Engineering & Mining Journal

MAR 2013

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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REGIONAL NEWS - ASIA Oyu Tolgoi Produces First Concentrate Ore containing copper and gold undergoes flotation at Oyu Tolgoi's 100,000-mt/d concentrator. The Oyu Tolgoi copper-gold project in the South Gobi region of Mongolia produced its first copper-gold concentrate on January 31, 2013, following the start of ore processing through the concentrator on January 2. The project is owned 66% by Turquoise Hill Resources of Vancouver, Canada, and 34% by the Mongolian government. Rio Tinto holds a 51% controlling interest in Turquoise Hill Resources and is the project manager. In a project update released on February 14, 2013, Turquoise Hill reported that construction of the first phase of Oyu Tolgoi development was 99% complete as of yearend 2012. Capital invested in first-phase construction totaled $6 billion as of that date. The final capital cost of first-phase construction is expected to come in at $6.2 billion, within 3% of the initial budget, excluding foreign-exchange exposures. The Turquoise Hill Resources update also noted that the government of Mongolia has recently raised a number of substantive issues relating to implementation of the Oyu Tolgoi project Investment Agreement, the companion Shareholders' Agreement, and project finance. "Turquoise Hill continues to engage with the government and other stakeholders to ensure the continued implementa20 E&MJ; • MARCH 2013 tion of the Investment and Shareholders' agreements in their current form, and to support the on-going development of Oyu Tolgoi for the benefit of all parties. Subject to the resolution of these issues, first commercial production at Oyu Tolgoi is scheduled to commence by the end of June 2013," the Turquoise Hill update said. Phase-one Oyu Tolgoi mine production is from the Southern Oyu open pit. The concentrator has an initial throughput capacity of 100,000 mt/d. A feasibility study for an expansion of operations at Oyu Tolgoi is on-going and is now expected to be completed in the first half of 2014 as the company continues to pursue value engineering and optimization. Planning for the expansion is based on development of an 85,000-mt/d underground block cave mine and an expected increase in concentrator throughput capacity to 160,000 mt/d. Xstrata a Step Closer at Tampakan The Philippines government has given Sagittarius Mines an environmental compliance certificate (ECC) for its $5.9-billion Tampakan mine, moving the company closer to bringing the highly anticipated project to fruition. Sagittarius is primarily owned by Xstrata with Australia's Indophil Resources holding a 37.5% interest. Development of the project, which is touted as Southeast Asia's largest coppergold prospect, has been delayed by a ban on open-pit mining that was imposed by the provincial government of South Cotabato in 2010. The ban does not conform with national mining laws. The ECC means Sagittarius can move forward with construction of the project if the ban is lifted. The company still needs at least three more local permits before construction can begin. Mining companies affected by the ban are pinning hopes on a change in governor at the May local elections, which may herald a more mining-friendly council. "We received an official notification that the Department of Environment and Natural Resources has signed the ECC for our Tampakan mine project," said Sagittarius' manager of contracts and procurement Nick Treweeke. The Tampakan mine is expected to yield 15 million mt of copper and 17.6 million oz of gold over a 17-year lifespan. The proposed mine site covers about 10,000 hectares and is between the towns of Tampakan, South Cotabato and Kiblawan, Davao del Sur in southern Mindanao. The proposed mining operation would also incorporate other infrastructure outside the mine site, including: • A coal-fired power station; • A filter plant; • A port to transport the copper-gold concentrate to international customers and to import coal; • A copper-gold concentrate pipeline from the mine site to the port; and • Power transmission lines from the power station to the mine site. If approved, the mine is estimated to yield an average 375,000 mt/y of copper and 360,000 oz/y of gold in concentrate. Due to the hurdles, Sagittarius has pushed back the target date to start production at Tampakan by three years to 2019, in a bid to gain the necessary approvals. The project delay means actual national mining investments between 2012 and 2016 are expected to fall short of a previous government forecast of $12 billion for the period. Sagittarius had filed for an ECC in 2010, shortly before the local council of South Cotabato banned open-pit mining. www.e-mj.com

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