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Rio Tinto A global leader in mining, metals & minerals
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March 2015 Issue 4
World Mining
Editor
The
Martin Ashcroft
Iron in the fire After almost 12 months of steady decline, iron ore prices appear to have turned the corner. I say this touching wood, of course, because as Aristotle might have said, ‘one month’s gain doth not a recovery make’, and it could take a dive again by the time you read this. The spot price of iron ore hit its lowest point on 2 April at $47.08. At the time of writing it’s a little over $59, taking it over the tipping point for some of the major producers who can now start making money again. Many factors exert their influence on commodity prices, and supply and demand often have a complex relationship, as your colleagues in the oil and gas sector know only too well. Both industries are experiencing low prices and over-supply, and both are heavily dependent on demand from China. Conspiracy theories accuse the major producers in each of these industries of deliberately flooding their markets to safeguard their market share, tolerating low prices to put pressure on their high-cost competitors. This is more likely to be true for oil & gas, where prices collapsed last year after OPEC (ie, Saudi Arabia) decided not to cut supply to support the price. It’s harder to believe that Vale, Rio Tinto and BHP Billiton are playing the same game with iron. As Dr David Blond points out in this magazine, we all love forecasts, but we should be careful about what we believe. Iron ore miners have been suffering because their expansion plans were based on overoptimistic forecasts for Chinese steel demand. But China’s GDP growth is now slowing down and its new environmental protection law threatens fines or closure for ‘dirty’ steel plants. Will China stimulate its economy, or will it stick to its ‘clean’ objectives? Our article from Platts Steel Raw Materials throws some light on this. I guess we should be grateful that Saudi Arabia is not a major iron ore producer. Martin Ashcroft martin@ogsmag.com www.ogsmag.com
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Contents
Cover story: Rio Tinto: A global leader in mining, metals and minerals
Page 6
03 35 35 37 39 39 41
The Editor: Iron in the fire Mining news in brief Adriana Resources feasibility study South Australia grants for exploration projects Avalon Rare Metals endorses budget Copper industry’s sustainable development QMX Gold to sell Snow Lake Project
41 41 42 50 58 70 72
Shandong acquires Tonkolili Iron Ore Tahoe takeover Economic forecasts by Dr. David L Blond Newcrest Mining: Delivering the future Process Plants International Mining equipment OEMs under cost pressure Barrick Gold: Responsible, modern mining
ADVERTISERS Front Cover (bottom banner): Man Diesel & Turbo Page: 2 Canary Systems 8 Greenfield Handlers 12 AKW Apparate + Verfahren 26 Wolseley Industrial Group 27 Conductix-Wampfler 34 DOK-ING 36 Atlas Copco 38 Polar Mobility 40 TerraMar Networks 59 Process Plants International 76 IsaMill Technology/Glencore 80 Monarch Vulcanising Systems 83 Chemithon 83 Hatch 84 JW Speaker 86 IDS Corporation 87 GEA Barr-Rosin 88 TowHaul Corporation
China’s growth vs environment conundrum
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Economic forecasts: We don’t believe them, but we can’t live without them
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Rio Tinto: A global leader in mining, metals and minerals
Rio Tinto has been unlocking the world’s mineral resources for more than 140 years, aspiring to be industry’s most trusted mining partner
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Rio Tinto Rio Tinto is a leading global mining group that focuses on finding, mining and processing Earth’s mineral resources, its goal being to deliver strong and sustainable shareholder returns from a portfolio of world-class assets and pipeline of projects. The company has been unlocking the world’s mineral resources for more than 140 years. It takes a long-term, disciplined approach to its business, developing and running long-life, low-cost, expandable operations that are capable of delivering value throughout the cycle. The nature of its business means that Rio Tinto’s operations often last for many decades. Indeed, some of its mines have been in operation and generating value for more than a century. Rio Tinto’s major products are aluminium, copper, diamonds, gold, industrial minerals (borates, titanium dioxide and salt), iron ore, thermal and metallurgical coal and uranium. Metals and minerals are transformed into end products that contribute to higher living standards and economic development and
The largest aluminium smelter in Australia is the Boyne Smelter, producing over 570,000 tonnes of aluminium per annum Rio Tinto is present at every point in the development cycle, from the iron ore that builds the fundamental infrastructure of our cities, to the copper and borates in the smartphones that keep us connected. Construction, communication, recreation, transport, healthcare and renewable energy: all these industries, and many more, rely on the supply of metals and minerals that Rio Tinto produces. Under its Group-wide organisational structure Rio Tinto’s four product groups – Aluminium, Copper & Coal, Diamonds & Minerals and Iron Ore – are supported by its Exploration and Technology & Innovation groups. www.ogsmag.com
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Rio Tinto Aluminium Building on more than a century of experience and expertise, Rio Tinto Alcan is a global leader in the aluminium industry. Its fully integrated facilities include highquality bauxite mines, large-scale alumina refineries and some of the world’s lowest-cost, most technologically advanced primary aluminium smelters. Light, strong, flexible, non-corrosive and infinitely recyclable, aluminium is one of the most widely used metals. Its largest markets are transportation, machinery and construction. Bell Bay Aluminium is situated on the mouth of the Tamar River, approximately five kilometres from George Town and 45 kilometres from the city of Launceston,
The Bell Bay Aluminium smelter produces around 180,000 tonnes of aluminium a year and operates 24 hours a day, 365 days per year Tasmania. Bell Bay Aluminium has been in operation since 1955 and was the first smelter built in the southern hemisphere. The smelter produces around 180,000 tonnes of aluminium each year and operates 24 hours a day, 365 days per year. Its main metal products are ingot, block and T-bar. Boyne Smelters Limited (BSL) is the largest aluminium smelter in Australia. Located approximately 20km south of Gladstone at Boyne Island on the Central Queensland coast, BSL produces more than 570,000 tonnes of aluminium per annum. Gove Operations Bauxite Mine Alumina Refinery: The Rio Tinto Alcan Gove Operation is located on the Gove Peninsula in north east Arnhem Land, in the Northern Territory. The operation is situated on extensive deposits of high-grade bauxite, a burnished red ore with high aluminium oxide content. Bauxite mining began in 1970, feeding both the Gove alumina www.ogsmag.com
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Rio Tinto refinery and the export market. Gove produced 8 million tonnes of bauxite in 2013, and 2.3 million tonnes of alumina. In November 2013, Rio Tinto announced that it intended to suspend alumina production at Gove and focus on its bauxite operations after determining the refinery was no longer a viable business in the current market conditions. Alumina production was curtailed during 2014, but bauxite exports have continued as the refinery production is suspended. Queensland Alumina Limited (QAL), was commissioned in 1967 with an annual production rate of 600,000 tonnes of alumina. Today, QAL remains one of the world’s largest alumina refineries, producing some 3.96 million tonnes of the world’s best smelter grade alumina per year. QAL’s bauxite supplies are mined
QAL employees and community volunteers plant approximately 2,000 new trees a year to revegetate the plant’s process residue areas in Weipa in far north Queensland and shipped around Cape York and 2,000 kilometres down to QAL in Gladstone. Here, the alumina is produced through the continuous four-stage “Bayer Process” involving: Digestion – dissolving bauxite’s alumina content – bauxite is finely ground in mills, and then mixed with a recycled caustic soda solution and steam in digester vessels operating at high temperature and pressure. This dissolves the alumina content of the bauxite and the solution is then cooled in a series of flash tanks. Clarification – settling out undissolved impurities - the impurities, which remain undissolved, are allowed to settle as a fine mud in thickening tanks. After several washing stages to recover caustic soda, this residue is neutralised with sea water and www.ogsmag.com
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Rio Tinto pumped to storage dams. The solution of alumina in caustic soda is further clarified by filtration. Precipitation – forming alumina crystals - precipitation involves the recovery of alumina crystals from the caustic solution. In open-top tanks, the solution is stirred by mechanical agitation and seeded with previously precipitated alumina to assist crystal growth. Calcination – high-temperature drying of alumina - the precipitated material (called hydrate) is washed and calcined at temperatures exceeding 1,000°C. This forms the dry white anhydrous aluminium oxide powder, alumina, which is cooled and conveyed to storage. Water is essential to QAL’s refinery operations. Since the commissioning of Queensland’s largest water recycling project in 2002, QAL continues to recycle the majority of Gladstone city’s wastewater. In 2011, QAL started construction to source treated effluent from Boyne Island and Tannum Sands for use in the refinery. QAL’s waste transfer facility allows for the segregation of on-site waste and recycling of materials including metal, cardboard and wood. In 2012, the facility recycled 85 per cent of the 6,060 tonnes of materials brought to the facility. Land revegetation of the plant’s process residue areas continues each year in the buffer zone between QAL and the community. Each year, QAL employees and community volunteers plant approximately 2,000 new trees. Long-term revegetation work on the former residue disposal area continues to be extremely successful with a large supply of grass for dust control and shelter for native animals. Tomago Aluminium: Part of the Hunter Region for 30 years, Tomago Aluminium is located around 13km north west of Newcastle, New South Wales. The smelter produces around 540,000 tonnes of remelt ingot, T-ingot, extrusion billet and rolling slab per year. Ownership of Tomago is 51.55% Rio Tinto Alcan, www.ogsmag.com
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Rio Tinto 36.05% Gove Aluminium Finance Ltd and 12.40% Hydro Aluminium. Tomago primarily produces ingot, T-ingot, billet and rolling slab. Weipa: Rio Tinto Alcan owns and operates the Weipa bauxite mine on western Cape York Peninsula in Queensland. In 2014, the mine produced 26 million tonnes of bauxite. Rio Tinto Alcan Weipa operates under three indigenous mining agreements: the Western Cape Communities Co-existence Agreement (WCCCA), the Ely Bauxite Mining Project Agreement (EBMPA) and the Weipa Township Agreement. These agreements provide economic, education and employment benefits as well as cultural heritage support and formal consultation processes between the company and the traditional owners of the land. The Weipa operations consist of
The Weipa port in Queensland can service post-Panamax vessels up to a capacity of 83,000 tonne cargoes two continuous mining operations at East Weipa and Andoom, two beneficiation plants, 19 kilometres of railway to transport mined bauxite to the port area, two stockpiles and two ship loaders. Rio Tinto Alcan Weipa owns and operates two diesel engine power stations (26 megawatts and ten megawatts). These supply the mine, Weipa town and the neighbouring community of Napranum. The operations’ main administration, warehouse, laboratory and ship loading and port facilities are located at Lorim Point on the Embley River. The Weipa port can service postPanamax vessels up to a capacity of 83,000 tonne cargoes. Some product is shipped to international customers but the majority of Weipa bauxite is supplied to the Queensland Alumina Limited and Rio Tinto Alcan Yarwun refineries, both located in Gladstone, Queensland. These refineries www.ogsmag.com
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Rio Tinto produce alumina as feedstock for Australian aluminium smelting operations and for sale on the international market. Rio Tinto Alcan has mined and shipped bauxite from Weipa since 1963. The original (northern) bauxite reserves are gradually being depleted and with continued demand for bauxite, the business has identified significant reserves south of the Embley River. A key milestone for the future of the Weipa operations was reached with the state government approving the South of Embley project. Rio Tinto Alcan Weipa is a major contributor to the regional economy, including significant investment in local infrastructure to support the Weipa Township. The Weipa Town Authority manages the township with the support of local traditional owners under the Weipa Township Agreement. The Authority is made up of elected community representatives, a traditional owner representative and appointed Rio Tinto Alcan Weipa personnel. Indigenous employment is a key focus area for the business, with around 22 per cent of the workforce representing local Aboriginal and indigenous Australians. The company is committed to improving quality employment outcomes for local Aboriginal employees, and focusing on developing existing and potential local Aboriginal leaders across the site. Yarwun: Rio Tinto Alcan Yarwun is a world-class alumina refinery situated ten kilometres north west of Gladstone in central Queensland. Construction began in 2002 and the first shipment of alumina was made in late 2004. The refinery was the first greenfield refinery to be built in the western world in 20 years. The aluminium ore bauxite is transported from Rio Tinto Alcan’s mining operations in Weipa on Western Cape York to be processed into alumina at the Yarwun refinery, which is 100 per cent owned and operated by Rio Tinto Alcan. Recent expansions have more than www.ogsmag.com
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Rio Tinto doubled production at the Yarwun refinery to 3.4 million tonnes of alumina per year, making Rio Tinto Alcan one of the world’s leading alumina producers. Yarwun’s alumina is shipped to customers in Australia and overseas, including the Middle East.
Copper & Coal The Copper and Coal group is made up of nine world-class operations and two high-value growth opportunities in the copper sector. The group aims to create shareholder value by reducing costs, leveraging technology to make its operations safer, more productive and more sustainable, and focusing its portfolio on lowcost, high-value operations and growth opportunities. Copper’s malleability, strength and conductivity make it useful in a range of building and electrical applications, and it is found in nearly every home and vehicle. In addition to this core product, Rio Tinto generates additional revenue from valuable copper by-products: gold, silver and molybdenum. Coal is a cost-effective and abundant energy source, and Rio Tinto is a leading supplier to the seaborne thermal coal market. Rio Tinto Coal Australia is one of Australia’s leading mining organisations, with a highly successful record in developing and managing world-class coal operations. It is a wholly owned member of the Rio Tinto Group. Rio Tinto Coal Australia produces both thermal and coking coal from its five operations – in the Hunter Valley in New South Wales and Queensland’s Bowen Basin – for international export. In Queensland the company operates the Hail Creek and Kestrel mines. In New South Wales, Rio Tinto Coal Australia manages Coal & Allied’s operations at Mount Thorley Warkworth, Hunter Valley Operations and Bengalla.
Diamonds & Minerals The Diamonds & Minerals group comprises mining, refining and marketing operations and projects www.ogsmag.com
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Rio Tinto across six sectors. Rio Tinto Diamonds is one of the world’s leading diamond producers, active in mining, sales and marketing. Rio Tinto Minerals is a world leader in borates, with mines, processing plants, commercial and research facilities. Dampier Salt is one of the world’s largest producers of seaborne salt. Rio Tinto Iron & Titanium is an industry leader in high-grade titanium dioxide feedstocks and the uranium business, made up of Energy Resources Australia and Rössing in Namibia. The Diamonds & Minerals portfolio also includes the Simandou iron ore project in Guinea. Argyle: Rio Tinto owns and
The Argyle diamond mine in Western Australia has produced more than 800 million carats of rough diamonds operates the Argyle diamond mine in the remote East Kimberley region of Western Australia. The mine has been operating since 1983 and has produced more than 800 million carats of rough diamonds. It is one of the world’s largest suppliers of diamonds and the world’s largest supplier of natural coloured diamonds. Dampier Salt: A joint venture between Rio Tinto, Marubeni Corporation and Sojitz, Dampier Salt Limited (DSL) is located in the hot, dry climate of northern Western Australia. The Dampier operation, established in 1967, was the first DSL site. Dampier is currently the largest producer of the three sites with a capacity of 4.2 million tonnes per annum. The Lake MacLeod site was acquired in 1978 and has the greatest potential for expansion of the three sites. Its current production capacity is 2.9 million tonnes per annum. The Port Hedland operation was acquired in 2001 and has a production capacity of 3.2 million tonnes per annum. DSL’s approach to salt production involves extracting seawater (the www.ogsmag.com
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Rio Tinto primary resource for Dampier and Port Hedland) or naturally occurring underground brines (at Lake MacLeod). The evaporative power of the sun and the wind is then used to crystallise pure sodium chloride (salt) in a series of ponds called crystallisers. Approximately once a year, each crystalliser is harvested by a mechanical harvester after 20 to 40 centimetres of salt has been deposited. The salt is then washed to remove impurities and stockpiled for shipment. Dedicated stockpile and shiploading facilities are located at Mistaken Island (Dampier) and the port of Port Hedland. Dampier Salt also operates its own port at Cape Cuvier. The majority of the salt DSL produces is used by the chemical industry. These chemicals are then used in the processing and manufacturing of other products across the automotive, construction and electronic industries. A smaller percentage of DSL’s salt is used in food processing Energy Resources of Australia Ltd is Australia’s longest continually operating uranium mine and one of the country’s largest uranium producers. Uranium has been mined at Ranger for more than three decades and it is one of only three mines in the world to have produced in excess of 100,000 tonnes of uranium oxide. Ranger began commercial production of drummed uranium oxide (U3O8) in 1981. In November 2012, mining in the operating Pit 3 ended. ERA has now begun the transition from open cut mining to underground exploration of the Ranger 3 Deeps mineral resource and potential underground mining. ERA sells its product to power utilities in Asia, Europe and North America under strict international and Australian Government safeguards and non-proliferation conditions to ensure that Australian uranium is only used for peaceful purposes. It maintains long-term relationships with customers and meets their energy needs by www.ogsmag.com
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Rio Tinto providing consistent and reliable supply of uranium oxide. The Simandou project provides access to one of the world’s largest untapped (over 2 billion tonnes), high-grade iron ore resources in the world. It can sustain a mine life in excess of 40 years and has the potential to make Guinea one of the world’s top iron ore exporters. Rössing is the world’s longestrunning open pit uranium mine. Operating since 1976, Rössing has produced the most uranium of any single mine. Rio Tinto manages and owns a 68.58 per cent stake in the mine. It is located 12km from the town of Arandis, which is 70km inland from the coastal town of Swakopmund in Namibia’s Erongo Region. Walvis Bay, Namibia’s only deep water harbour, is 30km south of Swakopmund. Uranium was discovered in the Namib Desert in 1928, but it was not until intensive exploration in the late 1950s that much interest was shown in the area. Rio Tinto secured the rights to the Rössing deposits in 1966. Ten years later, Rössing Uranium, Namibia’s first commercial uranium mine, began operations. Rössing produces and exports uranium oxide from Namibia to nuclear power utilities around the world.
Rio Tinto’s Pilbara operations include 15 iron ore mines, four independent port terminals, and a 1,700 kilometre rail network Iron Ore Rio Tinto’s Western Australian and Canadian operations are undergoing expansion programmes. The company is also investing in new projects, ensuring it is well positioned to benefit from continuing strong demand from China and other Asian markets. Pilbara, Western Australia: The Pilbara is a large, dry, thinly populated region in the north of Western Australia. It is known for its Aboriginal peoples, its ancient www.ogsmag.com
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Rio Tinto landscapes, the red earth, its vast mineral deposits (in particular iron ore) and as a global biodiversity hotspot for subterranean fauna. Rio Tinto’s Pilbara operations include a world-class, integrated network of 15 iron ore mines, four independent port terminals, a 1,700 kilometre rail network and related infrastructure and are designed to respond rapidly to changes in demand, supported by its operations centre in Perth. Rio Tinto is expanding its operations in the Pilbara to epic proportions while introducing next generation technologies to deliver greater efficiency, lower production costs and improve health, safety and environmental performance.
Sustainable development Rio Tinto’s global vision is to be a company that is admired and respected for delivering superior value, as the industry’s most trusted partner. Its operations allow Rio Tinto to create mutual benefit with the communities, regions and countries in which it works and it is always looking for new answers to complex global and local challenges, which include resource scarcity, climate change, community employment and regional economic development. To achieve its sustainable development goals, Rio Tinto works hand-in-hand with partners and communities on the ground, where it matters most. Supporting the business is a company of world-class people who are the foundation of its success. This 60,000-strong workforce, across more than 40 countries, pulls together as a powerful team where a culture of innovation is nurtured. With headquarters in the UK, the Group comprises Rio Tinto plc. – a London and New York Stock Exchange listed company – and Rio Tinto Limited, which is listed on the Australian Securities Exchange.
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Monthly news & features
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Monthly news & features Goldsource Mines has started construction of its low-cost Eagle Mountain gold mine in Guyana. “The Phase I development at Eagle Mountain is fully financed, the mine area is fully permitted for operations and mine site preparation and processing plant construction has begun,” said president and director Yannis Tsitos. Construction of the plant will take place in Vancouver from where it will be shipped to Guyana.
Adriana Resources completes feasibility study on Lac Otelnuk iron ore project
* * * Minera Alamos has decided to ‘reinitiate’ the development of its Los Verdes copper-molybdenum project in Sonora, Mexico. “Reducing the size of the initial build-out can minimize our capital requirement while reducing the project’s risk with respect to copper price fluctuations,” said Chris Frostad, President and CEO, Minera Alamos Inc. * * * There have been signs in April that the oversupply in the iron ore market is gradually evening out, according to Platt’s Steel Markets Daily. BHP Billiton has decided not to raise its iron ore production capacity in Western Australia to 290 million mt/year, potentially capping output at around 270 million mt/year over the next few years, while Atlas Iron was forced to close its Western Australian operations due to weak prices and will cease exporting over the next few weeks. * * * Manchester-based asset valuation and recovery support group Winterhill has been chosen to value and dispose of more than £35 million of construction and mining equipment for a multinational client. The assets include a wide range of construction equipment as well as mining and excavation machinery such as dump trucks, bulldozers and loaders made by the likes of Caterpillar, Volvo, JCB and Ingersoll Rand.
Adriana Resources has completed a feasibility study on the Lac Otelnuk iron ore project in Nunavik, Québec. The mine is owned by Lac Otelnuk Mining Ltd, a joint venture between Adriana and the Chinese company WISCO International Resources Development & Investment Limited (WISCO), of which Adriana owns 40% and WISCO owns 60%. WISCO itself is a major subsidiary of Wuhan Iron & Steel Corp. “The results of the study show that the LOM project has robust and attractive economics under different scenarios,” said Allen J. Palmiere, CEO of Adriana. “The feasibility study provides to our partner, WISCO, the basis for further strategic evaluations and financing arrangements. We are very proud of our team and the work that has been done to complete the feasibility study.” The LOM Project includes the
development of an open pit mine, ore processing plant, product delivery system (by a slurry pipeline system to the Port of Sept-Îles, Quebec), product dewatering, storage and reclaiming systems, conveyors and ship loading facilities, high voltage power transmission lines and other necessary facilities and infrastructures. The LOM Project is planned to be developed in two Phases. Phase 1 construction is estimated to need six years to complete. One of the key execution strategies underlying the feasibility study is the application of a modularization concept. Maximizing off-site prefabrication and preassembly would minimize the required onsite construction workforce as well as mitigate the effect of winter construction to the maximum extent possible. www.ogsmag.com
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Monthly news & features
South Australia grants A$2 million to mining exploration projects The South Australian Government is planning to distribute A$2 million of grants to 27 resource exploration projects as part of the state’s Plan for Accelerating Exploration (PACE) Discovery Drilling 2015. The grants will benefit over 20 companies undertaking discovery projects for gold, copper, zinc, lead, silver, diamonds, nickel, tin, graphite, base metals, mineral sands, uranium and IOCG (iron oxide copper gold). “This current suite of proposed drilling programs represents a significant push into frontier areas of the state over the next year and clearly demonstrates the range of active projects and companies exploring in South Australia,” said Mineral Resources and Energy Minister Tom Koutsantonis. “These 27 proposals were selected from a pool of 35 high-quality applications and show a broad distribution throughout South Australia and target a range of commodities. The value of government investment is multiplied when considering the industry contribution, so $2 million in co-funding grants will draw an estimated additional investment of $4.9 million from these explorers. “PACE is one of the ways the State Government has worked in partnership with industry to invest in long term exploration success,” he continued. “It has also
helped establish South Australia’s international credentials as a favoured destination for mineral resource investment.” Minister Koutsantonis announced the grants at the South Australian Resources and Energy Conference at the Adelaide Convention Centre in mid-April. Among the beneficiaries are Alloy Resources’ Martins Well copper, gold and silver project and Terramin Exploration’s Wheal Barton copper, gold project in the Adelaide Fold Belt, but the majority of projects receiving grants are in the Gawler Craton, including Lincoln Minerals’ Kookaburra Gully graphite project, Trafford Resources’ Challenger gold project and Zealous tin project, White Tiger Resources’ Blue Sky and Intercept Hill projects and Monax Alliance’s Margaret Dam diamond project. Despite a mining downturn, falling commodity prices and a drop in confidence, Koutsantonis said now was the right time to invest. “The cyclical nature of the resource industry means when prices are down is exactly the time you go out and explore,” he said. “It takes nearly 10 years from discovery to production so the copper mines discovered tomorrow will be producing in 2025. “That’s the type of timelines we’re looking at for this industry.” www.ogsmag.com
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• Heating Capacity: Electric Elements 3.3 kw
Heating Capacity: 3.3 kw Electric Heat Elements
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• Works in ambient temperatures of 50OC / 122OF
Works in ambient temperatures of 50OC / 122OF
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Works in ambient temperatures of 50OC / 122OF
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• Electrical Options: 200—240VAC 1 or 3 ph, 50 or 60Hz, 480VAC 3ph, 50/60 Hz
Electrical Options: 200—240VAC 1 or 3 ph, 50 or 60Hz, 480VAC 3ph, 50/60 Hz
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Corrosion resistant, rugged construction
Options: • 12 or 24vdc • Integrated hydraulic drive compressor making the P-9977 a fully self contained unit.
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Options: RESPA pressurization/ recirculation filtration
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Corrosion resistant, rugged construction
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Options: RESPA pressurization/ recirculation filtration
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Heating Capacity: 16,000 - 40,000 BTU
(please call for options)
• Engine or electric driven compressor configurations • Glycol or Polar Reverse Cycle heat • RESPA pressurization / recirculation filtration
POLAR MOBILITY RESEARCH LTD. Calgary, Alberta Canada Toll Free 1.800.309.8155 • Phone 403.279.3633
info@polarmobility.com | www.polarmobility.com
Do you require intrinsically safe or NON Electric Air Conditioning? Contact us to learn more about our POLAR VORTEX line of Heavy Duty Heater/ Air Conditioning Systems.
Monthly news & features
Avalon Rare Metals endorses Canadian budget Avalon Rare Metals has responded positively to the Canadian Government’s 2015 budget, which promised “an allocation of $23 million over five years . . . to stimulate the technological innovation needed to separate and develop rare earth elements and chromite.” Avalon’s Nechalacho Heavy Rare Earth Project in the Northwest Territories remains the most advanced large heavy rare earth deposit in the world outside of China and could become a significant and sustainable Canadian supplier of rare earths. “I am encouraged to see the Government of Canada realize both the importance of the rare earth industry and the opportunity it presents for Canada,” said Don Bubar, president and CEO of Avalon. “I commend them for their commitment to the industry and believe this support can assist Canadian industry in becoming a global player in the marketplace.” As noted in the budget, Economic Action Plan 2015, “rare earth elements have specific properties that make them critical inputs to the defence, aerospace, automotive, energy and consumer electronics industries […] Rare earth elements are critical minerals that represent an opportunity for Canada to enter an emerging and globally strategic market.”
Copper industry demonstrates commitment to sustainable development
Copyright © 2014 Rio Tinto
The International Copper Association (ICA) has launched a communications campaign to demonstrate the role of copper in sustainable development. ICA is a founding partner of the Efficient Appliances and Equipment Global Partnership Program, a global public-private partnership working to improve the energy efficiency of appliances and industrial equipment. By 2030 the partnership aims to: • reduce global electricity consumption by 10 per cent • lower CO2 emissions of 500 million passenger vehicles, • create economic development of up to $350 billion annually for industries and consumers, primarily in the developing world, through reduced energy bills. ICA has successfully worked with 40 countries on the development of minimum energy performance standards (MEPS) for motors. The partnership believes its goals are achievable through mandatory MEPSs (which are absent in most developing countries) and associated policies in six product areas: motors, distribution transformers, residential air conditioners and refrigerators, lighting and information technology. Jean-Sebastien Jacques, President of Rio Tinto Copper and ICA’s Chairman of the Board, stated, “This partnership represents the culmination of 20 years of learning and experience in energy-efficiency programs made possible by the investments of ICA’s members. Leadership and support of this partnership unequivocally demonstrates the copper industry’s contributions and commitment to sustainabledevelopment challenges worldwide.” www.ogsmag.com
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QMX Gold to sell Snow Lake Project
QMX Gold Corporation has entered into a definitive agreement to sell its Snow Lake Project in Manitoba to a wholly-owned subsidiary of Hudbay Minerals Inc. Hudbay will acquire 100% of QMX Gold’s interest in the Snow Lake Project for US$12.3 million in cash on closing and a contingent payment of US$5 million, payable if the price of gold is equal to or greater than US$1,400/oz on the third anniversary of the closing date. The Snow Lake Project consists of the Snow Lake mine and an associated processing plant, which are currently on care and maintenance, and C$1.867 million in cash, which supports the closure obligations associated with the property. The transaction is expected to close on or about 30 April 2015 and is subject to regulatory and third party approvals and customary
conditions. QMX Gold will use the proceeds of the sale, including its right to receive the contingent payment, to pay down the credit facility held by Third Eye Capital Corporation. Brett New, president and CEO of QMX Gold, commented: “I’m very pleased to announce that Hudbay, a well-established Canadian mineral producer, will be acquiring the Snow Lake Project. We remain confident in the historic Snow Lake mine, but this transaction will now permit QMX Gold to move forward and focus on its assets in Quebec.” The Snow Lake property is located on the edge of the town of Snow Lake, the administrative, transportation, communication and supply centre for northern Manitoba. The town is also home to HudBay Minerals’ Chisel North mine.
Monthly news & features
Shandong acquires Tonkolili Iron Ore from African Minerals
Shandong Iron and Steel has paid over $170 million to acquire the remaining 75 per cent of the Tonkolili Iron Ore mine in Sierra Leone. Shandong now owns 100 per cent of the equity of Tonkolili as well as the associated infrastructure company African Port and Railway Services. The Tonkolili mine has been on care and maintenance since November 2014 and African Minerals called in administrators in March when it could not meet its repayment commitments to its lender – the very same Chinese state-owned 25% partner that has now stepped in to purchase the mine. Shandong intends to return the mine to full production after protecting the assets against the imminent wet season. Tonkolili is 200km north east of the Sierra Leone capital Freetown, and is a fully integrated iron ore mine with 13.6 billion tonnes of resource. It is the second largest iron ore mine in Africa and one of the largest magnetite deposits in the world, with a mine life estimated in excess of 60 years. Shandong has invested more than $1.67 billion in Tonkolili over the past five years and has promised further funding, including $600 million to continue Phase 2 of the project, which will see production raised from 20mtpa to 25mtpa.
Tahoe takeover
Tahoe Resources and Rio Alto Mining have completed the plan of arrangement initially announced on 9 February 2015. Rio Alto, which operates the La Arena gold/copper mine in Peru and is developing the Shahuindo project, also in Peru, has now become a wholly-owned subsidiary of Tahoe. www.ogsmag.com
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Economic forecasts: We don’t believe them, but we can’t live without them By Dr. David L Blond, President, Quantitative Economic Research International 42
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Predicting the future is tough. As an economist with more than forty years trying to foretell the future, I sometimes wonder why we bother. Economic forecasts tend to have a stable upward momentum—that is unless they have a downward one, but then economists have a tendency to force the trend back in a moderately positive direction. When I was first out of graduate school and came into contact with economists who built economic models, I learned the secret sauce – add factors. At DRI, the precursor to what is now Global Insight – the economic software had this feature built in. Say, based on the model, the forecast for increased demand for minerals in the United States is 1%, but you, the commodity economist preparing the forecast, think that that’s too low, then you add a little secret sauce to the forecast and push up the estimate for next year’s demand to say 2% or 3%. But the next time you do the forecast you have actual data and it really was 1%, then you push the add-factor down. This revelation was eye opening. It’s the kind of thing you don’t learn in graduate school. Honestly, my own global industry demand, trade, and employment model covering 72 countries and more than 400 industries is far too complicated to fiddle
Economic forecasts
with add factors. So I’ve never tried to interfere with what is a complex web of inter-relationships between companies and consumers. The lead time for new mines and mills is long, but the crystal ball is cloudy once you get past the next year. Long term forecasts tend to show steady but unremarkable growth, even if the past has often been volatile. Looking at the QuERI forecast for metal mining products the integrated input-output model shows a relatively constant growth of around the 4% to 4.5% range for the next ten years. Due to the dynamic nature of the interplay of country demand patterns, it even has a slight cyclical aspect to it with the strongest growth – 5.3% – coming in 2017 before slowing back to around 4.3% growth for the following years. Of course in the past there has sometimes been extreme volatility, especially during the period when China’s demand for minerals seemed insatiable. Should we believe in this rosy view of the future? It is a good enough guess. As countries pass through higher stages of development they demand shiny new cars, beautiful buildings, appliances and other things that need metal. Of course, we could face another crisis that will send the world economy tumbling,
but forecasters are just not capable of predicting these events, so they tend to make forecasts for the future that are considered to be in an acceptable range. Not too hot, not too cold, not too far from past periods of growth, possibly a bit more optimistic than another forecaster, perhaps a bit more pessimistic just to be different. But when I look at this pure 4% to 5% back to 4% forecast, a byproduct of the integrated inputoutput model framework on which my model is built, I get cold feet thinking – is it too optimistic? too pessimistic? too steady? and a hundred other questions that have no answers. I look at the historical data and see peaks and valleys, highs and lows, and then my forecast with this even growth, and I know that somewhere in the next decade there will come another crisis of confidence, another boom, then bust, then boom again. Or if we are lucky, if sanity returns to the world, then perhaps, just perhaps, we may get the kind of steady, unremarkable but relatively good growth that allows companies to make long-term bets on minerals and add the capacity needed to meet this growing global demand. www.ogsmag.com
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China’s growth vs environment conundrum What do China’s current GDP growth and its attitude towards the closure of polluting iron and steelworks mean for global raw materials demand? 44
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China’s growth
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A
couple of numbers could provide some guidance on China’s approach to its huge environmental problem, and more pertinently for raw materials demand, how serious it might be about closing down polluting steel facilities this year. The first was the country’s GDP figure for the JanuaryMarch quarter, which came in at the targeted 7%, despite most analysts and economists expecting China’s economic growth to be much lower. The 7% GDP figure is, however, the slowest growth rate since the global financial crisis in 2009, and comments from Premier Li Keqiang ahead of the GDP announcement on 15 April suggested Beijing was aware of the challenges of a transitioning economy. “New dynamics have yet to grow strong while the old are losing steam,” he said. While more consumer-oriented, technologicallysophisticated growth sectors are emerging, will Beijing 46
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respond by stimulating the economy to keep things ticking over? It could pull on the growth levers by further loosening capital constraints, helping out the stalled property sector, and investing more heavily in infrastructure, such as rail. This would help support demand for steel and raw materials, but it could also mean that Beijing’s plans to clamp down strongly on polluting companies would lose some traction. Some analysts believe this scenario played out last year when the economy was stuttering, and that Beijing opted for growth over pollution control. The second important number to look out for is China’s Ministry of Industry and Information Technology’s (MIIT) target for steel and ironmaking capacity removal in 2015, which is likely to be announced in early May. Last year, the targets were 28.7 million mt/ year of steelmaking capacity and 19 million mt/year of ironmaking capacity. Hebei province – the world’s
China’s growth administration’s ‘to do’ list. But as is often the case, what the central government demands and what provincial governments are willing to deliver, are not always the same thing. At the start of this year, China’s new environmental protection law took effect, which raised the bar on waste treatment standards at steel facilities, among other measures, with the threat of closure or severe fines if mills were unable to comply within a certain timeframe. Later on, Hebei province announced it would close all blast furnaces smaller than 450 cubic meters, or at least make life extremely difficult for them by lifting electricity rates. In a bid to reduce steelmaking capacity, China previously targeted 400 cu m BFs, which gave steel companies the chance to replace smaller facilities with larger ones, often with the result that net capacity increased. This time around most steel companies are probably not in a financial position to adopt a similar strategy. Further, given that 450 cu m furnaces comprise 16% of Hebei’s steelmaking facilities, the likelihood of shutting them all down is remote as too many jobs, not to mention the province’s revenues and tax receipts, would be at risk.
“New dynamics have yet to grow strong while the old are losing steam”
largest steel producing region north of Beijing – plans to cut 60 million mt/ year of steelmaking capacity over 2012-2017, of which 28 million mt/year of ironmaking and 40 million mt/year of steelmaking capacity will come from Tangshan city in the province. In March an MIIT official said China had achieved all of its capacity removal targets for 2014, but that provincial government figures would need to be verified. Officials in Tangshan insisted the region eliminated 3.3 million mt/ year of ironmaking and 5.6 million mt/year of steelmaking capacity in 2014 as scheduled. But it would probably be wise to view any capacity removal with some caution.
Pollution top of list There is no doubt the Chinese government is serious about tackling the country’s pollution issue; environment and corruption are top of the Xi-Li
It is difficult to determine to what extent stoppages at mills have been due to environmental reasons because few mill officials are willing to confirm this. Nobody wants to risk the chance of losing market share. And mills fear their lender banks would interpret any stoppages as a sign of financial difficulty, causing them to potentially call in loans. For example, three privately-owned mills in Linyi city in eastern China’s Shandong province - Jiangxin Iron & Steel, Hujing Special Steel and Linyi Sande Special Steel - with combined steelmaking capacity of around 10 million mt/ year, were told to stop production in early March following a visit from Ministry of Environmental Protection officials. However, a Jiangxin source claimed the company’s 500 cu m BF was merely undergoing maintenance work, and had not breached any environmental measures. Local industry sources expected the mills to resume operating. Also in Shandong, Jinan Iron & Steel Group subsidiary Minyuan Iron & Steel was recently hit with a fine of Yuan 1.5 million ($239,544) after an inspection found that a sintering plant was emitting waste gases. www.ogsmag.com
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Nanjing Iron & Steel in Jiangsu province failed a blast furnace gas emissions test earlier this year and was told by the Nanjing Environmental Protection Bureau to upgrade its equipment or face a fine or suspension. When asked about this an official from the steel company told Platts that operations were running normally, noting demand for raw materials had in fact increased, “because we are stepping up production.”
Lack of clarity It is always difficult to take a few examples and extrapolate them to represent China’s huge and fragmented steel industry in its entirety. But the many steel market participants in China that speak to Platts on a daily basis do not appear unduly concerned by the environmental clampdown. The feeling has always 48
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been that economic growth and supporting jobs come first. This is despite Beijing’s focus on pollution, and also its aspiration to make the economy more marketdriven, leaving companies to fend for themselves, at least in principle. So: Is capacity really being shut down? And if so, will it stay shut? And is it closing due to weak market conditions or for environmental reasons? One senior Chinese steel official was sceptical that China was making any meaningful inroads into its steel capacity problem. “The overcapacity situation is still very serious; don’t believe the hype,” he said. Compounding the capacity situation is the fact that China could add significant new steelmaking facilities this year. Chinese consultancy Mysteel predicts the country could add some 30 million mt/ year of new
China’s growth
blast furnace capacity in 2015 from 21 BFs. A further 10 million mt/year capacity could be added over 20162017. Platts estimates around 7.3 million mt/year of new capacity was commissioned in 2014 compared with 24.4 million mt/year in 2013. Major projects in the pipeline this year are Shandong Iron & Steel’s 8.5 million mt/ year crude steel capacity works in Rizhao city, due to come online in late 2016. Wuhan Iron & Steel’s 2.1 million mt/year capacity cold rolling mill in Guangxi province could commission within the next few months. And biggest of all, Baosteel’s 9 million mt/year Zhanjiang steelworks, comprising a 5,050 cu m BF, in Guangdong province is due to commission in late 2015. But all of these are likely to be late, particularly if China’s steel exports are reduced this year – export
revenues accounted for much of steelmakers’ profits last year – and mills are forced to sell more into weaker domestic markets, so new capacity could be lower than anticipated. What does it mean for net steel production capacity? The GDP and capacity removal numbers mentioned at the top of this article may provide some clues. But in all likelihood, net capacity levels in 2015 may not diverge much from last year, and the chronic overcapacity situation will remain in place. Whatever happens, getting the economic growth versus improved environment balance right is perhaps Beijing’s biggest challenge right now. Published in association with Platts Steel Raw Materials Monthly www.ogsmag.com
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Newcrest Mining
Delivering the future Newcrest Mining Limited, headquartered in Melbourne, WA, is the largest gold producer listed on the Australian Stock Exchange and one of the world’s largest gold mining companies.
Newcrest dates back to 1966, when Newmont Mining Limited established an Australian subsidiary, Newmont Holdings Limited (which subsequently changed its name to Newmont Australia Limited), to find and develop gold prospects in Australia. In 1990, Newmont Australia Limited acquired Australmin Holdings Limited and merged with BHP Gold Limited (a wholly-owned subsidiary of BHP Limited). The merged entity changed its name to Newcrest Mining Limited. Newcrest owns and operates a portfolio of predominantly low cost, long life mines and a strong pipeline of brownfield and greenfield exploration projects. Its reserve and resource base is strong, with gold reserves representing more than 25 years of production at current rates.
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Newcrest Mining
Newcrest’s asset portfolio includes operating mines that use a variety of efficient mining methods for large ore bodies, together with selective underground mining methods to optimise high-grade epithermal deposits. Discovery of new ore bodies is an important element in Newcrest’s strategy and the company has a strong and successful exploration track record. A key objective of Newcrest’s exploration activities is to secure large mineral districts, or provinces, in order to establish long-term mining operations, while enhancing the potential for further discoveries.
Current operations Cadia Valley Operations (CVO), located in central west New South Wales is one of Australia’s largest gold mining operations and is 100 percent owned by Newcrest. CVO comprises three mines - the Cadia Hill open pit mine, and the Cadia East and Ridgeway underground mines. These are all large-scale mining operations using either block and panel caving or open pit mining methods. The new Cadia East underground mine, constructed at a cost of over $2 billion commenced commercial production on 1 January 2013. At CVO, Newcrest produces gold doré from a gravity circuit and gold-rich copper concentrates from a flotation circuit. Gold doré from CVO is refined at the Perth Mint and concentrates are piped to a dewatering plant at nearby Blayney and sent by rail to Port Kembla in New South Wales for export mainly to Eastern Asia. Over 8 million ounces of gold has been produced from CVO since commercial production commenced in 1999. Newcrest continues to explore areas around existing mines to expand reserves that will support the development of additional production capacity in this large mineral district. CVO undertakes a range of environmental reporting and monitoring activities, to ensure that the mine maintains a safe environment for employees, operating and developing mines in line with good environmental practices and embracing a strong sense of commitment to local communities. The Telfer gold-copper mines in the Great Sandy Desert in the East Pilbara region of Western Australia are 100 per cent owned by Newcrest. Telfer is a remote location, 400 kilometres east-south-east of Port Hedland and approximately 1,300 kilometres by air or 1,900 kilometres by road north-east of the state’s capital, Perth; therefore is run as a fly-in-fly-out operation. Telfer comprises the Main Dome and West Dome open pits and the Telfer
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underground mine. Ore from the mining operations is processed by a large, dual train, communition circuit, followed by flotation and cyanide circuits, which produce gold doré and copper-gold concentrate. The process is complex because of the need to accommodate differing ore types. Copper-gold concentrates produced at Telfer are filtered to produce a dewatered concentrate, which is trucked to Port Hedland and exported to various smelters, primarily in the East Asia region. The gold doré produced at Telfer is refined at the Perth Mint. Approximately six million ounces of gold were produced between 1975 until Telfer’s closure in 2000, with over four million ounces of gold produced since operations recommenced in 2004. The near mine environment contains a number of semi-toadvanced exploration targets, which have the potential to deliver new growth for Telfer. The project also contains a large regional tenement package that extends over 1,000 square kilometers. Application of a new exploration model has identified a number of regional targets. Telfer has a strong relationship with local communities, which consist predominantly of indigenous groups, principally the Martu. All infrastructure development and services are provided through direct consultation with the Martu, their communities and their community management personnel. Its environmental priorities include flora and fauna, land and water, air and noise, waste, rehabilitation and mine closure. A key environmental issue at Telfer is the management of cyanide, which is used as part of the process for recovering gold in the processing plant. Newcrest is a signatory to the ‘International Cyanide Management Code for the Manufacture, Transport and use of Cyanide in the Production of Gold’, and is implementing a program to ensure code compliance at Telfer. The Lihir operation on Niolam Island in the New Ireland Province of Papua New Guinea (PNG), 900 kilometres north-east of Port Moresby, is 100 per cent owned and operated by Lihir Gold Limited (LGL). Newcrest acquired the Lihir operation as a result of the merger with LGL by courtapproved scheme of arrangement in August 2010. The gold deposit at Lihir is within the Luise Caldera, an extinct volcanic crater that is geothermally active and is one of the largest known gold deposits in the world. Most of the ore is refractory and is treated using pressure oxidation, before the gold is recovered by a conventional leach process. Lihir
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produces gold doré. Since production commenced in 1997, the site has produced more than 9 million ounces of gold. At the end of January 2013, Newcrest commissioned a major expansion of the Lihir process plant including installation of a new crushing facility, upgrades to the ore processing plant, and additional power generation capacity and water supply. The expansion increases plant capacity and operational flexibility and reduces exposure to single pieces of equipment. Exploration has extended the mineralisation to the East with the discovery at the Kapit North East Exploration target. The mineralisation remains open to the East. Lihir supports PNG-based suppliers and businesses where possible, consistent with our commitments to landowners and the PNG Government. We also contribute to the local economy in accordance with agreements with the government and landowners by providing public infrastructure and services, including access to health services and the provision of electrical power and water to local villages.
Hidden Valley Hidden Valley is located in the highly prospective Morobe province in Papua New Guinea, approximately 300 kilometres north-west of the nation’s capital, Port Moresby, and 90 kilometres south-west of the sea port of Lae. The operation is owned by the Hidden Valley Joint Venture (HVJV), one of three unincorporated joint ventures between subsidiaries of Newcrest (50 per cent) and Harmony Gold Mining Company Limited of South Africa (50 per cent). Hidden Valley is an open pit gold and silver mine, consisting of three main lodes – Hidden Valley, Kaveroi and Hamata. Gold and silver doré produced at Hidden Valley is transported to the Perth Mint in Australia to be refined. Construction of the Hidden Valley mine began in 2007 and commercial production commenced in September 2010. The joint venture is continuing to ramp up operations to target annual production of 250,000 ounces of gold and 2.5 to 3 million ounces of silver. The mine sits within the New Guinea Mobile Belt of Papua New Guinea which is one of the world’s pre-eminent geological terrains for porphyry copper-gold and epithermal gold mineralisation. The belt is host to several world-class deposits. The Hidden Valley - Wau corridor is a world-class historic mining district with exploration upside.
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PPi is currently assisting Newcrest at the Lihir operation providing services for autoclave maintenance and process optimisation. This includes specialist process engineers and multidisciplinary trades personnel that are capable of completing field work and returning plant to operations ready for start-up. The level of rigour that PPi enforces is expected to assist with improving the reliability of the Lihir operations, which is a key target for Newcrest. PPi was created to support clients with the arduous duties of operating autoclaves in base metals and pressure metals projects. PPi hand picks the appropriate team to work with clients anywhere in the world. We know the harsh highlands of Porgera PNG, the coastal waters of Lihir PNG, the winters of Macraes NZ and the red dust of Murrin Murrin. And we enjoy a challenge. Current locations of projects that PPi is involved with include Australia, Papua New Guinea and Russia. This multi-discipline approach maximises efficiency and minimises durations. It also provides autonomy to the HPAL team, facilitating the necessary isolations, testing and other general work activities that modern work practices now demand. A successful start-up requires all stages of project development, implementation and operation to be suited for your particular ore deposit. The PPi approach has been developed from our involvement with 11 gold autoclaves and 11 nickel autoclaves. PPi’s one-team approach cuts time, saves money PPi eliminates the time-consuming and costly task of having to recruit, assemble and coordinate a diverse number of individuals typically required for project start-up. Our personnel have a range of skills that cover numerous industries. We provide our clients with a seamless, ready-made team of specialists, offering: A one team approach from construction completion, commissioning, start-up to ramp-up and ongoing maintenance A single point solution for new plant start-ups that will transition seamlessly from construction handover, through ramp up, to first maintenance shutdowns Complete integration with client project and operation teams Safety, once and right, with the degree of rigor to ensure success Remote site fly in fly out specialists anywhere in the world Detailed weekly status reports so you know what is happening each step of the way. Each report includes milestone achievements, forecasts, variations, slippage and additional work, issues and concerns, general activities and personnel details. Training of HPAL and POX Personnel We consider the training of our clients’ personnel an integral part of our services. 58
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PPi provides world-leading services to projects reliant on autoclaves. Our skills range from process development through detailed design, construction, commissioning and, most importantly, “making it work�. PPi regularly work with clients beyond the project implementation phase into specialist maintenance and process optimisation. Our personnel train and mentor operating and maintenance personnel to ensure that autoclaves operate reliably. We have developed advanced process control technology that simplifies the operation of autoclaves reducing the reliance upon highly skilled operators. Contact us at: www.processplants.com.au enquiries@processplants.com.au +61 417 965 870
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Hidden Valley is predominantly a fly-in-fly-out operation, located in a high rainfall area at an altitude of around 2,000 metres. Several permanent streams contribute to significant water run-off from the site, so water quality, soil stabilisation, waste management, and containment of tailings are closely monitored. Water used in the process plant is recycled which reduces the amount of fresh water required from local water sources. The construction of a 4.5 kilometre overhead conveyor to carry ore to the mill further lessens the impact of the mine on the natural environment, by reducing the need for trucks and haul roads.
Bonikro Bonikro in Côte d’Ivoire, West Africa, is owned and operated by LGL Mines CI SA, an Ivorian company 89.89 per cent owned by Newcrest. Bonikro is a conventional truck and excavator open pit mine, producing gold doré. First gold was poured in October 2008. The predominant method of gold recovery is via carbon in leach technology, with some gold recovered via a gravity circuit. At Bonikro the potential exists to increase the mine life by discovering additional satellite deposits that may be processed through the Bonikro facility. Mining at the Hire Deposit (12 kilometers South-East of Bonikro) commenced in late 2014 and further exploration is being undertaken to identify new deposits within a 30 kilometers radius of Bonikro. Newcrest holds three mining licences in the Bonikro near-mine area. In addition to the Bonikro near-mine area, Newcrest has interests in some 3000 square kilometers of regional tenements and tenement applications within Cote d’Ivoire. Recent consolidation of the tenement package has resulted in focused activity on the most prospective tenements, which are all located within highly prospective Birimian greenstone terrains. Newcrest has a committed exploration campaign in Cote d’Ivoire, aimed at discovering a major gold resource. Newcrest has also established a West African generative group, which is currently assessing a range of gold and copper opportunities across the region from greenfield projects right through to producing assets. Newcrest aims to leave a positive legacy in Côte d’Ivoire by creating jobs and improving living standards for Ivoirians. An agreement was signed with the United Nation Development Program (UNDP) to develop and implement a sustainable community development program in the Bonikro area through a partnership that will ensure financial leverage from other donors. Implementation of
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Newcrest Mining
the partnership started in January 2012 with the UNDP agreeing to a local development plan in collaboration with all the stakeholders. Gosowong is owned and operated by PT Nusa Halmahera Minerals (PTNHM), an Indonesian company 75 per cent owned by Newcrest. It is located on Halmahera Island, in the North Maluku Province of the Republic of Indonesia, approximately 2,450 kilometres north east of the national capital, Jakarta. Gosowong produces gold and silver doré. The processing plant at Gosowong, which has a capacity of up to 800,000 tonnes per year, comprises a primary jaw crusher followed by a SAG and ball mill circuit and a recently completed Vertimill circuit. The ore then undergoes a conventional cyanide leaching process. Gold and silver is recovered from the cyanide solution using the MerrillCrowe zinc precipitation process, and is smelted to produce gold doré. Gold and silver doré produced at Gosowong is refined in Jakarta. Since mine operations commenced in 1999, over four million ounces of gold and three million ounces of silver have been produced. The Gosowong exploration program is focussed on testing a portfolio of priority exploration targets within the vicinity of present operations and advancing a number of targets within the regional Contract of Work. More than 98 per cent of Gosowong’s total workforce, and 75 per cent of managers, are Indonesian. PTNHM invests extensively in community initiatives through its Corporate Social Responsibility program, committing one per cent of annual revenue to the program to share the benefits of mining, support community needs and strengthen socio-economic development in the region. PTNHM’s commitment to the local economy is further demonstrated by implementing a policy of preferring locally based suppliers, where possible.
Future opportunities Wafi-Golpu is an advanced exploration project located in the Morobe Province of Papua New Guinea (PNG), approximately 65 kilometres south-west of the port city of Lae, PNG’s industrial hub and second largest city. The project is owned by the Wafi-Golpu Joint Venture (WGJV). Deep drilling conducted by the WGJV since 2008 has identified a world class porphyry deposit at Wafi-Golpu (the Golpu deposit) suited to bulk underground mining techniques, similar to those being employed by Newcrest at Cadia Valley Operations. Currently, the Wafi-Golpu project
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Newcrest Mining
includes the Golpu copper-gold porphyry deposit, the Nambonga copper-gold porphyry deposit and the Wafi high sulfidation epithermal gold deposit. Exploration activity to date has shown that the Wafi-Golpu tenements host one of the highest grade porphyry copper systems in south-east Asia (the Golpu deposit). The Golpu deposit is one of several porphyry ore bodies identified along the 25 kilometre long Wafi-Transfer. Newcrest and its joint venture partner are actively exploring this highly prospective terrain for additional deposits. In December 2014 Newcrest and Harmony approved a stage one feasibility study of the Golpu project. Stage one would target the upper higher value portion of the ore body via two block caves with an approximate mine life of 27 years. Ore would be conveyed to a nearby surface process plant which would produce a copper-gold concentrate. Annual production would be expected to peak in 2025 at 320,000 ounces of gold and 150,000 tonnes of copper. During 2015 work will continue on updating the 2012 Golpu PFS for stage two of the project. Both the stage one feasibility study and the updated PFS for stage two are scheduled to be complete by December 2015.
Fiji The Namosi Joint Venture (NJV) is exploring for mineral resources in the Namosi and Naitasiri provinces in Fiji, approximately 30 kilometres west of Suva. The project covers an area of approximately 724 square kilometres. Namosi is owned by the Namosi Joint Venture (NJV), an unincorporated joint venture between Nittetsu Mining Co Ltd (Nittetsu), Materials Investments (Fiji) Ltd and Newcrest (Fiji) Limited (Newcrest). The Waisoi Project is a copper and gold project in the pre-feasibility phase. An environmental impact assessment is underway to assess the potential social and environmental impacts of a mine at Waisoi. The EIA process will help the Government decide if a mine at Waisoi can be built in an environmentally acceptable manner. A key component of the EIA is the social impact assessment, which will consider potential impacts, mitigations and opportunities. Following the Government’s decision, the NJV will determine if the Waisoi mine can be operated safely and economically and in an environmentally sustainable way. Exploration activities at Namosi are currently focused on the large Waisoi copper-gold deposit, the mineralised Waivaka Corridor and a portfolio of early
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Newcrest Mining
stage exploration targets. Waisoi consists of two deposits, Waisoi East and Waisoi West.
Exploration opportunities Discovery of new ore bodies is an important element in Newcrest’s business strategy. Through exploration, Newcrest seeks to identify and secure large mineral districts, or provinces, in order to establish long-term mining operations, while enhancing the potential for further discoveries. Exploration at Newcrest comprises organic greenfield and brownfield exploration activities, augmented by identifying and securing exploration prospects at various stages of maturity through joint ventures with exploration juniors, together with targeted mergers and acquisitions activity. Newcrest has a strong track record of discovering major deposits over the past 15 years, including the discovery of deposits at Cadia Hill, Cadia East and Ridgeway (all part of Cadia Valley Operations, in New South Wales, Australia), the Gosowong deposits in Indonesia, O’Callaghans at Telfer and in more recent times the Golpu discovery in Paupa New Guinea. Newcrest today has ongoing brownfield exploration programs in and around our operating mines and continues to search for and explore new greenfield regions that have the potential to deliver the next generation of discoveries. Exploration success requires skilled and capable people supported by industry leading systems, processes and governance. Newcrest has a strong exploration team with established experience in the successful discovery of porphyry and epithermal deposits. These are well suited to Newcrest’s experience in bulk underground mining.
Use of Technology Increasingly, gold deposits are becoming more difficult to find. They are lower grade, of challenging metallurgy, deeper underground, more difficult to develop and located in geographies that present logistical, development and operating challenges. In competition to these trends, Newcrest has a strong history of growth over the past 20 years, obtaining value from previously marginal, difficult ore bodies. It has developed mining and ore processing technology for the efficient extraction of copper as concentrate, gold as bullion and gold in copper concentrate. Examples include Cadia Hill, Ridgeway, Telfer, Cadia East and Wafi-Golpu.
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Newcrest Mining
An important element of Newcrest’s strategy is thus the adoption, adaption and development of innovative underground mining techniques and metallurgical processes, including: innovative geo-metallurgy knowledge approaches, adapting more continuous underground and pit systems, technology to facilitate early waste rejection to avoid high energy processing downstream, technology to lower energy required for mineral processing. Newcrest’s ‘Future mine’ vision is to utilise technology, along with continuous improvement techniques and step change methodology, to significantly reduce operating costs across its portfolio and increase production reliability. Newcrest’s vision is to be the miner of choice for all stakeholders including its workforce, the communities in which it operates and its shareholders. Social responsibility, safety and sustainability are fundamental guideposts to the Newcrest vision.
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Mining equipment OEMs under cost pressure from customers Original equipment manufacturers must support mining companies in Europe and the former Soviet Union with cost reductions or risk losing their market share, finds a new survey by Timetric’s Mining Intelligence Center
A
recent survey conducted with 100 mine managers and procurement managers at operating mines throughout Europe and the former Soviet Union has revealed that many could go elsewhere for their future equipment unless improvements are made in the three key areas of product quality and reliability, ability to support cost reduction, and after sales service. Respondents to Timetric’s Winning and Retaining Business in the European and Former Soviet 70
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Union Mining Equipment Sector, 2015, highlighted customers’ dissatisfaction with the costs associated with their equipment, with cost reduction being critical for OEMs to retain and develop their customers in the region. The report provides a detailed analysis of customer preferences throughout the European and Former Soviet Union mining sector, focusing on the factors that influence purchasing decisions and the performance of major equipment suppliers.
Suppliers were rated according to 16 different factors relating to costs, product attributes and supplier attributes and capabilities. The lowest satisfaction ratings were given to lowest price and lowest total life costs. Respondents in Scandinavia and the former Soviet Union had given the lowest satisfaction ratings for both these factors. When asked to nominate areas in which their suppliers needed to improve, 56% of respondents in Scandinavia and 44% of respondents in the FSU
Mining equipment
nominated ‘ability to support cost reduction/ minimisation’. Overall 31% of respondents indicated a likelihood to switch to a different supplier in the next five years. The report includes customer ratings of their existing suppliers across the same factors, identifying best-performing suppliers and how well suppliers performed in each category, relative to its importance. Respondents also indicated who they viewed as the top suppliers throughout Europe and the former Soviet Union for specific
equipment, including trucks, excavators, loaders, shovels, dozers, drills, continuous miners, engines, tyres, pumps and mining software. Caterpillar received the highest average satisfaction ratings in nine of the 16 factors, and was considered the leading supplier for most categories of mining equipment. Atlas Copco and Sandvik also performed well in terms of customer satisfaction. “Timetric’s research demonstrates the current mindset of those
mining companies in Europe and the FSU, and the importance now placed on minimising costs where possible,” says Nez Guevara, senior mining analyst at Timetric’s MIC. “A sizeable share of respondents will switch if their equipment manufacturers do not support them sufficiently with cost reduction.”
The full report is available from www.timetric.com or by email to reports@timetric.com www.ogsmag.com
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Barrick Gold Responsible, modern mining The world’s largest producer of gold is also a top performer in sustainable mining www.ogsmag.com
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Barrick was first listed on
the Toronto Stock Exchange on 2 May 1983 and by 1985 it was one of North America’s top gold producers. A year later, the purchase of the Goldstrike Mine in Nevada set the company on a trajectory to international expansion, acquiring mines in South America, Africa and the Australia Pacific region to become the world’s largest gold producer. Gold has always played an important role in the international 52 74
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monetary system. Gold coins were first struck on the order of King Croesus of Lydia (an area that is now part of Turkey), around 550 BC. They circulated as currency in many countries before the introduction of paper money. Once paper money was introduced, currencies still maintained an explicit link to gold. By the late 19th century, many of the world’s major currencies were fixed to gold at a set price per ounce, under the ‘Gold Standard’.
Barrick is a senior gold producer focused on growing free cash flow through disciplined capital allocation and operational excellence. Its vision is to be the world’s best gold mining company by operating in a safe, profitable and responsible manner. Barrick operates five cornerstone mines — Cortez and Goldstrike in Nevada, Pueblo Viejo in the Dominican Republic, Lagunas Norte in Peru and Veladero in Argentina. Barrick continues to be recognized for its
Barrick Gold
strong corporate responsibility culture. The corporation has been listed on the Dow Jones Sustainability World Index for seven consecutive years, ranked most recently as the top performer in the mining industry category. Barrick Gold’s breadth of operations spans the globe. Its key sites include Puerto Viejo in the Dominican Republic, Kalgoorlie in Western Australia, The Cortez District in Nevada, Jabal Sayid in Saudi Arabia, Pascua-Lama on
the Chile/Argentina border and Kabanga in Tanzania.
Pueblo Viejo Pueblo Viejo is located in the Dominican Republic, approximately 100 kilometers northwest of the capital city of Santo Domingo, and is operated by the Pueblo Viejo Dominicana Corporation (PVDC), a joint venture between Barrick (60%) and Goldcorp (40%). The mine completed its ramp up in 2014, and is now the only mine in the world with annual production
of more than one million ounces of gold. Barrick’s technical experts have identified multiple opportunities to further optimise operations and increase cash flow at Pueblo Viejo. These include: increasing plant throughput by optimising ore blending and autoclave ability; and reducing costs by optimizing maintenance programs. Longterm, Pueblo Viejo has significant reserves and resources with potential to extend the life of the www.ogsmag.com
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When KCGM needed to increase the grinding throughput at their Gidji Operation, the obvious choice was an IsaMill.
IsaMill, meeting the needs of the mining industry for over 20 years. Initially developed as the enabling technology for fine grained zinclead orebodies of McArthur River and Mount Isa deposits it was soon realised that this compact, highly energy efficient grinding machine could be equally applicable to a variety of other mineral applications and duties. In 20 years since technology development the IsaMill is now used in a range of metalliferous applications including base metals (copper, lead, zinc and nickel), PGMs, iron ore, industrial minerals, coal and gold processing, and is
the optimum choice for regrinding, fine and ultrafine grinding and mainstream grinding duties. IsaMills were first installed at Mount Isa in 1994 – now over 125 IsaMills are installed and supported across six continents. With a full product range to suit the smallest applications (75 kW) to the largest (8 MW) backed up by a world class, global contingent of process and mechanical support staff, there is an IsaMill to suit your needs.
“... our clients get more than just a mill, they become part of a technology partnership.” – Greg Anderson, IsaMill Technology Manager, Glencore Application of the IsaMill technology in gold processing started 15 years ago with the installation of 1.1 MW mills into KCGM’s Gidji and Fimiston operations. The current installation of the 3 MW IsaMill complements these first commercial installations.
To find out how IsaMill technology can improve your operation contact us at isamill@glencore.com.au www.glencoretechnology.com © Copyright 2015 GLT2432_02/15
Barrick Gold mine. As of 31 December 2014, Pueblo Viejo had proven and probable gold reserves of 9.3 million ounces.
Cortez District The Goldrush discovery is located approximately six kilometers from Barrick’s Cortez mine in Nevada. The project is progressing through a prefeasibility study, on schedule for completion in mid-2015. Barrick is evaluating a number of development options, including underground mining or a combination of both underground and open pit mining. Infill drilling is confirming continuity of high-grade mineralization and supporting an underground mining scenario. In 2014, Barrick submitted a permit application for twin exploration declines, which will help to better define the existing resource and allow them to test for additional mineralization beyond the northern end of the deposit. The Cortez District continues to yield promising exploration opportunities beyond Goldrush. Barrick has earned a 70% interest
in the Spring Valley project — approximately 60 miles west of Cortez — by conducting exploration drilling and scoping activities. The project is advancing through a prefeasibility study, which is on track for completion in late 2015. This is a low capital cost, heap leach project with the potential to become a standalone mine. The company also has the option to attain a 75% interest in the Gold Ridge project, located just north of Cortez, by completing a scoping study. This is an earlier stage opportunity in a key district, which has encouraging geological characteristics. During 2014, an Environmental Impact Assessment and Plan of Operations were approved for the 60%-owned South Arturo project, another near-mine discovery, which is located approximately eight kilometers northwest of Goldstrike. Barrick plans to start development in late 2015 and mine the high grade, high return portion of the resource in 2016 and 2017. The bulk of the ore will be processed through Goldstrike’s refractory
facilities. Due to its high grade, near surface nature, the project is expected to have lower capital development and operating costs than Goldstrike.
KCGM – Kalgoorlie, WA The Kalgoorlie operation consists primarily of the Super Pit open-pit mine, located along the Golden Mile ore bodies which were previously mined from underground. The mine is located adjacent to the town of Kalgoorlie approximately 550 kilometers east of Perth, Western Australia. The pit is oblong in shape and is approximately 3.5 kilometres long, 1.5 kilometres wide and 570 metres deep. At these dimensions, it is large enough to be seen from space. The mine produces 850,000 ounces (28 tonnes) of gold per year, and employs around 550 employees directly on site. Barrick holds a 50% interest with Newmont Mining Corporation holding the remaining 50% interest. Kalgoorlie is an open-pit, truck-andloader operation. Ore is treated at the Fimiston mill, with the resulting sulphide concentrates then roasted
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“The Super Pit at Kalgoorlie is large enough to be seen from space”
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Barrick Gold and leached at the Gidji roaster, approximately 20 kilometers north of the main Kalgoorlie operations. Gold-laden carbon from the Gidji roaster is also processed at the Fimiston mill. Concentrates that cannot be processed by the roaster are treated by two ultrafine grinding mills. The Super Pit is the biggest gold open pit mine in the country and the company’s operations ensure Australia holds its place, behind South Africa and the USA, as the third biggest gold producer in the world.
Jabal Sayid In July 2014, Barrick reached an agreement to form a 50/50 joint venture with Saudi Arabian Mining Company (Ma’aden) for the Jabal Sayid copper mine in Saudi Arabia, and finalised the deal in December 2014. First shipments of low-cost concentrate are expected in early 2016. When fully operational, the mine is expected to produce 100 million pounds of copper in concentrate per year in its first full five years, with the potential to increase to 130 million pounds per year. At the end of 2013, Jabal Sayid’s copper reserves were 1.4 billion pounds. Further exploration work will be carried out within the mining license area and the exploration license area surrounding the mine with the aim of extending the mine life.
Pascua-Lama The Pascua-Lama project is situated on the border of Chile and Argentina, in the Frontera district at an elevation of 3,800 to 5,200 meters, approximately 10 kilometers from Barrick’s Veladero mine. It has 15.4 million ounces of gold reserves and more than 674 million ounces of contained silver. Late in 2013, Barrick announced the temporary suspension of construction at Pascua-Lama, except for activities required for environmental and regulatory compliance. The rampdown process has been completed on schedule and budget and the project is now on care and maintenance. www.ogsmag.com
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Barrick Gold
Pascua-Lama’s new executive project director, Sergio Fuentes, has nearly three decades of successfully managing the construction of complex mining projects in Chile, including high-altitude operations in the Andes. He and the team he is assembling are working hard to assess Pascua-Lama’s economics going forward. To do so, they will address the project’s outstanding legal and regulatory hurdles, and will complete a new execution plan to optimise remaining construction activities. If that plan aligns with Barrick’s capital allocation objectives and demonstrates an acceptable return on invested capital of at least 15%, the company will be able to consider resuming development of Pascua-Lama. In the meantime, Barrick is working to minimize the costs of holding the asset.
Kabanga The 50%-owned Kabanga
nickel project in Tanzania has an estimated measured and indicated resource of 37.2 million tonnes grading 2.63% nickel and an inferred resource of 21 million tonnes grading 2.6% nickel. The project is located in northwestern Tanzania, approximately 385 kilometres west of the Bulyanhulu gold mine and 100 kilometres northwest of the Tulawaka gold project, which is currently under construction.
Future potential Cerro Casale is one of the world’s largest undeveloped goldcopper deposits. Approval of the Environmental Impact Assessment was received in January 2013 from the Servicio de Evaluacion Ambiental, the environmental authority of northern Chile. Cerro Casale has total proven and probable gold and copper mineral reserves of 23 million ounces of gold and 5.8 billion pounds of
copper contained within reported gold reserves. Barrick continues to explore alternative development options for this project, which is located in a high potential district, as well as continuing the process of obtaining necessary rights of way. The Donlin Gold project in Alaska is a joint venture between Barrick (50%) and Novagold (50%). Although the Donlin Gold project contains large, long life mineral resources, with significant leverage to the price of gold, it is uncertain when or if it will be able to meet the company’s investment criteria given the required large initial capital investment.
Responsible, modern mining Barrick Gold Corporation has been named to the Dow Jones Sustainability World Index for the seventh consecutive year and has been ranked as the top performer in the mining industry category. www.ogsmag.com
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Barrick Gold “We are honored to be included in this highly-respected index once again this year. Our goal is to be a responsible partner in resource development, ensuring our operations generate positive and sustainable benefits for all of our stakeholders, including governments, communities and investors,” said co-president Kelvin Dushnisky. “Achieving industry-leading social and environmental performance is a critical element of how we define operational excellence at Barrick,” said co-president Jim Gowans. “This recognition is a testament to our people around the world, who make responsible mining a focus of what they do every day.” Barrick was also included on the Dow Jones Sustainability North America Index for the eighth year in a row. In 2013, Barrick contributed $15.2 billion in economic valueadd to its host countries and communities through wages and benefits, royalties and taxes, local purchasing of goods and services and community investments. This included $7.1 billion in developing
Improving your bottom-line performance We partner with our clients to solve their toughest challenges. Ask us how we can drive asset productivity and reduce operational costs. We’re here to help. Learn more at www.hatch.ca
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Barrick Gold
“Our people around the world make responsible mining a focus of what they do every day�
and emerging countries. The Dow Jones Sustainability Index evaluates more than 3,000 companies annually using rigorous sustainability criteria to identify top performers. Companies are evaluated on a range of sustainability metrics, including
governance, social performance, environment and economic contributions — taking into account both industry-specific trends, as well as sustainability issues facing multiple sectors. In 2015 Barrick will be the exclusive provider of gold, silver and bronze
for the athlete medals at the Toronto Pan Am and Parapan Am Games.
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