LATIN AMERICA — Chile’s SX-EW mines hit full stride

Having spent the better part of this decade in the development stage, Chile’s 16 new solvent extraction-electrowinning (SX-EW) copper mines are finally pushing the country’s production to record levels while driving down costs.

The South American nation is expected to produce 4.3 million tonnes of copper in 1999, up 270% over 1989, with about two-thirds of the total derived from private-sector producers. About 1 million tonnes of that total will come from low-cost SX-EW operations.

By next year, Chile and Peru are expected to provide more than half the world’s output of SX-EW-derived (electrowon) copper, so that more than 45% of the world’s copper will be produced at a cash cost of less than US50 cents per lb.

This dramatic rise in copper production is consolidating Chile’s long-held position as as the world’s largest producer, at 30% of the total.

The following is a summary of the recent performance of Chile’s SX-EW operations.

Among the smallest of the new SX-EW operations is the Andacollo mine, 55 km southeast of La Serena. Owned and now operated by Toronto-based Aur Resources (AUR-T) (70%) and the Chilean firm Compania Minera del Pacifico (30%), Andacollo produced 5,584 tonnes of electrowon copper cathode in the recent second quarter (slightly above its 20,000-tonne-per year design capacity) at a record-low cash operating cost of US46 cents per lb., including transportation and marketing.

The mine is now in its third full year of production, and the copper product received its registration from the London Metal Exchange this past May.

Andacollo’s oxide and supergene-sulphide reserves stand at 25.6 million tonnes grading 0.73% soluble copper, using a 0.38% soluble copper cutoff grade. A further oxide and supergene resource is estimated at 26.2 million tonnes of 0.62% soluble copper, using a 0.2% cutoff, indicating a project a life of at least 11 years.

In 1998, Aur completed a prefeasibility study on a large porphyry-type copper-gold deposit underlying the oxide-supergene orebody now being mined. These deeper resources, amounting to 625 million tonnes of 0.36% copper and 0.12 gram gold per tonne, might be exploited via an open-pit operation once copper prices return above US95 cents per lb.

Situated 126 km east of Iquique, Rio Algom‘s (ROM-T) wholly owned Cerro Colorado SX-EW copper mine began production in 1994 at the rate of 40,000 tonnes annually. Today, the mine is producing 75,000 tonnes of electrowon copper annually following a recent US$214-million expansion. For the first six months of 1999, cash costs were US47 cents per lb., up a penny from all of 1998.

Cerro Colorado’s reserves are estimated at 204 million tonnes of 1.02% copper, which translate into an expected mine life of 17 years.

Weighing in as the world’s largest new mining project last year, the US$1.8-billion Collahuasi copper mine began commercial production in January. It is now producing at annual rates of 50,000 tonnes electrowon copper from oxide ore and about 350,000 tonnes of copper-in-concentrate at a total cash cost of about US45 cents per lb.

Situated 180 km southeast of Iquique, Collahuasi is owned by Falconbridge (FL-T) (44%), Anglo American (AAUK-Q) (44%) and a Japanese consortium led by Mitsui (12%). Reserves of 2 billion tonnes of 0.82% copper set the mine life at a minimum of 25 years. Another 1.5 billion tonnes of 0.73% copper lie in the resource category.

The US$1-billion El Abra mine, 55 km north of Calama, is the world’s largest SX-EW operation, and its production costs are among the world’s lowest, at about US35 cents per lb. copper.

The mine is owned by Cyprus Amax (51%), currently being acquired by Phelps Dodge (PD-N), and Corporacion Nacional Del Cobre de Chile, or Codelco (49%), Chile’s state-owned copper colossus.

Started up in 1996, El Abra is now producing at a rate of about 225,000 tonnes electrowon copper annually and has the potential to boost this to 450,000 tonnes in the mid-term. With reserves of 770 million tonnes grading 0.55% copper, El Abra’s project life is set at 17 years.

A second, small SX-EW operation is the US$22-million El Soldado mine, 130 km north of Santiago. Owned by a subsidiary of Exxon (XON-N), El Soldado produces 7,800 tonnes of electrowon copper annually. With reserves of 73 million tonnes of 1.29% copper-in-sulphide and 0.86% copper-in-oxide, the project life is pegged at 12 years.

The largest copper mine in the world, Escondida, has been in operation since 1994 and now has a portion of its copper production derived from the SX-EW process. Previous to the building of the new US$73-million SX-EW facility, Escondida’s oxide ore had been stockpiled.

Today, electrowon copper output is humming along at the planned rate of 125,000 tonnes annually, which should keep Escondida’s total copper production consistently above 900,000 tonnes each year.

Escondida’s operational cost is US47 cents per lb. while its total cost is US55 cents per lb. The mine turned a profit of US$420 million between mid-1997 and mid-1998, more than all of Codelco’s operations combined.

Situated 160 km southeast of Antofagasta, the US$1.9-billion Escondida mine is owned by Broken Hill Proprietary (BHP-N) (57.5%), Rio Tinto (RTP-N) (30%), a Mitsubishi-led Japanese consortium (10%) and the International Finance Corp.

Reserves at Escondida are pegged at 2.1 billion tonnes grading 1.28% copper using a 0.80% cut-off grade, for a minimum 40-year mine life.

Far less impressively, Glamis Gold‘s (GLG-T) small underground Ivan mine, acquired through its February 1999 merger with Rayrock Resources, was shut down in March. The five-year-old mine, situated 35 km northeast of Antofagasta, had been producing 10,000 tonnes of SX-EW cathode copper per year at a production cost of US65 cents per lb.

Lo Aguirre, another small SX-EW operation, 30 km west of Santiago, is producing 15,000 tonnes SX-EW copper cathode annually. Controlled by Chile’s Minera Pudahuel, the US$70-million mine has a project life set at 19 years.

Boliden‘s (BOL-T) Lomas Bayas copper mine uses SX-EW methods to produce 60,000 tonnes copper annually at a production cost of US50 cents per lb. Situated 110 km northeast of Antofagasta, the US$220-million mine began commercially producing cathode in September 1998.

Acquired through the 1997 takeover of Westmin Resources, Lomas Bayas’ reserves are pegged at 284 million tonnes of 0.36% copper, indicating a project life of 12 years.

Mantoverde, a mid-sized SX-EW operation 53 km southeast of Cha-aral, produces 42,000 tonnes of electrowon copper annually at a production cost of US57 cents per lb. Controlled by Empresa Minera de Mantos Blancos and Anglo American, Mantoverde was started up in late 1995 after a US$177-million investment. Reserves there are estimated at 83 million tonnes of 1.8% copper, giving a project life of 16 years.

Just north of Antofagasta, the privately held Luksic group operates the US$120-million Michilla SX-EW mine, which is producing at a rate above 60,000 tonnes copper annually. With reserves of 30 million tonnes of 1.8% copper, the project life is set at a minimum of 12 years.

Quebrada Blanca, 240 km southeast of Iquique, is the US$360-million baby of Cominco (CLT-T) (47%), Teck (TEK-T) (29%), Minera Paduduel (13.5%) and state-owned Enami (a carried 10%).

Starting up in September 1994, the mine suffered teething pains in its early years, owing to its novel bacterial leaching processing. Today, Quebrada Blanca produces at its design rate of 75,000 tonnes electrowon copper annually, though the mine had an operating loss of about $4 million last year.

Reserves at Quebrada Blanca are pegged at 75 million tonnes of 1.27% copper, for a project life of 14 years.

Radomiro Tomic, 248 km north of Antofagasta, is Codelco’s only other SX-EW operation apart from El Abra. The US$641-million project started up i
n mid-1998 and is now producing 160,000 tonnes of electrowon copper per year. A planned US$200-million expansion to 225,000 tonnes has been delayed due to low copper prices.

Radomiro Tomic’s reserves are pegged at 800 million tonnes of 0.59% copper, suggesting a project life of 22 years.

The Tesoro-Leonor complex, 150 km northeast of Antofagasta, was generated by combining assets of Australia’s Equatorial Mining (39%) and the Luksic group (61%). Together, the Tesoro and Leonor SX-EW operations produce more than 60,000 tonnes of electrowon copper per year.

In terms of reserves, the Tesoro deposit contains 61 million tonnes of 1.14% copper, whereas Leonor contains 41 million tonnes of 0.77% copper.

Situated 200 km southeast of Antofagasta, the Zaldivar SX-EW operation has become a bit of a white elephant for equal owners Outokumpu of Finland and Placer Dome (PDG-T), both of which have tried unsuccessfully to unload their respective interests.

Started up in June 1995, the US$600-million mine is now producing 125,000 tonnes of electrowon copper annually.

Zaldivar’s reserves are pegged at 316 million tonnes of 0.89% copper, which is sufficient to support 19 years of mining.