitigate the influence of the values in the upper tail of the distribution. However, this procedure omits part of the grade variability and is likely to provoke a bias in the estimates. To avoid these issues, a recently proposed approach is to decompose the grade of interest into three components (the truncated grade, a weighted indicator above the top-cut grade, and a zero-mean residual) and jointly estimate the truncated grade and the indicator by cokriging. This approach is attractive as it provides unbiased grade estimates, allows choosing the ?optimal? top-cut value, and essentially works with truncated and indicator data, thus avoiding the use of outlying values for calculating sample variograms and performing spatial interpolation. This work presents an application of this approach to a disseminated gold deposit that has been identified through exploration drilling. The effect of using an indicator covariate is assessed through leave-one-out cross-validation, by comparing the grade estimates with the true grades and with the grade estimates obtained with the conventional capping approach, which considers only the truncated grade as the variable of interest. As a result, cokriging the truncated grade and the indicator above top-cut grade outperforms the conventional capping approach, yielding significantly more accurate estimates. A few complementary guidelines are provided for validating the model hypotheses and for the implementation of cokriging.

Jan 1, 2014

By Rodrigo A. Marinho

Erratic high grade values are as common in Nature as they are a source of problems for resource estimators. In some highly erratic metal deposits, less than 2% of the drilling samples can represent more than 10% of the total metal in the blocks and they are associated with a high risk level. There is a risk of local overestimation but also of global overestimation, with the high grades being projected over too large a volume. Capping or restriction of these outliers control is being widely used in the industry and commonly applied in resource estimation for the last three decades. The primary purpose of this paper is to present and describe the most applied methodologies for restricting the extrapolation of high grade samples and discuss the results based on a theoretical simulated model. Additionally, this paper demonstrates the economical impact associated with the high-grade and the project risk profile associated with each method.

Oct 1, 2009

In the Broken Hill South mine tile practice of issuing to the miner a quantity of fuse and a box of caps from which he made up the "rods" required for a particular blast, has been abandoned. Instead, capping stations have been established, and the miner can now obtain, from the magazines, fuses cut to accurate lengths with the detonators attached.Various types of fuse-cutting machines and crimping devices are available, but only those used by the Broken Hill South Mine Ltd. are described in this paper.The fuse-cutting machine, designed by the engineering staff, is an electrically driven unit fitted with a gear box for the purpose of adjusting the rate at which the fuse is fed to the cutting device, thereby enabling fuses of various lengths to be accurately severed from the main coil of fuse.The machine in question is designed to cut 4, 6, and 8-ft. fuses, but no difficulty should be experienced in designing a machine to cut fuses to any required lengths.

Jan 1, 1932

By Anthony F. G. Lucas

BORN on Sept. 9, 1855, in the city of Spalato, Dalmatia. Austria, Antonio Francisco Luchich was the son of Francis Stephen Luchich, a prosperous shipbuilder and ship-owner of Lesina. His mother, Johanna Giovanizio, was known to the people of Trieste as a woman of unusual learning and piety. After receiving his high school training in Trieste, Antonio Luchich entered the Polytechnic Institute at Gratz in the year 1875, graduating two years later as an engineer. He then entered the Naval Academy of Fiume and Pola as a Midshipman, receiving his commission as a Lieutenant in 1878. In 1879, then 24, Antonio Luchich obtained a leave of absence from the Austrian Navy and came to Saginaw, Mich., to visit an uncle. He remained in this country and on May 4. 1885 at Norfolk, Va.. he became Anthony Francis Lucas. an American citizen.

Jan 1, 1945

By Dale E. Walker

The Captain mine came into being under the following circumstances: 1) Commonwealth Edison had need for fuel for the generation of electricity in their Chicago service area. 2) Southwestern Illinois Coal Corp. had an ample supply of coal in the Illinois No. 6 and No. 5 seams. 3) The Gulf, Mobile & Ohio R.R. had a one-line transportation system with the capability of transporting coal from the Captain mine to Commonwealth Edison. These fortuitous conditions permitted an effective three-way partner- ship to develop. Commonwealth Edison had built a new generating station at Joliet, Ill., across the Illinois River from the existing station, to supplement their power-generating capacity for the Chicago area (Fig. 1). The annual requirement of the Joliet station is approximately 4.5 million tons of coal. From large reserves of coal in the No. 6 and No. 5 seams, Southwestern Illinois Coal Corp. contracted to supply Commonwealth Edison with approximately 6 million tons annually from its Captain mine. The logical carrier was Gulf, Mobile & Ohio, whose mainline travels through this coal field and also passes by the Joliet station on its way to Chicago. This railroad has been moving Southwestern's coal from the Streamline mine for more than 30 years. The basic ingredients of timing, scheduling, moving, and handling were adopted by the three parties, the precise details being worked out jointly. To do this, each group had to know its requirements exactly. The initial schedule was drawn up and tentatively approved, with each party taking a hard look at its own requirements and commitments to make certain that the schedule could be met on a normal daily basis. With only minor changes, the final schedule was adopted, each participant feeling that it had a sufficient factor of safety to maintain steady operation. Each party agreed to help the other in time of emergency. When a delay occurs in any part of the operation, the other

Jan 1, 1969