LATIN AMERICA — SX-EW takes hold in Latin American camps

In tough times for copper, big operations have to find refuge in low production costs. This is especially true of large porphyry copper projects, where low grades mean that big savings per tonne of ore translate only into small savings per unit of metal.

The current downturn in copper prices coincides with a new development in copper production: the advent of large-scale operations that produce copper using solvent extraction and electrowinning (SX-EW), a metallurgical process that has meant a competitive edge for mines that can use it. Pioneered in the porphyry copper camps of the southwestern U.S., especially by Phelps Dodge (pd-n), SX-EW has taken hold in Latin American projects where leachable ores are frequently well-developed.

In SX-EW, ores are heap- or dump-leached instead of being milled. A weak sulphuric acid solution draws the copper from the rock and is collected at the base of the leach pad. The weak acid is collected and mixed in an agitator with organic solvents that have a high affinity for copper. These solvents, which are immiscible in water, are allowed to separate from the acid, then mixed with much stronger sulphuric acid in a second circuit. The stronger acid strips the copper out of the organics, and, after another settling period where the acid and organics separate, the copper is recovered from the acid by electrolysis.

The process has the advantage of producing copper cathode directly, without smelting; this saves smelting charges, which can represent 10% to 15% of production costs.

There are catches: leaching only works on ores in which the copper is held in mineral species that easily dissolve in weak acids. This means SX-EW is only practical for weathered copper ores, with copper oxides and enriched copper sulphides such as chalcocite. Primary sulphides, such as chalcopyrite, do not release their copper to the solution, and producing a flotation concentrate remains the only game in town for primary mineralization.

Another disadvantage is the loss of byproduct credits. SX-EW chemistry is specific to copper, and byproducts such as molybdenum, gold and silver are lost to the tailings.

Two new SX-EW projects are now on the scene in the Chilean Andes. The Collahuasi mine of Falconbridge (FL-T), Minorco (MNRC-Q), and Japanese industrial groups Mitsui Mining and Nippon Mining & Metals produced its first copper cathode in the second quarter of 1998. Production of concentrate from its millable ores is expected to start in early September.

Boliden’s (BOL-T) Lomas Bayas mine, northeast of Antofagasta, produced its first cathode in July. Boliden is expecting to see costs near US54 cents per lb. (US$1,190 per lb.) and the mine is on track to produce 60,000 tonnes annually once full production starts, sometime in the third quarter.

Aur Resources (AUR-T) has been operating its Andacollo mine, near La Serena, since mid-1997 and has seen its production cost fall to US53 cents per lb. (US$1,168 per tonne). Aur and 30% partner Minera del Pacifico had budgeted for costs closer to US58 cents. The mine, which is expected to produce around 21,000 tonnes of copper this year, has also amassed 500,000 man-hours without a lost-time accident.

Andacollo has a relatively small oxide orebody, having started the year with minable reserves of 28.2 million tonnes grading 0.74% copper. But a much larger body of primary mineralization has a preliminary resource of 600 million tonnes with an average grade of 0.4% copper and 0.13 grams gold per tonne, based on a cutoff grade of 0.3% copper.

A prefeasibility study is investigating the economics of bringing the primary deposit into production with a mill. Aur expects to have the results in hand before the end of the year.

Still, poor copper markets are taking their toll on the producers. London Metal Exchange (LME) prices have declined from just over US$2,200 per tonne (US$1 per lb.) at the end of 1996, to around US$1,650 per tonne (US75 cents per lb.) today. Lower prices have been hard on conventional copper operations, but SX-EW projects have not been unscathed.

Northern Chile’s Zaldivar mine has been lucky in seeing its production costs fall in tandem with the price of copper. Zaldivar, owned equally by Placer Dome (pdg-t) and Outokumpu, has been improving its cost performance, not least because of metallurgical upgrades and higher grades in the pit. Cash costs per lb. of copper in the first half of 1998 were down to US47 cents, against US61 cents for the full year in 1997. Total costs declined as well, to US70 cents in the first six months of 1998, compared with US86 cents for the whole of 1997.

Street talk has Placer putting its 50% stake in Zaldivar up for sale, consistent with the company’s intention to concentrate on gold production.

There is a similar picture at the Ivan-Zar mine, owned by Rayrock Resources (ray-t), where production increased to 5,400 tonnes in the first half of 1998 from 5,000 tonnes in the same period of 1997, and cash costs have fallen to US60 cents from US75 cents per lb.

One SX-EW project whose development has been stalled by the copper markets is Cerro Colorado in Panama’s western province of Chiriqui. Although the Panamanian government has granted Tiomin Resources (TIO-T) a 5-year extension on its development commitments, the company has temporarily closed the project.

Cerro had historically been impeded by the immense capital expense that a company would have to incur in developing it. The project’s economics had successively beaten back Canadian Javelin, Texasgulf, and British behemoth Rio Tinto (RTP-N).

Tiomin had negotiated more favorable tax and ownership structures with the Panamanian government, and was looking at how a smaller-scale SX-EW operation might provide initial cash flow to ease the cost of full-scale development of Cerro’s larger body of primary sulphide mineralization. Initial prefeasibility studies were favorable, suggesting the 136-million-tonne supergene body, which grades 0.56% copper, could be economically mined on its own, allowing the primary mineralization to be brought on-stream when conditions warranted.

Tiomin held the property under a contract between its local subsidiary, Panacobre, and the state mining enterprise Codemin. Panacobre’s original contract had obliged it to pay US$4 million once a positive feasibility study was complete. Kvaerner Metals Davy completed its feasibility study in early 1998, and Tiomin turned it over to Codemin, while, at the same time, applying for the government for relief from the terms of the contract.

Under the terms of the extension, the clock has effectively stopped running for Cerro Colorado, and Tiomin’s contractual obligation for the $4-million payment is on hold. The clock will start again once the LME copper price advances beyond US$2,600 per tonne and stays there for 90 consecutive days; then Tiomin must pay the US$4 million and has a year to start construction on the mine.

Kvaerner’s feasibility study concluded that the project was feasible at a production rate of 25,000-27,000 tonnes of copper cathode per year. The firm estimated a US$200-million capital cost and cash costs of US49 cents per lb. (US$1,080 per tonne).

At the same time, Kvaerner delivered a prefeasibility study on the primary deposit, which estimated a 100,000-tonne-per-day milling operation would produce 180,000-225,000 tonnes of copper (in concentrate) annually, at a unit cost around US64 cents per lb. or US$1,410 per tonne. Building the mine and mill, with additional infrastructure including a bulk terminal, would cost US$1 billion.

Another big project awaiting better times for copper is the Cambior (CBJ-T) development at La Granja in Peru’s Cajamarca province. Cambior acquired a full interest in the property in May of 1997 when it submitted a feasibility study to the Peruvian state mining agency, Minera Peru, which retained a 5% net smelter return.

La Granja has proven and probable reserves of 2.3 billion tonnes grading 0.59% copper, plus 4.2 grams silver and 0.05 gram gold. That minable reserve includes 392 million tonnes of leachable material gradin
g 0.42% copper, suitable for SX-EW, but Cambior has decided La Granja is not yet ready for the show.

Faced with the current low copper market, Cambior cut back its 1998 program, limiting the work to securing local land rights and completing the environmental permitting process. A final feasibility study and production decision await a higher price for copper.