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By David Schlain

The Bureau of Mines investigated methods for electrodepositing platinum-group metals from molten cyanide baths. The preparation of thick, protective coatings on molybdenum, Inconel, graphite, stainless steel, copper, and other structural metals were studied, as well as the electroforming of platinum and iridium crucibles. Iridium, rhodium, and ruthenium can be electrodeposited under an inert atmosphere, while platinum and palladium require the presence of air. Electrolytes may be prepared by direct-current electrolysis in NaCN or mixtures of NaCN and KCN using anodes of the particular platinum-group metal. When the concentration of metal increases to about 0.3 or 0.4 percent, the deposits become bright, adherent, and coherent. Current densities may be 10 to 25 ma/cm2, and plating rates are often 0.5 mil/hr. Platinum and palladium baths deteriorate because of the oxidation of cyanide to cyanate and carbonate, and the precipitation of metal. Changes in the platinum cyanide bath are relatively slow. The protection against oxidation afforded by the platinum-group metal coatings is evaluated by testing encapsulated specimens in a thermogravimetric balance. Surface pretreatment and the use of undercoats are discussed.

Jan 1, 1977

By B. Caro Vargas

The Toulon Tunnel project is a key component of the highway corridor on the French Riviera between Marseille and Nice and is a fundamental transportation infrastructure for the region. The first design studies started in the 1960s. The tunnel project is comprised of two separate tunnels: south and north. The north tunnel was built between 1992 and 2002 after 10 years of difficult construction. On March 15, 1996, for example, a collapse of the tunnel in the Marchand area generated a sinkhole in the city center, causing a 20-month delay. The south tunnel alignment runs parallel to the north tunnel below Toulon?s historical downtown at a depth of 20 to 40 m (65 to 131 ft) with some areas with less than 10 m (32 ft) of cover. The risk management program was studied to be a state of the art program in urban tunneling construction.

Jan 1, 2012

By Kidd, Robert L.

INASMUCH as galena and sphalerite flotation concentrates are being produced that contain over 95 per cent galena or sphalerite, it is not unreasonable to believe that a flotation concentrate assaying at least 80 per cent of native gold can he secured provided the gold is free. As yet, little if any fundamental information has been published concerning the flotation of free gold either alone or in the presence of sulfides. So far, we are unable to make as complete a separation of gold from sulfide minerals by flotation as is possible in, the separation of one sulfide from another by this method. An introductory study of the flotation of several free gold ores has been made in our Utah laboratories. For this study three general types of gold ores were chosen, namely: (1) Quartzite containing 0.26 oz. gold per ton in which no base metals are present; (2) sulfide ore (2.04 oz. Au; 1.31 oz. AO containing pyrite as the only sulfide present and the gold free; and (3) oxidized ore (1.10 oz. Au; 0.70 oz. Ag) from an oxidized zone of the vein from which sulfide ore (No. 2) was taken; little sulfide iron was present.

Jan 1, 1932

By R. C. D. Phillis

The annual mine planning process is one of the most important tactical/operational steps towards achieving strategic goals. These tactical plans are part of a very comprehensive Mineral Resource Management process, with the natural sequel to planning being execution. The execution of an underground hard rock mine plan is a multi-project environment that comprises many development-construction-equipping-stoping single project paths, which are referred to as ?stoping paths?. The uncertainty that typifies execution of projects comes in the form of untimely disruptions to constituent tasks and/or project paths. Annual mining plans also include quantified objectives for occupational health and safety, production, quality, cost, employee morale, environment, and corporate social investment. Such objectives make for a highly complex environment that management must contend with?complex in the sense that all the paths and objectives have interdependent constraints. Furthermore, at the time of this paper, Sections54*and 55**of the MHSA*** put the onus on management to ensure legislative adherence. It stands to reason that planning estimates allow excess capacity?buffers?that cushions the impact of untimely disruptions. This paper concerns the fact that despite all the buffers allowed for, time, scope, and budget creeps impact on mine planning and threaten its successful execution. As a consequence, the paper deals with buffer management, the essence of Critical Chain Project Management (CCPM). Effective buffer management provided strategic (executive level) updates without losing the tactical/operational detail necessary for job card creation, especially where professional skills and experience are in short supply. Indicative bottom-line results showed CCPM to be highly effective.

Jan 1, 2011

By Myles G. Hyams

A mining project is proposed for the state of Pahang, Malaysia. The proposal involves the mining of a sulphidic ore body and initial processing to form a sulphide concentrate which will be transported to a roaster/acid plant for the production of sulphuric acid. An outline is presented on the potential environmental impacts of the project which have been assessed by superimposing project infrastructure and processes on to the physical, biological and social environment during the early design and planning stage of the project. The potential impacts eliminated by engineering design and the techniques employed are presented. However, there are a number of potential impacts that require careful consideration and planning for long term management. These include surface water drainage, waste rock leachate, tailings disposal and the social environment. Environmental management designed to minimise or alleviate these impacts as a result of project implementation concludes the paper.

Jan 1, 1991

By Jürgen Antrekowitsch, Harald Osthof, Stefan Steinlechner

"In the case of feasibility assessments or feasibility studies, an important point of discussion is often how to calculate the capital (CAPEX) and operating expenditure (OPEX) of a plant. Generally, there is also the request to know how the CAPEX varies when the size of the plant is increased. Nowadays, many databases give an indication of specific equipment costs in relation to the production rate. These data are based on cost information from equipment suppliers and have to be continuously updated by the owner of the database. The approach presented here is a model which allows sizing of process equipment, for example a leach tank, based on process data in combination with the calculation of mechanical properties. Furthermore, it calculates the CAPEX based on construction material cost and adequate machining surcharges. Thus, a single cost model for a leach tank is adequate for both copper and other hydrometallurgical plants and stays valid with changing construction material prices. To summarize, the advantage of this model is the more versatile approach and thus the flexibility due to the inclusion of design aspects, process and mechanical engineering aspects and an updatable database. The database, which is in regard to material cost and is the basis for the cost estimation, is easily updatable from commonly accessible data. This model thus approaches the procedures of an engineering company when designing a plant and executing a cost calculation. INTRODUCTION Hydrometallurgy nowadays plays an important role in processing of primary and secondary resources. In copper metallurgy, hydrometallurgy accounts for roughly 20 % of worldwide primary production, especially in the case of oxide or low copper-containing ores. Zinc smelters changed their method of production from a pyrometallurgical-dominated concept decades ago to mainly hydrometallurgical routes today. Gold production processes using leaching, especially, have a long history without any development which would not be competitive if not based on hydrometallurgical concepts (Pawlek, 1983; Winnacker-Küchler, 2006)."

Jan 1, 2015

By J Guo, K Williams, J Y. Guo, A W. Roberts, M Jones, B Chen

Numerical simulations using the discrete element method (DEM) were carried out to investigate the flow patterns and stress field redistribution at the hopper and feeder interface. The influences of different filling heights, belt speeds and clearances between the hopper bottom and feeder surface on feeder loads were studied. Meanwhile, experiments were conducted by utilising wedged plane-flow hoppers with different configurations and horizontal feeders with various clearances. The simulation results were compared with theoretical values and experimental measurements. In terms of the cases presented in this study, simulation results reveal good agreements with experimental observations regarding the flow pattern. Being similar to the theoretical values, the simulations provide close predictions on vertical feeder loads for steady flow states, but they may show significant overestimations for initial states. Additionally, suggestions are given for relevant simulation parameters based on the comparisons shown in this investigation.CITATION:Guo, J, Roberts, A W, Williams, K, Jones, M, Chen, B and Guo, Y J, 2017. Simulation investigation of flow patterns and feeder loads at hopper/feeder interface, in Proceedings Iron Ore 2017, pp 173–182 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Jul 24, 2017

By G W. Wilson

Rehabilitation of tailings impoundments is one of the most challenging aspects in mine closure, as not only does the potential for producing leachate pose a challenge to the rehabilitation designer, but also other aspects such as stability and settlement must be considered. The water balance of a tailings impoundment is unique in the sense that it usually hosts a pond that in turn causes a phreatic surface in the impoundment. The position of the phreatic surface defines the saturated and unsaturated zones in the impoundment, which of course varies spatially and temporally. Predictive modelling for this hydrologic system becomes difficult, as numerical models capable of analysing the combined saturated/unsaturated zones are not adequately refined to accurately solve the flux boundary problem for infiltration at the surface of the tailings. This paper describes the development of a flux boundary model that enabled accurate modelling of the unsaturated zone in the tailings impoundment at Kidston Gold Mine, Queensland, Australia. The technique made it possible to accurately predict the spatial variation of infiltration to the tailings as a result of the presence of the phreatic table. The conceptual model defines the boundaries for the Kidston tailings dam, based on a generalised cross-section through the dam. Firstly the shape of the top boundary is described as a function of the particle size of the tailings associated with particle segregation that occurs due to the hydraulic placement of tailings. This function was rigorously tested using in situ infiltration tests and laboratory materials testing. Defining the bottom boundary of the section, ie the phreatic level was done by physically monitoring the phreatic level with 42 piezometers strategically located on the tailings dam. Analysis of this data led to the fixing of this bottom boundary through the introduction of a function that mimicked the shape of the phreatic level. The material properties of the surface layer, specifically the saturated permeability that would govern the infiltration/exfiltration rates of moisture through the top boundary layer were defined on the basis of extensive field and laboratory material testing. A function for the saturated permeability was developed on the principles of particle segregation. Finally a procedure is described for the application of the new conceptual model for the evaluation of the spatial infiltration to a tailings surface using the rigorous one dimensional surface flux boundary code SoilCover. The solution of the calculation described above was then used as the top boundary condition in conventional three dimensional saturated/ unsaturated flow codes, and verified against measured seepage rates from the tailings impoundment under drains. It was concluded that the developed spatial flux function was in deed a most rigorous representation of reality. Although the methodology presented here was applied to the Kidston tailings impoundment only, the authors believe that the principles are directly transferable to any tailings impoundment that has a varying phreatic zone thickness due to the presence of a pond. The mathematical equations describing the typical cross-section would be site specific, but the approach and ultimate solution methodology would be directly transferable.

Jan 1, 2003

By Edward A. Metz, R. Larry Grayson, Douglas F. Scott

We describe inconsistencies in disease and illness reporting in U.S. mining, identify under-reporting of disease and illness in U.S. mining, and summarize selected disease and illness in U.S. mining from 1983 through 2001. Methods: We summarized information on mining-related disease and illness data for the years 1983-2001 from the Mining Safety and Health Administration database (MSHA). Results: Discrepancies exist in types of information collected by the Centers for Disease and Control, the National Institute for Occupational Safety and Health, and the Mining Safety and Health Admin¬istration database. Several factors, including a worker's fear of losing his or her job, health insurance, or other job-related benefits contribute to under-reporting of disease and illness information in the US mining industry. Conclusions: Since 1997, both number of workers employed in mining and disease and illness rates have decreased; however, the highest disease and illness rates in mining continue to be coal worker's pneumoconiosis and hearing loss.

By Kr. J. Dedelyanova

Selective flocculation of iron minerals could improve the economics of high intensity magnetic separation as concomitant process. When the minerals are finely disseminated is necessary a finer grinding to be applied which generates a lot of slimes. The HIMS is not enough efficient for particles below 20 microns ? territory where the selective flocculation is already well known industrial practice, so the combination of these two methods of beneficiation can bring a higher grade at high recovery to be achieved. The dynamics and selectivity of the precipitation process is studied in batch tests with flocculant starch and dispersants sodium silicate and sodium hexametaphosphate. The influence of preliminary conditioning with nitrogen acid at pH 2 before flocculation is also investigated. Flowsheet including these two methods is tested and the distribution of iron is shown.

Jan 1, 2014

By AIME AIME

NO FEATURE of the annual meeting is considered more important at Institute headquarters than the assembly of delegates from the various local sections and divisions. There the president of the Institute and other officials may learn at first hand what the members are thinking and doing in every part of the country, and the delegates, in turn, may find that head- quarters is not a group of more or less cold-blooded New Yorkers whose primary function is to send out annual bills for $15. This year, the section and division delegates required three sessions to thresh out the matters of common interest: Monday morning and afternoon and Thursday afternoon. They were also guests of the Institute at the Directors' dinner on Tuesday night, and at the Directors' meeting afterward.

Jan 1, 1932

By R R. Large

"An EXTENDED ABSTRACT is available for download. A full-length paper was not prepared for this presentation. The formation of orogenic gold deposits is commonly a two-stage process. The first stage involves preconcentration of gold in a suitable source rock, such as carbonaceous black shales, felsic volcaniclastics or komatiitic volcanics. The second stage involves the release of gold (commonly with arsenic and/or tellurium) from the source rocks during metamorphism or magmatic intrusive events, accompanied by the replacement of source rock pyrite by pyrrhotite. Recent research suggests that synsedimentary gold trapped in the structure of diagenetic arsenian pyrite in reduced carbonaceous facies of continental margin sedimentary basins is an ideal source of gold for many orogenic and Carlin-style gold deposits. The conversion of diagenetic arsenian pyrite to pyrrhotite during basin closure and greenschist facies metamorphism is the key process releasing gold and arsenic to the metamorphic fluid, with metal deposition in structural trap sites to form the deposits.CITATION:Large, R R, 2015. Orogenic gold deposits – a two-stage process of gold enrichment, in Proceedings PACRIM 2015 Congress, pp 335–340 (The Australasian Institute of Mining and Metallurgy: Melbourne)."

Mar 18, 2015

By Robert J. Timko, Charles D. Taylor, Edward D. Thimons, Tom Mal

A test system was developed for measuring airflow in the National Institute for Occupational Safety and Health (NIOSH) ventilation gallery using a three-axis ultrasonic anemometer. The gallery was used to simulate face airflow conditions in underground mines having a blowing curtain. Airflow data collected at multiple sampling locations between the face and the end of the curtain were used to draw airflow profiles for different curtain setback distances, intake flow quantities and entry widths. In addition, methane was released at the face, measured at the sampling locations, and displayed as methane distribution in the area between the curtain and the face. Entry geometry had a significant effect on airflow patterns, and the flow patterns affected the distribution of methane in the entry. Flow measured at and parallel to the face was a good predictor of methane dilution and removal within two feet of the face.

By Robert E. Mazurak

Mines and plants for sale, downsizing, bankruptcies, consolidation, slab imports, minimill growth displacing traditional integrated steel-making. These are some issues for North American iron ore and integrated steel producers. But the blast furnace still remains the workhorse of the ironmaking industry. And direct reduction and other alternate ironmaking technologies have yet to make any serious inroads in North America. How come? This article addresses the current state of primary ironmaking in the changing North American steel industry, the direct reduction market and new technologies under development that may hold some promise.

Jan 1, 2003

By S. M. Spottiswoode, Linzer. L. M.

We report on further progress in improving seismic locations by using the so-called double-difference method (Spottiswoode and Milev, 1998 and Waldhauser et al., 1999). Double-differences are obtained either using picked arrival times or various measures of time differences obtained from waveform pairs. The double-difference method provides for much improved relative locations by reducing the effect of the errors in the wave velocity of ray paths between each event and each geophone. Further improvements are obtained by using known locations, such as blasts. One of the difficult problems that we have overcome is that of finding the best “weights” for the time corrections. Experience obtained in relative moment tensor inversions by Andersen (2001) suggests that use of median corrections is both more stable and more accurate, even while the locations of the individual events is based on weighted least-squares minimization. A hybrid location program with known reference events has been developed. Tests on a synthetic data set gave relative locations that were much less widely spread than the absolute locations. The use of known event coordinates (blasts) moved the relative locations back towards the real locations. These results are confirmed in preliminary analysis of data from a mine. The absolute locations are adjusted using blast events restricted to the line of tunnel development. Inter-event distances are distributed in a power-law fashion that suggests that the relative location accuracies are improved by a factor of three or more. Nous rendons compte des progrès faits dans l’amélioration des locations de séismes en utilisant la méthode appelée de double- différence (Spottiswoode and Milev, 1998 et Waldhauser et al., 1999). On obtient les double-différences soit en utilisant des temps d’arrivée choisis soit des mesures variées de différences de temps obtenues de doublets de forme d’onde. La méthode de double-différence fournit des locations relatives très améliorées en réduisant l’effet des erreurs dans la vitesse d’onde des trajectoires de rayon entre chaque évènement et chaque géophone. D’autres améliorations sont obtenues en utilisant des locations connues, telles que les coups de mine. Un des problèmes difficiles que nous avons surmontés est celui de trouver les meilleurs coefficients de pondération pour les corrections de temps. L’expérience obtenue dans des inversions de phases tensorielles relatives par Andersen (2001) suggère que l’utilisation de corrections médianes est à la fois plus stable et plus exacte, même lorsque la location des évènements individuels est basée sur minimisation pondérée de moindres carrés. Nous avons développé un programme hybride de location avec des évènements connus pour référence. Des tests sur des données artificielles ont donné des locations relatives qui étaient beaucoup moins étendues que les locations absolues. L’utilisation de coordonnées d’évènements connus (coups de mine) a ramené les locations relatives vers les locations réelles. L’analyse préliminaire des données d’une mine a confirmé ces résultats. Les locations absolues sont ajustées en utilisant des évènements de coup de mine restreints à la ligne du développement du tunnel. Les distances entre chaque évènement sont distribuées comme par loi exponentielle ce qui suggère que les degrés d’exactitude des locations relatives sont améliorés par un facteur de trois ou plus. Wir berichten über einen weiteren Fortschritt, die seismische Positionen unter Verwendung der zu sogenannten Doppel-Unterschied-Methode (Spottiswoode und Milev, 1998 und Waldhauser et al.,1999) zu verbessern. Doppel-Unterschiede werden entweder mit ausgewählten Ankunftszeiten oder verschiedenen Messungen von Zeitunterschieden erreicht, die von den Wellenformpaaren erhalten werden. Die Doppel-Unterschied-Methode liefert viel verbesserte relative Positionen unter Verringerung der Auswirkung von Fehlern in der Wellengeschwindigkeit von Strahlengängen zwischen jedem Fall und jedem Geophon. Weitere Verbesserungen werden erreicht, indem man bekannte Positionen, wie Sprengungen verwendet. Eines der schwierigen Probleme, die wir überwunden haben, ist jenes des Findens der besten "Gewichte" für die Zeitkorrekturen. Die Erfahrung, die in den relativen Momentspannerumkehrungen von Andersen (2001) gewonnen werden bietet den Schluß an, daß der Gebrauch von mittleren Korrekturen beständiger und genauer ist, sogar wenn die Positionen der einzelnen Fälle auf der bewerteten Reduzierung der Methode der kleinsten Quadrate basiert. Ein hybrides Positionsprogramm mit bekannten Bezugsfällen ist entwickelt worden. Tests auf einem synthetischen Dataset gaben relative Positionen, die viel weniger weit gestreut waren als die absoluten Positionen. Der Gebrauch von bekannten Fallkoordinaten (Sprengungen) schob die

Jan 1, 2003

By Mark A. Krall, Robert L. Geddes, James C. Frost

Introduction The Conda Partnership's Dry Valley phosphate mine is a thinly bedded, multiple seam open-pit mining operation where selective mining techniques are used to recover phosphatic shales. The mining methods used are truck/shovel and scraper/dozer operations. Ore is shipped 32 km (20 miles) by rail to a beneficiation facility. The ore is upgraded by washing and calcining. The mine and beneficiation complexes are owned by the Conda partnership. It is a joint venture between Beker Industries Corp., of Greenwich, CT, and Western Co-Operative Fertilizers (US) Inc., of Alberta, Canada. The Partnership operates as a separate entity of the two partners. The Dry Valley mine is located 48 km (30 miles) northeast of Soda Springs in Caribou County in southeastern Idaho. The mine is situated on the Caribou National Forest. Mining operations take place between 2 and 2.4 km (6400 and 7900 ft) in elevation. It is accessible partly by 32 km (20 miles) of paved roads and 16 km (10 miles) of dirt roads. The winters are long and severe, and the summers are short and mild. This article describes the history, geology, exploration, mining, and reclamation that makes this mine Idaho's largest producing mine and the western US' leading phosphate producer. History and production In the mid-1950s, Western Fertilizers of Salt Lake City, UT, drove an exploratory drift in Maybe Canyon. A large bulk sample of phosphatic shales was analyzed for phosphate content and processing characteristics. No large scale mining or processing operations were undertaken. In the late 1950s, the Dry Valley property was sold to Central Farmers of Chicago, IL. No major operations took place. In 1964, Central Farmers sold the property to El Paso Products Co. of Odessa, TX. El Paso Products supervised the mining operations of Wells Cargo Mining Co. from 1965 through 1967. During this time, El Paso Products built a beneficiation facility and a fertilizer complex in Conda. A 32-km (20-mile) railroad was also constructed from the mine to this facility. From 1968 through 1972, the mine was shut down due to a depressed fertilizer market. In 1972, El Paso products sold its ore reserves, beneficiation plant, and fertilizer complex to Beker Industries Corp. In 1979, Beker Industries sold 50% of its ore reserves and 50% of its beneficiation plant to Western Co-Operative Fertilizers (US) Inc., of Alberta Canada, forming the Conda Partnership. It has operated the mine and beneficiation plant since January 1979. From the mid-1950s to the mid-1960s, no substantial production took place. From 1965 to 1967, El Paso Products stripped 3 Mm3 (4 million cu yd) and mined 2.3 Mt (2.5 million st). From 1972 through 1983, 50 Mm3 (66 million cu yd) were stripped and 18 Mt (20 mil¬lion st) were mined. Geology The Wells Formation forms high ridges and hillsides in the Dry Valley area. It is best exposed along the west face of Dry Ridge. It forms the imposing wall on the east side of Dry Valley. The formation is divided into two members. The lower member, about 213 m (700 ft) thick, is dominantly thin to medium-bedded limestone and silty limestone. It contains nodules and stringers of chert and minor sandstone. The upper member is composed principally of thick-bedded to massive cross-bedded, light-gray to orange-yellow, fine grained sandstone. There is some interbedded brown to light-gray limestone. This member varies from 369 to 457 m (1300 to 1500 ft). Recent investigations indicate that the upper Wells is of Permian age. Under some conditions, the Wells may be water-bearing. Otherwise, it has no apparent economic significance. Grandeur Member (Park City Formation) Overlying the Wells Formation is a distinctive light-gray to white dolomitic fossiliferous limestone. This unit has been identified by the US Geological Survey (USGS) as the Grandeur Tongue Member of the Park City Formation. This member is sometimes absent due to its contact with the Meade Peak Member of the Phosphoria Formation. It is easily detectable by its color, hardness, and fetid odor. Phosphoria Formation The Phosphoria Formation of Permian age was named from Phosphoria Gulch, Bear Lake County. The formation has been studied extensively and developed for its economically valuable phosphate reserves.

Jan 11, 1985

By M. K. McCarter

Previous investigations suggest the possibility of determining shear strength of geologic materials by measuring the force necessary to rupture the web between two closely-spaced, parallel holes using a borehole jack. Current research using finite element modeling and laboratory testing of intact rock indicates that web failure initiates by tensile fracturing induced by a complex stress field. Based on these results, a theoretical justification for relating web strength with shear strength appears unlikely for holes of equal diameter spaced two diameters apart. Empirical results, however, show a strong correlation between average web strength and average unconfined compressive strength for some rock materials under laboratory conditions. A good correlation also exists between residual web strength and the residual angle of friction under the same conditions. This research project involves the construction and field testing of a large borehole jack. The jack is designed to operate within a conventional 12-1/4 inch rotary blasthole common to open pit mining. The system is capable of exerting approximately 800,000 pounds on curved platen measuring roughly 4x24 inches. Field tests indicate that the system will operate in a mining environment, and preliminary results suggest the possibility of using the force-displacement data generated by the jack to rank the competency of material within a mine bench.

Jan 1, 1982

By R. R. Tatiya

The selection of a mining method for a particular deposit must be based on certain technical and economic criteria. This can be interpreted as maximizing extraction and productivity while maintaining safe working conditions and minimum costs. The methodology developed here examines some of these aspects. The proposed methodology was tested on copper deposits that could be mined by underground stoping methods such as sublevel stoping, cut-and-fill stoping and their variants. In general, it provides a practical approach to both method selection and optimum stope design for base-metal deposits.

Jan 1, 1998

By G. W. R. Kuzyk

The Underground Research Laboratory (URL) , a major geotechnical research facility, is currently being developed by Atomic Energy of Canada Limited (AECL) , 120 km northeast of Winnipeg, Manitoba. The URL is part of the Canadian Nuclear Fuel Waste Management Program, which is assessing the concept of nuclear fuel waste disposal in a vault deep in stable plutonic rock of the Canadian Shield (Simmons, 1986). Comprehensive geotechnical research and development activities are being carried out in conjunction with excavation? and construction of the underground facilities.

Jan 1, 1989

By Wilfred P. Schmoe

Introduction An integrated oil company has two options in approaching strategic planning. It has to decide whether it is in business for the long-term. I state this in all seriousness. Those who help manage public companies have the responsibility of good stewardship of other people's money. We must decide whether continued investment in our basic business will generate a reasonable rate of return. With a world surplus of petroleum production capacity, and continuing downward pressure on prices, this question should be addressed by all oil companies. And a positive answer is not necessarily a foregone conclusion in all cases. The decision should be made based on proven competence in finding and developing petroleum reserves on a cost-competitive basis with other producers, and on a frank analysis of future prospects. This should include a realistic assessment of the projected rate of return on specific investment projects. If a company did not pass these tests, its strategy could take one of four paths. Diversification First, it could diversify. But recent history suggests that oil companies are not good at managing other businesses. Second, it could seek a buyer for its business at the optimum return for its owners. Third, it could sell its assets on a piecemeal basis. And, fourth, it could adopt a longer-range plan of self-liquidation by living off current recoverable reserves. In other words, by not investing in exploration and development, it could maximize short-term profit and pass the money back to shareholders in the form of dividends. The Conoco component of DuPont has a below-average cost of finding petroleum, a good track record of efficient production, and a full plate of projects that pass the test of return-on-investment. In short, Conoco is in business for the long-term. That fact, in itself, determines at least one key element in strategy. This is to extend the life of the petroleum reserve base while at the same time maintaining maximum efficient rates of production to provide a strong cash flow. A company that is able to maintain a strong reserve base will ultimately see the value of those reserves escalate as world oil supplies tighten. Our planners expect this tightening to occur within the next decade as demand grows and production in non-OPEC areas of the world begins to decline. An exploration program tailored to meet the requirements of reserve replacement and current production should have two basic parts. The first is relatively low-risk exploration in proven oil provinces. This is augmented by

Jan 6, 1985