Rio Tinto's renewed African vigour
Brendan Ryan
Posted: Fri, 21 Nov 2008
miningmx.com
[miningmx.com] -- SOUTH AFRICA’S main copper producer – Palabora Mining (Palamin) – could get a new lease on life if controlling shareholder, Rio Tinto, decides to extend the existing underground “block caving” operation.
That emerged during a media trip to three of Rio Tinto’s African operations: Palamin, Rössing Uranium (Namibia) and the QIT Madagascar Minerals (QMM), its heavy mineral sands mine in southern Madagascar.
The trip – which included South African, Australian and British financial media – allowed the SA press its first good look at Rio Tinto’s southern African operations in more than a decade, during which the group has kept a low profile. Reasons for that appear to include the operating and financial problems at Palamin, which initially made heavy weather of the switch from open pit mining to underground block caving.
Rio Tinto CEO Tom Albanese pointed out block caving technology is now proven and described Palamin as “probably the most productive single shaft mine in the world, which is now operating at 10% above its design capacity”.
Albanese added the expertise gained at Palamin will be put to good use throughout the group as various mines – such as the huge Argyle diamond mine in Western Australia – also introduce the block caving system that Palamin’s staff reckon is the cheapest underground mining system to operate.
Palamin’s management must decide by end-2009 whether to develop the next block caving stage about 350m below the existing operation if the mine is to keep production going at full output after 2014. It will take five years to develop the new block cave section but management declined to provide an estimated capital cost at this stage.
Its change in attitude towards publicity appears to reflect Rio Tinto’s renewed interest in Africa, as well as fitting in with management’s campaign to fight off the pre-conditional bid launched by rival BHP Billiton in November last year.
Albanese came straight to the point during question time at the initial briefing session at QMM. “BHP Billiton needs us more than we need them,” he said. Albanese reckoned Rio Tinto’s operations were superior to BHP Billiton’s across the full range of commodities that both groups produce.
QMM should start production by this year-end. The Madagascar mine has cost US$800m, with a further $200m spent on smelting facilities in Canada as well as construction of new handling and storage facilities there.
First phase production will be 750 000t/year of ilmenite concentrates, which will be shipped to Canada for conversion into high-grade titanium oxide. Subsequent expansions could take QMM to 1,7m t/year of ilmenite concentrates and eventually to 2,2m t/year.
Asked why the ilmenite concentrate was being shipped to Canada and not the smelters at Richards Bay Minerals (RBM)) – a 50:50 joint venture with BHP Billiton – Albanese said RBM was already running flat out and the QMM end-product would be higher grade.
Albanese said RBM still had 20 years of economic life, but Rio Tinto’s next big heavy minerals project was likely to be in Mozambique, where it controlled a deposit containing more than 70m t of ilmenite, which would be developed “sometime in the coming 10 years”.
Rössing Uranium, situated near Swakopmund, is ploughing capital into expanding both its production and extending its life in response to the uranium market’s revival. The mine started operations in 1976 and built up to a “nameplate” production capacity of 4 000t/year of U308, which it last achieved in 1990. After that, the slump in the uranium business forced retrenchments and prolonged production cutbacks at its operation.
Rössing will produce 4 000t of uranium this year for the first time since 1990. It’s targeting production of 4 500t/year by 2012 from existing operations and a further jump to 5 500t, again by 2012, if it decides to introduce a new heap-leaching recovery plant, which would be able to treat low-grade material off existing stockpiles as well as from current production due to its lower operating costs.
Driving motivation behind the heap leach proposal is Rössing management’s need to keep costs down. Chief financial officer Peter Carlson said: “About 70% of our costs are fixed, so the more we produce the lower will be the unit cost of our production.” |
