Shortage leads to `black market’ for sodium cyanide

Sodium cyanide, essential in the recovery of most gold produced today, is in such short supply that a “black market” has developed for the chemical driving prices up sharply for those without an assured supply thereby threatening to increase their over-all cost of production.

Whereas sodium cyanide has been selling on average for about $3 per kg on a contract basis, the commodity now fetches about $5 per kg if you can find an unlicensed seller.

Usage and cost of cyanide for a mine operation differ according to the geology, size and type of mining operation. The owner of an underground gold mine set to enter production early in 1989 in northern Ontario is estimating a cyanide cost of $15.75 per oz for next year, whereas, a significant heap-leach operator in the southwestern United States with interests in several mines, estimates its average cyanide cost to be $6-$12 per oz.

“It’s available if you’re prepared to pay the price,” the manager of a new gold mine in the southwestern United States said after discussing the problems his company had in obtaining a supply of the chemical for start-up purposes. He said management has since acquired a long- term contract for the chemical.

Cause of the world-wide shortage is attributed to the hectic activity in the gold mining industry the last few years and the number of projects which have come on stream.

Chemical production of sodium cyanide is running at about 95%, an industry source said, adding that plant maintenance shutdowns this past summer did nothing to help the situation. And relief is more than a year away, he said; new North American capacity is not expected to start making a difference until the end of 1989 or beginning of 1990. Dissolves gold

The importance of cyanide to the mining industry is that the chemical is one of the few which can dissolve gold. The Northern Miner’s Mining Oil & Gas Explained describes the chemical as being “very poisonous and dissolves easily in water.” In solution and in the presence of oxygen, cyanide liberates gold from waste rock without attacking the host ore. (The gold is then separated from the cyanide by either the Merrill-Crowe or carbon- in-pulp process.)

Interestingly, there is no producer of sodium cyanide in Canada, despite the country’s long history of mining. One manufacturer in the country, Cyanamid Canada, does produce a competing chemical, calcium cyanide, which is sometimes referred to as black cyanide.

Processing or other requirements may dictate a mining company’s preference for one cyanide product over the other; base and precious metals giant Noranda Inc. (TSE) uses the sodium variety, while gold producer LAC Minerals (TSE) buys the calcium type.

Calcium cyanide, sold in bulk and shipped as a dry product, is described as containing about 48% the equivalent strength of sodium cyanide. (The calcium variety is priced competitively on a 100% real basis, delivered to the customer.) The sodium variety is sold in Canada in either briquette or granular form.

Substitutions for cyanide in the milling process appear not to have attracted much of a market following. Alternate supplies

Senior mining companies with long-term contracts would seem to have the least to fear in a shortfall situation. But one company, Noranda, is considering the possibility of securing alternate supplies of cyanide.

“While we haven’t had any shortage, we’re aware of the world condition and are watching it carefully,” said a Noranda Minerals chemical commodities purchaser, Michael Mason. “We’re looking at alternatives such as calcium cyanide, which previously was thought not to be practical.”

Recently joining the supplier side of the sodium cyanide market in the U.S. was Korben International Corp., a trading company involved in the import and export of industrial chemicals.

“Business is good,” co-owner Ben Cohn said in a telephone interview from his New York state office. “To us, the shortage seems very acute.”

The company, which purchases its supplies of the chemical from offshore, began offering sodium cyanide only within the last year.

Not a natural product, cyanide is currently produced in the U.S. only by E.I du Pont, which is planning an expansion of its Memphis, Tenn., facility and new plants for Texas and Mexico in 1989 and 1990, respectively. Major producers set to come on to the sodium cyanide market in the U.S. in the next few years include Degussa and FMC.

Account manager Robert Champ of Du Pont Canada in Calgary said his company forecasts the current rate of demand for sodium cyanide will last through to mid-1990.

Uli Miersch of Degussa Canada in Burlington, Ont., said about 85% of the sodium cyanide produced is used by the mining industry, with the electroplating and chemical synthesis businesses accounting for most of the balance.