Copper

Content maintained by Keith Porritt

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

Australia is a major copper (Cu) producer with mining and smelting operations at Olympic Dam in South Australia (SA) and Mount Isa in Queensland (Qld). Other significant copper producing operations are at Northparkes, Cadia-Ridgeway and Tritton in New South Wales (NSW), Ernest Henry and Osborne (Qld), Nifty and Golden Grove in Western Australia (WA), and Mount Lyell in Tasmania (Tas). Copper and copper alloys are used in building construction, electrical cables and electrical equipment as well as in industrial machinery and equipment. An average car contains over 20 kilograms (kg) of copper and suburban homes now have around 200 kg of copper.

Australia's total demonstrated resources of copper rose by 13 million tonnes (Mt) in 2008 to 120 Mt. The increase occurred mostly in SA, NSW and Qld.

Australia's Economic Demonstrated Resources (EDR) of copper rose by 18.4 Mt to 77.8 Mt, an increase of 31% for the year. South Australia has the largest EDR at 57 Mt, which increased by 32% in 2008 to be around 73% of the national total. Almost all of the SA EDR are associated with the Olympic Dam deposit, where, with the release of new data in 2008, EDR rose by 13.1 Mt to 54.9 Mt. Queensland has the second largest EDR with 11% of the national total, followed by NSW (9%) and WA with (6%).

Inferred Resources fell by 11% to 34.2 Mt in 2008 largely as a result of the conversion of Inferred Resources to Indicated Resource at Olympic Dam. South Australia holds 58% of Australia's Inferred Resources (mostly at Olympic Dam) followed by Qld 18%, WA 10% and NSW 9%.

All copper EDR is accessible.

JORC Code reserves account for around 25% of Accessible Economic Demonstrated Resources (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. The copper resource life using national EDR divided by annual production is 88 years, but using the ore reserve and dividing by annual production gives a resource life of only 22 years.

Spending on exploration for copper rose by 11% in 2008 to $293 million. Expenditure in Qld of $108 million was 37% of all copper exploration. Expenditure in SA of $106 million represented a further 36%. The main areas of expenditure in Qld were the Mount Isa and Cloncurry districts. In SA expenditure was at the Olympic Dam deposit and in the search for further Olympic Dam style mineralisation in the Gawler Craton. Western Australia had 14% of spending on copper exploration across a range of projects and NSW had 9%, with the remainder to a lesser extent in the Northern Territory (NT) with 3% and Tas with 1%. Expenditure on exploration for copper made up 11% of all mineral exploration.

In 2008, Australia's mine production of copper totalled 887 kilotonne (kt) of contained copper, 2% higher than 2007 (871 kt). Queensland continued to dominate production with 389 kt, largely from the Mount Isa region. This was 3% more than in 2007 and represented 44% of Australian production, slightly up from 43% in 2007. South Australia held the second largest producer position with an increase of 10% to 196 kt. Olympic Dam produced all of SA's output, contributing 22% of national production. New South Wales produced 146 kt in 2008, 13% less than in 2007 and largely from Cadia-Ridgeway, Northparkes and Tritton. Western Australia produced 126 kt, up 7% and largely from Nifty and Golden Grove. Tasmania produced 28 kt, down 8% and nearly all from Mount Lyell.

The value of Australia's exports of copper concentrates and refined copper in 2008 totalled just under $6.7 billion, up slightly on the $6.4 billion in 2007 but down from 4% to 3% of the value of total merchandise exports. Australian dollar copper prices decreased for a second year in 2008 after three prior years of substantial rises. The average copper price was down 6% in 2008 to $7 975 a tonne compared to the average of $8 512 a tonne in 2007. Exports in 2008 increased 15% to 811 kt despite only slightly increased copper production.

Based on United States Geological Survey (USGS) data for other countries, Australia has the second largest EDR of copper (13%) after Chile (27%) and ahead of Peru (10%), Mexico, Indonesia and the United States of America (USA) with 6% each and China and Poland with 5% each. As a producer, Australia ranks fifth in the world, with 6% of world copper production, after Chile (36%), the USA and Peru (both 8%) and China (also 6%).

Olympic Dam (SA): Production for 2008 totalled 196 kt of copper cathode. This was 10% more than in 2008 but 17% below the nameplate capacity of 235 kilotonne per annum (ktpa). BHP Billiton has undertaken a two-year pre-feasibility study to examine capacity expansion options. If the expansion proceeds, it is likely to see the advent of an open pit mine which would operate simultaneously with the existing underground mine and lift ore production six-fold. The project would increase copper production to 750 ktpa, with Olympic Dam becoming one of the world's largest mines. This will require major infrastructure for water, energy, and transport as well as a township expansion. The existing smelter would be expanded to produce 350 ktpa of the copper. A new concentrator and new hydrometallurgical plants would lift concentrate production four-fold and generate a surplus 1.6 million tonnes per annum (Mtpa) of copper concentrate for smelting overseas. BHP Billiton is seeking approval from the Australian Government and the SA and NT governments for the expansion. As part of the process, a detailed Draft Environmental Impact Statement (EIS) has been prepared to comply with the guidelines set by the three governments. The proposed expansion would be a progressive development, requiring construction activity over a period of 11 years.

BHP Billiton reported an increase in the Olympic Dam resource base of 635 Mt (8%) for the year ended 30 June 2008 to 8490 Mt of ore. The total sulphide resource base is now 8339 Mt at 0.88% Cu, 0.28 kilograms per tonne (kg/t) uranium (U₃O₈), 0.31 grams per tonne (g/t) of gold (Au) and 1.5g/t of silver (Ag). The increase was due to drilling of a further 487 surface and underground holes totalling 192 000 m. This has provided greater confidence in the continuity of mineralisation and has resulted in the conversion of resource material from Indicated Resource to Measured Resource and from Inferred Resource to Indicated Resource. Also, 600 Mt of new Inferred Resource was added. A 40% increase in overall ore reserves is due to additional resource material being available for conversion to Proven and Probable Reserves. In addition, mining parameters for stope design and grade factors have been updated following a review of the previous two years reconciliation data. Total Reserves are now 473 Mt at 1.86% Cu, 0.60 kg/t U₃O₈, 0.76 g/t Au and 3.95 g/t Ag.

Mt Isa and Ernest Henry (Qld): Copper-in-concentrate production in 2008 from Xstrata Plc's Mount Isa and Ernest Henry operations totalled 263 kt, a decrease of 2% compared to 2007 resulting from planned lower head grades at Mount Isa, which was offset partially by higher milled tonnes and grades at Ernest Henry. The decrease at Mount Isa was 12% to 152 kt, while the increase at Ernest Henry was 16% to 111 kt. The last phase of the copper smelter expansion project at Mount Isa, namely the construction and commissioning of two new oxygen plants, was completed in the fourth quarter of 2008, raising the nominal production capacity to the targeted 300 ktpa. This project delivered improved smelter production in the second half with total 2008 anode production up by 8% to 236 kt. At the Townsville refinery, this Mount Isa smelter anode, together with anode purchased from Xstrata Copper's Altonorte smelter in Chile, resulted in an increase of 15% in copper cathode production to 267 kt compared to 2007.

During 2008, studies advanced into underground mass mining options for both the Mount Isa and Ernest Henry mines. At Ernest Henry, more than 50 000 m of drilling was completed and used to update the mineral resource model. This resulted in a 19% increase for the Ernest Henry underground mineral resources to 56 Mt, including an initial underground Ore Reserve estimate of 10 Mt at 1.1% Cu and 0.6 g/t Au. The feasibility study into a potential large scale underground sub-level caving operation at Ernest Henry is expected to be completed in the first half of 2009. A feasibility study evaluating further emissions capture enhancements at the Mount Isa copper smelter is continuing.

Prominent Hill (SA): Development and construction of OZ Minerals' copper and gold mining operation at Prominent Hill was 97% complete as at 31 December 2008 and final work was completed early in 2009. The first copper gold concentrate was delivered on 26 February 2009. The company has forecast 2009 production of as much as 100 kt of copper and 70 000 ounces of gold in concentrates. The operation comprises an open pit mine, a conventional grinding and flotation processing plant with 8 Mtpa capacity, a permanent village, haulage road, power line and bore field. Prominent Hill concentrates travel directly to customers, including smelters in China and India, via the Adelaide to Darwin railway and the Port of Darwin. The open-pit mine was estimated to operate for 10 years. However, exploration drilling has continued to increase resources both deeper and laterally and a new deposit has been identified immediately to the west of the mine. In September 2008 OZ Minerals announced that total contained copper had increased a further 35% to 2.5 Mt and contained gold was up by 100% to 7.4 million ounces (Moz). Studies of underground mining and expansion could result in the mine life extending to 2030.

Cadia-Ridgeway (NSW): During the year Newcrest Mining Ltd reported a significant increase in the Cadia Valley Mineral Resource of 8.3Moz of gold and 2.4 Mt of copper. Total Cadia Valley contained metal is now 39.4Moz gold and 7 Mt copper in 2479 Mt of ore. Most is at Cadia East which has a total resource of 1834 Mt at 0.5g/t Au and 0.3% Cu. Copper production was 26 kt for Cadia and 34 kt for Ridgeway for the 12 months to 30 June 2008. The Ridgeway Deeps underground project at Cadia continues on schedule and within budget with production expected to commence on schedule in 2010. Decline development for the Cadia East project commenced in May 2005 and by the end of the pre-feasibility phase in December 2008 the target depth of 955 m below the surface was reached on schedule and within budget. A new approach to developing and mining at Cadia East has been recognised. Study work has established that development of an underground mine in the upper portion of the Cadia East ore body - previously planned to be mined as an open pit - will negate the need for significant pre-stripping and will increase metal production rates. Newcrest has reported that Cadia East's panel cave will be Australia's largest underground mine and have an expected life of more than 30 years.

Northparkes (NSW): Production for 2008 was 25 kt of contained copper, which was down from 43 kt in 2007 and 83 kt in 2006. Rio Tinto Ltd reported production was constrained throughout 2008 as a result of the early closure of the E26 Lift 2 block cave in 2007 because of the ingress of clay in the underground draw points. Surface stockpiles were used to maintain full mill capacity while additional underground and open cut ore sources were brought into production. This included construction of the Lift 2 North extension, which was completed in early 2008 and ramped up to full production in mid-2008, and the E22 pit, which was re-opened and began producing ore from July 2008. The $270 million E48 block cave project, approved in November 2006 and expected to extend mine life until 2016, was suspended in January 2009 when 75% complete until prices for copper recover. Exploration drilling has identified mineralisation beneath the E48 project with the potential to sustain larger scale underground mining. A near doubling of reserves at Northparkes in 2008 was the result of updated models following additional drilling, technical studies, application of new economic parameters and upgrading resources to reserves.

Carrapateena (SA) and Rocklands (Qld): These two newly discovered significant copper deposits were both the subject of extensive drilling through 2008 but for both deposits the resultant resources are yet to be reported. For Carrapateena, owner RMG Services Pty Ltd and operator Teck Resources Ltd have not released any resource figures since discovery in 2005 despite more than three years of appraisal drilling totalling over 75 000m. Teck has the right to acquire Carrapateena by paying 66% of the market value determined by an independent valuer. At Rocklands, owner CuDeco Ltd reported in October 2008 that more than 130 000 m of drilling in more than 1000 holes had been completed and new mineralisation had been discovered. It said further extensive drilling was planned. The last resources for Rocklands date from August 2006 when CuDeco announced an Inferred Resource of 25 Mt at 2% Cu equivalent.

Lady Annie, Leichhardt, Eloise and Mount Gordon (Qld): Lower copper prices, particularly in the last quarter of 2008, contributed to a number of copper mines moving to care and maintenance. These included Lady Annie, Leichhardt (Mount Watson), Eloise and Mount Gordon. CopperCo Ltd officially opened operations at Lady Annie in October 2007 and production started at a rate of 19 ktpa from a resource inventory of 40 Mt at 0.9% Cu for 359 kt of contained copper. Matrix Metals Ltd commenced mining in April 2007 of 8 Mt of copper oxide ore at 1% Cu from the Mount Watson open pit for processing 30 kilometres (km) south at its refurbished Mount Cuthbert plant to produce 5 ktpa of copper cathode. In November 2008 both CopperCo and Matrix appointed voluntary administrators and then in February 2009 high rainfall led to mining being suspended and the projects were moved to care and maintenance. The Eloise underground copper mine which produced 10 kt of copper in 2008 was placed on temporary care and maintenance in December 2008. The owner, FMR Investments Pty Ltd, advised that after taking into consideration a number of factors, particularly the substantial reductions in the copper price, that the most commercial approach for managing and maximising future value was to suspend mining activities. Similarly, Aditya Birla Minerals Ltd put the 22 ktpa Mount Gordon copper mine under care and maintenance in January 2009.

Mount Elliott, Mount Dore, and Starra Line (Qld): In September 2008, Ivanhoe Australia Ltd released its first resource statement for the neighbouring deposits of Mount Elliott, Mount Dore and Starra Line south of Cloncurry. The three projects have a combined inventory of 3.1 Mt of contained copper and 5.1Moz of gold. The biggest deposit of the three is Mount Elliott with a 475 Mt resource at 0.5% Cu and 0.3g/t Au. Mount Dore has a resource of 80 Mt at 0.6% Cu, while Starra Line has a 30 Mt resource at 0.9% Cu and 0.8g/t Au. The company plans to move to a scoping study to evaluate mining options at Mount Elliott after an updated resource is completed early in 2009. It also plans to undertake a scoping study into installing a new 2 Mtpa concentrator at nearby Starra Line.