Copper

• Copper
• Resources
• Accessible EDR
• JORC Reserves
• Exploration
• Production
• World Ranking
• Industry Developments

Australia is a major copper producer with mining and smelting operations at Olympic Dam (SA) and Mt Isa (Qld). Other significant copper producing operations are at Northparkes, Cadia Ridgeway and Tritton (NSW), Ernest Henry, Osborne, and Mt Gordon (Qld), Nifty and Golden Grove (WA) and Mt Lyell (Tas). Copper and copper alloys are used in building construction and electrical equipment such as electrical cables as well as in industrial machinery and equipment.

Australia's EDR rose by 1 Mt to 42.5 Mt of Cu, an increase of 2% for the year. South Australia has the largest EDR at 26 Mt, which decreased by 2% in 2006 to be around 62% of the national total. The majority of these resources are associated with the Olympic Dam deposit in South Australia. Queensland has the second largest EDR with 17% of the national total, followed by New South Wales with 11%, and Western Australia with 7%. EDR in New South Wales increased by 2 Mt following an upgrade of resources at the Cadia East deposit.

Sub-economic demonstrated resources increased by 23% to 7.5 Mt, made up of 6.4 Mt in the para-marginal demonstrated resource category and 1.1 Mt in the sub-marginal demonstrated resource category. The increase of 1.6 Mt in para-marginal resources compared to 2005 reflects activity in the Mt Isa region of Queensland where a range of deposits are being evaluated as well as in Western Australia at the Spinifex Ridge Mo-Cu deposit and in the Northern Territory at the Browns deposit. Most of the para-marginal Resources are in Queensland and Western Australia with 43% and 22% respectively, followed by South Australia with 12%.

Inferred resources rose by 15% to just under 35 Mt in 2006. South Australia holds 65% of Australia's Inferred Resources followed by Queensland 15%, Western Australia 11% and New South Wales 8%.

All copper EDR is accessible.

JORC Code reserves account for around 43% of AEDR. The remaining AEDR comprise those measured and indicated resources reported by mining companies, which Geoscience Australia considers will be economic over the long term.

Spending on exploration for copper rose by 68% in 2006 to $177.5 million. Expenditure in South Australia of $83.2 million was 47% of Australia's copper exploration and was directed mainly to the search for further Olympic Dam style mineralisation in the Gawler Craton and resource definition drilling at Olympic Dam and Prominent Hill. Queensland had 27% of spending on exploration for copper across a range of projects and New South Wales 14%, with the remaining 12% distributed largely in Western Australia with 8% and to a lesser extent in the Northern Territory, Tasmania and Victoria. Expenditure on exploration for copper made up 12% of all mineral exploration. Significant exploration results reported during 2006 include:

Rocklands (Qld): Cudeco Limited reported an Inferred Resource for this new discovery of 25 Mt at 1.57% Cu, 818 ppm Co and 0.2 g/t Au. Drilling intersections included 78 m at 2.31% Cu and 33 m at 3.86% Cu, including 13 m at 6.39% Cu and 8 m at 1.36 g/t Au. Subsequent intersections include one drill hole with more than 100 m of visual native copper.

Golden Grove (WA): Two Cu-Zn discoveries made in 2006 have the potential to significantly extend the mine's life beyond the current seven years. Drilling beneath the Xantho orebody at Gossan Hill intersected 51 m at 6.1% Cu, 1.8% Zn and 1.1 g/t Au from 1,000 m, including 23 m at 9.8% Cu, 3.9% Zn and 1.8 g/t Au. Drilling beneath the Scuddles mine intersected 45.7 m at 2.4% Cu from 1,629 m, and 6.5 m at 26.6% Zn from 1,675 m. The 6 km long Scuddles-Gossan Hill system lies within a 34 km belt of volcanic rocks with the potential to host additional volcanic hosted massive sulphide (VHMS) systems. Testing of the larger area is underway along with a drilling program to locate repetitions at depth or extensions of existing ore bodies.

In 2006, Australia's mine production of copper totalled 875 kt of contained copper, 5% lower than in 2005 (921 kt). Queensland continued to dominate production with 353 kt, largely from Mt Isa, although this was 12% less than in 2005. Queensland accounted for 40% of Australian production, down from 43% in 2005. New South Wales surpassed South Australia as the second largest producer with an increase of 11% to 210 kt or 24% of total production, mostly from Cadia Ridgeway and Northparkes. In South Australia, Olympic Dam produced all of the State's output of 183 kt in 2006 which was 14% less than in 2005. Other output saw Western Australia produce 98 kt, up 11%, and Tasmania produce 31 kt, up 3%.

The value of Australia's exports of copper concentrates and refined copper in 2006 totalled just under $6.6 billion, 66% more than the $4 billion in 2005 and 4% of the value of total merchandise exports. The increase reflects higher copper prices in 2006 with the average up by 86% to $9,003/t compared to the average of $4,852/t in 2005. In line with decreased production of copper in 2006 was an 8% decrease in exports to 724 kt.

Based on USGS data for other countries, Australia has the second largest EDR of copper (8%) after Chile (30%) and ahead of the USA and Indonesia (both 7%) and Peru, Poland and Mexico (all 6%). As a producer, Australia ranks fourth in the World with 6% after Chile (35%), the USA (8%) and Peru (7%).

Mt Isa (Qld): Copper-in-concentrate production in 2006 from Xstrata Plc's Mt Isa and Ernest Henry operations totalled 278 kt, a decrease of 9% on 2005. At Mt Isa, head grades of 3.42% Cu and record higher ore production gave a copper-in-concentrate result of 194 kt. This was offset by Ernest Henry production at 84 kt of copper-in-concentrate, 35% lower than 2005. This was due to scheduled 27% lower grade ore of 0.89% Cu and 10% less throughput because of harder ore, despite a record plant runtime of 94%. Smelter production of 213 kt copper was 3% lower than in 2005, predominantly due to a planned month long shutdown of the smelter in September 2006 to re-brick the ISASMELT furnace and to enable the commissioning of the second rotary holding furnace. The Townsville copper refinery produced 209 kt of saleable cathode, 5% less than in 2005 due to the lower anode supply from the Mt Isa smelter. During 2007, the copper smelter and refinery capacities will continue to be expanded to the planned production rate of 300 ktpa through the completion of a series of projects. This is designed to match the total copper-in-concentrate production from the Mt Isa and Ernest Henry copper mines.

At the Enterprise copper mine, access development to the Northern 3500 underground copper ore body was completed at the end of 2006 at a total capital cost of $38 million. Production from this additional high-grade mining zone will be progressively increased during 2007 to enable the mine to maintain its rated capacity of 3.5 Mtpa and improve use of the existing hoisting and concentrator capacity. Pre-feasibility work is to commence in 2007 on evaluating the potential to exploit significant known low grade resources contained within the 500 ore body (70 Mt at 1% Cu) and the halo mineralisation surrounding the 1100 ore body through bulk mining methods.

Olympic Dam (SA): Production for 2006 totalled 183 kt of copper cathode. This was 14% less than in 2005 which was attributed to maintenance activities at Olympic Dam and the variability of ore sources and their grade. Because of the size of the Olympic Dam ore body, there is potential to further increase the size of the operation beyond the current capacity. BHP Billiton continued a pre-feasibility study initiated by WMC to examine capacity expansion options with open-pit being a preferred mining method. The project would approximately double copper and treble uranium capacity from an investment of up to US$5 billion. As a consequence, major infrastructure for water, energy, transport and a township expansion would be required. The timeframe for the project is the pre-feasibility study by the end of 2007, feasibility conclusion by early 2009 and construction from 2009 to 2013, resulting in operation of the expanded facilities from 2013 onwards.

Prominent Hill (SA): The bankable feasibility study was completed on schedule in August 2006 and Oxiana Limited formally announced it would proceed with the $775 million development of Prominent Hill, which will produce an average 84 ktpa of copper-in-concentrate and 115,000 oz gold per annum for 10 years. Production of the first commercial copper and gold concentrates is scheduled for the 3rd quarter of 2008. Development includes an open-pit mine, a conventional grinding and flotation processing plant with 8 Mtpa capacity, construction of a permanent village to accommodate a workforce of approximately 400 people and construction of a haulage road, power line and bore field. Pre-stripping of the 100 m of sedimentary cover began in October 2006 with the orebody due to be reached in early 2008. Copper and gold concentrates will be transported by 140 t road trains to a rail siding at Wirrada and shipped in 10,000 to 20,000 t lots to smelters in Asia and Australia.

Telfer (WA): After almost two years under construction, Newcrest Mining Limited's re-development of Telfer as a gold-copper mine completed its first full year of production in 2005-06. The 650,016 oz of gold and 38,374 t of copper produced was almost all from the open-pit supergene ore which proved more complex than expected and required further drilling and sampling to improve predictability of ore grades. The supergene ore is confined to the open-cut and its proportion of total ore treated will diminish as production from the underground mine increases to its planned 4 Mtpa rate in 2007.

Cadia East (NSW): Newcrest updated the Cadia East Mineral Resource as 21.9 Moz Au and 3.6 Mt Cu. This occurs in two zones: an open-pit zone, for which an initial Ore Reserve of 1.8 Mozs Au and 0.63 Mt Cu was reported, and an underground zone, for which the ore reserve was increased by 1.3 Mozs Au and 0.12 Mt Cu to a new total of 7.3 Mozs Au and 0.75 Mt Cu. The decline for the Cadia East Underground Panel Cave feasibility study advanced 1.5 km of the total 7 kms which is required to access the orebody. Newcrest reports that Cadia East's Panel Cave will be Australia's largest underground mine with an expected life of more than 30 years.

Browns (NT): Compass Resources signed a binding contract with Hunan Nonferrous Group (HNC) which will fund development of the $69 million Browns base metals oxide project. The operation is expected to produce about 10 kt copper cathode, 1 kt cobalt and 750 t nickel annually from the 10-year, 1 Mtpa project. Compass has relocated the solvent extraction plant and most of the electrowinning plant from the Cawse laterite project in WA. HNC also has committed to provide all the capital required to develop a potential 4 Mtpa sulphide operation at Browns. Brokers have estimated potential capital costs of a 2 Mtpa operation to be in the order of $300-400 million.

Lady Annie (Qld): CopperCo is spending around $80 million developing a 19 ktpa copper producing operation. From a resource of 21.5 Mt at 0.9% Cu for 194 kt of contained copper, 16.8 Mt is to be crushed and stacked at an average grade of 0.94% containing 157 kt copper. CopperCo plans to mine five ore bodies by convenional open-pit mining: Lady Annie, Mt Clarke, Flying Horse, Mt Kelly Workings and Swagman, with Mt Clarke to be mined first.

Redbank (NT): Redbank Mines Limited is currently vat-leaching high grade oxide stockpiles under the project's first stage to produce 1 ktpa Cu. A proposed Stage 2 commencing in 2008 will mine oxides from the Bluff, Redbank and Azurite breccia pipes to increase production to 3 ktpa Cu. Stage 3, involving mining of underlying sulphides for floatation is proposed to double Cu output to 6 ktpa from a resource base of 4.2 Mt at 1.5% Cu.

Mt Watson (Qld): Matrix Metals Limited is spending $10 million at its Leichhardt project developing a mine at Mt Watson, refurbishing the Mt Cuthbert processing plant 25 km south and constructing a haul road. Production of 5.5 ktpa copper cathode for 4 years is planned from an oxide resource of around 8 Mt at 1% Cu. Stage 2 development proposes increasing to 10 ktpa Cu and is estimated to cost an additional $5 million for the plant upgrade.

Balcooma (Qld): Kagara Zinc Limited announced an initial copper reserve of 2.35 Mt at 3.4% Cu, 15 g/t Ag and 0.37 g/t Au within a 180 m deep pit. Production is scheduled to start in 2007 at a rate of 30 ktpa of contained copper with the bulk of the ore likely to be processed through the Thalanga treatment plant.

Roseby (Qld): A feasibility study of the proposed Roseby mining and processing operation was completed in October 2006. The proposed open-pit 8 Mtpa operation is forecast to produce up to 34 ktpa copper from the start of 2009 and during the first four years, 14,700 oz per annum Au. The current estimated life of the project is 8.5 years at a capital cost of $388 million with a total resource of 127 Mt at 0.73% Cu and 0.06 g/t Au.

Mutooroo (SA): Havilah Resources has been funded $3 million by Heilongjiang Resources (HJR) for a feasibility study aimed at determining a JORC measured resource and a minimum production schedule of about 10 ktpa Cu and 1 ktpa Co. Thereafter HJR will fund 100% of the mine development until production for a share of up to 50% of mine output. Scoping studies at Mutooroo based on drilling to date, indicate the deposit contains at least 11 Mt at 1.1% Cu and 0.1% Co, and deeper ore sections indicate grades of 2% Cu and 0.2% Co.