Escondida sees shortfall

Vancouver – Coming off of a 19% drop in output during the month of February, production at the world’s largest copper mine fell much more than expected in March.

Output from Chile’s Escondida mine fell 24%, when compared to the same month last year, to 58,602 tonnes. This was some 18.3% lower than originally planned. During the month, some 45,841 tonnes of concentrates and 12,761 tonnes of Cathodes were produced. Total copper production in the first three months of 2002 tallied 172,516 tonnes, down 19.2% from the corresponding period last year. Gold output in March hit 11,888 oz., for a total of 27,281 oz. cranked out so far this year.

The short fall is attributed to a 60-hour hour shutdown of one area of the concentrator plant for routine maintenance.

Last November, a serious fall in the demand for copper caused BHP Billiton (BHP-N) to reduce production at the operation by 10%, which is equivalent to 80,000 tonnes per annum. During the curtailment period, the mill’s head grade is being selectively mined at a lower cutoff grade. Higher-grade ore is being preserved for processing when market conditions improve. The 10% cut is in addition to the natural decline of production that occurs because of declining head grades.

Despite the cut backs, BHP is continuing with the US$1.04-billion phase-4 expansion at Escondida, along with sulphide leach development and the potential development of Escondida Norte. Together, these actions have the potential to add more than 450,000 tonnes of copper production annually at a cash cost of under US40 per lb. Escondida is currently averaging cash costs of about US42 per lb.

BHP Billiton is the operator and owns a 57.5% interest in the open-pit mine, which is 160 km south of the port town of Antofagasta. The remaining interest is divided among Rio Tinto (RTP-N), with 30%, a Japanese consortium that includes Mitsubishi, Mitsubishi Materials and Nippon Mining & Metals, with 10%, and International Finance Corp., with 2.5%.

At last count, Escondida held proven and probable sulphide reserves of 1.6 billion tonnes grading 1.22% copper, of which BHP’s share of recoverable copper amounts to 16.6 million tonnes. An additional, lower-grade component stands at 474 million tonnes grading 0.62% copper, while oxide reserves are pegged at 246 million tonnes grading 0.64% copper.