There are some mighty mining operations in Western Canada - the oilsands of Fort McMurray in northeastern Alberta, the metallurgical coal mines of the Elk Valley in southeastern B.C. and the thermal-coal strip mines around Estevan in southeastern Saskatchewan - to name a few.

Output from these three alone totals millions of tonnes annually and is used to power automobiles in the U.S., steel mills in Japan and electrical generating plants in Canada.

But for all their scale and might, the mines of Fort McMurray, of Elk Valley and of Estevan share a common problem - one that has the potential to put a serious dent in their production and cost them millions of dollars.

Tires are in short supply and prices are skyrocketing.

File photo by Larry McDougal, Business Edge
Each tire on a heavy hauler costs more than $55,000, but have fetched up to $300,000 on online auctions.

These are not the ordinary tires used by suburban drivers of vans and sport utility vehicles, but the whoppers required by the gigantic dump trucks that are known as heavy haulers, which are the size of a two-storey, four-bedroom home and haul raw product from the mine to the primary processing facilities.

Each of these behemoths takes six tires, which are up to 13 feet in diameter, four feet thick and cost more than $55,000 apiece, if purchased from a manufacturer or through other conventional channels. They have sold for as much as $300,000 in Internet auctions. And mining companies go through a lot of them. For example, two of the big oilsands producers, Syncrude and Suncor, both have fleets of about 80 heavy haulers and tires tend to last 12 to 14 months.

The shortage began about four years ago. Rapid industrialization in China, India and elsewhere has created a voracious appetite for commodities. World prices have hit new records. That triggered an international mining boom and unprecedented use of heavy equipment. Demand for tires has more than doubled. Manufacturers have been running their plants at capacity, but have been unable to keep pace. Nor can they expand quickly enough to solve the problem.

Mining industry spokesmen, especially those who represent publicly traded companies, are eager to assure investors that they have a secure and adequate supply of tires. "The shortage hasn't had an impact on our operations," says Alain Moore, a communications official with Syncrude Canada in Fort McMurray. "We have long-standing relationships with all our suppliers."

"It's always on our mind," says Collin Tetryk, director of investor relations with Calgary-based Fording Canadian Coal Trust, which controls the Elk Valley mines. "We've disclosed for the last couple of years that we were constrained by the shortage of tires, but it is not going to impact our sales for 2008."

Others suggest that the mining companies are a lot more desperate than they're willing to admit. A retailer in Saskatchewan who services the industry, and therefore was not prepared to be quoted on the record, says that his firm has dug up used tires buried years earlier at minesites and looked for units that could be reused or used for repairs. He says some people have even begun pulling painted tires out of school playgrounds.

Another Saskatchewan retailer, Gary Redhead, who owns four farm implement dealerships and a construction vehicle rental business, says the problem is affecting agriculture and other industries. "When we buy a tractor from a manufacturer, you don't know what kind of tires you're going to get," says Redhead. "You order Goodyears, but the manufacturers are buying them wherever they can get them."

The big mining companies are doing what they can to extend the life of tires. They are keeping their haul roads clear of large rocks. They have informed employees of the problem through corporate newsletters and have erected signs and posters in change rooms. They are keeping loads and speed of travel within the limits recommended by manufacturers of tires and heavy equipment. Some companies are reporting that these and other such measures have led to an extra 30 to 60 days' use.

The shortage has also resulted in some unusual business arrangements. Recently, Toronto-based Barrick Gold Corp., one of the world's largest gold producers, announced a 10-year deal to buy 1,300 off-road tires annually from Yokohama Rubber Co. of Japan starting in 2009. Barrick purchases about 3,000 units yearly and spends about $80 million.

The deal with Yokohama is potentially worth $200 million. As well, Barrick is advancing the company $35 million to finance an expansion of one of its plants.

Barrick is big enough and sufficiently wealthy to invest in a solution. Not everyone has those resources and those who don't may be parking million-dollar trucks, or shutting mines temporarily - all because they can't get tires.

(D'Arcy Jenish can be reached at jenish@businessedge.ca)