Rio Algom counts on copper earnings

By launching a major project in Chile, Rio Algom (TSE) has secured its future copper earnings, said President Colin Macaulay. The Cerro Colorado property, which is to reach full production in 1994, has an expected life of 23 years.

“I’m optimistic about copper,” Macaulay said at a recent luncheon of the Toronto Society of Financial Analysts. He predicted the price of the metal will stay at US$1 per lb. this year.

Sitting on a desert plateau about 2,600 metres above sea level, Cerro contains 79 million tonnes grading 1.39% copper. Finished cathode copper has been pre-sold for a 14-year period based on London Metal Exchange prices at delivery time.

Daily production of 10,000 tonnes is planned, which would yield about 40,000 tonnes copper per year. Solvent extraction-electrowinning would be used instead of smelting.

Rio will spend US$290 million to bring the project up to its first-phase capacity, Macaulay said, adding that a 50% expansion could be accomplished for another $US35-50 million.

Rio produces copper through its one-third interest in the Highland Valley mine in British Columbia, where production in 1992 totalled about 377 million lb. (and almost four million lb. molybdenum).

Two years ago, copper accounted for 31% of Rio’s operating profit from mining; uranium accounted for 54%. In 1992, copper’s share rose to 42% and uranium slipped to 31%.

Rio also produces uranium and potash from Canadian operations, and has a 29% interest in the Bullmoose coal mine in British Columbia. It operates metals distribution businesses, as well, in Canada, the U.S., Australia, New Zealand and southeast Asia.