Peru's mining industry

Peru's mining industry contributes significantly to the country's economy (6.5% of the GDP). It is a major producer of gold (largest producer in Latin America), silver, tin, copper, lead and zinc. Peru's mineral production is based on the growth of its gold sector as well as expansion into hydrometallurgical projects.

Peru experienced a 3-.6% growth in GDP during 2003 with the value of all Peruvian exports increaseing by 11% to US$8.2 billiion. Amomng the most important news in 2003 was Barrick Gold's decision to start construction of the Alto Chicama gold project.In 2003 the value of Peru's mine production grew by 21% to US$5.6 billion as the output of most minerals increased. The biggest increases were recorded for cadmium (16%), zinc (12%), and gold (9%). The value of mining products exported during the year rose to US$4.25 billion. Together with oil export revenues, mining revenues made up 60% of the country's total export revenues.

Peru is embarking on a privatisation programme that has seen the piece meal privatisation of Peru's largest mining company, Empresa Minera del Centro del Perú S.A. (Centromin). Foreign investment in Peru has resulted in the development of several world class deposits, including Yanacocha and Pierina Gold Mines and the massive Antamina copper-zinc mine.To date Peru has experienced a 2,5% decline in copper production in 2005

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Big copper projects make progress, with expected gold or moly byproducts, to partially satisfy future copper demand

Latest issue of International Mining Project News available (September 25): The development at Ivanhoe Mines’ and Rio Tinto’s Oyu Tolgoi copper/gold project in Mongolia is the big news from this fortnight. The companies have mutually agreed to ‘fine tune’ two provisions of Rio’s phased investment of $2.4 billion in Ivanhoe, in expectation of the Investment Agreement between the companies and the Mongolian Government being signed shortly. There is also news of two big copper/molybdenum projects in Peru. Anglo American looks set to develop Quellaveco, and Xstrata Copper is closing in on the start-up of Las Bambas. In Chile, Pan Pacific Copper is progressing with the development of its Caserones copper and molybdenum deposit. Also, Coal of Africa has successfully completed the sale and loading of its first train of mid volatile ‘lean’ coal, mined at its Mooiplaats thermal coal project in South Africa.

Early on in the fortnight there was promising news for the diamond mining industry - a sector that has really suffered over the last 12 months. Diavik Diamond Mines, a subsidiary of Harry Winston Diamond Corp, decided to cancel a winter production shutdown at the Diavik mine in Canada’s Northwest Territories. Earlier this year, Diavik had announced a series of actions in response to changes in market conditions, including plans for a summer and winter production shutdown. The summer shutdown was safely and successfully concluded on 24 August and rough diamond production has returned to pre-shutdown levels. The winter shutdown, which has now been cancelled, was originally planned for 1 December 2009 through 11 January 2010.

Vale has announced that it has a budget of 6.2 billion reais ($3.45 billion) for growth projects in the Minas Gerais state of Brazil, the state’s government said at mining institute Ibram’s 13th annual conference being held this week in Belo Horizonte. The investments include the construction of the 25 Mt/y Apolo iron ore mine in the next four or five years, and expansions to the Itabira and Itabirito mines.

Moving back to Pan Pacific, it is intending to start construction of its Caserones project during the second half of 2010 with completion towards the middle of 2013. SX-EW production of refined copper (dump leaching) should start by the beginning of 2013, and production of copper and molybdenum concentrates by the middle of 2013. Estimated annual production (the average during the initial phase of five years) is 150,000 t of copper in copper concentrate and 30,000 t of refined copper produced by SX-EW process. About 3,000 t/y of molybdenum will also be produced

In Alaska, Northern Dynasty and Anglo American continue to progress the most extensive, undeveloped porphyry system in the world. At a 0.30% Cu equivalent cutoff, the Pebble deposit comprises 5,100 Mt of Measured and Indicated mineral resources grading 0.77% CuEq, containing 48,000 Mlb of copper, 57 Moz of gold, and 2,900 Mlb of molybdenum; plus 4,000 Mt of Inferred resources grading 0.55% CuEq, containing 24,000 Mlb of copper, 37 Moz of gold and 1,900 Mlb of molybdenum.

In the DRC, First Quantum Minerals has suspended construction at its Kolwezi project. The suspension follows the issuance of an order by the General Prosecutor of Katanga to seal Kingamyambo Musonoi Tailings’ facilities; however First Quantum has been advised by its lawyers that such an order is illegal for several reasons. Construction of the project is at an advanced stage (around 65% complete) and was on schedule to start commissioning in May 2010. Initial production rates are expected to be 35,000 t copper and 7,000 t cobalt per year, rising to 70,000 t copper and 14,000 t cobalt within two years. The company has said it regrets that the suspension will result in the immediate loss of around 700 jobs in the Kolwezi area, loss of tax revenues to the DRC government, and an indefinite delay in commissioning of the Kolwezi project, which was targeted for May 2010.

There is also news of BC Iron commencing trial mining at its Nullagine iron ore project in the Pilbara, comments from Gabriel Resources’ Chief Executive Officer about its Rosia Montana project in Romania and three updates from Giralia Resources’ iron ore projects; as well as many others.

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Gold Fields obtains cyanide code accreditation for all eligible operations

Gold Fields has become the first mining group, registered as a signatory with the International Cyanide Management Institute (ICMI), to obtain accreditation for all its eligible operations with the International Cyanide Management Code. This follows both the Kloof and Driefontein mines, located in South Africa, attaining the standard. Gold Fields’ CEO, Nick Holland, commented: “We have now achieved the objective we set ourselves in November 2005, when we became a signatory to the cyanide code, for all Gold Fields operations to be ICMI accredited”.

Holland: “The Kloof and Driefontein achievements follow equally impressive accomplishments at Beatrix mine, which is also in South Africa and which achieved its full accreditation in February 2009, Tarkwa and Damang mines in Ghana that achieved full accreditation in June and May 2008, respectively, and the new South African mine, South Deep, which achieved full accreditation in December 2008. Cerro Corona mine in Peru does not require accreditation as it does not use large amounts of cyanide in its processes. The Agnew mine in Australia achieved substantial accreditation in June 2009 and is expected to achieve full accreditation in December 2009. This means that all of the eligible Gold Fields mines are now accredited and seven of the eight have achieved full compliance.”

The President of the ICMI, Paul Bateman, congratulated Gold Fields on being, “the first mining group to obtain accreditation for all its signatory operations”.

The code is recognised as best practice for cyanide management in the gold mining industry by the World Gold Council and the Council for Responsible Jewellery Practice. The ICMI accreditation process adheres to the principles of the International Council on Mining and Metals’ Sustainable Development Framework to which Gold Fields says it is fully committed. It has also been acknowledged by the International Finance Corp and the G8 Group of Nations as the best practice guide for responsible cyanide management.

Gold Fields’ support of the ICMI is consistent with the principles and objectives of the group’s sustainable development framework, which addresses every aspect of sustainability in the organisation, including the use of cyanide in the production of gold.

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Xstrata Copper sees 1.5Mt/y in 2015

Xstrata Copper, the red metal division of Anglo-Swiss mining group Xstrata (LSE: XTA), expects copper production to grow 60% to roughly 1.5Mt/y by 2015 through six advanced projects, the division's CEO Charlie Sartain said Thursday.

"Now is the time to be starting to accelerate delivery of these projects, given the analysis of the market that we've undertaken and our confidence in the strength of the market in the mid to long term," Sartain said during a webcast investor seminar in London.

The six projects - five in Latin America and one in Australia - will add some 800,000t/y of new copper output, but the declining production profile at existing operations means a net impact of 550,000t/y, said the CEO.


"We see that starting to come through in 2011-12, but certainly picking up into 2013 and 2014."

The company's output in southern Peru alone is slated to increase from the current 100,000t/y to more than 600,000t/y in that timeframe, thanks to development of the Antapaccay deposit at the Tintaya mine, the Las Bambas greenfield project and an expansion at its 33.75%-owned Antamina.

Development approval at copper-zinc mine Antamina is expected by year-end, while decisions on Antapaccay and Las Bambas are scheduled for 2010, according to Sartain's presentation.


The company also plans to expand its 44%-owned Collahuasi mine in northern Chile, with a development decision planned for next year. A decision came in October on an expansion at Lomas Bayas, also in northern Chile. And on Thursday Xstrata Copper announced a positive decision to expand the Ernest Henry operation in Australia.


The projects "will consolidate the operating improvements that we've been working on for the last 3-4 years at a number of mines," Sartain said, adding that the plan is to reduce overall copper cash costs by 15% by end-2014.

Xstrata corporate has budgeted US$4.9bn in expansionary capital for 2010, with 30% going to copper projects, 28% to nickel projects, 37% to coal, 3% to zinc and 2% to alloys. Another US$1.9bn is planned in sustaining capital.


FUTURE GREENFIELDS


A series of earlier-stage greenfield projects could eventually add another 700,000t/y of copper production. The 200,000t/y El Pachón project in Argentina is still undergoing a feasibility update, though the company has said it requires greater certainty about the tax scheme the project would be subject to.

The earliest El Pachón could potentially be in production is 2016, according to Sartain's presentation.

Other greenfield endeavors are the 340,000t/y Tampakan project in the Philippines and the 190,000t/y Frieda River project in Papua New Guinea.

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Rio Blanco Mine, Peru

Rio Blanco is a porphyry copper mine located at an altitude of 2,200m to 2,800m in the lower Andes, northern Peru. The mine has one of the largest undeveloped copper deposits in the world. It is owned and operated by Zijin Mining Group. Zijin Mining Group purchased the property from Monterrico Metals in 2007 and currently owns 89.9% of Monterrico's shares. It will invest $1.44bn in the project.
The mine will begin production by 2011. It has a production capacity of 200,000t/y of copper. The project was not commissioned until January 2009 due to security reasons.

Reserves
The mine contains 1,257mt of reserves with a cut-off grade of 0.4% copper. Proven reserves are approximately 146mt with 0.73% cut-off copper grade. Centred primarily on Henry's Hill, the mine also receives a small contribution from the adjacent Soho deposit.

Geology
The mine lies on the northern end of the Peruvian copper-gold belt. Extending over 1,000km, the belt is tertiary, porphyritic, epithermal and metallogenic in nature. It hosts several deposits including Yanacocha, Santa Rosa, Alto Chicama, Cerro Corona, Peirina, Sipan, La Granja, Michiquillay and Carpa. Copper and copper-gold porphyry systems in the zone are characterised by small porphyritic intrusions.

The Rio Blanco porphyry system is hosted within Portocello batholith and siliceous Palaeozoic meta-sediments, two rock units that dominate the region. A multi-phased and intrusive complex, the Rio Blanco porphyry system contains a quartz porphyry section exposed in Quebrada Majaz.
Around the boundaries of the quartz porphyry, an extensive development of igneous breccia has formed. Towards the north of Quebrada Majaz there is a large core of phreato-magmatic breccia. This mass of rock features steep cliffs that were created when the breccia was silicified.
A large phyllic zone forms a significant alteration at Rio Blanco. Stretching 5km², this zone is intense, has low pyrite content and contains an overprinted potassic zone.
It extends to about 100m into the granodiorite batholith, leading to a poorly developed propylitic alteration. Towards the north of Quebrada Majaz the phyllic zone merges into the phyllites.
In spite of significant argillic overprint, clay development at Rio Blanco has been in the range of 5% to 15% of rock by volume. The system also contains a 25km² areal extent indicated by hydrothermal alteration and copper discovered in stream silt sediments and the bedrock's rock samples.

Mineralisation
The deposit is characterised by chalcocite and covellite mineralisation. Secondary enrichment in this deposit contains chalcocite and covellite in an approximate 1:2 ratio.
The minerals are spread across in veinlets, as fracture fillings or as coated patinas on pyrite crystals. They also form halos and sub-halos around the chalcopyrite crystals. The zone is characterised by abundant pyrite. The grade of molybdenum in this region is similar to that of the underlying primary ore.

The transitional zone hosts a partially damaged blanket. Apart from chalcocite, covellite and pyrite, the zone contains limonite. In comparison to the corresponding primary ore, the average copper grade in this zone is lower.

The mixed zone hosts a mixture of minerals including pyrite, chalcopyrite, covellite and chalcocite. The leached cap of Rio Blanco is characterised by geothitic ores.
Steep topography and the corresponding supergene copper intersections below the ridge crest of Henry Hill represent the distinguishing anomaly at Rio Blanco.
Mining and processing

The mine will operate as a conventional open pit mine. Ores of higher grade will be extracted first. As the level of deleterious elements in the concentrates is expected to be very low, all ore types at Rio Blanco will be easy to process.

Separate copper and molybdenum concentrates will be produced through the conventional process of flotation. Tailings will be dried and arranged in a valley adjacent to the open pit, a process that will reduce environmental impact and operating costs.
Transportation

The concentrates will be initially transported from the mine to port using trucks. A pipeline will be constructed to transport concentrates. To minimise environmental impact the pipeline will be constructed parallel to the road in upland areas wherever possible.
Almost 25km of new road will be constructed. The existing road, which is 176km long, will also be upgraded. Facilities for storage and loading will be constructed at the port of Bayovar, 800km north of Lima.

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Newmont eyes steady production at Peru gold mine

LIMA - Newmont Mining Corp said on Thursday it expects output at Yanacocha – one of Latin America's largest gold mines – to hold steady in the next few years, contradicting an earlier forecast made by its partner.

Yanacocha, run jointly by US-based Newmont and Peruvian precious metals miner Buenaventura, reported sales of 1,8-million ounces of gold last year.
"This year, we're going to have something similar to 2008 production ... and for the next few years, we're going to maintain levels of around 1,8-million, 1,9-million ounces," Carlos Santa Cruz, Newmont's vice president of South American operations, told reporters
.
His statement conflicts with one made last month by Roque Benavides, Buenaventura's chief executive, who said he expected to see production at Yanacocha falling roughly 25 percent to 1,5-million ounces in 2010, as lower ore grades are explored.

Also on Thursday, Santa Cruz said Newmont has still not made a decision about whether to develop its Minas Conga copper-gold project in Peru, which it postponed because of the global economic and credit crunch.

The company had originally said it would announce a decision in the first quarter of 2009.
The development, which is thought to have equity gold reserves of more than 6 million ounces and roughly 1,7-billion pounds of copper, is located in the northern part of Peru, near the city of Cajamarca.

"The Minas Conga project is passing to the next stage of evaluation. We're going to take roughly 12 months more – or 16 months more – to make the final decision," said Santa Cruz.
According to Peru's mining ministry, the mine would require just over $1-billion to develop.
Peru, a major metals exporter, ranks sixth in the world in gold production and is No. 3 in copper.
Edited by: Reuters

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Rio Alto Mining eyes start of its Peru project

Rio Alto Mining eyes start of its Peru project

LIMA - Rio Alto Mining, a small Canadian miner, said on Wednesday it expects to start construction at its Peruvian copper and gold project around the middle of next year and that production should begin before the end of 2010.

The La Arena project, located in the northern region of La Libertad, has reserves of some 4-million ounces of gold and 3-billion pounds of copper. The mine is expected to have a life span of 20 years.

Rio Alto Mining is moving forward in Peru, a major metals exporter, where a number of other companies have postponed or canceled developments because of last year's drop in metals prices and tough financing conditions.

Minerals have climbed back this year, but not to peak levels, and financing for new mines remains tight.

"In the second half of 2010, the project will be built so that production can start at the end of 2010," Alex Black, chief operating officer, told reporters in Lima.

He estimated the mine would produce 50 000 ounces of gold in its first year and then 100 000 ounces per year after that, for five or six years.

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Peru's mining industry

Peru's mining industry contributes significantly to the country's economy (6.5% of the GDP). It is a major producer of gold (largest producer in Latin America), silver, tin, copper, lead and zinc. Peru's mineral production is based on the growth of its gold sector as well as expansion into hydrometallurgical projects. Peru experienced a 3-.6% growth in GDP during 2003 with the value of all Peruvian exports increaseing by 11% to US$8.2 billiion. Amomng the most important news in 2003 was Barrick Gold's decision to start construction of the Alto Chicama gold project.
In 2003 the value of Peru's mine production grew by 21% to US$5.6 billion as the output of most minerals increased. The biggest increases were recorded for cadmium (16%), zinc (12%), and gold (9%). The value of mining products exported during the year rose to US$4.25 billion. Together with oil export revenues, mining revenues made up 60% of the country's total export revenues.

Peru is embarking on a privatisation programme that has seen the piece meal privatisation of Peru's largest mining company, Empresa Minera del Centro del Perú S.A. (Centromin). Foreign investment in Peru has resulted in the development of several world class deposits, including Yanacocha and Pierina Gold Mines and the massive Antamina copper-zinc mine.
To date Peru has experienced a 2,5% decline in copper production in 2005.

Read more...