China to the rescue
THE world’s highest grade zinc mine near Cloncurry is set to begin production just as metal prices improve but might not have proceeded without cash from communist China.
General manager of MMG’s Dugald River zinc project Pierre Malan told a mining conference in the city yesterday Western banks didn’t even have the appetite to look at them when zinc prices, along with a host of commodity prices, slumped in 2015.
He said links into Chinese banks from its major shareholder, China Minmetals, enabled them to secure the $ US600 million ($ 805 million) needed to complete what had been a stalled project.
“There was no way we were going to get any of that finance from Western banks, especially at a time when zinc prices were hovering at 65c and 66c a pound,” Mr Malan said. “At that time, we did look and ask.” Prices have now recovered to around $ US1.20 a pound and could move higher.
Mr Malan said finance from the Bank of China and the China Development Bank had enabled “a little bit” of counter cyclical move to build the mine and “hopefully have it ready for an upsurge in zinc prices”.
Annual production of about 170,000 tonnes of concentrates is expected to begin later this year for shipment early in 2018 to world markets and Townsville’s Sun Metals zinc refinery.
Mr Malan said they received 900 applications for the first 40 positions with assessment under way in Mount Isa, Cloncurry and Townsville.
The mine will employ up to 400 people, primarily from Mount Isa and Cloncurry with a fly- in fly- out base established at Townsville.
But while the mine’s ore grade is high around 12.5 per cent zinc, Mr Malan said it would still be a marginal operation, requiring them to run well and efficiently.
Development of the mine was halted in 2013 after encountering challenging geotechnical conditions relating to the ore body.
Mr Malan said the decision enabled them to better identify the resource and refine processing.
About 145km of underground diamond drilling has been conducted and there has been 30km of underground development.
Work has been completed on a 65km high voltage transmission line and mine village accommodating more than 500 people, structural steelworks have been erected for its concentrator and float cells have been installed.
Mr Malan said they were on track to come in under budget on the $ US1.2 billion ($ 1.6 billion) project. it