Common Mining Law Proposed for West African States
The Economic Community of West African States (ECOWAS) and Oxfam America in mid-April announced a proposal for a region-wide mining code that would introduce common social, environmental, and business practice standards across the 15 ECOWAS countries. Ghana and Mali are members of ECOWAS and have substantial gold-mining industries. Other gold producers in the group include Burkina Faso, Nigeria, Senegal and Côte d'Ivoire.
In an April 18, 2008, news article, UN Integrated Regional Information Networks reported that the proposed mining code was launched in Dakar, Senegal, on April 17 and that ratification would be sought from ECOWAS parliaments during 2009. Goals of the code include transparent financial practices, strict environmental standards and assurance that more mining industry revenue ends up in the hands of governments and communities. Consultations are planned with the private sector and others before details of the code are finalized and the code comes before ECOWAS member states for a vote.
National mining codes were weakened in many countries in the 1990s when the World Bank pushed governments to deregulate, the article states, with countries in the region competing with each other to attract foreign investors.
Helene Cisse, a Dakar-based lawyer and a legal consultant on the mining code, was quoted in a Voice of America article as saying meaningful partnership among all concerned is the only way mining can be profitable in the long run. "We need productive investment. But it must be for the sake of everybody, for the interest of everybody. And this is the basic idea of this mining code, to convince the people that there is no durable development, human development, if there is no partnership."
In a separate development, Ghana’s Minister of Mines Esther Obeng Dapaah said in an address to a meeting of the U.N. Conference on Trade and Development (UNCTAD) in Accra, Ghana, that Ghana will amend its laws to gain more benefit from its mining sector. "Our laws will have to be amended. At the moment the laws are so liberal. The idea was to attract investment, but we are willing to take a look at our laws again," the minister told delegates at a forum on how developing nations can benefit more from high commodities prices, Reuters reported on April 23. "A committee is being organized to look into mining activities in Ghana and how Ghana can benefit from mining," Dapaah said.
Dapaah also said that Ghana had relied too much on the exploitation of gold, diamonds, bauxite and manganese, and would move to increase production of other minerals, such as kaolin, limestone, salt and columbite-tantalite.
Selloff: Rio Tinto Sheds Mining Properties as it Fights Billiton’s Takeover Bid
Within the space of three weeks in February, two well-known precious metals producers announced that they were buying out their long-term partner in gold- and silver-mining operations in deals that ranged from $750 million to almost $1.7 billion in value. The selling partner in both cases was Rio Tinto, which has been shedding its noncore business assets to focus more strongly on its iron ore and aluminum operations as it fights off a hostile takeover bid by BHP Billiton.
In November 2007, BHP Billiton made an unsolicited takeover bid to acquire Rio Tinto, offering three BHP Billiton shares for each Rio Tinto share. The Rio Tinto boards unanimously rejected the proposal, saying that it significantly undervalued Rio Tinto and its prospects. On February 6, 2008, BHP Billiton made an another bid, this time offering 3.4 BHP Billiton shares for each Rio Tinto share for a total valuation of about $147 million, which also was quickly rebuffed by Rio Tinto.
However, by not labeling its most recent bid as final, BHP Billiton left the door open to possibly make another offer that would most likely have to be significantly higher, particularly after Aluminum Co. of China, also known as Chinalco—China’s largest aluminum company—and Alcoa teamed up to buy a 12% share of Rio Tinto in early February, paying an equivalent of about 4.1 BHP Billiton shares for each Rio Tinto share in a transaction valued at about $14.05 billion. The deal reportedly was the largest ever overseas investment by a Chinese company. Alcoa said it contributed $1.2 billion to the buy-in.
NorthMet Project Ahead of the Pack in Minnesota Polymetallic Resource Rush
Polymet Mining, owner of the large NorthMet polymetallic deposit in northeastern Minnesota, USA, is hoping that a logjam in the state’s natural-resource regulatory bureaucracy will break early in 2008, allowing the Vancouver, B.C.-based company to move forward with draft Environmental Impact Statement preparation and to eventually obtain permits leading to an anticipated startup of production sometime in the first half of 2009—making it the first nonferrous metal mine in modern times to obtain official approval from this upper Midwestern state.
The company, which plans to spend an estimated $380 million to get the project up and running, plus an additional $72 million in sustaining capital over the course of a projected 20-year mine life, began the permitting process in 2004 and initially expected the state’s Department of Natural Resources and the U.S. Army Corps of Engineers to complete their evaluation of its operating plans in November 2007. However, the agencies were unable to meet that target and said they needed another few months of study time.
During a conference call with analysts and investors in early November following the extension, company executives expressed confidence that the evaluation would be completed in January 2008 and downplayed any concerns that the regulators were deliberately prolonging the process or encountering unanticipated problems. LaTisha Gietzen, vice-president of public, government, and environmental affairs for PolyMet, said that during a meeting with Minnesota Governor Tim Pawlenty, the company had been assured of the state’s interest and support for the project. Chief Financial Officer Douglas Newby noted that the agencies had been previously engaged in similar studies for two other large projects and that "we had the [misfortune] to be third on the list."
Concurrently with the extension, Polymet said that in the latter half of 2007 it had focused on improving certain environmental aspects of the project. The company modified its proposed mining schedule to allow waste rock backfilling in mined-out portions of the pit, and eliminated plans for an overburden stockpile to reduce impact on nearby wetlands. In addition, mine-site water will be collected, treated, and pumped to the plant site where it will be used as process water, resulting in zero surface water discharge and a reduced requirement for makeup water.
PolyMet’s project is located just south of the northeastern end of the famous Mesabi Iron Range. The project comprises the NorthMet orebody—containing copper, nickel, cobalt, platinum, palladium and gold with traces of zinc and silver—and a large former taconite processing complex situated 6 miles to the west of the deposit and connected by a private railroad. The orebody is in the center of a trend of polymetallic nonferrous metal deposits on the northwestern contact of the Duluth Complex, a mineral belt that is believed to be one of the three largest known concentrations of nickel in the world, behind the Norilsk district in Siberia and the Sudbury Basin in Ontario, Canada.
U.S. Steel first discovered NorthMet in the late 1960s, initially targeting high-grade mineralization at depth before moving up dip into lower-grade material that outcropped. However, prior to the autocatalyst market and significant industrial demand for platinum group metals, the only metals of relevance were copper and nickel—and nickel contamination of copper concentrate made the economics of existing flotation technology unattractive. U.S. Steel, after conducting widely spaced drilling along the deposit’s 3-mile strike length, ultimately sold an automatically renewable 20-year lease for it to PolyMet in 1989.
When compared with the world’s largest nickel/copper sulphide districts, various sources rank the Duluth Complex as third largest in nickel content, second in copper and second in PGM content. There are presently 13 known nickel/copper sulphide deposits in the Duluth Complex that combined, could host a theoretical resource of 4.4 billion tons of copper/nickel ore averaging 0.66% Cu and 0.20% Ni using a cutoff grade of 0.50% Cu equivalent. Not surprisingly, its economic potential has attracted a number of players.
The NorthMet project is by far the most advanced of its type in the area, but other companies are avidly pursuing exploration and development of additional polymetallic deposits throughout the Complex. Franconia Minerals Corp., an Alberta, Canada, company with its head office in Spokane, Washington, USA, holds more than 15,000 acres in the area and is focusing on its Birch Lake copper-nickel-PGM deposit located in the north-central part of the mineral belt. According to the company’s latest figures, Birch Lake contains resources of more than 100 million t grading 0.59% Cu, 0.19% Ni and 0.14 g/t Au, 0.65 g/t Pd and 0.32 g/t Pt. The company’s Maturi deposit, 3 miles to the north of Birch Lake, contains another 83.1 million t of similar but lower-grade mineralization, and its Spruce Road property is estimated to contain 124 million t of underground-minable and 376 million t of surface-minable inferred resources. Pre-feasibility studies are presently aimed at evaluating the viability of separate mines at Birch Lake and Maturi that would feed a single processing complex built near the Birch Lake deposit.
Another company active in the area is Ontario, Canada-based Duluth Metals, which reports that current estimated resources at its Nokomis deposit in the western portion of its Maturi Extension properties in the Duluth Complex consists of 347 million t of indicated resources grading 0.62% Cu, 0.20% Ni, and 0.52 g/t of platinum+palladium+gold (total precious metals, or TPM), plus an additional 108 million t of inferred resources grading 0.64% Cu, 0.18% Ni, and 0.70 g/t of TPM. In mid-January 2008, the company announced it had acquired a Platsol technology license from the process patent owner, International PGM Technologies Ltd., for future processing of these metals extracted from its properties along the Complex.
Eagle Nickel-Copper Project Takes Flight on Permit OK
Kennecott Eagle Minerals Co., a subsidiary of Rio Tinto Group’s Kennecott Minerals Co., based in Salt Lake City, Utah, USA, said it has received state regulatory approval of three principal environmental permits needed to launch construction of its Eagle nickel and copper mine in the state of Michigan’s Upper Peninsula, 30 miles northwest of Marquette. The Michigan Department of Environmental Quality (MDEQ) issued mine, air, and groundwater discharge permits, following an application review process that began in February 2006.
A two-year mine construction phase will begin in 2008. The company expects the mine to produce a total of roughly 300 million lb of nickel and 250 million lb of copper over its estimated six- to eight-year life. Capital cost for the project is estimated at $120 million.
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Teck Cominco, NovaGold Pull the Plug on Galore Creek
NovaGold Resources and Teck Cominco sent ripples of surprise—and concern—throughout the industry when they announced on November 26 that they were suspending construction activities at the Galore Creek copper-gold-silver project in northwestern British Columbia after a review indicated vastly higher capital costs and a longer construction schedule for the project.
These two factors, combined with reduced operating margins as a result of the stronger Canadian dollar, made the project—as currently conceived and permitted—uneconomical at current consensus long-term metal prices, said the two companies in a joint statement. The Canadian dollar has appreciated strongly, rising 60% since 2002 and surpassing the U.S. dollar in September.
A recent report from Metals Economics Group (MEG) indicates that the nonferrous exploration budgets of 1,821 companies increased to $9.99 billion in 2007—the fifth consecutive yearly increase since the bottom of the cycle in 2002 and the highest total since the study series began in 1989.
MEG estimates that the budgets of the companies covered by the study (using a $100,000 cutoff) account for more than 95% of worldwide commercially oriented nonferrous expenditures. When the remaining 5% is added, estimated spending for commercial nonferrous metals exploration reaches $10.5 billion—a 40% increase over last year’s estimated total and more than double the estimated $5.2 billion at the height of the last exploration cycle in 1997.
Six months ago one of the world’s major refiners of platinum, Johnson Matthey, predicted a global surplus of the metal for 2007 due to supply increases outstripping demand. The global surplus was set to increase further from a small 65,000 oz in 2006.
Now the organization, which tracks platinum group metal (PGM) markets closely, expects an overall platinum deficit of 265,000 oz this year. The reason is that, while demand has grown as anticipated, South Africa’s PGM mines, which supply 75% (5.220 million oz out of a total of 6.660 million oz) of the world’s platinum, will come up 400,000 oz or more short of predictions.
South Africa’s platinum sector has had a difficult year, and in fact will see its 2007 output fall some 70,000 oz below its 2006 level of 5.29 million oz. All the major producers, Anglo Platinum, Impala Platinum and Lonmin, have experienced problems. These range from processing setbacks, to geological problems, to the impact of skills shortages and safety related issues.
In February 2007, the world’s largest platinum producer, Anglo Platinum, predicted its output for the year would be 2.8 million oz to 2.9 million oz but, due to factors such as lower recoveries from oxidized ore at its PPRust north pit and rolling shutdowns of its predominantly underground operations motivated by intensified safety concerns, the company’s full year forecast for refined platinum production has been reduced to 2.45 million oz to 2.5 million oz. Anglo Platinum anticipates though, that its total platinum production will increase at about 5% a year.
At Impala’s lease area on the Western Limb of the Bushveld Complex, refined platinum output in the first half of 2007 declined by 5% to 510,000 oz reflecting lower recoveries, but the group did acquire a 74% stake in the Leeuwkop project in 2007 when it bought out a junior, Afplats. It will begin to develop that mine in 2008. Impala has also approved smelting and refining capacity expansions that will allow it to treat up to 2.8 million oz of platinum annually by 2010.
Although by area it is the second largest country in Africa, Algeria is not one of the continent’s major mining economies. There is a tradition of iron ore and phosphate rock mining but overall, the government believes, the nation’s non-hydrocarbon mineral resource base remains underexploited. Progress has been spotty but a fresh start is under way, propelled by the U.K.-based company GMA Resources and suppliers such as Swedish piping specialist Alvenius Industrier. The country’s second gold operation, at Amesmessa, should first pour late in 2007.
The project to exploit gold resources discovered during the 1970s in the province of Tamanrasset started in 1997. The two deposits of first interest, Tirek and Amesmessa, are located 2,400 km south of Algiers, near the southern tip of Algeria and close to the border with Mali. The Enterprise d’Exploitation des Mines d’Or (ENOR) was formed by various financial and industrial state-owned organizations initially to develop a mine at Tirek, which is located toward the northern end of a corridor of gold mineralization that extends about 85 km southward down to Amesmessa. This operation, built with assistance from the South African company MDM, started up in 2001.
Following the merger of Meridian Gold and Northern Orion into Yamana Gold (See E&MJ, October 2007, p. 10) Yamana released a press statement on October 18 outlining its strategic plan for exploiting the combined mining assets gained from the acquisition. The long-term plan, according to Yamana’s management, is focused on organic growth, initially targeting production of 1.2 million oz of gold in 2008 and increasing to 2.2 million oz in 2012. Production at these levels will be driven from enhancements, expansions, improvements and development of existing assets. Yamana owns seven producing mines, two of which are undergoing expansion; five development-stage projects and an extensive exploration portfolio in North, Central and South America.
The principal components of targeted production to a sustainable production level of 2.2 million oz include the following:
Increasing sustainable gold production at the Chapada mine in Brazil from a baseline of 170,000 oz of gold in addition to copper, with plant capacity increases;
Increasing production at the El Peñón mine in Chile initially to 420,000 gold equivalent oz (GEO) and potential to achieve approximately 500,000 oz (GEO) with modest plant capacity increases and tailings improvements;
Increasing production at the Jacobina mine in Brazil to exceed 200,000 oz Au largely from development of new mine areas including Canavieiras and Morro do Vento;
Increasing production at the Gualcamayo property in Argentina from an initial target of 200,000 oz/y Au to over 300,000 oz from growing resources at satellite and potential underground areas;
Increasing production at the Minera Florida mine in Chile to approximately 120,000 oz/y Au from plant capacity increases;
Developing the Mercedes property in Mexico to a production level of up to
200,000 oz/y Au with a target date for production of 2009;
Developing the C1 Santa Luz property in Brazil to over 100,000 oz/y Au with a target date of December 2007 for a feasibility study;
Developing the Jeronimo project to a production level of 150,000 oz/y Au;
Pursuing the San Andres mine in Honduras for a production level of 90,000 to 100,000 oz/y Au;
Improvements and enhancements at the Sao Francisco mine in Brazil to increase production to up to 140,000 oz/y Au; and
Continuing development efforts at the Sao Vicente, La Pepa, Amancaya and other projects.
Toronto-based Yamana Gold and Meridian Gold, Reno, Nevada, USA, after an extended hostile takeover battle, announced on September 24 that they had agreed to a $3.55-billion deal in which Yamana acquired all of Meridian’s outstanding shares. Under the terms of the agreement, Meridian’s shareholders received C$7 in cash plus 2.235 Yamana common shares for each Meridian common share tendered and taken up by Yamana. Yamana and Northern Orion, a Canadian mid-tier copper and gold producer, announced their merger on the same day Yamana made its unsolicited bid for Meridian.
(Content from Nov 2007 Engineering & Mining Journal)
Constellation Implements Production Enhancements at Lisbon Valley Copper (Oct 2007)
Constellation Copper Corp. recently reported on the progress of production enhancement projects under way at its Lisbon Valley surface mine located in southeastern Utah, USA. The company said its immediate focus has been on increasing the amount of contained pounds of copper placed on the leach pad and expediting construction of an Intermediate Leach Solution (ILS) system.
During July and August 2007, Lisbon Valley commissioned a fleet of three 100-ton capacity trucks and started hauling and stacking primary crushed ore onto an 800,000-ton-capacity section of the leach pad. Previously, all ore was processed through a secondary crushing system before being loaded on the leach pad.
The company said the decision to leach primary crushed ore resulted from the inability to process all of the ore being mined through the secondary crushing and stacking system. Any excess ore is now being hauled directly to the leach pad, with a goal of placing at least 6 million lb of contained copper per month on the pad. As of the end of August, 383,000 tons of primary crushed ore, containing approximately 5 million lb of copper, had been stacked. Initial leaching of this ore began during the first half of September 2007. Continuation of the truck stacking program will depend on an assessment of the effectiveness of the program once initial leach results have been compiled.
Constellation expects the ILS system is expected to double the amount of ore maintained under leach and help offset the expected slower recovery of sulphide copper. In addition, copper concentration in the Pregnant Leach Solution (PLS) are expected to increase significantly as a result of recycling leach solution back over the leach pads before it is processed through the SX/EW facility. The earthwork part of the ILS project was completed in early September 2007, and lining the pond, assembling the pumping plant, and installing the large piping system required to facilitate doubling the leach solution flow rate was scheduled to begin in mid-September. Lisbon Valley expects to start the ILS system in November 2007, and have it at full capacity by mid-spring 2008.
In order to mitigate problems Lisbon Valley experienced last winter with low solution temperatures, it has placed plastic insulating balls on all three solution ponds. Another cold weather mitigation project, completed in the spring 2007, involved converting the solvent extraction plant to parallel flow to allow slower solution flows through each SX extractor, while increasing the total flow rate 16%.
IFC to Increase Investment in Simandou Iron Project (Oct 2007)
International Finance Corp., a member of the World Bank Group, said it is increasing its investment in Rio Tinto’s Simandou iron ore project in Guinea to continue funding exploration and feasibility studies and to support its environmentally and socially sustainable development.
IFC has approved an additional $30 million investment in Simfer S.A., Rio Tinto’s Guinean project company, to maintain the 5% shareholding it acquired in 2006. IFC said it has been working with Rio Tinto on biodiversity, conservation, community development, and supply-chain linkages between the project and local entrepreneurs.
“IFC has considerable expertise and experience in projects like Simandou, particularly in maximizing the development benefit for local communities,” said Mike Harris, managing director of Rio Tinto Iron Ore Atlantic. “Working with IFC will enable us to increase jobs, improve infrastructure, and have a positive impact on the economy of surrounding areas.”
IFC’s involvement will support Rio Tinto and the Guinean government in conducting feasibility studies, environmental and social assessments, and ore transportation evaluations. IFC, the World Bank, and the government, have also conducted a broader study on best practice community development standards in the country’s mining sector. The study reportedly will be published soon, and the recommendations will be implemented shortly thereafter.
“By increasing our investment in the project, IFC is continuing a close relationship with Rio Tinto to benefit Guinea and its people,” said Somit Varma, IFC director for oil, gas, mining, and chemicals. “The Simandou project has the potential to make a large, positive contribution to the country’s economy for many years and the infrastructure associated with the project will help attract further private sector investment to the region.” Simfer was granted a mining concession by the government of Guinea in April 2006 for development of the Simandou iron ore project in West Africa. Rio Tinto has been exploring and evaluating the iron ore potential of Simandou under exploration licenses granted in 1997.
Barrick Offers Researchers $10 Million for Enhanced (Oct 2007)
Silver Recovery at Veladero Barrick Gold Corp. said it is challenging scientists worldwide to devise a process to unlock the silver from the ore at its Veladero gold mine in Argentina. The Canadian company is offering a $10 million prize to the winner.
Barrick’s said its Unlock the Value program invites scientists, engineers and other inventors to solve a scientific conundrum. Geologists have determined there are 180 million oz of silver contained in gold reserves in the ore at the Veladero mine. Because the silver particles are encapsulated in silica, current processing methods are recovering only 6.7% of the silver. The program invites proposals for an economically viable way to significantly increase silver recovery from this type of ore.
For proposals judged to have merit, Barrick will fund research and development. For a technology that is successfully implemented at Veladero, the company will pay a performance bonus of $10 million. Interested researchers can register and submit proposals through a special Web site. Preliminary proposals must be submitted by January 21, 2008, to be considered for the next stage of proposal development. Proposals will be assessed by a team of experts and evaluated on their technical viability and ability to be safely implemented at Veladero. Those judged to have merit will be invited to submit a detailed proposal. If successful, they will go on to further phases of development, testing and commercial evaluation.
The Veladero mine is located in San Juan Province, about 320 km northwest of San Juan in the Frontera District. It is located at elevations between 4,000–4,850 m above sea level, and comprises two open-pits: Filo Federico to the north and Amable to the south. Barrick invested about $540 million to construct the mine, which opened in October, 2005.
In 2006, its first full year of production, Veladero produced 511,000 oz of gold. It is a conventional open-pit operation that uses 36 m3-class hydraulic shovels, 240-mtcapacity haul trucks, and 45,000–90,000 lb-class drills. Ore is crushed to 32 mm by a two-stage crushing process, and then transported via trucks to the leach pad area. Run-of-mine ore is trucked directly to the valley-fill leach pad. Recovered gold is smelted into doré on-site and shipped to an outside refinery for processing into bullion.
Norilsk, ARM Approve $445M Nkomati Nickel Expansion to Quadruple Annual Production (Oct 2007)
African Rainbow Minerals Ltd. (ARM) and Norilsk Nickel, 50:50 joint-venture owners of the Nkomati nickel mine in Mpumalanga Province of South Africa, have approved a R3.2-billion ($445-million) mining expansion project to increase average annual nickel production to 20,500 mt from 5,500 mt and extend the life of mine by 18 years to 2027.
Peter Breese, chief executive of Norilsk Nickel International commented: “Approval of the Phase 2 expansion cements Nkomati’s long term future as it unlocks around 1 million tons of contained nickel resource and quadruples annual nickel production to 20,500 tons. Norilsk Nickel is planning to invest R6 billion ($830 million) in Africa over the next three years to double nickel production and implement Activox technology. “The expansion also is expected to deliver a boost to the regional Mpumalanga economy through this large direct investment and the creation of new employment opportunities. The recent successful delivery of the Interim Plan on time, within budget and with zero lost time injuries by Nkomati project team bodes well for this project.”
ARM CEO André Wilkens said: “The Phase 2 Large Scale Mining Expansion takes ARM to the next level of becoming a larger producer of nickel, in line with our 2 x 2010 strategy, and at an operational cost which is globally competitive.”
The expansion will exploit two zones of the large layered polymetallic disseminated sulphide resource, which contains 904,335 mt of nickel. The first is the Main Mineralized Zone (MMZ) which is currently being mined by underground and open-pit methods. This is overlayed by the Peridotite Chromititic Mineralized Zone (PCMZ) which will be mined by open pit methods. In addition to nickel, by-products of PGMs, chromite, copper and cobalt will also be recovered.
Mining will continue from the underground mine at the rate of 47,000 mt per month. Development of two new open-pits will provide another 578,000 mt per month of ore at a steady state of production. The average mill grade for the total project will be about 0.4% nickel, over the life of mine.
The existing 100,000-mt-per-month concentrator will be upgraded to 250,000 mt per month to process the PCMZ ore and a new 375,000-mt concentrator for the MMZ will be constructed to give an overall concentrator capacity of 625,000 mt per month. The mine’s related infrastructure will also be upgraded, including construction of two new tailing facilities and an upgrade of the power supply to 80 MVA.
Construction will commence in early 2008 and is scheduled to take 24 months. Production will be sequenced, targeting initial production ramp up from the MMZ concentrator during the third quarter of 2009, with full production by first quarter 2010, and then initial PCMZ production ramp-up targeted during the third quarter of 2010, with full production by 2011.
Average annual nickel production in concentrate is forecast to be 20,500 mt over the 18-year life of mine. By-product production is expected to be 9,000 mt/y copper and 110,000 oz/y PGMs, predominantly palladium. The project assessment was based on a capital cost of R3.2 billion ($445 million) in May 2007 terms and an average nickel cash cost forecast of $3.57/lb. This will result in an after-tax real IRR greater than 20%. The project will be funded from Nkomati internal cash flows and by both partners when required. The release of the project triggers a $20-million payment by Norilsk Nickel (previously LionOre) to ARM in accordance with the original transaction.
Nkomati has secured toll smelting and refining capacity for its concentrate. A Bankable Feasibility Study will be carried out during 2008 to examine the viability of constructing an Activox refinery for Nkomati.
