JOURNALLondon,July 14, 2000Volume 335No. 8591

Established 1835ISSN 0026-5225 http://www.mining-journal.com

In what is described by its chairman,Nicky Oppenheimer, as “one of themost significant developments the dia-mond industry has seen since the1930s”, De Beers this week unveiled anew strategy whereby it will abandonits long-held role as custodian of thediamond market, and focus instead onboosting demand. Since the depressionyears of the 1930s when the price of dia-monds slumped, De Beers has stock-piled the world’s surplus diamonds as ameans of controlling supply (andprices). Under the new strategy, thestockpile is not being eliminated but itwill be substantially reduced – to aworking level of around six months’supply, equivalent to some US$2.5 bil-lion. According to Gareth Penny, theDe Beers executive mainly responsiblefor developing the new strategy, theworking-stock level should be achievedtowards the end of next year, or evensooner. At the end of 1999, it stood atUS$3.9 billion.

De Beers will no longer underwritethe market as a buyer of last resort.

Instead, it aims to be the ‘supplier ofchoice’. However, it currently sellsabout two thirds of the world’s annualsupply of rough diamonds, and themines that it manages contribute about40% of world production. Hence itremains very much the dominant play-er, and intends to continue to sell dia-monds to selected clients through itsregular sales or ‘sights’ held roughlyevery five weeks.

There will be some marked changesthough in how the sights are conducted.At present, they are characterised bytheir opacity. The 125 selectedsightholders or diamantaires – it is esti-mated that as many as 900 diaman-taires are on the ‘waiting list’ – have noformal contract with De Beers, nor anycontrol over the quality, quantity or theprice of the ‘parcel’ of diamonds theyare offered. De Beers decides what themarket can absorb and customers aregiven their allocations accordingly on atake-it-or-leave-it basis. As from Julynext year, legal contracts with thesightholders Continued on p.19

De Beers’ newstrategy

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REGULATED BY THE SFA

Inside• Gold threat adds to

Zimbabwe’s woes (p.23)

• Freeport’s copper shipmentsfall (p.27)

• Analyst’s poll of forecastbase metal prices for 2000and 2001 (p.30)

• Alcoa earnings keep rising(p.32)

Falconbridgejoins in Gag

The Canadian nickel producerFalconbridge Ltd is to join the GagIsland lateritic nickel project, in theeastern part of the Indonesian archipel-ago, as project manager of a new jointventure. Gag Island is currently held75% by Broken Hill Proprietary Co.Ltd (BHP) of Australia and 25% bythe Indonesian mining company PTAneka Tambang. Falconbridge willearn a 37.5% interest from BHP byinvesting US$75 million in the project,with BHP retaining 37.5% and AnekaTambang 25%.

BHP has been planning to bring in apartner experienced in the nickel busi-ness, and the funds injected byFalconbridge will be directed mainlytowards completing a feasibility study,over the next two years, under theCanadian company’s management.According to BHP, the feasibility study“may lead to development of the pro-ject”, but the company stresses thatthere is no commitment to proceedbeyond feasibility at this stage.

Establishment of the joint venture issubject to a number of conditions, ofwhich three are highlighted as key.First is the clarification of commercialarrangements with Aneka Tambang.The latter’s interest in Gag Island, aseventh generation Contract of Work,is currently described as 15% free-car-ried and 10% loan carried, with anoption to gain an additional 20% inter-est after 13 years of commercial opera-tion. Although publicly listed on theJakarta Stock Exchange, with a sec-ondary listing in Australia, AnekaTambang is still controlled by theIndonesian Government which holds a65% interest in the company. The gov-ernment plans to dispose of a further14%, but would still retain control at51%.

The second condition is clarificationof the forestry classification of the landon Gag Island. Commentators inIndonesia have expressed concern overa new law which threatens to ban open-pit mining in protected forest areas(MJ, April 14, p.282). Thirdly, thescope of work for the proposed feasibili-ty study needs to be established.

Gag Island has a total resource of240 Mt, including both oxide and sili-cate zones, at an average grade of

1.35% Ni and 0.08% Co. The mea-sured and indicated portions total 12Mt and 93 Mt respectively. Accordingto Aneka Tambang, feasibility workcarried out in 1999 envisaged potentialproduction of 61,000 t/y of nickel, anda capital cost of US$1.16 billion. ■■

(Photograph courtesy of De Beers).

Personal copy; not for onward transmission

JOURNAL

COMMENT

WORLD GOLDPaul Burton ACSM, M.Sc., MBA

Helen Payne M.Sc., DIC

MINING MAGAZINEJohn Chadwick B.Sc.

Des Clifford B.Sc.

SUPPLEMENTS/REPORTSAustin Wheeler B.Eng.

MINING ENVIRONMENTAL MANAGEMENTTracey Khanna M.Sc., MCSM

CONSTRUCTION PUBLICATIONSIan Clarke B.Sc.

Alan Kennedy B.Sc.Mike Smith HND (Min.)

RESEARCH SERVICESIris Moncrieff

Editorial Consultant & ChairmanMichael West B.Sc., F.Eng.

Managing Director & PublisherLawrence Williams B.Sc., C.Eng.

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MJ

In the industrialised countries waste dis-posal is a mounting problem; the millionsof tonnes being generated each year by a

throw-away consumer society are rapidlyexhausting available landfill sites and thereis environmental opposition to creating newsites or to the alternative, incineration. Insome instances it has been deemed expedi-ent to pay to export the rubbish to develop-ing countries where revenue from whateversource is very much to be welcomed.

For many developing nations, however, byfar the most important source of revenuesand foreign exchange is their mineralresources. Here again, it is a convenientarrangement; mines in remote parts of theworld are relied upon to meet the raw mate-rials needs of the affluent society of thedeveloped nations who much prefer not tohave an unsightly mining operation on theirdoorstep. It is an imperfect solution but onewhich is mutually beneficial.

But mining also generates waste, andworldwide an estimated 3,000 Mt is pro-duced each year from metal mining alone.Much of the overburden and mined waste isinert and stored safely above ground or usedto backfill previous mining areas (open-pitand underground). A significant proportion,as processed waste, is stored in tailingsponds which may or may not contain quanti-ties of heavy metals. The safe containmentof such waste, or lack of it in recentinstances, has probably generated moreadverse publicity for mining than any othersingle issue.

In Papua New Guinea, the Ok Tedi copper-gold mine was developed controversially inthe mid-1980s without a tailings impound-ment area because the steep topography atthe mine site precluded dam construction.Tailings are consigned directly into the FlyRiver system and the operation has beenplagued by complaints about pollution. Themajority owner, BHP, is considering sellingits 53% stake or halting operations early –remaining resources are sufficient for tenyears – and a recent World Bank report hasrecommended Ok Tedi’s closure on environ-mental grounds. The PNG Government, how-ever, is anxious that operations continue.

Ok Tedi is a prime example of the range ofcontradictions, dilemmas and socio-political/environmental problems faced by govern-ments, local communities and mining com-panies when attempting to extract mineralsand metals for the greater human societyand for the betterment of local communitiesand national income. Commentary on theseissues is predominantly from non-govern-mental organisations, mainly based in theindustrialised countries. It is instructive,therefore, to receive a viewpoint from thedeveloping world and from someone withdirect knowledge of the local situation (thisissue, p.19).

Professor Bordia, head of the departmentof mining engineering at the PNG Universityof Technology at Lae, is forthright. He readi-ly concurs that any major development suchas mining will disturb the environment butargues that often it is the only source oflivelihood for the local populace. Local com-munities, provincial and national govern-ments, he says, will accept such develop-ment, as long as the economic trade-offs aresufficient to compensate for environmentaldamage.

The total economic benefits and spin-offsfrom Ok Tedi are huge by any world stan-dards. The local town, once a hamlet of 500,now has a population of about 10,000, andmore than 50,000 people are estimated todepend on income generated by the mine.There is no social security net in a develop-ing country such as PNG, and ProfessorBordia contends that on balance most peo-ple in PNG’s Western Province (where themine is located) would like to see its contin-uation.

For those environmental lobbyists “whoare located far away from the real scene ofaction, where their governments takecare of their livelihood”, his message is sim-ple – their efforts should be directedtowards forcing governments in emergingcountries to create basic social securitysupport for the poor. Only when poverty isbanished can the problems of pollution andenvironmental damage be resolved.Ultimately, he argues, poverty is by far theworst polluter.

18 Mining Journal, London, July 14, 2000

Change High- 52-weekon week Low Max/Min

Share Indices Jul 12 (%) (%)FT 30 3,741 0.5 38 4,103-3,521US Dow Jones 10,784 2.9 55 11,551-9,857FTSE Gold Mines 788 1.5 16 1,232-702Australian All Mining 677 2.9 46 771-597South African Gold 985 –0.9 32 1,358-807Toronto Met/Min 3,425 2.2 11 4,749-3,266Nikkei Dow 17,342 –0.5 27 20,833-16,044Hang Seng 17,552 6.5 90 18,096-12,438

Commodity Prices Jul 12Gold (London) $280.50 –2.2 38 $324-254Copper (LME) $1,790.50 1.4 68 $1,877.5-1,609Aluminium (U.S. prod.) 64.50c 0.0 44 69-61Brent Blend (dated) $30.29 0.1 93 $31.16-18.64

LEADING INDICATORSChange High- 52-weekon week Low Max/Min

HSBC Indices Jul 12 (%) (%)(100 on 31/12/88 except*†)

Global Mining 119 3.6 26 146-109Global Diversified Mining 156 3.8 29 198-139Smaller Mining Companies 46 –0.8 20 59-43Global Base Metal Index 149 4.7 15 204-140North American Base Metal 347 5.9 15 489-322Global Gold Index 53 0.9 8 78-51Global Gold Ex S Africa 60 1.7 14 85-56North American Gold 69 1.8 17 97-63Global Coal Mining† 141 2.5 26 188-124Other Metals/Minerals† 272 3.1 100 272-219Latin American Mining* 246 0.9 61 286-182Latin American (Ex CVRD)* 139 4.3 24 184-125*100 on 31.12.89 †100 on 31/12/85

De Beers unveilsstrategy

will be introduced, and Mr Penny says that“the level of supply will be justified againstevidence of marketing criteria”. A pilot sys-tem that gives sightholders supply commit-ments for six months at a time is already inoperation, and Mr Penny expects this to“migrate in time into a much more commit-ted set of arrangements which will be indi-vidually tailored, reflecting market abili-ties”. In order to deliver marketingimprovements, Mr Penny predicts thatsightholders will have to work much moreclosely with retailers.

Greater emphasis on marketing is seen asthe key to increasing demand for diamondsand De Beers is calling on the rest of theindustry to match its own efforts, hence thepreferential treatment that will be given tothose diamantaires who market and distrib-ute diamonds most efficiently. De Beers willspend US$170 million on international mar-keting this year but for the industry overall,the annual spend on marketing is little morethan 1% of retail sales revenue. This com-pares with annual expenditure of 6-10% forthe luxury goods market as a whole. Theluxury goods market is growing at 10% peryear and De Beers’ managing director,Gary Ralfe, says there is “a huge untappedpotential” for the diamond business tomatch the growth rates enjoyed by leadingluxury goods companies. He sees the brand-ing of diamonds as a catalyst for suchgrowth.

De Beers’ London-based marketing arm,Diamond Trading Co., is set to play a muchmore prominent role under the new strategyand is being given a “powerful new identi-ty”. Until now, the DTC has been referredto as the company responsible for saleswithin the Central Selling Organisation butthe perpetuation of the CSO, with itsmonopolistic connotations, is no longerdeemed prudent. The DTC sorts and valuesthe rough diamonds shipped to London(into some 14,000 categories) and is at theinterface with sightholders.

To ensure continued consumer confi-dence, the new strategy includes the estab-lishment of a code of professional and ethi-cal standards – best practice principles –and the DTC will be responsible for ensur-ing that sightholders comply as a conditionof sale. These principles are intended toreassure customers in the distributionchain, as well as consumers, that the dia-monds they purchase are not, for example,so-called ‘conflict diamonds’.

Finally, De Beers says that it is offeringto sightholders an extensive package of“world-class value-added support services,including training, marketing, business-planning support and market research”.

Mr Oppenheimer believes the new strate-gy “places De Beers and its partners in astronger position to meet the business andconsumer challenges of the future”.

De Beers sources it diamonds principallyfrom its own mines in South Africa and fromthe mines it owns in partnerships with thegovernments of Botswana and Namibia. Italso purchases diamonds from Alrosa inRussia under a trade agreement whichextends until the end of next year, and 35%of the run-of-mine production from Ekati inCanada. A proportion has also been pur-chased until recently under contract fromSDM in Angola (a joint venture betweenstate-owned Endiama, Ashton of Australiaand Odebrecht of Brazil). Negligibleamounts of diamonds are now purchased onthe open market. ■■

Ok Tedi dilemmaThe environmental problems facing the OkTedi copper-gold mine in Papua NewGuinea have been well publicised, the eco-nomic implications of closure for the localcommunity less so. Professor Surek Bordia,Head of the Department of MiningEngineering at the University ofTechnology in Lae, Papua New Guinea, hasattempted to redress this imbalance*. Theoperating company, Ok Tedi Mining Ltd(OTML), is owned 53% by BHP, 17% byInmet Mining and 30% by the PNGGovernment, and produces close to 200,000t/y of copper in concentrates plus about400,000 oz/y of gold. In 1998, the operationaccounted for 20% of PNG’s total exportsand about 10% of GDP. Export sales in thatyear were Kn702 million (US$1.00 = kina2.47) and since 1984 total export sales havebeen well in excess of Kn6 billion.

There are 81 businesses in the local areaemploying 1,050 people, with a totalturnover in 1998 of Kn80.6 million, andcumulative gross turnovers to that year ofKn625 million. OTML directly employsaround 1,860 workers of whom only 163 areexpatriates. At the beginning of 1999, therewere 80 PNG companies servicing the minewith contracts valued at Kn209 million,and 45 overseas companies with contractsworth Kn35 million. Since 1982 until theend of 1998, Professor Bordia says thatsome Kn429 million were paid directly tothe government in taxes.

Total direct benefits to local communitiesto the end of 1998, as calculated by thePNG Chamber of Mines and Petroleum,amounted to Kn515 million, and includedroyalties (Kn82.3 million), landowner com-pensation (Kn93 million), education andtraining (Kn22.3 million) and infrastruc-ture development (Kn317 million). It isnow some 16 years since the start of produc-tion and it has been estimated that in excessof 50,000 people depend on income generat-ed by the mine.

So much for the economic benefits. Onthe environmental side, the problems ariseprincipally from the fact that tailings aredisposed of directly into the Fly Riverbecause steep topography precludes con-struction of a tailings dam. ProfessorBordia outlines the options being consid-ered to mitigate the environmental damage:the continuance of trial dredging in the low-er Ok Tedi area; to dredge and move tailingsby pipeline to a formed storage area; to doneither; to close the mine early. Mine clo-sure has been considered by BHP, andProfessor Bordia says that as the pit goesdeeper and costs rise the mine will becomeincreasingly marginal as compared withBHP’s other assets. Even without the envi-ronmental issues, he says, the mine isbecoming an economically unattractiveasset to manage and operate. (BHP hasalready paid A$110 million in compensa-tion in an out-of-court settlement with locallandowners in 1994, and analysts estimatethat early mine closure would necessitate awrite-down of A$250 million.)

Since Professor Bordia prepared hisanalysis, other options have been cited,including the sale of part of BHP’s stake toits partners, with the balance placed intrust for local villagers affected by the mine,and the government has said that it hasreceived unsolicited enquiries from tworesource companies interested in acquiringBHP’s stake (MJ, March 24, p.223).

Ok Tedi is located in the rugged StarMountains of PNG’s Western Province andProfessor Bordia says that prior to its devel-opment the people in the province were liv-ing in abject poverty with no access to gov-ernment services because of their remote-ness from Port Moresby. The mine, he says,has brought tremendous economic benefitsto the province, especially along the FlyRiver delta. There is some opposition tomining continuing in the lower Fly Riverarea, and he says that most of the new eco-nomic and social studies should be donethere to measure the extent of the damageand the economic trade-offs against thisdamage. On the whole, however, ProfessorBordia says that the people of WesternProvince would like to see the continuationof mining operations. He believes that theOk Tedi dilemma mirrors real-life condi-tions everywhere in the developing world(Comment, p.18). ■■

*‘Metals & the Environment-Socio-Economic DilemmaFacing Developing Countries’ was presented during theECOW’99 workshop in Cairns.

Castromil licencerefusal confirmed

Dublin-based MinMet plc announced lastFriday that the Government of Portugalhas refused to grant the company a mininglicence for its Castromil gold-silver project,in northern Portugal. MinMet warned last

MINING WEEK

Mining Journal, London, July 14, 2000 19

Continued from p.17

Mining Centres of the World

JOHANNESBURGThe fourth in the series of Mining Journal's special supplements on Mining Centres of the World willfeature Johannesburg - the City of Gold - the centre for the huge South African mining industry. Untilrecently, Johannesburg has been the headquarters of (and is still the key office for) half a dozen of theworld's most important mining companies, as well as a large array of associated financial, engineering andmanufacturing companies. Most needs of the mining industry can be catered for within the Johannesburgmetropolitan area.

Mining Journal will publish the Special Supplement on Johannesburg at the beginning of September 2000to coincide with this year's Electra Mining Exhibition (one of the southern hemisphere's biggest miningevents) being held in the city, and at which the publication will be distributed to visitors. The supplementwill cover the whole spectrum of mining and mining-related companies and services located in the area.The supplement will thus follow the pattern of our previous 'Mining Centre' supplements, on London,Denver and Toronto, and will highlight major corporations and organisations. It will include maps locatingkey companies, details of access by public transport, accommodation etc, making it an invaluable guide forany mining executive visiting the city.

The supplement is being prepared for us by the African Mining editorial team in Johannesburg, inconjunction with our own editorial team in London. If you feel that you have relevant material to submit,please contact Paul Crankshaw in Johannesburg on (011) 622 4666 or e-mail: paul@mining.co.za or ChrisHinde in London on +44 20 7216 6060 e-mail: chris.hinde@mining-journal.com

The supplement will be sent as part of the normal subscription to Mining Journal's worldwide key miningindustry management readership in some 130 countries, as well as to visitors to the Electra Miningexhibition. It will also be available from our exhibit at MINEXPO 2000 in Las Vegas in mid-October.

Advertisements in the supplement are available at normal Mining Journal rates. The booking deadline isAugust 11th with copy required by August 18th at the latest. For details please call Mike Bellenger or FrankGordon on +44 20 7216 6060; fax: +44 20 7216 6050 or by e-mail to advertising@mining-journal.comIn Africa, call Bob Stephen on +27 11 952 1721 or by e-mail to bstephen@iafrica.com

month that the government had expressedenvironmental concerns during discussionof the details for a final mining licence forthe project (MJ, June 2, p.434), one of anumber which MinMet holds in Portugalthrough its wholly-owned subsidiaryConnary Minerals.

MinMet notes that the government“appears to cite additional environmentalconcerns and a delay in Connary not pro-viding expert studies on certain aspects ofthe Castromil mining plan by May 30”. Theproject lies close to residential areas. Thecompany contends that the government’sposition with regard to the apparent rea-sons for its denial of the mining licence “hasno legal basis”.

The expert reports in question were beingprepared by Knight Piésold (UK) Ltd forsubmission this Monday (July 10), coveringsix areas of the project’s plans: pit lining;cyanide management; water management;waste management; environmental man-agement; and mine closure. MinMet notesthat Connary had previously advised thePortuguese authorities that a short delaywould occur, attributed to the amount ofwork required, and considers that the gov-ernment, in the form of the InstitutoGeologico e Mineiro, has “moved with inde-cent haste” to rescind its decision ofDecember 1999 to grant the mining lease.

Although conceding that MinMet’semphasis has shifted to its South Americanexploration projects in the past year, thecompany’s chief executive, Michael Nolan,has expressed its determination to securethe Castromil mining lease, via the appealprocess, or to agree a compensation packagefrom the Portuguese Government. MinMethopes to begin talks with government offi-cials in Lisbon early next week. ■■

Navan in transitionShares in Navan Mining plc, the successorcompany to Navan Resources plc, begantrading this week following the official list-ing of the company on the London andDublin stock exchanges. A new UK-incor-porated holding company has been estab-lished, headquartered in the UK, to acquirethe old Navan (MJ, May 26, p.419). Navanhas made considerable strides since itsincorporation in Ireland in 1987. It hasgrown from an explorer with activities pri-marily in Ireland to a significant Europeanbase and precious metals producer. Irelandis retained in its exploration portfolio but,under a new management team, the mainfocus is now on gold-copper mining andexploration in Bulgaria, and base metalsproduction and exploration in Spain.

MINING WEEK

Mining Journal, London, July 14, 2000 21

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GIS Andes is a homogeneous information system of the entire AndesCordillera, covering an area of almost 4 million km2 and extendingfor some 8,500 km from the Guajira Peninsula in northern Venezuelato Tierra del Fuego in southern Argentina. Conceived as a tool forboth the mining sector (as an aid to minerals exploration), and theacademic sector (as an aid to developing new metallogenic models),GIS Andes is based on original syntheses and compilations.

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In southern Spain, the company hasachieved significant success since its acqui-sition of the Almagrera mining-milling-acidplant complex from the SpanishGovernment in 1997 and the developmentof the new Aguas Tenidas undergroundmine. This mine, 21 km from Almagrera, isbeing integrated into the processing opera-tions and will complement the low-gradeore feed from the Sotiel mine. AguasTenidas will not reach full production untilnext year but output is already exceedingexpectations.

Last year, Almagrera produced 22,200 t ofzinc, 4,100 t of lead and 2,600 t of copper.This year, zinc production should reach44,000 t, with a further 20% increase sched-uled for 2001. In 1999, the 1.0 Mt/y capacitySotiel mine contributed 410,000 t of ore at ahead grade of 4.77% Zn. At the 0.6 Mt/ycapacity Aguas Tenidas operation, produc-tion totalled 158,400 t of ore at a grade of7.24% Zn but 60% of production was devel-opment ore and the grade should rise accord-ingly as the proportion of stoping ore increas-es. Early this year, the first 23,000 t of ore runthrough the concentrator provided a headgrade of 9.1% Zn. Operating costs at theSpanish mines last year (excluding deprecia-tion but including mining, milling, manage-ment, administration and services) wereUS$44.17/t milled. The figure is high andreflects in part the development and trialmode of Aguas Tenidas, but it is considerablylower than the 1998 figure of US$51.27/t,and further improvement is anticipated.

Both Sotiel and Aguas Tenidas are vol-canic massive sulphide deposits and at thelatter, where proven and probable reservesamount to some 9 Mt, exploration is expect-ed to increase the resource base consider-ably. A new gold resource has also beenestablished in the hanging wall amountingto some 950,000 t at 1.5 g/t Au, 7.49% Zn,0.65% Cu, 1.37% Pb and 42 g/t Ag, andconsideration is being given to installing aCIL/CIP gold plant at the Almagrera com-plex. Elsewhere in southern Spain, the com-pany is still considering whether to proceedwith the Mazarron polymetallic projectnear Cartagena.

In Bulgaria, Navan acquired a 68% stakein Chelopech, Europe’s largest gold mine, in1994. It has now increased its effective hold-ing to 92% with the balance of ownershipheld by the government. The mine and millhave undergone major rehabilitation, andthe former practice of room-and-pillardevelopment is being eliminated in prepara-tion for a switch to more efficient, multi-directional sub-level caving. This is expect-ed to reduce development tonnage from30% of the total mined to 14%. Last year,the Chelopech mine and processing facilitytreated 612,232 t of ore (1998: 559,072 t),head grades of 1.54% Cu and 4.33 g/t Auwere achieved and production amounted to59,908 oz of gold and 8,143 t of copper. Totalsilver in concentrates was 70,402 oz.

Operating costs (excluding depreciation)totalled US$20.29/t milled (1998:US$21.62/t) and US$19/t is targeted by2001, by which time ore throughput shouldhave reached 800,000 t/y, copper output10,800 t/y and gold output 76,200 oz/y.Proven and probable reserves at Chelopechamount to some 5 Mt averaging 3.4 g/t Auand 1.5% Cu. Navan also has its largestexploration portfolio in Bulgaria.

Increased revenues as a result of thedevelopment at Aguas Tenidas and the revi-talisation of Chelopech enabled Navan toreturn a trading profit of US$5.8 million in1999 after a US$2.96 million loss in 1998,and although the retained loss for the yearwas US$7.37 million this compared with aloss of US$12.46 million in 1998. The com-pany says that arrangements withDeutsche Bank mean that it is now fullyfinanced to complete all its base capital anddevelopment plans and it expects to have aprofitable business by the end of the year,with a “significant improvement in 2001”. ■■

Zimbabwe gold minesat risk

According to Zimbabwe’s Chamber ofMines, the country’s gold mines are facing acritical shortage of foreign exchange and90% are “at risk” if the situation does notimprove.

Zimbabwe’s 25 mines employ a workforceof 35,000 and last year’s production of27,666 kg accounted for 3.5% of grossdomestic product and earned the country30% of its foreign exchange.

Under Zimbabwean law, gold minersmust sell their product to the centralReserve Bank. They are paid inZimbabwean dollars and the current rate ofexchange of Z$38 to one US dollar, whichhas remained unchanged for the past 18months, is proving too strong for the indus-try. One industry executive believes that adevaluation to around Z$50 to the US dollaris required if the industry is to survive.Another source of frustration is that goldproducers are not allowed to hold foreigncurrency accounts – such facilities arerestricted to direct exporters, and gold pro-ducers do not qualify because they sell theirproduction directly to the Reserve Bank.

Underlining the severity of the situation,Australia-based Delta Gold halted produc-tion last month at its Eureka mine becauseof the low gold price and the economic prob-lems in Zimbabwe (MJ, July 7, p.10). Thenew US$24 million mine was only openedlast December. This week, Falcon GoldZimbabwe Ltd suspended operations at itsVenice mine and warned of permanent clo-sure if a “meaningful devaluation of theZimbabwean dollar does not take placeshortly”. It said that it might be forced totake similar action at its Dalny and GoldQuarry mines before the end of the year. ■■

MINING WEEK

Mining Journal, London, July 14, 2000 23

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Coal represents some 90% of China’sprimary energy reserves, and in 1998the total output of 1,220 Mt

accounted for 75% of national primaryenergy production. In terms of equivalenttonnes of oil it consumed around 650 Mtcompared with 530 Mt in the US and aworld total of about 2,260 Mt. Coal supplies76% of the fuel requirements for China’spower industry, 80% of the commercialenergy for householders and 60% of the rawmaterial required for the chemicals sector.

The vast majority of coal produced is con-sumed domestically, and the main cause ofair pollution in China is from coal combus-tion. The damage to municipal buildingsand farm land alone, as a result of air pollu-tion from coal combustion, has an annualestimated economic cost of Yu16 billion(US$1.00 = Yu8.28), and this is withoutconsidering the cost to the nation’s health.

Because coal is likely to remain China’sprimary energy source for the foreseeablefuture, the introduction of clean-coal tech-nology is essential, not only to reduce airpollution but also to make coal utilisationmore efficient.

Emphasis on washingUnlike the situation in the US, Australia

and Europe where the focus is on researchinto advanced combustion systems as ameans of tackling air pollution, China hasyet to reach that stage. Instead, it is direct-ing its efforts towards developing andimproving methods for producing washedcoal, and the following article, contributedby Zhou Wei and Li Linqing of the ChinaCoal Preparation Design and ResearchInstitute in Pingdingshan*, outlines thecurrent status of coal preparation in China.

Until recently, less than one quarter ofChina’s total raw coal production, includingboth coking coal and steam coal, has beenwashed. The remainder is burned or usedwithout being cleaned. Coal washing, more-over, is concentrated in the coking coal sec-

tor, and the main priority over the next fewyears will be to increase the proportion ofsteam coal being washed. Coal-washingtechnology is low cost and its installationrequires only modest capital investmentcompared with other clean-coal technolo-gies. In China, medium- and high-sulphurcoals (sulphur content more than 2%)account for 11% of total annual coal pro-duction, and in about 65% of such coals thesulphur is contained in pyrites. Mr Zhousays that most of the ash content and 50-70% of the pyrite can be removed bymechanical separation.

At the end of 1997 (the latest comprehen-sive data), China’s major state-owned coalmines possessed 226 coal preparation plantswith a total washing capacity of 341 Mt/y.Of these, coking coal washeries numbered140, with a washing capacity of 187 Mt/y,and steam coal washeries numbered 86,with a capacity of 154 Mt/y. In addition,there were 176 local state-owned coal prepa-ration plants with a total design washingcapacity of 49 Mt/y. There are also quite anumber of private coal preparation plants,although these are rather small. In 1997,23% of the raw coal produced in China wascleaned. Of the total volume of coal washedof 318 Mt, the major state-owned coalpreparation plants washed 240 Mt.

The average washing capacity of thestate-owned plants is 1.4 Mt/y. The biggest

FOCUS

China’sapproachto coal

pollution

24 Mining Journal, London, July 14, 2000

The 4 Mt/y capacity Fanggezhuang coking-coal preparation plant.

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coking-coal preparation plant isFanggezhuang (Beijing), with a capacity of4.0 Mt/y. The biggest steam-coal prepara-tion plant, Antaibo in Shanxi Province, isfar larger, having a capacity of 15 Mt/y. Asister plant with the same capacity,Anjialing, is under construction and com-pletion was expected at the end of 1999.

In the typical Chinese coking-coal prepa-ration plant, there is normally a combinedprocess of jigging plus flotation or heavy-media separation (HMS), with the feed par-ticle size of up to 50 mm. In a typical steam-coal preparation plant, there is normally anHMS system or a jigging circuit, with feedparticle sizes of 25-100 mm or 13-100 mm.

The average coal quality of the majorstate-owned coal mines in 1997 was as fol-lows:

Coal Ash Moisture SulphurContent Content Content

(%) (%) (%)Raw coal 25.41 – 1.02Washed saleable coal 20.49 9.17 0.80(coking and steam coal)

The average ash content for all Chineseraw coal is 30% with sulphur content aver-aging 1.04%. Coking coal is normallywashed to an ash content of 9.9% and a sul-phur content of 0.67%. Because of the low

proportion of raw coal being washed, partic-ularly steam coal, all saleable coal has ahigher average ash content.

In order to improve coal quality, Chinaplans to build more coal preparation plants.By the end of this year it is expected thatwashing capacity will reach 450-500 Mt/y,and that some 350-400 Mt/y of raw coal willbe washed, equivalent to around 30% oftotal coal production compared with the23% three years ago. Mr Zhou says that,during the ninth Five-year Plan, China willbuild 223 new plants with total washingcapacity of 289 Mt/y, and 100 existingplants will be expanded to raise their capac-ity to 200 Mt/y.

Future plansIn the longer term there will be a number

of aims. It is intended that the next genera-tion of coal-preparation plants to be builtwill be larger in scale as a greater proportionof raw steam coal will be washed. Plants willalso need to be highly efficient and use reli-able equipment in order to operate success-fully. To this end, new HMS systems will bedeveloped and high efficiency jigs intro-duced, especially to treat ‘difficult’ coals. Inthose coalfields, particularly in the north-west, where the coal is plentiful and of good

quality but where there is a lack of water,dry-cleaning methods are considered tohave considerable potential.

The development of processes to removethe sulphur content from coal will be a pri-ority. High-sulphur coal is mainly concen-trated in the coalfields of southwest andcentral China, and in the deep seams ofnorthern China. The continued develop-ment of these resources over the nextdecades will necessitate an effective methodfor sulphur removal.

For fine coal, advanced dewatering equip-ment will be developed. At present, mostcoal-preparation plants dewater theirwashed fine-coal concentrate by means ofvacuum filters, and the moisture content ofthe filter cake, normally around 30%,results in the moisture of the final productbeing too high.

Finally, Mr Zhou says, there will also be afocus on the development of instrumenta-tion and devices for automatic process con-trol. It is intended that ash and moisturecontent, solids and liquids flow levels will bemeasured on line (for both coal and slurry)as a means of improving not only coal quali-ty but also financial returns.

*Coal Preparation Design and Research Institute, 281 WestJianshe Road, Pingdingshan, Henan Province, 467002,People’s Republic of China. Tel: (+86) 375 4938284. Fax: 3754938459. E-mail: cpdri@public.pdptt.ha.cn

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INDUSTRY IN ACTION

Exploration

Howards Pass optionCopper Ridge Explorations ofVancouver has announced that it hasacquired an option from Placer Domeand a US Steel subsidiary, CygnusMines, to purchase a 100% interest inthe Howards Pass Zn-Pb-Ag depositalong the Yukon/NWT boundary innorthern Canada on which aroundC$15 million has already been spent.According to the company, theproperty encompasses one of thelargest undeveloped zinc deposits inthe world, with a resource estimatecalculated by Placer Dome of 110.5Mt at 7.7% combined zinc and lead(5.3% Zn and 2.4% Pb) at a 4%combined cut-off, plus additionalsilver and cadmium.

The terms of the purchase includean initial C$10,000 payment and a150-day period for due diligence.Copper Ridge can then exercise itsoption by making a C$1 millionpayment (75% cash, 25% equityunits) as a part of a C$10 million totalpayment over four years. A furtherC$5 million is payable as a bonus if adecision to move to productionresults. The option is in the form of anon-binding letter of intent andremains subject to approval by theCDNX exchange and the respectiveBoards of Directors of Placer Domeand US Steel/Cygnus Mines.

MMAJ successThe Metal Mining Agency of Japanhas discovered two gold deposits,some 150 km southeast of Bamako.The deposits cover an area of 0.4 km2

and the MMAJ has completed 11,600m of drilling on them, returning goldvalues of up to 164.7 g/t. Thediscoveries were made after a three-year exploration programme andfurther work on the deposits will beundertaken by a private Japanesecompany, the Overseas MineralResources Development Co., aconsortium of Japanese mining andmetals companies.

The MMAJ made its discoveriesduring a geological survey that it isundertaking in Mali in conjunctionwith the Japan International Co-operation Agency and under theauspices of Japan’s officialdevelopment assistance programme.

McIlvenna Bayresource expansionForan Mining Corp. has reported theresults of a new independentlyaudited resource estimate for itsMcIlvenna Bay deposit located in theFlin Flon area of northernSaskatchewan, Canada. Totalcombined indicated and inferredresources for the Lens 2 massivesulphide, the Upper West zone andthe Lens 3 massive sulphide areashave been increased by 26% and are

now estimated at 14.5 Mt at a gradeof 6.08% Zn, 0.91% Cu, 0.4% Pb,0.45 g/t Au and 23.7 g/t Ag. Thelatest resource estimate has beenaudited independently by consultingengineers Watts, Griffis and McOuatof Toronto.

The increase follows the drilling ofan additional 14 holes from thewinter/spring 2000 infill andexpansion drilling programme. Thenew estimate is based on over 63,000m of drilling from 124 diamond drill-holes and covers mineralisation fromsurface to a depth of 1,200 m.

Cracow resourceestimateThe Cracow joint venture hasreported an inferred resourceestimate of 1.1 Mt at a grade of 11 g/tAu and 9.5 g/t Ag within the RoyalShoot in the Klondyke epithermalvein complex in Queensland,Australia. Thus far, no resourceestimate has been announced for thezone of mineralisation beneath theold Klondyke workings. The jointventure has applied for a mining leaseover the area containing the RoyalShoot and is continuing with thepreparation of a prefeasibility studydue for completion in August.Meanwhile, exploration continues.Two holes located 400 m and 500 mnorth of the Royal Shoot haverecorded intersections of 4 m at 5.7g/t Au and 5.5 m at 12 g/t Aurespectively. Results are awaited forholes drilled 100 m below theseintersections.

Newcrest Mining has an interest of70% in the joint venture and isconducting the explorationprogramme. Sedimentary Holdingsholds the balance of 30% in the jointventure over the Cracow tenementsand retains a 100% interest in theCracow CIP plant and associatedinfrastructure located some 2 km tothe east of the newly estimatedresource.

NDT in PeruNDT Ventures Ltd of Vancouver hasacquired two contiguous mineralconcessions totalling 1,600 ha incentral Peru. The so-called Coshurosproject is located 90 km east ofTrujillos and about 10 km southwestof the Tres Cruces gold-silver deposit.The area contains silicified brecciasand zones of quartz-vein stockworkshosted by intermediate Tertiaryvolcanics. NDT reports gold values ofup to 7 g/t Au in the vein material andup to 1.9 g/t Au in the breccias.Detailed sampling is to begin shortly.

Mungari EastsuccessThe Australian junior, DioroExploration NL continues to reportpromising results from its MungariEast gold project in south-centralWestern Australia. The company hasa 49% interest in a joint venture withMines and Resources Australia Pty

Ltd (51%), part of France’s Cogemagroup. Attention is focused on theFrog’s Leg project, where 3,500 m of a10,200 m reverse-circulation anddiamond drilling programme has yetto be drilled. The holes are beingangled at 60o and better results todate from the RC drilling, all fromseparate holes, include: 28 m at 2.93g/t Au at a depth of 50 m; 16 m at 7.56g/t Au from 108 m; 7 m at 11.85 g/tAu from 190 m; and 4 m at 12.17 g/tAu from 179 m. The more significantdiamond drilling results include a 5 mintersection at 34 g/t Au from 40 m,including 152 g/t over a 1.0 minterval.

Dioro recently announced plans toraise up to A$5.96 million through arights issue in order to fund itsMungari East project (MJ, July 7,p.16).

Audit resultsfor Aredor’s K23Trivalence Mining Corp. has receivedthe results of an audit on its bulksampling programme on the K23kimberlite within the Aredorconcession. The company hasextracted a 12,065 t bulk sample overthe past few months and an audit ofthe sampling programme by MPHConsulting South Africa (Pty) Ltdindicates that the kimberlite has anaverage grade of 0.4 ct/t (based on wettonnes of kimberlite). Another MPHestimate assumes a moisture contentof 30%, and a 30% increase in diamondgrade to compensate for the loss ofsmall stones (less than 2 mm). On thisbasis the grade of the sample is 0.7 ct/t.

Trivalence says that Guinea’sBureau National d’Expertise valuedthe 161.73 ct of gem-qualitydiamonds recovered from the sampleat US$181.39/ct, and the 319.57 ct ofindustrial diamonds and boart atUS$29.32/ct.

As a result of the positive audit andthe subsequent sale prices of thediamonds recovered by the samplingprogramme, Trivalence willundertake a 2,000 m diamond drillingprogramme to test the K23kimberlite at depth and more clearlydefine its shape and phases present.

Trivalence has also reported higherproduction from Aredor (this issue,p.28).

Development

Nalunaq on schedule Crew Development Corp. of Canadareports that test mining is onschedule at the Nalunaq gold projectin southern Greenland where it is injoint venture with NunaMineralsA/S. Crew is earning a 67% interest inthe project and is the operator. Thepartners are committed to spendingC$7 million on a developmentprogramme preparatory tocompleting a final feasibility studyand securing project financing with

the object of bringing a mine intoproduction early in 2002. Crewreports that visible gold has beenidentified in each of the three newraises, and that the existing adit (inexcess of 400 m in length) is beingextended into the gold-bearingstructure.

Discovered in 1993, Nalunaq islocated within 6 km of an ice-freedeepwater fjord, and 40 km fromexisting port facilities at Nanortalik.The Main Vein outcrops at surfaceand has been mapped over a strikedistance of 2,000 m. It occurs inmetavolcanics within the Ketilidianmobile belt. Underground operationsinvolve drilling and blasting in threeparallel adits, and simultaneously inraises. Ultimately, three adits, pluseight to ten raises connecting theadits at 80 m intervals, will becompleted. At present, in excess of300 t/d of mineralised material isbeing treated. In addition, geologistsare collecting more than 50 channelsamples per day and StrathconaMineral Services is supervising agrade-verification programme. Testmining will continue until September,by which time a total of 20,000 t ofmaterial should be recovered.

A positive prefeasibility studycompleted in March 1999 (MJ, April2, 1999, p.242) estimated an indicatedand inferred resource of 425,000 oz ata grade of 32 g/t Au at Nalunaqwithin a geological resource of 1.8Moz.

Mindoro feasibilitystudy under way Meanwhile elsewhere, Crew hasannounced the commencement of abankable feasibility study for itswholly-owned Mindoro lateriticnickel project in the Philippines. Thestudy will be undertaken by KvaernerPhilippines Construction Inc., thesame company which completed theprefeasibility study in August 1998.International Mining Consultantshas been contracted to make anindependent assessment of theresource estimate, and CoffeyPhilippines International will carryout the geotechnical evaluation of theminesite, overland ore-slurry pipelineand refinery sites. URS will designthe overland slurry pipeline and thetailings disposal pipeline.

The Mindoro deposit is located onMindoro Island, approximately 200km south of Manila. Measured andindicated resources total 72.6 Mt(dry) with an average in situ grade of0.94% nickel and 0.06% cobalt,including 21.4 Mt (dry) at 1.16%nickel and 0.06% cobalt. Accordingto Crew, a significant portion of thehigher-grade resource has up to 60%low-grade bedrock material, and itsremoval during de-agglomeration ofthe ore should cause a considerableincrease in the head grade. Mined orewould be pumped 40 km by slurrypipeline to the refinery at Pili Pointon the coast. The high-pressure acidleach process to be used will bedesigned to produce approximately

26 Mining Journal, London, July 14, 2000

INDUSTRY IN ACTION

40,000 t of nickel briquettes and 3,000t of cobalt briquettes annually. By-product output would include 126,000t/y fertiliser-grade ammoniumsulphate, representing about 30% ofthe Philippines’ annual consumption.

Snap Lake scopingstudyWinspear Diamonds Inc., the targetof a hostile takeover bid by De Beers(MJ, June 30, p.497), has nowreleased the results of its July 2000scoping study for the Snap Lakeproject. The study, prepared byMRDI Canada (a division of AGRASimons Ltd), estimates the mineabletonnage of kimberlite at 39.5 Mt atan average diluted mine grade of 1.7ct/t which would yield some 67 Mct ofdiamonds. This is considerably higherthan the prefeasibility study estimateof 12.6 Mt at a diluted mine grade of1.75 ct/t and an estimated recovery of22 Mct. The average value for theSnap Lake diamonds is C$171/ct(US$118). The proportion ofmineable tonnage from that portionof the kimberlite dyke in excess of 2 min thickness is estimated at 27.6 Mt

The scoping study envisagesmining to a depth of about 750 m withore hoisted via a vertical shaftstarting in 2006. A two-stagedevelopment is contemplated, withinitial daily ore throughput reaching3,000 t by the end of 2003. In a secondstage, which would see thedevelopment of a second access-shafton the north shore of Snap Lake,throughput would rise to 6,000 t/d.Mine life is expected to be more than20 years. Capital costs are estimatedat C$289 million initially, and afurther C$230 million for the secondphase expansion would be fundedfrom project cash flow. Overalloperating costs are estimated atC$88/t. Winspear’s chief executive,Randy Turner, says that thecompany is excited by the results andis moving ahead to prepare abankable feasibility study.

Finlayson studyExpatriate Resources reports that ithas completed the initial stage ofprocess metallurgy and concentratemarketing for its Finlayson Project inCanada’s Yukon. The company saysthat the results of locked-cycleflotation and concentrate roasting,and of initial discussions withinterested smelters, have exceeded theexpectations from the Wolverinescoping study compiled earlier thisyear. The project combinesdevelopment of the recently acquiredKudz Ze Kayah deposit and theWolverine deposit, the latter ownedby the Wolverine joint venture (60%Expatriate and 40% AtnaResources). The results from the

locked-cycle flotation testing haveconfirmed that ores from Kudz ZeKayah and Wolverine can becombined resulting in improvementsover results previously attained fromWolverine alone.

Based on a mill-feed ratio of 3,000t/d from Kudz Ze Kayah and 1,250t/d from Wolverine, the combinedoperation has been assessed to be ableto produce, on an average annualbasis, the concentrates detailed in thetable below.

Recoveries achievable to finalconcentrate are Zn – 91%, lead –64%, Cu – 81%. Silver recovery is85% and gold 73%.

The prefeasibility study currentlyin progress is on schedule forcompletion late this year.

Iranian alumina plantdelayDevelopment of a 280,000 t/yalumina refinery in the KhorasanProvince of northeastern Iran hasbeen interrupted by questionsregarding the plant’s design. Thecontract to establish the refinery isheld by Technoexport of the CzechRepublic, which took over the projectfrom another Czech companyawarded the contract in the early1990s.

According to Reuters, the Iranianauthorities have already spent aroundUS$400 million on the project(including US$260 million in foreigncurrency), which was originallyscheduled to be commissioned lastSeptember. The Iranian side of theproject is managed by AmidEngineering and Development, aprivate Iranian company. Discussionsare reported to be under way inTehran between Technoexport andthe Iranian side regarding re-establishing a schedule for theproject.

The alumina refinery, located inthe Jajarm area, 570 km northeast ofTehran, is designed to supply Iranianaluminium smelters, replacingimported alumina. The Jajarm area isrich in bauxite, and the plant lies closeto a mine with reported provenbauxite reserves of 19.2 Mt.

Aquarius confirmsEverest additionAquarius Platinum Ltd, registered inBermuda, has agreed to acquire theEverest South, Chieftains Plain and aportion of the Everest Northplatinum group metal (PGM)properties from Impala PlatinumHoldings Ltd, in exchange for a25.5% interest in Aquarius’ wholly-owned subsidiary, Aquarius Platinum(South Africa) Pty Ltd. The lattercompany owns the Marikana PGMproject, where a feasibility study hasalready been completed. Aquarius

plans to commission an 80,000 oz/y(Pt) mining and concentratingoperation at Marikana by mid-to-late2001.

The deal, confirming discussionsrevealed last month (MJ, June 9,p.458), effectively allows Impala tooutsource development of three of itssmaller project to Aquarius, whilstretaining the rights to treat theconcentrates produced. Marikanawas already subject to an agreementwhereby Impala would treat theoutput (MJ, June 23, p.487), andImpala would thus hold interests ineach of these potential sources ofsmelter feed. Impala also holds a17.2% shareholding in AquariusPlatinum Ltd itself, which is listed inAustralia and on London’sAlternative Investment Market.

The immediate focus of theprojects to be acquired is EverestSouth, where Impala has alreadycompleted 57 drill-holes with 100deflections to establish an unclassifiedresource estimated at 34.7 Mt of UG2reef, at a grade of 4.0 g/t combinedPGM. The reef under the propertyruns from surface to a depth of 250 m.Aquarius plans to conduct afeasibility study of Everest Southwhilst Marikana is underconstruction, with a view to possibleproduction at Everest Southcommencing in mid-to-late 2002.Such production would raise theproduction of Aquarius Platinum(South Africa) to 300,000 oz/y ofcombined PGM.

Everest North and ChieftainsPlain lie 12 km due north and duewest of Everest South respectively.These properties have not beenexplored in detail, but Aquariusbelieves that Chieftains Plain “hasthe potential” to host at least 70 Mtof Merensky reef and 90 Mt of UG2,and that the mineralisation could be“significant ... especially at currentmetal prices”.

BHP sells White PineBroken Hill Proprietary Co. Ltd ofAustralia has sold its White Pinecopper refinery in Michigan toConsidar Inc., a wholly-ownedsubsidiary of the Arbed steel group,for an undisclosed sum. The disposalfollows the closure of BHP’s UScopper mines a year ago (MJ, July 2,1999, p.2), which remain on care andmaintenance. White Pine was notimmediately affected by the closuresbecause it was operating largelyindependently of BHP’s mines.However, BHP’s relatively newmanagement team has been reviewingthe group’s worldwide asset base.

BHP’s director of external affairsin the US, Chuck Taylor, told Reutersthat the sale was not material (interms of its financial impact) to thewider group. The refinery has acapacity of 68,000 t/y, but isproducing only “minor amounts ofcopper cathode during the transitionperiod”, according to Mr Taylor.Considar plans to use White Pine torefine copper anodes purchased from

Considar Metal Marketing, a jointventure with Hudson Bay Miningand Smelting of Flin Flon, Canada,part of Anglo American plc.

Pirdop plant upgradeUnion Minière’s Bulgariansubsidiary, Union Minière PirdopCopper (UMPC), has signed anagreement with Lurgi Metallurgie ofGermany for the upgrading of itsPirdop Copper plant in compliancewith European environmentalstandards. The contract calls for theupgrade to be completed within 24months. This is the final stage inUMPC’s ongoing investmentprogramme at Pirdop which willachieve an annual production of185,000 t/y of copper anode and45,000 t/y of LME-grade coppercathodes.

The contract with Lurgi includesthe supply and service of thefollowing equipment: new steam-heated dryers with dust-controlsystem; upgrading of the existing dryelectrostatic precipitators; newprimary and secondary hoods at theconverters; upgrading of the existingwet gas-cleaning system; andupgrading and capacity increase ofthe sulphuric acid plants. The Lurgicontract falls within Union Minière’soverall investment plan for anadditional US$109 million forenvironmental and plantmodernisation projects in Pirdop.

The investment plan also covers anew tailings pond, upgrading of slagflotation facilities, upgrading ofwater-cooling systems and enhancedenergy efficiency. The completion ofthe programme will result in thedecrease of gas and dust emissionsinto the environment by up to 15times compared with the levels at thetime of UM’s acquisition of the plant.

Production

Freeport sales belowexpectationsFreeport-McMoRan Copper andGold Inc. has said that copper sales inthe June quarter of this year stood at256 Mlb, compared with forecast salesof 320 Mlb. The company hasattributed the shortfall to a numberof factors, including delayedshipments caused by bad weather andsea conditions, and changes in thesequence of mining material andlower ore throughput rates at itsGrasberg mine in Indonesia.

Following a landslip into the mine’soverburden dump, the mine hasstarted on a programme to move 8 Mtof overburden in a bid to stabilise thedump. As part of this plan, Freeport’soperating subsidiary has been forcedto reduce production at its open pit to200,000 t/d. To compensate for this,the mine has added 20,000 t/d ofproduction from its undergroundoperation which is under

Mining Journal, London, July 14, 2000 27

Flotation product Tonnes Zn Pb Cu Ag Au(%) (%) (%) (g/t) (g/t)

Copper concentrate 40,300 2.5 1.8 25 4,350 16Lead concentrate 32,600 6.2 55 1.4 2,000 35Zinc concentrate 201,700 55 1.5 0.3 120 0.8

development. This has enabled themine to maintain mill throughput ataround 220,000 t/d compared withthe originally budgeted 230,000 t/d.

Esmeralda suitsThe Hungarian Government said thisweek that it plans to sue the owners ofthe Baia Marie gold operation inRomania for US$110 million indamages. The operation, which isowned by the Romanian Governmentand the Australian company,Esmeralda Exploration Ltd, wasblamed for causing widespreadpollution in the Tisza and Danuberivers after a tailings dam overflowed(MJ, March 24, p.230).

The mine, which reopened lastmonth, is also to be sued byYugoslavia. According to TanjugBelgrade, the country’s publicattorney, Milos Bojovic, hassubmitted a claim for US$2 million indamages as compensation for theimpact of the spill on the Danube inYugoslav territory.

Codemin maintainsoutput . . .Mineraçao Codemin, the Braziliannickel producer owned 90% by AngloAmerican plc, should produce around7,000 t of nickel contained in ferro-nickel this year according to RuyFischer, a director of the company.This is at a similar level to 1999output. According to Mr Fischer,Codemin plans to maintain currentproduction levels while investing inother projects such as the Barro Altonickel deposit in Goias State, Brazil,and the Loma de Niquel mine inVenezuela. At Barro Alto, containednickel reserves are estimated at72,000 t and feasibility studies are inprogress. At Loma de Niquel,production this year is forecast at18,000 t. The company currently hasno plans to reopen the Morro deNiquel operation shut down in 1998.

. . . SLN increaseanticipatedAccording to Yves Rambaud,chairman and chief executive ofparent company Eramet, Société LeNickel’s nickel production shouldreach 62,000 t in 2001, up from ananticipated 57,000 t this year (areduction from the initial targetowing to labour problems in Februaryand March). Next year, depending onthe results of an ongoing feasibilitystudy, SLN is due to make a decisionon whether to increase its NewCaledonian nickel production to70,000-72,000 t/y by 2004 or 2005.

Witkrans successCaussa Capital Corp. has recovered a5.4 ct gem quality diamond in thecourse of trial mining at its alluvialdiamond property at Witkrans, 120km west of Johannesburg in SouthAfrica’s Ventersdorp district. To date,173 diamonds have been recovered

with a combined weight of 133.18 ct.Approximately 17% exceed 1.0 ct.Toronto-based Caussa reports that ithas received C$215,000 from the saleof surplus mining equipment and thatthe proceeds are being used tosupplement working capital.

Labour contractagreedWorkers at Canada’s second largestaluminium smelter at Becancour inQuebec have overwhelminglyendorsed a new labour contractaccording to a spokeswoman forAluminerie de Becancour (owned75% by Alcoa and 25% by Pechiney).The old labour contract expired at theend of June.

Power and labourproblems hit ZincorPower outages and labour problemswithin its 680-strong workforce areexpected to cause Zinc Corp. of SouthAfrica Ltd’s output to fall to its lowestlevel in four years, according to acompany spokesman. Zincorestimates production of 103,000 t ofzinc metal this financial year (endedJune 30), as against 110,000 t lastyear. However, the company forecastsproduction increasing to 113,000 tduring the new financial year, andintends to raise output to 125,000 t by2004. Zincor is now controlled byIscor which acquired a 65% stakeearlier this year from Gold Fields ofSouth Africa.

Jinchuan fireChina’s largest nickel producer,

Jinchuan Nonferrous Metal Co.(JNMC), has reported that a fire at anickel mine in Jinchang city in GansuProvince, northwest China, has killed17 people. The fire broke out in atransport tunnel and the miners weresuffocated. The cause of the fire isbeing investigated.

The fire has been put out andoperations are described as nearlyback to normal. Last year JNMCproduced 40,000 t of nickel andexpects to exceed this tonnage in2000. Annual maintenance isscheduled to begin shortly but thiswill be in rotation, one furnace at atime, so as not to affect overalloutput.

Bronzewing resumesmillingMilling has resumed at theBronzewing mine in WesternAustralia, although the mine itselfremains closed following the recentmudrush (MJ, July 7, p.10). Searchoperations have continued for thethree missing miners feared dead inthe mine according to a spokesman formine operator Normandy Mining.The mill is treating stockpiled orefrom Bronzewing and ore fromNormandy’s nearby Mt McClureoperation. Mining will not resumeuntil the state government and the

state coroner, who are investigatingthe accident, have given theirapproval. Normandy does not knowwhen this will be.

Harzer to closeMetaleurop is to close the zinc metalproduction plant at its Harzer Zinkfacility at Harlingerode in Germanyas it is unable to produce metalcompetitively. The plant has anannual production capacity of 20,000t/y and supplies its own zinc oxideoperation, also in Harlingerode. Thislatter operation will continue, but willnow buy its zinc metal on the openmarket.

Harzer uses a vertical retortprocess which has proved unable tomeet the desired level of profitabilityand cannot comply with newenvironmental legislation withoutheavy new investment. Metaleuropsays the plant made a �3 millionnegative contribution to its resultslast year.

Aredor productionand sales riseTrivalence Mining Corp. reports thatits 85%-owned Aredor operation inGuinea (MJ Guinea Supplement,March 2000, p.9) achieved a 63%increase in diamond output during thefinancial year to June 30. Productionreached 40,802 ct and sales revenuesrose by 88% to US$15.27 million. Thecompany attributes the increase toimprovements in the diamondrecovery process at the mine andplant. March quarter net income hasbeen restated at $1.03 millioncompared with a loss of $855,717 forthe same period in 1999. Trivalencealso reports that at its most recentdiamond sale held in Conakry on June27 it sold 4,276.3 ct for $2.62 million,including $1.32 million for a 25.73 ctpink diamond.

Trivalance has also reported onbulk sampling work (this issue, p.26).

Mexican silver liftApril silver production in Mexico, theworld’s top producer, was 234,647 kg,up by 5% on April 1999, according tothe country’s national statisticsinstitute INEGI. Overall Mexicanmining output in April was 4.5% upon a year ago in real terms. In the 12months to April, silver productiontotalled 832,958 kg – 8.4% more thanin the same period in 1999. Goldproduction rose 8.5% in April, butwas still down 11.6% year-on-year.Copper output was 21% higher, zincoutput fell by 20% and leadproduction was slightly higher.

Prosecutor Generaldemands moremoney from NorilskIn the latest twist in the investigationof the privatisation of Norilsk Nickel(MJ, July 7, p.4), Russia’s ProsecutorGeneral claims that Interros, the

company that controls Norilsk Nickelthrough its holding in Uneximbank,underpaid the Russian Governmentby US$140 million when it acquiredthe complex in the mid-1990s.According to Reuters, the DeputyProsecutor General, Yuri Biriukov,sent a letter to Vladimir Potanin,head of Interros, saying that if thegroup voluntarily repaid the US$140million, no further legal action wouldbe taken. In an open responsepublished in Kommersant businessdaily, Mr Potanin demanded an openinvestigation of the case inaccordance with Russia’s civil law.

Strike mandate atSudburyOver 97% of union members atFalconbridge’s Sudbury nickeloperations have voted in favour ofgiving their representatives a strikemandate. Tom Dattilo, a spokesmanfor the Canadian Auto Workers Unionwhich represents the workers, saidthat over a four-day period, 85% ofthe unionised work force voted. As aresult of the mandate, if no agreementbetween the union and Falconbridgeis reached by August 1, the workerswill go on strike.

Mr Dattilo said that union andmanagement representatives aremeeting on a daily basis to discuss anumber of issues regarding a newlabour contract, includingcontracting out work, wages, pensionsand job security. He said that theCAW had no plans to accept a similaragreement to that agreed by Inco andthe United Steelworkers of Americaunion at its Sudbury operations,adding that he “wasn’t too impressedwith the Inco agreement.”

Three years ago, when the previouslabour contract expired, unionmembers went on a 26-day strikebefore the current contract wasagreed upon.

High power-costsbite againThe high power-costs caused byelectricity shortages in the westernUS (MJ, June 30, p. 499) haveclaimed another victim, theContinental copper and molybdenummine in Butte, Montana. The mine isa joint venture between MontanaResources (50.1%) and Asarco Inc., aunit of Grupo Mexico, and producesaround 40,000 t/y of copper and 10Mlb/y of molybdenum. MontanaResources said that the closure istemporary and that the mine willreopen when its management cansecure power rates that will enable itto operate profitably. According to aMontana Resources spokesman,electricity is the single largest cost atthe operation.

Whereas the mine’s closure hasminimal significance for the coppermarket, it has the potential to besignificant for the molybdenummarket as its output is equivalent toaround 3% of annual globalproduction.

INDUSTRY IN ACTION

28 Mining Journal, London, July 14, 2000

TECHNOLOGY TODAY

At present, magnesium metal isproduced via two processes. Thethermal method operates attemperatures of over 1,200oC anduses a metallothermic reductionreaction in which silicon and/oraluminium extract magnesium as avapour from the oxide. The otherprocess is based on fused saltelectrolysis of anhydrous magnesiumchloride.

The thermal process offers severaladvantages over the chloride processin that the main feedstock isdolomite which requires onlycalcining, unlike the electrolyticroute which requires complexpurification to produce anhydrousmagnesium chloride feed. Thereducing agent in the thermalprocess, ferrosilicon (or ferrosilicon-aluminium), can be cost-effectivelyproduced using a standardsubmerged arc furnace utilising muchof the plant infrastructure at themagnesium plant. However, thereducing agents are relatively costlyand the furnaces operate under avacuum, necessitating batchoperation which lowers productivity.

South African researchorganisation Mintek believes thatthe thermal process can be improved.In conjunction with Anglo American,South African electricity producerEskom and the South AfricanDepartment of Arts, Culture,Science and Technology, Mintek hasdecided to build a pilot plant to testits thermal magnesium process(MTMP), developed as a result ofwork in the 1980s and 1990s. Theprocess utilises a dc open arc furnaceand condenser which, Mintek says, isfar less capital intensive than theconventional electrolytic processroute for magnesium. It alsoreduces the operating costs of thethermal route. Mintek believes thatit could become the most costeffective method of magnesiumproduction.

The pilot plant is currently in thedesign phase and testwork will bestarted between November 2000 andApril 2001. Mintek says the furnaceof the test plant will be designed tooperate at between 0.5 and 1.5 MWand a condenser will be rated at 50-100 kg/h of magnesium metal.According to Mintek, this setup willenable the design of a commercialoperation comprising one or morefurnaces producing 1-2 t/h ofmagnesium. Three to four suchfurnaces would be required toproduce around 50,000 t/y of

magnesium, which is less than halfthe number of ac furnaces requiredby a conventional thermal plant ofsimilar capacity.

Dr Nic Barcza, Mintek, SouthAfrica. Tel: (+27 11) 709 4680. Fax:709 2469.E-mail: nicb@mintek.co.za

CANMETinvestigatesnarrow veinminingThe Canadian Government isfunding a project by CANMETinvestigating ways of improving theefficiency of narrow-vein mining. Thethree-year study was initiated inSeptember 1999 and is beingundertaken by a research teamincluding specialists in miningengineering, mechanical engineeringand electronic/computer engineering.The study team is based atCANMET’s experimental mine nearVal d’Or in Quebec, and it hasalready visited 16 mines in threeprovinces. At each mine theoperation is studied and added to adatabase of techniques andequipment used in narrow-veinmining. The study team will then usethe information to determine theoperator’s needs in themechanisation and automation ofmine methods and equipment.

The project has already producedseveral ideas that may lead tospecific research projects. Theseinclude new mining sequences,equipment and non-explosive rock-breaking. The ideas will be madeavailable on a website to encouragethe exchange of information betweeninterested parties.

Jean-Marie Fecteau. Tel: (+1 819)736 4331. Fax: 736 7251. Website:www.nrcan.gc.ca/mms/canmet-mtb/mmsl.htm

PROFILEsystem fromLeicaLeica Geosystems has introduced itsnew tunnel surveying system theTMS Profile. According to thecompany, the system has a variety ofapplications in 2D or 3D measuring

modes, including cover tunnelexcavation control, wriggle surveys,shaft sinking, tunnel refurbishment,clearance control and non-destructive control of concrete layerthicknesses including volumes.

The system is the result of a jointdevelopment between Leica andSwiss-based Amberg MeasuringTechnique Ltd. It is based on theLeica TPS1100 TCRM, a compacttotal station which featuresreflectorless electronic distancemeasurement technology. The on-board TMS PROscan software offersusers a selection of six different2D or 3D measurement modes and avariety of parameter pre-settings.These features enable users to makemanual or automated measurementsto any target surface from ranges of1.5 m to 50 m. The TMS PROwin 7.0software is Windows 95/98/NTcompliant and allows users toundertake practice-orientated dataanalysis. It also providescomputation functions to enable thecalculation of cross-sections, areas,over and under-break and volumes.The system can export data in avariety of file formats for use in CADsystems.

Amberg Measuring TechniqueLtd, Trockenlostrasse 21, PO Box 27,8105 Regensdorf-Watt, Switzerland.Tel: (+41 1) 870 9222. Fax: 870 0618.Website: info@amberg.ch

MineMarketlaunchedEnterprise software specialistMincom Ltd has launched its newMineMarket product. According toNick Beaton, senior vice president ofthe company’s mining, oil and gasunit, the software is unique in that itoffers an e-commerce-enabledsolution providing “unprecedentedmanagement and transparency of thetotal mineral processing supply chainfrom bedrock to boardroom”.Mincom says that the softwareintegrates all aspects of mining andmineral processing and includesattaching a value to a quantity ofmetal or coal throughout the wholeproduction and logistic processwhich, it believes, will improve users’responsiveness to the market.

MineMarket covers two broadfunctions: it models and monitorsmining, crushing, processing andbeneficiation; and enables massbalancing and metal balancing. Italso enables the reconciliation of datafrom weightmeters, stockpiles andorepasses to processed and measuredamounts. The system can placevalues on metal or coal content fromthe start and transfer the value to thebalance sheet. The second mainfunction enables the sale of productat any stage in the mining, processingand shipments process on the basis oflong-term or spot contracts. Thesoftware has the capability to recordand categorise contracts, plan sales,create invoices and pass them on to

accounts receivable, assay andquality tracing and management, andmaintain a marketing database.MineMarket will also optimiseshipping and logistics channels, saysMincom. MineMarket is a keyelement of Mincom’s EnterpriseManagement Solution (EMS) whichalso includes components for supplychain and quality management andsales and shipping components.

Mincom Ltd. Website:www.mincom.com

OTR treads newgroundOTR Tyres Ltd says that the use ofits Earthscan unit at the company’sheadquarters in Alfreton in the UKhas generated international interestfollowing a recent presentation at theTyre Association of North Americaconference. The Earthscan unit is theonly one of its kind in the world anduses ultrasonic examinationtechniques to scan a tyre’s casing fordefects and assess its condition forrepair or retreading.

According to OTR, the unitenables it to overcome many of theprejudices concerning the quality ofretread tyres, and it believes thatestablishing the integrity of tyrecasings, coupled with the lowerrunning costs per hour of retreadtyres, should improve customerconfidence in retread tyres.

OTR Ltd, Bluebell Close, CloverNook Industrial Park, Alfreton,DE55 4RD, UK. Tel: (+44 1773) 520885. Fax: 520 882. E-mail:earthmover@otr-tyres.co.uk Website:www.otr-tyres.co.uk

Clough winsCSA contractAustralian mining and constructioncompany, Clough Engineering Ltd,has been awarded a five-yearcontract to co-manage the CSAcopper mine at Cobar in New SouthWales. Clough will manage theoperation in conjunction with themine operator/manager CobarManagement Pty Ltd. The contractwill include undergrounddevelopment and ore production andfollows Clough’s four-monthcontract at the mine last year when itcarried out preliminary developmentwork.

Under the terms of the newcontract Clough will use tele-remoteloaders to mine some 2.8 Mt ofmaterial. It will develop over 9 km ofunderground road ways and installall ground support, mineinfrastructure and associatedservices.

Rob Jewkes, Managing Director,Clough Engineering Ltd, 6th Floor,251 St Georges Terrace, Perth, WA6000, Australia. Tel: (+61 8) 92819281. Fax: 9481 6699. Website:www.clough.com.au

Mintekmagnesiumproject

Mining Journal, London, July 14, 2000 29303

MINERAL MARKETS

The fourth of July celebrations in the US, anet long position on Comex, a stronger USdollar and a weaker oil price were not theonly factors behind gold’s slip from lastweek’s high of almost US$290/oz. The othercontributing factor was this week’s Bank ofEngland gold auction.

The London morning gold fix immediate-ly before the auction this Wednesday wasUS$282.85/oz. The auction price, however,was US$279.75/oz and the 25 t of gold thatwere on offer were oversubscribed by just1.3 times, the lowest level of interest sincethe auctions started last year. According toKevin Crisp, precious metals analysts withCredit Suisse First Boston, the level ofinterest in the auctions has been in declinethroughout 2000, but it had been hopedthat the bottom had been set in the last auc-tion which was 2.7 times oversubscribed.Mr Crisp said that the latest auctionreflects the quiet and thin state of the cur-rent gold market, but he hopes that by thetime of the next auction (on September 19),the market will be a little more robust.

As expected, the World Gold Council(WGC) maintained its condemnation of theauction process, saying that the process islosing British taxpayers money and givingaway a cornerstone of British economic sov-ereignty. The WGC urges the UKGovernment to abandon the gold sales butif it chooses not to do so, it says that itshould at least change the method of thesales, to using either the London gold fix orthe Bank of International Settlementsmechanism. The latter is used by the SwissGovernment to reduce its gold holdings.

In the wake of the auction result theafternoon gold fix in London wasUS$279.95/oz. Where the price will go fromhere is difficult to say. Traders warned thata number of funds are holding long positionswhich may be liquidated should the pricefall below US$278/oz. ■■

Copper boostedOn the London Metal Exchange the three-month copper price, after dipping lower atthe end of last week, has managed to breachUS$1,800/t aided by two pieces of positivenews. In its July report, the Lisbon-basedInternational Copper Study Group (ICSG)announced that the refined copper markethad a 46,000 t deficit in April comparedwith a surplus of 5,000 t in March. Thedeficit is the first recorded by the ICSGsince mid-1996 and comes as a result ofstrong growth in consumption. This rose by

6.4% in the first four months of the yearcompared with the same period in 1999.Production during the same period rose byonly 3.4%. The ICSG says that “all fivecontinents have experienced positive con-sumption growth, with Europe and Asiacontributing most”. The ICSG notes thatat the end of June refined stocks of copperon the LME, Comex and Shanghai metalexchanges stood at 696,524 t compared with742,840 t at the end of May. The other spurto the copper price was the announcementby Freeport-McMoRan that sales of copperwere lower than forecast (this issue, p.27).

After breaching US$1,800/t the copperprice fell back slightly and BarclaysCapital’s metals analyst, Kevin Norrish,says that the price will have to breachUS$1,820/t to break out of its recent trad-ing range convincingly.

Nickel continues to maintain its widecash to three-months backwardation.Although fundamental tightness is a majorfactor behind the backwardation, rumoursare rife that long position holders are tryingto squeeze a fund that is holding a 10,000 tshort position. Traders note that, despitethe apparent tightness of the market as evi-denced by the cash to three-months back-wardation, cash to next week’s July date istrading at a US$6/t contango pointing toreasonable liquidity in the market. ■■

Base metals surveyThis week Reuters announced the findingsof its bi-annual survey of base metal priceforecasts. The survey of 28 analysts from avariety of banks, brokers and independentresearch companies is encouraging. Thetables set out the average price forecasts inUS cents/lb for 2000 and 2001.

2000Aluminium Copper Lead Nickel Tin Zinc

Mean 72.6 83.1 20.5 404.8 254.4 53.0High 75.6 90.0 22.1 469.5 269.0 56.0Low 69.0 80.0 19.3 359.0 240.0 51.0Yearto date 70.7 80.1 19.8 425.2 251.6 51.4

2001Aluminium Copper Lead Nickel Tin Zinc

Mean 75.9 89.2 21.9 367.8 259.5 53.7High 90.0 100.0 27.0 544.3 318.0 62.0Low 66.0 75.0 18.6 299.5 230.0 48.0

All metals with the exception of nickel areforecast to move higher, with most analystspointing to a continued expansion in the USeconomy and more robust demand fromEurope, Japan and China as reasons behind

their optimistic outlooks. Aluminium isviewed as the metal with the best funda-mental outlook, with smelter cutbacks inthe US caused by high power costs havingthe potential to continue into next year. Theforecast for copper is also promising, withstrong demand from China particularly sig-nificant. Analysts are forecasting deficitsfor virtually all of the base metals this yearand the supply shortfalls may well continueinto 2001.

However, despite the positive forecasts,current prices are subdued. There appearsto be an element of nervousness about thefuture of the global economy which has beenreflected by a reluctance of consumers toraise their stock levels in line with theirorder books. A number of analysts warn ofpotential pitfalls for metal prices. HSBCbelieves that the consensus view is overlyoptimistic and feels that in 2001, base metalprices are likely to be lower than currentlevels. It points to the key role that themomentum of economic growth has on met-al prices. Historically, says HSBC, wheneconomic growth has slowed, metal priceshave fallen.

The optimists believe that monetaryauthorities in the US and elsewhere in theworld will be able to slow global growth tothe extent that inflationary pressure willabate and growth in industrial productionwill be around 3.5-4%. This, they say, willkeep metal markets in deficit and maintainupward pressure on prices. However, HSBCargues that this would imply a slowdown in

30 Mining Journal, London, July 14, 2000

Gold slips afterauction

LME PRICES & STOCKS

Prices (a.m.) July 13 July 6Tonne basis Buyers Sellers Buyers SellersCOPPER Grade ACash....................... $1,785 $1,786 $1,763 $1,763.5Three months ......... $1,810 $1,811 $1,785 $1786TINCash....................... $5,445 $5,450 $5,445 $5,455Three months ......... $5,485 $5,490 $5,480 $5,485LEADCash....................... $433 $434 $433 $434Three months ......... $463 $464 $448 $448.5ZINC Special high gradeCash....................... $1,129.5 $1,130 $1,127.5 $1,128.5Three months ......... $1,136 $1,137 $1,144 $1,144.5ALUMINIUM Higher gradeCash....................... $1,572.5 $1,573.5 $1,560 $1,560.5Three months ......... $1,567 $1,568 $1,583 $1,584AlloyCash....................... $1,224 $1,227 $1,225 $1,230Three months ......... $1,268 $1,270 $1,268 $1,273NICKELCash....................... $8,365 $8,370 $8,380 $8,390Three months ......... $8,220 $8,230 $8,140 $8,150SILVERCash....................... $4.95 $5.00 $4.95 $5.00Three months ......... $5.00 $5.05 $4.00 $5.05

LME warehouse stocks on July 12Stocks Stocks

(t) (July 5)

COPPER Grade A cathodes 528,650 543,300

TIN 11,220 10,610

LEAD 169,950 178,075

ZINC SHG 216,600 221,475

ALUMINIUM HG 494,075 508,125Alloy 94,700 94,940

NICKEL 17,346 18,870SILVER – –

MINERAL MARKETS

economic growth from current levels ofaround 6%, to 1% by next summer, andthat this slowdown would serve to pushmetal prices lower. ■■

LME revises proposalsAfter receiving members’ comments on theLondon Metal Exchange’s proposedrestructuring (MJ, June 16, p.461), theexchange’s board of directors have decidedto issue a document setting slightly modi-fied proposals for the restructuring. Thedocument will also explain the reasoningbehind the modifications and changes andthe LME plans to hold an extraordinarygeneral meeting (EGM) in the second weekof September. The EGM had been original-ly scheduled for July 27, but the LME saysthe revised schedule will enable theexchange to achieve its twin objectives ofremaining transparent and allowing itsmembers sufficient time to contemplate theproposed changes. ■■

Antimony climbshigher

At long last, some activity returned to theminor metals market during June but onlyfor a few of the metals. The hope is, however,that the increased activity will spread to allof the metals.

Antimony led the charge, with pricesreaching US$1,500/t by early July. Thereappeared to be little fundamental reasonbehind the sharp advance and it is claimedthat the increase is being orchestrated bycertain traders who are reporting exagger-ated sales prices which are encouraging pub-lished quotations to be increased. This, inturn, encouraged the Chinese to increasetheir offers, allowing traders to follow upwith further bids just below the market tosupport it. This cycle is said to have contin-ued throughout the month. As a result, oth-er traders are concerned that Chinese salesagreed at previously lower levels aroundUS$1,100/t will not be shipped – as it is nor-mal practice with many Chinese suppliersto renege on contracts when markets moveup. This, along with the Chinese now claim-ing restrictions on exports, could lead toeven further price increases. However,although last year official export licenceswere issued to cover only 40,000 t, around85,000 t were exported. Whether the pat-tern is repeated this year will depend onhow much metal is smuggled out of China;smuggling is reportedly at lower levels thanin recent years.

Bismuth prices continued to subside, withregular offerings from China as low asUS$3.10/lb. There is strong speculation,however, that some Western producers areencouraging these lower prices whilst they

renegotiate long-term purchases from theChinese, as the lower prices will encouragethe Chinese to look at larger discounts. It isgenerally expected that prices will pick uplater in the year.

Cadmium got caught up in the excite-ment, with sales as high as US$0.30/lbreported for higher-grade sticks (min99.99%Cd). This increased activity was ini-tially created by buying interest from Chinaamid reports that the Huludao zinc smelterwas to reduce its cadmium output by about70% as a result of mechanical problems atone of its production units. The marketresponse was surprising, given that thesmelter is only a minor cadmium producer.

The fundamentals for cadmium seemunchanged particularly for standard com-mercial grade (99.95% Cd) material forwhich the story is the same as it has beenover the past year, with good availabilityand spot prices well below US$0.20/lb. Onceagain it appeared to be traders and specula-tors creating an artificially higher market.The supply surplus, worldwide, can only beeliminated by major production cutbacksand for the time being material continues tobe freely available, particularly from pro-ducers in Eastern Europe and SouthAmerica, in the US$0.10-0.20/lb range for

all grades and forms. Even the technicalsqueeze on high-grade material appeared tohave disappeared by the end of the month assupplies appeared from stocks inRotterdam and the buying interest eased.

Chromium prices, particularly foraluminothermic grade, improved a littleduring June, with the disposal of theremaining lots of Russian/CIS materialthat were available in Rotterdam atUS$4,300/t. Fresh supplies have yet toarrive, and in the meantime the Chinese aremaintaining prices around US$4,600/t. Themarket will probably hold at this level untilnew supplies from Russia arrive in Augustand September.

Cobalt, for once, was the poor relation ofthe minor metals. Prices slipped further inJune, with sales reported as low asUS$12.00/lb for 99.30% Russian-gradematerial at the end of the month. There hasbeen aggressive selling against a markeddownturn in enquiries as most consumersare well stocked, particularly the Japanese,who appear to have once again almost com-pletely withdrawn from the market in antic-ipation of lower prices.

In the US, the Defense Logistics Agency(DLA) awarded some 735,000 lb of cobaltgranules to one buyer during June. TheDLA approximated the value of this sale atUS$9.22 million and now has only about635,000 lb of cobalt that it can sell againstits 6 Mlb sales plan for the fiscal year endingSeptember 30.

The next spot sale of cobalt will be heldon July 26 when the DLA plans to offeraround 350,000 lb of the metal. The quanti-ty offered in August will depend on theresults of the July sale. The form of thematerial for future sales has not yet beendetermined. The DLA has scheduled anegotiated sale for September. If all the fis-cal-year 2000 allocation is consumed by theend of August, this sale may still be heldwith the award occurring in early Octoberas part of the fiscal-year 2001 programme.Sale decisions by the DLA could be a keyinfluence on the movement of cobalt pricesover the next few months.

Mercury at long last has started to pickup now that the Russian/CIS stockpilesappear to be exhausted. This leaves theremaining few producers of primary mer-cury, particularly the Spanish andAlgerians, in a strong position, andalthough demand is not increasing owing tothe environmentally unfriendly nature ofmercury it is clear that restricted suppliesare pushing prices higher. Whereas theRussian material had been freely availablearound US$125/flask, it is now difficult tofind good-quality mercury belowUS$150/flask. The producers, however, willbe careful not to push prices too high bymanaging their production, otherwise sub-stantial quantities of secondary mercuryare almost certain to appear again, particu-larly from Eastern Europe. ■■

LONDON PRICES

Metals Jul 13Aluminium (US producer) 63.00-66.00 c/lb d/dAntimony $1,500-$1,575/t cifArsenic (Rotterdam 99%) $0.35-$0.45/lbBismuth Bismuth $3.10-$3.30/lb cifCadmium (99.99%) $0.18-$0.23/lb cif

.. (99.95%) $0.16-$0.19/lb cifChrome (UK 99%) $9.00-$10.00/lbCobalt (99.8%) $12.70-$13.90/lb net

.. (99.3%) $12.00-$13.00/lb netGermanium $580-$640/kgGold £186.60($280.65)/oz Indium $110-$130/kgIridium (J Matthey price) $415/ozMagnesium (Norsk Hydro Euro. prod.) �2.33/kg*

.. (US Free mkt, 99.8%) $2,040-$2,100/t*Manganese

metal (99.7%) $950-$1,000/tMercury (99.99%) $140-$150/flaskNickel $3.80-$3.81/lbOsmium $400-$450/ozPalladium (J Matthey price) $671.00/oz

.. (Free market) $658.00-$668.00/ozPlatinum (J Matthey price) $557.00/oz

.. (Free market) $552.00-$560.00/ozRhodium (J Matthey price) $2,450.00/ozRuthenium (J Matthey price) $160/oz cifSelenium $2.95-$3.40/lb cifSilver $5.01/ozTellurium (UK lump & powder

99.95%) $4.00-$6.00/lb netTin (Kuala Lumpur) RM20.30/kg

Ore & Oxides Jul 13Antimony (60%) $8.00-$8.50/t unit, cif nom*Beryl (10% BeO) $75-$80/s ton unit BeO cif*Chrome (Transvaal, Friable 40%) $48-$70/t, fob*

.. (Turkish, concs 48%) $65-$70/t fob*Columbite (min. 65% comb. oxides) $3.10-$3.80/lb cif*Ilmenite (54% TiO2) A$100-A$115/t fobLithium ores (Petalite 4.2% Li2O) $180-$270/t fob*

(Spodumene>7.25% Li2O) $385-$395/t fob*Manganese ore (48-50% Mn,

max. 0.1% P) $1.81-$1.90/t unit fob*Molybdenum

oxide (conc 55-57%) $2.80-$3.00/lbRutile (Aust. 95-97%

TiO2) A$760-A$885/t fob (bulk)Tantalum oxide (60% cif N. Euro port) $42-$52/lbUranium (Nuexco unrestricted/restricted

U3O8) $7.00/$8.10/lbVanadium (98% V2O5) $1.90-$2.10/lb cifWolframite (65%) $40-$45/t unitZircon sand (std 66-67% ZrO2) A$560-A$660/t fob (bulk)

* Source: Metal Bulletin

Mining Journal, London, July 14, 2000 31

MINING FINANCE

Aluminum Co. of America Inc. (Alcoa)kicked off the June quarter reporting seasonthis Tuesday, posting net earnings ofUS$377 million, a 57% increase comparedwith the corresponding quarter last year.Perhaps just as impressively, the result wasa 6% improvement over the three months toMarch 31, 2000 (MJ, April 14, p.293),despite a 9% decrease in the spot price ofaluminium in the June quarter (as quotedon the London Metal Exchange) and higherenergy costs.

Alcoa’s chief executive, Alain Belda,attributed the continued increase in earn-ings to three factors: the company’s focus onprofitable growth, its ‘business system’ anda continued concentration on cost control.The group set a target in mid-1998 of reduc-ing its annual costs by US$1.1 billion, andby the end of June had achieved US$884million towards its goal. Alcoa noted thatcost savings achieved in the June quarterwould have been higher, but for the increasein worldwide energy prices, particularly forgas and fuel oil (aluminium production isinherently energy intensive).

The growth element in Alcoa’s strategywas most apparent in the completion duringthe period of the acquisition of fellow US-based aluminium producer ReynoldsMetals Co. The results for the June quarterinclude two months’ worth of the operationsacquired, excluding those Reynolds assetsearmarked for disposal (interests in threealumina refineries and part of one smelter)as required by the competition authorities(MJ, May 5, p.341). The effect of theReynolds acquisition was evident in the risein the group’s shipments of aluminiumproducts to 1.36 Mt in the June quarter,compared with 1.13 Mt in the March quar-ter and 1.12 Mt in the June quarter of lastyear. Shipments of Alcoa’s alumina andrelated chemicals actually fell slightly, to1.80 Mt in the June quarter from 1.83 Mt inthe March quarter, and 1.84 Mt in the Juneperiod of last year, consistent with the omis-sion from the June 2000 figures of the refin-ing capacity due for disposal.

The Reynolds acquisition helped to raiserevenues to US$5.57 billion in the Junequarter, a 38% increase compared with thecorresponding quarter of last year, and 23%more than in the March quarter of this yeardespite the decline in primary prices.Revenues were also boosted by the acquisi-tion during the quarter of CordantTechnologies Inc., principally a manufac-turer of aerospace components, for aboutUS$2.2 billion in cash plus the assumptionof US$685 million in debt. Cordant and itssubsidiaries contributed one month’s worthof results to Alcoa’s June accounts, as partof the ‘engineered products’ division.

The cost of the Reynolds acquisition,which was effected by the issue of 1.06 Alcoashares for each share in Reynolds, must bebrought into the reckoning from a share-holder’s perspective by assessing the dilu-tive effect of issuing the additional shares.The merger necessitated the issue of about68 million new shares at the start of May,worth US$4.36 billion, to bring the totalissued at June 30 to 865 million from 734million a year ago (the latest figure is post atwo-for-one split in June, and the compara-tive figure is adjusted accordingly). The57% growth in total earnings comparedwith the June quarter of last year was thusrestricted to the still-respectable figure of47% on a per-share basis, to US$0.47/share,based on the average number of shares onissue in the respective periods.

Another negative effect of the Reynoldsand Cordant acquisitions, and the assetsthat they have added to Alcoa, is the neces-sary assumption of the associated debt intoAlcoa’s balance sheet. The group’s long-term debt stood at US$4.92 billion (includ-ing the portion due within one year), upfrom US$2.72 million at the end of last year.The debt position has also been increasedby the cash nature of the Cordant takeover:Alcoa’s short-term borrowings increasedalmost ten-fold to US$3.40 billion at June30, compared with US$343 million sixmonths earlier. Cash and equivalentsamounted to US$320 million at the end ofJune, and short-term investments were onthe balance sheet at US$76 million. ■■

Rio Tinto opensNorth bid

The cash takeover offer of A$3.80/sharemade by the Rio Tinto group for North Ltdof Australia opened this Thursday (July13). The offer is scheduled to close onAugust 14.

Last Friday, Rio Tinto confirmed thatNorth’s announcement of its decision toreopen the Sept-Iles iron-ore pelletisingplant in Quebec (MJ, July 7, p.3) doesbreach the conditions of Rio Tinto’s bid.However, Rio Tinto stated that it was not ina position to determine whether or not thebreach was of sufficient magnitude to war-rant using the breach to withdraw its bid, asNorth’s announcement “did not containsufficient information for an informedassessment of the financial impact”.

Furthermore, Rio Tinto indicated thatits main concern would be “significantexpenditure and commitments” by Northon port facilities and duplicative railwayinfrastructure related to the West Angelasiron ore project in Western Australia duringthe “relatively short period of its offer”. Amajor aim of Rio Tinto’s bid is to takeadvantage of the capital cost savings thatwould be achieved by developing the pro-ject with Rio Tinto’s existing infrastruc-

Alcoaup on

takeovers

32 Mining Journal, London, July 14, 2000

Alcan Aluminium (C$) ..... 3 8.5 00.00 485Alcoa ($) .......................... 00.00 0.000.0024,96911Anglo Amer. Plat. (R)....... 00.00 0.7 00.00 00Anglo American (£)..........AngloGold (R) ................. 0.0 00.00 00Anglovaal Mining (R) ...... 00.00 0.0 00.00 00Antofagasta Holdings (£)Arch Coal ($) ................... 00.00 0.0 00.00 00Ashanti Goldfields ($) ......Ashton Mining (A$) ......... 00.00 0.0 00.00 00Asturiana de Zinc (�)....... 00.00 0.0 00.00 00Barrick Gold (C$) ............ 00.00 0.0 00.00 00BHP (A$) ........................ 00.00 0.0 00.00 00Billiton (£) ......................Boliden (C$) .................... 00.00 0.0 00.00 00Caemi Mineracao .............Cameco (C$).................... 00.00 0.0600 00Cleveland-Cliffs ($) .......... 255 0011 00Cominco (C$) .................. 00.00 0.0 00.00 00CVRD (BR) .................... 00.00 0.0 00.00 00De Beers (Linked Uts) (£) 0.000.0 0.00 10,244Eramet (Eur)...................Falconbridge (C$)............Freeport-Mc. C&G ($) ..... 00.00 0.0 00.00 00Gold Fields Ltd (R).......... 00.00 0.0 00.00 00Grupo Mexico (MP)......... 00.00 0.0 00.00 00Hindalco (Rs) .................. 00.00 0.0 00.00 00HZL (Rs)......................... 00.00 0.0 00.00 00Iluka (A$)........................ 00.00 0.0 00.00 00IMC Global ($) ................ 00.00 0.0 00.00 00Impala Plat. (R) .............. 00.00 0.0 00.00 00Inco (C$) ......................... 00 0.0 00.00 00Industrias Peñoles (MP) .. 28.90 14.5 440 00Iscor (R) .......................... 14.80 0.0 00.00 00KGHM (Zt) ..................... 32.30 0.0 00 00Lonmin plc (£) ................. 6.65 0.0 00.001 11,MIM Holdings (A$)......... 86 00.00 00Minsur(PS)...................... 00.00 0.0 00.00 00Mitsui Min. & Smlt. (¥)... 00.00 0.0 00.00 00Newmont Mining ($)........ 00.00 0.0 00.00Noranda Mining(C$)........

Norilsk Nickel (Rb).......... 74.66 13 00.00 00Normandy Mining (A$) ... 00.00 0.0 00.00 00Norsk Hydro (NK) .......... 00.00 0.0 00600 00North Ltd (A$) ................ 00.00 0..0 00.00 00Outokumpu (�) ..............Pasminco (A$) ................. 0011 0.0 00.00 00Pechiney ‘A’ (�)................ 00.00 0.0 00.00 00Phelps Dodge ($).............. 00.00 0.0 00.00 00Placer Dome (C$) ............ 00.00 0.0 00.00 00Potash Corp. of Sask. (C$) 00.00 0.0 00.00PT Tambang Timah (Rp) 00.00 0.0 00.00 00Rio Algom (C$)................ 0.0 00.00 00Rio Tinto plc (£) ............. 00.00 0.0 00.00 00RJB Mining (£) ............... 00.00 0.0 00.00 00Stillwater Mining (US$) ...Sumitomo Met. Min. (¥) . 00.00 0.0 00.00 00Teck ‘B’ (C$) ................... 00.00 0.0 00.00 00WMC (A$) ...................... 00.00 0.0 00.00 00Xstrata (SF) .................... 00.00 0.0 00.00 00

Share prices and exchange rates are intra-day Wednesday.100 in the high/low column indicates that the share is tradingat a high, 0 that it is at a low, based on local prices over thepast 52 weeks.

Currencies July 12Value of £ $(US)$ (US) ................................................... 0.0558 —$ (Australian)........................................ 0.2.512 0.05$ (Canadian) ......................................... 0.00 0.00Ringgit (Malaysian) Fixed official rate ..Franc (Swiss) ........................................ 0.00 0.00Krona (Swedish) ................................... 0.00 0.00Yen ....................................................... 0.00 0.00Rand (SA) ............................................ 0.00 0.00� (Euro) ............................................... 0.00 0.00Markka (Finnish) ................................. 0.00 0.00Franc (French)...................................... 0.00 0.00Deutschmark ........................................ 0.00 0.00Source: Bloomberg

SHARE PRICES AND EXCHANGE RATES

Company July 12 Change Local US$ mill.Local 5-day % % hi-lo Mkt cap.

Company July 12 Change Local US$ mill.Local 5-day % % hi-lo Mkt cap.

47.2532.50

196.0034.59

266.0023.35

3.837.811.651.04

10.0627.0519.57

2.852.08

215.0018.7525.5019.7045.4016.8444.4517.40

9.3825.3032.30

811.208.904.60

14.69249.00

23.5018.9012.9030.80

7.911.015.15

823.0020.8815.45

1.19.23.27.8

–0.7–2.32.01.60.08.33.71.13.19.6

18.2–2.33.3

–1.7–1.7–1.31.9

–0.4–8.7–3.8–3.60.91.14.74.55.94.20.9

14.57.5

–4.39.11.0

–1.0–0.1–2.95.5

1832876016514928

089192963351491282811746423

24

42184213782861131910669221

0903318

6,99628,276

6,23321,366

4,187369

1,142298185198385

7,24220,489

9,225301468716273

1,14110,11410,163

1,0172,0831,4841,6872,1521,352

84607

1,6822,4202,889

795490

1,4382,1211,025

3844,1223,5042,573

58219591141819101864103835702979156388

1,409993

11,2151,6721,231

6243,8303,1293,0462,849

139728

18,502123

1,1002,601

7165,3131,400

1.512.562.245.752.47

13.38163.09

10.291.59

1.001.691.483.801.638.84

107.736.801.05

�1=Mk5.94573�1=FF6.55957�1=DM1.95583

–2.10.01.9

–1.0–1.0–4.112.3

4.6–1.1–1.80.02.06.8

–1.84.83.2

–3.06.4

–5.6

209.930.963.683.84

10.410.94

49.6039.7513.8080.20

2600.0017.7510.98

0.5628.56

490.009.857.87

388.00

MINING FINANCE

ture. Such expenditure by North “wouldpotentially be wasteful and would diminishthe value of North to Rio Tinto”, assumingthe bid is successful.

Rio Tinto also noted that the waitingperiod under the US Hart-Scott-RodinoAntitrust Improvements Act of 1976expired this Monday, indicating that thebid has not attracted adverse attentionfrom the US competition authorities. ■■

Franco-Nevada leavesCanyon to pursueSeven-Up Pete

Canyon Resources Corp. of Golden,Colorado, and Franco-Nevada MiningCorp. of Toronto have reached agreement toterminate their financing agreement withrespect to the Seven-Up Pete gold joint ven-ture, in Montana. The settlement includesthe dismissal by Franco-Nevada of its legalaction filed against the joint venture inDenver in the middle of last month. Thelegal action had sought to rescind thefinancing agreement, to return all fundspaid by Franco-Nevada under the agree-ment and to recover damages.

The financing agreement between thetwo companies was made in May of lastyear. Under the agreement, Franco-Nevadaagreed in late 1999 to advance to the Seven-Up Pete joint venture US$3.0 million incash, and to commit US$500,000 to main-tain an existing environmental reclamationbond, to allow the joint venture to maintainits property rights in the project and to pur-sue a ‘takings’ legal action against the Stateof Montana (MJ, October 8, 1999, p.295).This legal action followed the state’s I-137initiative effectively banning the use ofcyanide (MJ, November 20, 1998, p.407).The joint venture holds property includingthree deposits, including the McDonaldproject, located near Lincoln. Developmenthas been prevented, according to Canyon,by I-137. Franco-Nevada advanced the nec-essary funds to the joint venture in returnfor the right to receive a 4% net smelterreturns (NSR) royalty on any mineral pro-duction, or one third of the proceeds of any‘takings’ action.

Although referred to as a joint venture,Seven-Up Pete is 100% owned by Canyonand its wholly-owned subsidiary, CR

Montana Corp., following the withdrawalof Phelps Dodge Corp. However, the latterretains an interest in the project under theterms of the agreement whereby Canyonpurchased Phelps Dodge’s 72.25% holdingin the joint venture, in return for a modestdown-payment and extensive follow-uppayments if the project were ever developed(MJ, October 3, 1997, p.276). This agree-ment with Phelps Dodge was modified onthe entry of Franco-Nevada, such thatPhelps Dodge would receive a payment ofUS$10 million on the issue of all necessarypermits to develop the project, or one thirdof the proceeds of any successful ‘takings’legal action.

This month’s out-of-court settlementprovides that Franco-Nevada will return tothe joint venture all of its interests in thefinancing agreement, including the 4%NSR royalty and the one-third share of any‘takings’, in exchange for the repayment ofUS$1 million of the US$3 million paid lastyear. The US$500,000 bond will remain inplace until October 20, 2002, at which pointFranco-Nevada’s bond obligations will ter-minate. The president of Canyon, RichardDe Voto, said that the company is “disap-pointed that Franco-Nevada has with-drawn”. Canyon retains its belief in its caseagainst the State of Montana, and appearsdetermined to proceed.

Franco-Nevada recently agreed to mergewith Gold Fields Ltd of South Africa in amajor all-share deal (MJ, June 16, p.461).■■

Cambridge plans moveinto Spain

Trading of shares in Cambridge MineralResources plc on London’s AlternativeInvestment Market (AIM) resumed thisMonday (July 10), closing at £0.185/sharebefore subsiding slightly on Tuesday to£0.175/share. Trading in Cambridge hadbeen suspended on June 15, at£0.1775/share, pending the company’sannouncement of its proposed acquisitionof Recursos Metallicos SL of Spain. Thedeal is classified as a reverse takeover underAIM rules and thus required that suspen-sion be requested by Cambridge. RecursosMetallicos’ principal assets are three miner-al projects in Spain: the Lomero-Poyatospolymetallic project, and the Salamon andFalle de Leon gold prospects.

The acquisition is to be effected by thepayment of US$200,000 in cash and theissue to Tethys Iberian Minerals Ltd, theowner of Recursos Metallicos, of 7.50 mil-lion new shares in Cambridge, bringing thetotal issued to 46.48 million. The additionalshares are scheduled to be admitted to AIMfor trading on July 26.

As part of the deal, ownership of RecursosMetallicos will be transferred to Tethys byJosé Fidalgo, who is to become a non-execu-tive director of Cambridge. Dr Fidalgo, pro-fessor of metallurgy at the PolytechnicUniversity of Madrid, is employed byRecursos Metallicos as a consultant. ColinAndrew, a director of Cambridge, has anindirect interest in Tethys via GeorgiaHoldings Ltd, which holds 33% of Tethys,and the acquisition of Metallicos Recursostherefore requires the approval of a majori-ty of shareholders in Cambridge other thanMr Andrew. A vote is scheduled to takeplace immediately after the company’sannual general meeting on July 25.

Lomero-Poyatos is located in southwest-ern Spain, in the Iberian Pyrite Belt.Drilling and underground exploration haveestablished indicated resources, split intotwo categories of mineralisation: massivesulphides totalling 4.25 Mt, at 5.76 g/t Au,116.9 g/t Ag, 1.58% Cu, 5.71% Zn and1.48% Pb; and semi-massive sulphidestotalling 11.2 Mt, at 2.29 g/t Au, 70.8 g/tAg, 1.26% Cu, 3.02% Zn and 0.98% Pb.Tethys has carried out a preliminary evalu-ation of the resource, based on open-pitmining, and further modelling is inprogress.

The Salamon and Falle de Leon prospectsare in Leon Province, northwestern Spain.Salamon is the subject of a joint-ventureagreement for Recursos Metallicos to earn a50% interest from Sociedad deInvestigación y Explotación Minera deCastilla y Léon SA (Siemcalsa), a state-sponsored company that holds the mineralrights, by spending US$1.2 million over twoyears. The prospect has inferred resources of433,000 t, at 7.86 g/t Au. The Falle de Leonproperty surrounds Salamon (and inciden-tally adjoins ground held by the Rio NarceaGold Mines Ltd-Barrick Gold Corp. jointventure). Falle de Leon is also the subject ofa joint-venture agreement with Siemcalsa,which has carried out preliminary explo-ration work. Under the terms of the jointventure, Recursos Metallicos can earn a

Mining Journal, London, July 14, 2000 33

HeapLeach.comHeapLeach.com

MINING FINANCE

50% interest by spending US$800,000 overthree years.

Cambridge retains its interests in explo-ration projects in Ireland, the FalklandIslands and Scotland. ■■

Market newsSwiss-based Xstrata AG has secured aUS$300 million revolving credit facility,principally arranged by Credit Suisse FirstBoston and Société Générale, which thecompany intends to use to refinance itsexisting three-year loan facility. The newfacility comprises two tranches, each ofUS$150 million. The first has a five-yearterm, and the second a one-year term com-mitted, plus a three-year option. Loansdrawn down under the new facility will bearinterest at 40-65 basis points (100 bp = 1%)over the London Inter-Bank Offered Rate,depending on certain financial ratios. Thefacility is syndicated through seven otherbanks. Xstrata believes that the new loanfacility, plus the proceeds of recent non-coredisposals, will give it the funding ability to“pursue growth opportunities”.■ Vancouver-based Winspear Diamonds Inc.has received the hostile takeover offerannounced by the De Beers group twoweeks ago (MJ, June 30, p.497), and will

post its formal response to shareholders nolater than next Monday (July 17). The offeris due to close on July 28. Winspear’s boardof directors meanwhile “strongly urgesshareholders not to make any decision”with respect to the offer, which it believes“significantly undervalues” Winspear. Thisweek, the company released an updatedscoping study of its Snap Lake project in theNorthwest Territories (this issue, p.27), aspart of its “value recognition programme”,and announced that it is opening a dataroom under a confidentiality agreementbasis to qualified companies. ■ Los Pelambres, the copper mine in Chileowned 60% by London-listed Antofagastaplc and 40% by a group of Japanese compa-nies, has satisfied the terms of a completionguarantee provided by Antofagasta. Theguarantee was made in favour of the banksand other institutions that provided financefor the project. Antofagasta is now releasedfrom the obligations prevailing under thatguarantee, the most significant immediateconsequence being the release of US$133million set aside by Antofagasta in anescrow account to cover overruns, etc.These funds can now be put to other uses.The guarantee also provided the lenderswith a charge over Antofagasta’s 33.6%shareholding in a non-mining associate,Quiñenco SA. This charge is also released,

offering Antofagasta the opportunity toborrow against this asset in future if it sochooses. Antofagasta notes that the releasewas achieved 18 months ahead of schedule,which highlights the strong early perfor-mance of the project, commissioned inNovember last year one month ahead of theoriginal plan. The early release from theloan guarantees was signalled three monthsago by the chief executive of Antofagasta’smining arm, Jean-Paul Luksic (MJ, March31, p.257). Los Pelambres produced 146,000t of copper in the first half of this year and,with the plant operating at 12% over itsplanned capacity, full-year output is nowforecast at over 300,000 t (MJ, June 16,p.470). This is well ahead of the 271,000 t/yoriginally planned for the first five years ofproject life.■ London-listed Randgold Resources Ltdhas completed the proposed sale of half ofthe company’s 80% interest in the Morilagold project in Mali to AngloGold Ltd ofSouth Africa for US$132 million, and thetwo companies have agreed the terms of thejoint venture that will manage the project(MJ, April 7, p.275). AngloGold andRandgold will each have 40% of the project,with the Government of Mali holding thebalance of 20%. Final agreement followsthe approval last month of shareholders inRandgold Resources. Randgold has

34 Mining Journal, London, July 14, 2000

NOW PUBLISHED BYMINING JOURNAL BOOKS LTD

Statistics & Analyses of the World’s Minerals Industry

Phillip Crowson

MINERALSHANDBOOK

1998-99

The Author

Phillip Crowson graduated from Cambridge in 1961 with a first class honoursdegree in Economics. After ten years working as an economist in variouscompanies in the UK chemical industry he joined the Economics Department ofwhat was then Rio Tinto Zinc Corp. He became head of the department, and thecompany’s chief economist in May 1981, a position he held until his retirementat the end of 1996. He was a director of several subsidiary companies, lecturedfrequently, and took an active role in many organisations in the mining andmetals industries. Phillip Crowson has continued to add to his many publishedpapers and articles, and is an invited director of the London Metal Exchange.

For each of 52 minerals the following information is provided:

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received the sale consideration, and hasrepaid a R312.3 million bridging loanadvanced by Barnato Exploration Ltd,another company originally in the Kebblestable. The chief executive of RandgoldResources, Mark Bristow, said this weekthat after settling all current liabilities, thecompany would be left with US$90 millionof the sale proceeds which it intends toapply to “new growth opportunities”.■ The London-based mining group AngloAmerican plc has agreed to dispose of a 68%shareholding in LTA Ltd, a Johannesburg-listed engineering, construction and projectmanagement group, specialising in mining,petrochemicals and infrastructure projects.The sale is the latest in a long list of non-core disposals by Anglo American (MJ,March 24, p.233). The sale agreement takesthe form of an irrevocable undertaking byAnglo American to tender its shares to aR46/share takeover offer for 100% of LTAfrom Aveng Ltd, another Johannesburg-list-ed construction company which also hasinterests in steel distribution and cementmanufacture. Anglo will receive about R900million in cash for its LTA shares.■ The positive effects of the privatisation ofthe Zambian copper mining industry arealready being felt by the industries thatsupply the operations. Last Friday, theZambian Government announced that ithas distributed K292 billion (US$1 =K3,175) to creditors of state-owned ZambiaConsolidated Copper Mines Ltd (ZCCM),out of a total of K423 billion set aside for thepurpose in the government’s 2000 budget.The Secretary to the Treasury, JamesMtonga, issued a statement reiterating thegovernment’s commitment to clear all ofZCCM’s trade creditors “in full as soon aspossible”. The Zambian Government hasnot detailed ZCCM’s obligations to tradecreditors, but the group’s balance sheet atMarch 31, 1999 showed accounts payable atK527.9 billion, of which K439.9 billion wasowed on goods and services, K30.2 billion onmetal trading and K14.3 billion on financeleases.■ The Australian-based zinc producerPasminco Ltd has received A$22.95 millionas settlement of an insurance claim withrespect to the company’s Elura operation inNew South Wales. The sum represents asettlement of A$25 million, less amountsalready paid and other deductions, to com-pensate for a collapse in the Elura mine in1996 (MJ, March 22, 1996, p.215).Pasminco expects to book a gain of A$16.5million (A$11 million after tax) in itsaccounts for the year to June 30, 2000.■ Barrick Gold Corp. of Canada has postedits takeover offer to shareholders in PangeaGoldfields Inc. (MJ, July 7, p.1). The boardof Pangea has recommended that share-holders accept, and all directors and officersof the company have pledged their shares tothe offer, collectively accounting for 20%.The offer closes on July 28. ■■

People

The Queensland State Government hasmade Ted Campbell Director General of theDepartment of Mines and Energy, subjectto the approval of the executive council,replacing Ron Boyle who died in April. DrCampbell is promoted from DeputyDirector General.■ Tom Dale has been appointed as chiefexecutive of Mopani Copper Mines plc, thejoint-venture company established earlierthis year by Glencore International AG(46%-51% voting), First QuantumMinerals Ltd (44%-49% voting) and state-owned Zambia Consolidated Copper MinesLtd (10% carried) to operate the Mufuliramine, concentrator, smelter and copperrefinery, and the Nkana copper mine, con-centrator and cobalt plant in Zambia. MrDale will take over from Philip Pascall, whohas served in the role of interim chief execu-tive since April 3, when Mopani formallytook control of the newly privatised assets(MJ, April 7, p.263). Mr Pascall moves tothe position of non-executive chairman ofMopani. Mr Dale is a well-known figure inSouth African mining circles, until lastSeptember serving as managing director ofthe South African operations of Gold FieldsLtd, one of the world’s largest gold produc-ers (MJ, September 10, 1999, p.211).■ Australian-based Ashton Mining Ltd hasappointed Justin Gardener as non-executivechairman, replacing Paul McClintock whoresigned last month following his appoint-ment as head of the Cabinet Policy Unit ofPrime Minister John Howard’s administra-tion (MJ, June 2, p.440). Mr Gardener is aformer member of the board of partners ofAndersen, the international consulting andaccountancy group.■ Dia Met Minerals Ltd of Canada hasappointed James Rothwell as president andchief executive with effect from August 15,replacing James Eccott who is retiring. MrRothwell was formerly president of BHPDiamonds Inc., part of Broken HillProprietary Co. Ltd of Australia, Dia Met’s51% partner in the Ekati™ diamond minein Canada. Dia Met holds a 29% interest inthe mine, Canada’s first diamond producer.■ Brisbane-based MIM Holdings Ltd isexpanding the role of its group executive foroperations in Australia, Vince Gauci, tocover all of the company’s operations world-wide. MIM’s chief executive, Nick Stump,said last week that the move will extend thecontribution Mr Gauci has made to theoperating performance of MIM’s assets inQueensland to the company’s Europeanoperations and to its 50% interest in theBajo de la Alumbrera copper-gold mine inArgentina, which MIM manages.■ Colorado-based Canyon Resources Corp.has appointed David Fagin as a non-execu-tive director. Mr Fagin was formerly chair-

man and chief executive of Golden StarResources Corp., and has held senior posi-tions with Homestake Mining Co. andAmax Inc. ■ Robert Yeoman has been appointed vicepresident of corporate development byExpatriate Resources Ltd of Vancouver,effectively replacing Douglas Goss who heldthe post of vice president of business devel-opment. Mr Yeoman, currently corporatesecretary of Caussa Capital Corp., will alsobe nominated to join Expatriate’s board atthe company’s annual general meeting onJune 28. Expatriate has also appointedJustin Himmelright manager of environ-ment. Mr Himmelright, who joins fromKnight Piésold, will be responsible for thecompany’s environmental programmes, andfor securing the relevant permits for itsFinlayson project in Yukon Territory.■ The US National Mining Hall of Famehas announced its nominations for 2000.Eight persons are to be inducted, to bringthe total of those “enshrined as leaders ofthe mining industry” to 159. This year’snominees include one living person, JohnLivermore, who was “a driving force behindthe 1961 discovery of the Carlin gold minein Nevada”. The posthumous nomineesinclude the three Kelce brothers, “who ledPeabody Coal to become the nation’s largestcoal producer”; David Skillings Jr, who waseditor and publisher of the weekly SkillingsMining Review until his death last year; andSimon Strauss, “an authority on the world’smetal markets” and author of ‘Trouble inthe Third Kingdom’. The ceremonies willbe conducted at a black-tie dinner at theLas Vegas Hilton on October 8 (on the eveof the MINExpo conference). ■■

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METALLURGICAL MANAGER/GENERAL MANAGER

We have an immediate requirement for a seniormetallurgist, experienced in gold CIP/CIL/heap leaching totake charge of a new project in Asia. The operation involvesboth treatment of run-of-mine ore and tailings retreatmentand applicants should be suitably senior to assume the postas the project’s General Manager. Terms and conditions area senior package and the appointment is on married status.

Please send an up-to-date CV, quoting Ref No 4846, to:Dennis Thomas, Thomas Mining Associates, P.O. Box 2010,Lancing, West Sussex BN15 8HZ, UK. Tel: +44 1903 753511.Fax: +44 1903 753510. E-mail: dennis@thomasmining.prestel.co.uk

Mining Journal, London, July 14, 2000 35

Wanted - Mineral Projects Producer looking for advanced base orprecious metal projects with realpotential to produce. Email brief detailsto:

info@mineit.co.uk

Published by The Mining Journal Ltd, 60 Worship Street, London EC2A 2HD, England. Typeset and printed in Gt. Britain by Pensord Press Ltd, Gwent.Registered as a Newspaper with the Post Office.

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