Expansion strategy inks the zinc

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 09 Aug 2012   Posted by admin

AS part of the international Xstrata group, Xstrata Zinc is one of the world’s largest zinc and cobalt producers, boasting operations and exploration projects in Australia, Canada, Germany, Peru, Spain and the UK.
Its Australian mine portfolio comprises a range of open pit and underground operations in the highly-prospective Mount Isa region of Northern Queensland.
These include projects operated by Xstrata Mount Isa Mines (XMIM: jointly owned by Xstrata Zinc and Xstrata Copper); the Lady Loretta zinc-lead mine (currently under construction); and the McArthur
River open pit zinc-lead mine in the Northern Territory, operated by Xstrata Zinc’s wholly-owned subsidiary McArthur River Mine (MRM).
Xstrata Zinc’s assets in and around Mount Isa constitute the world’s largest zinc resource base.
As of December 2011, its resources in the Mount Isa region included 654 million tonnes of zinc and 533mt of copper (measured, indicated and inferred).
Following a 91 per cent increase in its identified zinc-lead reserves since 2005, Xstrata Zinc has committed $1.1 billion to growth projects in the region and already has a number of development proposals under way.
Xstrata Mount Isa Mines XMIM operates two separate mining and processing streams – copper and zinc-lead-silver – which together form one of the largest underground mining operations in the world.
XMIM is a significant contributor to the  Queensland state economy: studies have shown that 57 per cent of employment in Mount Isa is indirectly generated by  XMIM, including 5767 direct employees and contractors at the company’s operations in the region.
In addition to domestic sales, XMIM exports to 16 countries throughout Asia, Europe, the US and the UK.
XMIM’s assets comprise the George Fisher zinc-lead underground mine, which has a current production rate of 3.1 million tonnes per annum, and two open pit zinc-lead mines: Handlebar Hill and Black Star.
XMIM also operates a concentrator with a 6.5mtpa throughput capacity, as well as a lead smelter.
George Fisher
In late 2010 approvals were finalised forthe $274 million expansion of the George Fisher mine, 20km from the Mount Isa township, which will increase annual production rates by almost 30 per cent to 4.5mt by 2013.
The expansion, which involves the development of a second hoisting shaft and associated infrastructure to service the northern area of the mine, will create  an additional 250 contractor jobs during construction and employ 120 staff once in operation.
Of the allocated funds, $36 million will be used for a new crushing facility at the mine that will process 40 per cent of zinc-lead ore from the company’s Mount Isa operations.
Handlebar Hill and Black Star
In May 2011, Xstrata Zinc announced that it would invest a further $30 million to extend the life of the Handlebar Hill open cut zinc-lead mine, 20km north of Mount Isa, by one year (to 2014).
The stage three expansion follows improvements in mining methods and metallurgic performance since the mine was approved in 2007.
Developing a narrow cutback to the south of the pit and targeting deeper ore from under the first two stages of development will add about 1mt of ore grading 8.7 per cent zinc, 2.7 per cent lead and 44 grams per tonne of silver to the existing open pit reserves.
In 2010, Xstrata Zinc announced a $133 million expansion of the Black Star open cut zinc-lead mine, which will extend its life by four years to 2016. The project is currently in pre-feasibility stage. Expansion
XMIM said expansion of its Mount Isa underground and open pit operations was necessary to maintain production.
As part of its expansion plans, XMIM is investigating the viability of a large multi-commodity open pit mine that will extend the life of the existing Mount Isa  operations by between 20 and 30 years beyond its current mine life of 2032.
The company said that without the newopen pit mine, copper mining operations
would cease in 2021.
In August 2011, XMIM commissioned a $47 million pre-feasibility study to determine the viability of a new open pit mine.
The study is expected to be completed in 2013, after which a decision will be made on whether to proceed to the next stage.
The proposed open pit mine will encompass the existing open pit and underground operations on the XMIM  mining lease and, should approvals be granted, the company anticipates  production to begin in 2016.
Xstrata Zinc has already shown there is potential to mine and process at least 340mt of zinc-lead ore and 130mt of copper ore by large-scale open pit mining    methods, and the expanded facilities   would continue to process copper and zinc-lead ore from existing Xstrata-owned
mines in the region.
XMIM also plans to invest $360 million during the next five years on additional
environmental management programs.
Copper phase-out XMIM reported that to sustain its Mount Isa operations it must expand its current lead and zinc mining and concentrate operations, but phase out copper smelting at Mount Isa and its copper refining operations in Townsville by the end of 2016.
In a statement, Xstrata Copper North Queensland chief operating officer Steve de Kruijff said this was a necessary response to changing global market conditions.
“Market conditions have been very challenging for copper smelting and refining operations as a result of overcapacity in the global market, low treatment and refining charges, and increasing operating and capital costs,” he said.
“The economic viability of our Mount Isa copper smelting and refining operations has been under increasing pressure for a number of years and cannot be sustained in the long term.
“We need to evolve our business to ensure we can secure the future of our operations.”
Lady Loretta mine
The $246 million greenfield Lady Loretta underground mine construction project, 140km north-northwest of Mt Isa, is well ahead of schedule and on track to begin production later this year.
Xstrata Zinc assumed sole ownership of the Lady Loretta deposit in April 2011, following its acquisition of the remaining 25 per cent stake in the project. Construction began in July 2011, and the mine’s higher-grade zinc will eventually improve the overall quality of the Mount Isa resource base: increasing annual average zinc production from the region by about 20 per cent to 100,000t.
The high-grade zinc-lead-silver mine was originally expected to be completed bylate 2013. However, further expenditureof $57 million was approved in May 2012 to accelerate development of the mine, increasing the expected annual ore production rate from 1mt to 1.2mt.
Work is underway to secure key equipment and redesign the development infrastructure, mining plan and associated road upgrades to accommodate the increased annual ore volume.to 13.3mt in December 2011.
The amount of contained zinc metal was increased by 12 per cent to 1.4mt and contained lead metal by 10 per cent to 448,000t for a 12-year mine life.
“We are accelerating the delivery of ore from Lady Loretta to Mount Isa by developing the upper ore bodies independently to the deeper underground resources,” Xstrata Zinc Australia chief operating officer Brian Hearne said in a recent statement.
The Lady Loretta development brings total capital expenditure on current Xstrata Zinc development projects in the Mount Isa region to $800 million, and it is anticipated that the expansion of the Lady Loretta and Handlebar Hill operations will generate a net increase in annual zinc production of 5 per cent (or 25,000t).
Mr Hearne said that the expansion of both mines through a total additional investment of $87 million would realise significant value from the company’s Australian Zinc business, and generate an estimated 30 new direct jobs. McArthur River mine MRM is the world’s largest producer of zinc in bulk concentrate form, and supplies 70 per cent of global demand for bulk high-grade zinc-lead-silver concentrate.
Although now an open pit mine, McArthur River was originally an underground operation that began mining 1995.
In 2006, the Northern Territory Government approved a $110 million open pit development.
The company has proposed a $270 million expansion of the operation to increase mineable reserves from an
identified 53mt to 115mt, extending the mine life by nine years to 2036.
A draft environmental impact statement (EIS) released in January 2012revealed that the expansion project would deliver many benefits to the Northern   Territory.
The EIS proposed increasing capacity at the mine from 2.5mtpa to 5.5mtpa, to produce about 800,000 dry metric tonnes  per annum of zinc-lead concentrate  export markets, and an anticipated 20mt  of zinc-lead concentrate for export during the mine’s lifetime.
It is thought that the expansion will increase MRM’s operational workforce by 67 per cent, creating 295 new jobs when in operation and bringing the total peak workforce to 735 by 2020.
The company has also proposed extending the life of the MRM Community Benefits Trust to 2036, which will allowan additional $11.3 million to be invested in the community.
The MRM Community Benefits Trust, established by the Northern Territory Government and MRM, is designed to deliver long-term economic and social benefits by funding local initiatives such as education, social and community development.
This includes MRM’s commitment to achieve 20 per cent indigenous workforce participation at the McArthur River mine.
The expansion project is expected to boost industry output by $8.4 billion within the Northern Territory and $9.3 billion nationally during construction, operational and decommissioning stages. “Our earlier estimates have now gone through the robust process of an EIS and we’re looking at being able to offer more jobs, a longer mine life and greater financial investment into the community in which we operate, and the Northern Territory and Australian economies,” Mr Hearne said.
The proposed expansion of the mine is in the feasibility study stage and is subject to approval by Xstrata.
The accelerated development of Lady Loretta was supported by an increase in total resources from 12.6mt in June 2010

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