Judge rejects $558 million case against Cemex

Therese Dunphy

February 2, 2010

by Kerry Clines, Senior Editor

In June, Texas General Land Office (GLO) Commissioner Jerry Patterson accused Cemex of trespassing on its own land by not paying the state of Texas for the removal and sale of sand and gravel by Cemex, and all of its predecessors, at its McKelligon Canyon operation in El Paso County. The GLO sought $558 million from Cemex in alleged unpaid royalties and also asked for payment of the value of the sand and gravel that had been removed.

When the case went to court in December 2009, Judge Carlos Villa ruled in favor of Cemex and against the state of Texas and the GLO. From the bench, he ruled that sand, gravel, limestone, granite, caliche, and soil are not minerals reserved to the state of Texas, and that the State cannot require Cemex to pay royalties for their removal.

“This ruling confirms our view that the suit by the State of Texas and the General Land Office is completely lacking in merit,” said Cemex USA President Gilberto Perez in a company press release.

Cemex’s evidence showed that the GLO’s allegations were contrary to Texas Supreme Court rulings and Texas Attorney General opinion. The case could potentially have an effect on other Texas landowners of mineral-classified lands. The judge’s ruling protects the rights of these surface landowners to the sand, gravel, limestone, granite, caliche, and soil on their property.

“We’re going to appeal,” GLO spokesman Jim Suydam told The Associated Press. “This is round one.”

Mining fatalities fall to an all-time low

According to recently released, preliminary data from the U.S. Department of Labor’s Mine Safety and Health Administration (MSHA), mine fatalities in 2009 fell to an all-time low for the second year in a row. A combined total of 34 mining deaths nationwide in 2009, only 16 of which were metal/nonmetal mines, is a significant drop from 2008’s combined total of 52 deaths.

“This decline in numbers is a testament to the commitment of miners, mine operators, MSHA, the Department of Labor, and other members of the mining community in making safety and health our top concern,” said Joseph A. Main, assistant secretary of labor for mine safety and health, in a Department of Labor news release. “At the same time, we are ever mindful that these numbers represent a tragic loss to the families and friends of the 34 victims. We will not rest until we reach zero fatalities in mining.”

According to Main, key contributing factors include enforcement of the Federal Mine Safety and Health Act of 1977 and continued implementation of the Mine Improvement and New Emergency Response (MINER) Act enacted by Congress in 2006. In 2009, MSHA assessed 173,000 civil penalties for violations of mine safety and health legal requirements, totaling $140.7 million.


Highlights of the 2009 Quarry Academy

The 2009 Quarry Academy — hosted by Sandvik and Dyno Nobel — put special emphasis on balancing unit operations with total process outcomes while maintaining standards of safety and best practices. The curriculum addressed critical processes within the quarry operation, as well as the relationship between each process, how these processes interact with one another, and how they can be linked to improve overall operational improvement.

“We know for certain that the old approach of ‘silo’ costing isn’t effective — that is, thinking of drilling, blasting, crushing, sizing, loading, and hauling as separate activities,” said John Watson, general manager/marketing, Dyno Nobel, at the opening session. “Instead, each is part of a total value chain and the key is to attain the optimal cost zone.”

“It’s not about lowest cost at every step, but the overall profitability,” added Aaron Berg, director of consulting, River Logic Inc. “There is an optimal intersection of a quarry’s capabilities and what the market demands. The key is setting up the ‘stone production value chain’ to make less waste product and more value added materials.”

Instructors pointed out that one of the largest areas of cost reduction for quarry operations is understanding the key controls and levers of crushing equipment to reduce waste, lower energy consumption, and optimize productivity of crushers. A real-world case study demonstrated how drilling and blasting can be used to accomplish chemical crushing to yield significant gains in productivity and process economy. Various tools were highlighted that electronically collect, store, and manage drilling and blasting data.

Volvo Construction Equipment personnel pointed out the effect that roadway conditions, grades, haul-road turn-radius geometry, and other factors had on productivity and cost of operation. They discussed loading, contrasting the principal alternatives of rubber-tired loaders, back-hoe excavators, and hydraulic front shovels. GPS terrain logging technology was used on a software simulation program to demonstrate production dynamics and economics based on one particular quarry’s haul road distance and grades.

The academy offered interactive classes, workshops, and field trips, as well as hands-on training on a drill training simulator. Vulcan Materials hosted the on-site visit that included four different workshops and demonstrations, including signature waveform data collection, drill deviation control and measurement review, crushing, and electronic detonator technology.

More than 250 students in North America have graduated from Quarry Academy since it began. To learn more about the 2010 Quarry Academy, go to www.quarryacademy.com

Vulcan Materials elects new directors

Kathleen Wilson-Thompson and James T. Prokopanko were recently elected as directors of Vulcan Materials Co., according to press release from the company.

Wilson-Thompson, formerly senior vice president, global human resources for the Kellogg Co., joined Kellogg in 1992 as a senior attorney and has served in her current position since 2005. In January, she joined Walgreens as senior vice president and chief human resources officer.

Prokopanko is president and chief executive officer of The Mosaic Co., a producer of concentrated phosphate and potash crop nutrients. He began his career with the company in 2004 and served as executive vice president and chief operating officer.

“We are very pleased that Kathleen Wilson-Thompson and Jim Prokopanko have agreed to join Vulcan’s board,” said Don James, chairman and chief executive officer of Vulcan Materials. “Kathleen and Jim are outstanding and experienced leaders making significant contributions to the success of large, dynamic, publicly traded companies. We look forward to working with them in the years ahead and to their contributions as members of our board.”

With the addition of Wilson-Thompson and Prokopanko, Vulcan’s 12-member board consists of 11 outside directors.

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