Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr
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NEWS-LEADING DEVELOPMENTS JANUARY 2017 • E&MJ; 5 www.e-mj.com which includes an operating smelter, the hydroelectric facilities at Kinlochleven and Lochaber, as well as all associated land. SIMEC's intention is that the smelt- er will be operated by the Liberty House Group, its sister company within the in- ternational GFG Alliance. In addition to improving the perfor- mance of its asset base, Rio Tinto is also committed to investing in growing the business. In the near term, this will be delivered via three high-quality growth projects—Silvergrass (iron ore in Western Australia), Amrun (bauxite in Queensland) and Oyu Tolgoi (copper and gold in Mon- golia). This investment underpins an an- nual average copper equivalent growth in excess of 2% between 2015 and 2025. Longer term, exploration remains a priori- ty for Rio Tinto. Regarding iron ore production, Rio Tinto set out the high-value options avail- able to optimize its Pilbara system, with a focus on value over volume. This includes potential enhancement of mine capacity through productivity improvements and replacement of depletion through low capital cost brownfield investment, in- cluding Yandicoogina Oxbow and West Angelas Deposit F. The approximately 20 million-metric-ton-per-year (mt/y) Silver- grass project with a capital intensity of $29/mt and an IRR of more than 100% remains on track for completion in the second half of 2017. Over the next three years, sustain- ing capital expenditure in the Pilbara is expected to be around $2.2 billion and replacement mine capital expenditure around $1 billion. One option following the brownfield replacement mines is the next greenfield Pilbara development, Koodaideri, with capacity of around 40 million mt/y and capital expenditure of around $2.2 billion from late 2019. First ore will potentially be available by 2021. The AutoHaul project is expected to advance progressively during 2017 and be fully implemented by the end of 2018. Pilbara shipment guidance for 2017 re- mains at 330 million-340 million mt/y of iron ore. Rio Tinto Aluminum remains globally the highest margin aluminum business, according to the company. The aluminum product group is on track to deliver 2016 cost savings of $300 million. Initiatives are under way in the aluminum business to further reduce costs and increase pro- ductivity, including more than 250 initia- tives in bauxite and more than 500 initia- tives in each of the alumina refining and aluminum smelting businesses. The Amrun bauxite project remains on schedule and on budget. Production guid- ance for 2017: Aluminum, 3.5 million to 3.7 million mt; alumina, 8 million to 8.2 million mt; and bauxite, 48 million to 50 million mt. Majors Maintain Gold Reserves At the end of 2015, the top 20 gold-pro- ducing companies held more than 760 million ounces (oz) of gold reserves— sufficient for 16 years of production at 2015 rates, according to SNL Metals & Mining. They accomplished this while in- creasing their combined production 7% over the previous 10 years, from 39.7 million oz in 2006 to 42.5 million oz in 2015, and producing a total of 403 mil- lion oz of gold. At the same time, the 20 major gold companies replaced an average of 151% of their production over the period through a combination of acquisitions and explo- ration. They added 670.9 million oz of re- serves through acquisition and exploration with costs totaling $77.7 billion between 2006 and 2015, for an average cost of $115.81/oz of gold. Among the 20 companies, 16 had positive reserves growth, net of produc- tion, and four had negative net growth, with Polyus Gold and Newcrest Mining leading with the highest growth. In terms of reserves-replacement rate, China Na- tional Gold topped the list, replacing 400% of its 9.4 million oz of production, and Polyus Gold and Zijin Mining shared second place, each with a replacement rate of 370%. Nineteen of the 20 companies made acquisitions during the period, buying more than 253 million oz of gold reserves for $61.02 billion, for an average cost of $241/oz. Barrick Gold topped the list, having acquired more than 60.4 million oz of gold reserves between 2006 and 2015 at an average cost of $177.25/oz. Gold Fields took second place with the acquisition of 37.4 million oz. The group developed 417.7 million oz of gold reserves by budgeting $16.68 billion, or $39.93/oz, for gold exploration. Polyus added 55.8 million oz by budgeting $567 million, or $10.17/oz, followed by AngloGold Ashanti, which added 44.2 mil- lion oz with exploration budgets totaling $2.53 billion, an average of $57.29/oz. Only 11 of the 20 major gold producers reported shares in large discoveries, either alone or in joint ventures, AngloGold being the most successful with 73.3 million oz of gold in reserves and resources found in 7.1 attributable discoveries. Barrick was next with 31.6 million oz in 3.3 attributable discoveries. Polyus had three attributable discoveries containing 22.7 million oz.