Re­newed vigour in Africa

Plough­ing money into both old and new ven­tures

Finweek English Edition - - Companies & Markets - RIO TINTO

SOUTH AFRICA’S MAIN cop­per pro­ducer – Pal­ab­ora Min­ing (Palamin) – could get a new lease on life if con­trol­ling share­holder, Rio Tinto, de­cides to ex­tend the ex­ist­ing un­der­ground “block cav­ing” op­er­a­tion. That emerged dur­ing a me­dia trip to three of Rio Tinto’s African op­er­a­tions: Palamin, Rössing Ura­nium (Namibia) and QIT Mada­gas­car Min­er­als (QMM), its heavy min­eral sands mine in south­ern Mada­gas­car.

The trip – which in­cluded South African, Aus­tralian and Bri­tish fi­nan­cial me­dia – al­lowed the SA press its first good look at Rio Tinto’s south­ern African op­er­a­tions in more than a decade, dur­ing which the group has kept a low pro­file. Rea­sons for that ap­pear to in­clude the op­er­at­ing and fi­nan­cial prob­lems at Palamin, which ini­tially made heavy weather of the switch from open pit min­ing to un­der­ground block cav­ing.

Rio Tinto CEO Tom Al­banese pointed out block cav­ing tech­nol­ogy is now proven and de­scribed Palamin as “prob­a­bly the most pro­duc­tive sin­gle shaft mine in the world, which is now op­er­at­ing at 10% above its de­sign ca­pac­ity”.

Al­banese added that the ex­per­tise gained at Palamin will be put to good use through­out the group as var­i­ous mines – such as the huge Ar­gyle di­a­mond mine in West­ern Aus­tralia – also in­tro­duce the block cav­ing sys­tem that Palamin’s staff reckon is the cheapest un­der­ground min­ing sys­tem to op­er­ate.

Palamin’s man­age­ment must de­cide by end-2009 whether to de­velop the next block cav­ing stage about 350m be­low the ex­ist­ing op­er­a­tion if the mine is to keep pro­duc­tion go­ing at full out­put af­ter 2014. It will take five years to de­velop the new block cave sec­tion but man­age­ment de­clined to pro­vide an es­ti­mated cap­i­tal cost at this stage.

Its change in at­ti­tude to­wards pub­lic­ity ap­pears to re­flect Rio Tinto’s re­newed in­ter­est in Africa, as well as fit­ting in with man­age­ment’s cam­paign to fight off the pre-con­di­tional bid launched by ri­val BHP Bil­li­ton in Novem­ber last year.

Al­banese came straight to the point dur­ing ques­tion time at the ini­tial brief­ing ses­sion at QMM. “BHP Bil­li­ton needs us more than we need them,” he said. Al­banese

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