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Posts Tagged ‘underground’

Rio Tinto to expand diamond operations

September 16, 2010 1 comment

“A bullish outlook for precious stones has prompted Rio Tinto, the London-listed miner, to spend $800m (£518m) expanding its diamond operations. The mining group is primarily focused on iron ore, copper and coal, but has a diamond business that is sometimes overlooked in spite of being the third-largest in the world behind industry leaders De Beers and Alrosa. Rio’s division is based on two mines, including Argyle in the Australian desert.

Rio said on Tuesday that it would spend $803m to construct an underground mine at Argyle, a plan it authorised in 2005 then froze when the financial crisis hit. The expansion will push Argyle’s productivity from 10.6m carats last year to about 20m annual carats in the years leading up to the mine’s closure in 2019, said Harry Kenyon-Slaney, chief of Rio’s diamond and minerals arm.”

Source: Wall Street Journal, June 8 2010

Observations:

  • Rio decided in 2005 to start development on the transition from open pit to underground mining at the Argyle diamond mine in Western Australia. Low global demand and uncertainty about capital conditions forced the company to freeze this decision for several years.
  • The company is mainly active in the production of industrial diamonds, although part of Argyle’s production (the pink diamonds) are used in jewellery. Expansion of Diavik diamond mine is one of Rio’s key capital projects at the moment.

Implications:

  • Global demand for both industrial diamonds and stones for jewellery mainly depends on the Chinese economy. De Beers, among others, is actively trying to improve the image of diamonds in the Asian market. Industrial diamonds, used for cutting and sawing, clearly depend on the growth of construction and industrial sectors.
  • Development of an underground mine at Argyle can be performed rapidly, as an exploration drift can be expanded in order to develop the underground infrastructure. Underground production could therefore start within 2 years.

©2010 | Wilfred Visser | thebusinessofmining.com

Chile miners alive but long rescue ahead

August 24, 2010 2 comments

“Specialist drilling equipment arrived on Monday at a small gold and copper mine in Chile to begin digging out 33 miners trapped nearly half a mile underground for 18 days – a Herculean task that could last until Christmas.

Thirty-three miners trapped deep underground for 17 days after a cave-in at a small private gold and copper mine in northern Chile are alive and well, but still face months underground until they can be hauled out.

The men tied a note reading ‘the 33 of us in the shelter are well’ to a drill that finally reached them on Sunday just as hopes of finding them alive were fading following the August 5 accident in the mine in Chile, the world’s top copper producing nation.”

Source: Financial Times, August 23, 2010

Observations:

  • Compañía Minera San Esteban Primera, the owner of the mine, is likely to go bankrupt due to the lost production and the cost of the rescue operation. Other parties in Chile have ensured the funding of the rescue operation.
  • Drilling 700 meter at a 66cm diameter would normally not take more than a couple of weeks. However, no conventional methods can be used because of the risk of collapse or flooding of the shelter.

Implications:

  • The safety regulations for underground mining in Chile will become stronger. Chile is an important mining country, but regulation has mainly focussed on the large mining corporations. Smaller companies will have to increase safety to similar levels, which will reduce the competitiveness of some of the mines.
  • The major mining houses, working together in the ICMM, might consider setting up a global mine rescue team for situations like these. Having a team standby with the best equipment possible to assist in any mine disaster would shorten the time required to rescue miners and increase the likelihood of survival.

©2010 | Wilfred Visser | thebusinessofmining.com

Rio Tinto will open Michigan Mine

June 16, 2010 Comments off

“Anglo-Australian miner Rio Tinto PLC Tuesday said it will invest $469 million to build the Kennecott Eagle nickel and copper mine in Michigan after receiving the final environmental approvals for the project.

Rio Tinto plans to produce an average of 17,300 metric tons of nickel and 13,200 tons of copper metal annually over six years from the new mine. Construction of the mine and mill will begin this year and first production is expected in late 2013.

“The long-term demand outlook remains strong for both nickel and copper and bringing Eagle on stream will give us greater benefit from that growth,” said Andrew Harding, chief executive of Rio Tinto’s copper division. “

Source: Wall Street Journal, June 16 2010

Observations:

  • The investment in Michigan is one of the first large mining investments in the area in decades. Michigan’s environmental regulations are among the strictest in the US.
  • The $0.5 bln will be spend on development of an underground mine, rehabilitation of an existing mill and infrastructure.

Implications:

  • Copper and nickel prices have recovered after the crisis, although nickel price recently dropped some 30%. Rio Tinto is clearly convinced the prices will stay above crisis level for an extended period of time, as the new mine will certainly not be a low cost producer.
  • Building the only large scale nickel mining operation in the US, Rio Tinto will certainly benefit from low transportation costs to market on the US East Coast. However, in the longer term competition from African seaborne nickel trade might put this position under pressure.

©2010 – thebusinessofmining.com