Since 1915, the Northern Miner weekly newspaper has chronicled Canada’s globally significant mining sector.
Walking through the Toronto offices of Selco, the minerals division o f BP Canada Inc., one gets a nagging suspicion that many eyes are following you. On closer examination, one’s suspicions are proved correct for most of the offices are walled in glass. The glass is a physical manifestation of a management philosophy based on open communication — and no secrets. A philosophy espoused by Patrick C. MacCulloch, vice-president of mining and minerals at BP and head of Selco.
It’s also no secret that under his leadership, Selco has quietly made capital project commitments during the last two years exceeding $250 million — project commitments which will propel Selco into the realm of a major precious and base metals producer during the next decade.
For this reason, the publisher and editorial staff of The Northern Miner have chosen Patrick C. MacCulloch as The Northern Miner’s Mining Man of the Year for 1986.
During the present period of depressed base metal prices, Selco emba rked in 1985 on a $125-million expansion program at its Selbaie copper-zinc mine 60 km northwest of Joutel, Que. It was an expansion which raised the collective eyebrows of the Canadian mining community. In fact, The Northern Miner Magazine questioned in May “At first you have to wonder if it isn’t all a big mistake. A base metals mine at today’s prices?”
Mr. MacCulloch is not a man prone to making big mistakes. During an interview in his office, the 58-year old mining executive outlined the strategy at Selbaie which BP hopes will enable the operation to become a moneymaker. “At Selbaie, we substantially increased the milling rate (from 1,500 tonnes to 6,500 tonnes per day) at a low incremental capital cost.” With two mines in operation, the B zone an underground operation and the A-1 an open pit, the project warranted a hydro line. The power line will result in a savings of 4 cents per lb of copper. The lean operation, which generated an operating profit of $6 million in 1985, is expected to make a small profit in 1986.
Added to the Selbaie project, is the new Hope Brook gold mine being built at a cost of $150 million near Newfoundland’s southern coast. Scheduled to start operating in 1987, the big mine will eventually pour 126,000 oz of gold per year — enough to rank it as Canada’s sixth largest gold mine. A boon for Selco, the mine is also a blessing for the province of Newfoundland with its perennial record unemployment.
Both projects, Mr. MacCulloch states, were subject to the rigorous technical parameters established by BP International. “The BP Group has a view of future metal prices and exchange rates. Any project has to fly on the basis of these parameters,” he explains. Showing his true mining colors, however, the Selco executive notes that “I personally do not believe in price forecasts — we look at production costs.”
Mr. MacCulloch notes that at both operations, he expects to see production costs in at least the lowest quartile. “That’s a very strong personal philosophy of mine.”
It’s a philosophy bred of more than 30 years with Selection Trust, the British mining house which for years operated around the globe searching for minerals. Born in England, Mr MacCulloch entered the military in 1947. “I was a peacetime soldier. That’s the best kind of soldier to be,” he adds with a wry chuckle. Following what he adds was a most satisfying military career, he joined Selection Trust while attending the London School of Economics at night.
In 1952, the young MacCulloch was sent to Africa’s copper belt where he worked underground in two of Zambia’s larger copper mines, Roan Antelope and Mufulira. “That was a continuation of the on-the-job training for the youngsters (SelectionTrust) recruited to management.” In fact that training took him not only underground, but into the warehouses, mills and offices of the company. While doing statistical work for Sir Ronald Praine, he acquired the negotiating and management skills which were to aid him throughout his mining career. “I saw a master at work,” he adds affectionately. “Sir Ronald was `Mr. Copper’ during the ’50s and ’60s and I had the opportunity to study at his feet.” Of A. Chester Beatty, then chairman of Selection Trust and another mentor of Mr. MacCulloch’s, he simply says, “just a magnificent man.”
Perseverance is another trait not only of Mr MacCulloch’s, but of his entire team. It’s a trait which has paid off in the past. During the opening of the Selbaie B zone in 1981, he told The Northern Miner that the mine was a result of “sticking to a concept.” That concept was that rhyolite volcanic rocks had potential for hosting economic mineral deposits.
Although eventually discovered in 1973, “we walked over the bloody thing (Selbaie) in 1958,” he said.
Perseverance has also paid off at Hope Brook. Using new ideas about the genesis of gold deposits developed by BP’s international geologists, the southern coast of Newfoundland was targeted for exploration. “It’s an example of the high tech approach to global exploration we use,” he says. However, Mr MacCulloch also stresses Selco’s reliance on local expertise. Ivor McWilliams, a geologist from Newfoundland, is credited with the actual discovery. “He went that extra mile,” Mr MacCulloch explains. McWilliams prospected outside of his own area, sampling outcrop after outcrop until the discovery was made.
Mr MacCulloch, who has been with Selco since its first days in Canada in 1953, has also had to work with an oil company better accustomed to making big profits in oil and gas. Selco was acquired by BP in 1980.
Until recently, oil companies were used to an environment of stable prices for their products. “It was difficult to cope with volatile metal prices. Today, however, most oil companies have become accustomed to this volatility,” he says, explaining why BP has continued with investments in minerals whereas so many other oil companies have left the sector.
However the Selco chief agrees that it has been difficult to give BP the kind of return it came to expect from the oil and gas business. “I don’t see that as a problem, but as an incentive to try harder.” With a large copper-zinc mine in operation and a significant gold mine coming on stream, Selco is poised to reap future benefits. Although Selbaie and Hope Brook are Selco’s most important projects, Patrick MacCulloch and his people are not relaxing. “I’m sure our people will continue to discover more deposits. And we’ll continue to finance them to production.”
Discovering, developing and financing mineral deposits, it becomes evident, are things Mr. MacCulloch and his crew at Selco do very well.