Don’t Get Into Hot Water

There are a number of existing and planned potash projects in Saskatchewan and Atlantic Canada using a solution mining process. The solution mining process involves the construction of a well field composed of at least two drill holes – one to send hot water down to the potash-bearing zones of rock, and another to bring the potash-laden brine up to the surface after percolating in an underground cavern.

Given that on greenfield sites these solution mines will use up to 60,000 cubic metres of water per day, or between 500 to 700 litres of water per second, water is becoming an increasingly important issue for the engineering design of these mines. The two key risks in such projects involve water supply and containment. Some mine owners have already signed contracts to use treated effluent instead of freshwater to mitigate the supply risk, while other mine owners rely heavily on engineering design to ensure they comply with environmental legislation and to mitigate the risks of containment.

What this means for consulting engineers is that these projects carry some particular risks for them in terms of professional liability. The solutions include careful planning and having well drafted contracts suitable for the project with your clients.

Estimating the water supply

Compared to other mining operations, the footprint of solution potash mines is relatively small. Their tailings consist primarily of salt which is stored in an above ground tailings management area over the operating period of the mine. Eventually, the tailings are dissolved and disposed of by underground injection. As such, the risk of significant environmental contamination is lower than with other commodities that are mined. Nonetheless, since environmental regulations continue to become more stringent, the tailings and brine should be considered a contaminant and addressed accordingly in the design and environmental compliance.

Mine owners often engage consulting engineers on solution mine projects to provide water-related services for environmental science, tailings management and water supply. Consulting engineers may also design the well field (where the pumps and drill holes are located), the screening and compaction unit (to process the brine) and the design of various processing, retention and tailings ponds.

Based on the design by the consulting engineer and their specification for the required amount of water, lawyers will negotiate and execute a water supply agreement. The agreement will commit a supplier (usually a municipality or water agency) to provide a certain amount of water at a set price.

If the water requirement specified by the engineer is inadequate, the mine owner may have to renegotiate with the water supplier for additional quantities. Should that not be possible, the consulting engineer is exposed to considerable risk. If there is an inadequate water supply the entire mine operation may be suspended or have to be redesigned. Current potash projects in Saskatchewan are costing as much as $14 billion and damages incurred by a consulting engineer for underestimating the water supply figure could potentially be very significant.

But as the consulting engineer you cannot over-design either. If the engineer specifies a water supply that is in excess of what is required, the mine owner may have to pay for this oversupply. The consulting engineer may be liable to the mine owner to pay the difference between the actual usage and the excess rate contracted for.

Salt and Containment

The environmental risks of mining projects are generally well recognized. However, with potash solution mines using such large quantities of water, the risks of containment are more significant. Due to the high salt content of the brine, water not properly contained and managed may damage the environment as well as damaging equipment due to corrosion.

Designing structures to manage such significant quantities of water also poses challenges. Also, as the structures handling much of the water are outdoors, excessive snowfall or rain can lead to spills and contamination.

All these potential risks should be taken into account in allocating risk. Generally, the consulting engineer will take on any design risk in the agreement with the mine owner, but the allocation and extent of the risk should be carefully considered. cce

Chad Eggerman is a partner with Miller Thomson LLP in Saskatoon, Sask.. E-mail ceggerman@millerthomson.com