By the time the clock strikes midnight on December 31 and we bring in the 21st century, the new $810 million Pasminco-owned Century operation in north-west Queensland will have loaded its first shipment of concentrate for export to the company’s Budel zinc smelter in Holland.
Pasminco’s management is in no mood for distractions — the company is understandably extremely preoccupied with Century’s vital commissioning phase and consequently banned staff from talking to media and analysts as it closes in on a big milestone.
Named Century for this coincidence of timing, the mine lives up to its monolithic name in many ways. It will be the world’s biggest zinc mine. The huge orebody runs 1200m east to west and 1400m north to south and will sustain average output of about 500,000 tonnes per annum of zinc contained in concentrate, which equates to around 8% of western world zinc production and 30% of Australia’s production. Mining reserves currently total 98 million tonnes grading 11.6% zinc, 1.7% lead and 46 gpt silver, sufficient for a mine life of about 20 years based on existing operating parameters.
The deposit occurs in the Mount Isa Inlier, a band of Lower Proterozoic rock extending from McArthur River to Cannington. Once CRAE/Rio Tinto acquired the lease in 1987, it had been held over a period of 30 years by nine different mining groups. Amazingly, because of the fine grain, low iron content of the sphalerite and lack of geophysical signatures the mineralisation was not recognised until 1990 when the discovery hole assayed 6.3% zinc over 27m.
Initially, preliminary studies examined both open cut and underground extraction methods. The major challenge was how to interface the upper and lower zone ores. Interburden between the two zones had to be removed in order to improve head grade and continuous blending of the two zones was needed to reduce grade variability. Furthermore, to justify an investment of about $1 billion, Century had to be capable of delivering big tonnages. An open cut operation met these various criteria.
The project features numerous innovations and firsts including the ultra-fine milling circuit, which is designed to achieve 6.5 micron grind size via technology borrowed from the china clay industry. Century is also the site of Australia’s biggest mining contract, awarded to the Roche-Henry Walker Eltin joint venture for five years and worth $600 million.
During construction project managers, Bechtel Australia, used innovative
3D tools to track every aspect of the fabrication and construction process, from procurement of raw materials to plant installation.
“Three-D modelling and electronic detailing has significantly reduced rework and errors in construction and given us far greater accuracy,” said Dave Webber, Bechtel’s site manager.
Century also incorporates leading edge technology in areas such as mine planning, process control and processing.
All of which has not come cheap. The final capital cost of $810 million to develop this world-class project was under the original estimates of $940 million, although the huge investment and depreciation of development debt would put a hold on franked dividends until at least 2003 when Century is planned to be running at full capacity. This was the word to shareholders from chairman Mark Rayner at Pasminco’s annual general meeting in October.
For Pasminco, Century is a crucial asset and will cement the company’s position as a major global zinc producer as well as ensuring continued access to an important resource base. According to analyst Peter Mangano, of investment bank Salomon Smith Barney, before the purchase of Century Pasminco’s resources had begun to look dangerously low.
“They were drifting towards a situation where they would be very ‘long’ smelting, which doesn’t work so well in this part of the world. They were being forced to look at expansion options at both Elura (in New South Wales) and Rosebery (Tasmania), neither of which made particularly good economic sense. Rosebery, because it is small and expensive; Elura, because it is very low grade. So Century was a gift to Pasminco in that it gave them an adequate resource base from which to support their smelting operations,” he said.
In a paper delivered to a conference in May 1999, Pasminco’s executive general manager, Ian Williams, said the project was expected to move towards profitability towards the end of year one of operations.
“Century will reach a break-even zinc price of about $US850 per tonne at long term parameters of US73c and $US1250/t when steady state design performance is reached,” he said. “Future improvements will come from attention to detail in the mining area to minimise cost, grade control and on the metallurgy in the process plant.”
Final commissioning has been underway since September 1999 and concentrate from the plant was introduced into the 304km slurry pipeline in mid-November. The first shipment of zinc concentrate is expected to set sail for Europe from the Karumba port facilities by the end of December.
Pasminco hopes to get the operation to about 50-70% of design levels by mid-2000 and full capacity by 2003 when revenue is forecast to exceed $450 million per annum from then on.
At the nameplate rate, Century will generate an average 500,000tpa zinc in concentrate grading 57.5% zinc and 40,000tpa lead in high grade concentrate which will be pumped alternatively by underground pipe to Karumba. There concentrates will be dewatered and stored as briquettes in an 80,000t-capacity shed before being transferred by 5000t transfer vessels to offshore export vessels. About half the budgeted production is destined for Pasminco’s 200,000tpa Budel smelter in the Netherlands and up to 90% of it has been pre-sold to smelting companies.
JB Were & Son analyst, Craig Temby, believes the mining side of Century will be relatively easy but says the processing and milling components are the linchpins to the success of the new Queensland operation. “The behaviour of the fine grinding and the recovery rates are the key issues to get to full capacity. The question is whether they can separate out some of the impurities in the flotation,” he said.
“It will take a while for the plant to be optimised and get to design recovery rate which is 82.5%. They are expecting to be at about 70-75% of that 82.5% in year one.”
Minor delays such as an electrical fault in the motor of the ball mill have not affected the commissioning schedule.
