BHP bets billions on Chile mines to face global copper crunch
BHP detailed to investors this week plans to spend $10.7 billion to $14.7 billion within about 10 years.
Ivanhoe Mines (TSX: IVN; US-OTC: IVPAF) has awarded a 500,000 tonnes per annum direct-to-blister copper smelting plant contract for the Kamoa-Kakula Complex to China Nerin Engineering.
The smelter will be the most extensive of its kind in Africa and one of the largest single-line flash smelters in the world.
The $700 million project is expected to speed along Ivanhoe’s ambition to produce environmentally sustainable ‘green copper’ to feed into the emerging global energy transition.
The smelter, supplied by Finland’s Metso Outotec, has been sized to process most of the copper concentrate forecast to be produced by Kamoa-Kakula’s Phase 1, 2 and 3 concentrators.
The smelter is expected to be built concurrently with the project’s Phase 3 mine and concentrator expansion over the next three years and the upgrading of turbine five at the Inga II hydropower complex.
Ivanhoe says an onsite smelting facility has compelling cost and environmental benefits, including reducing the volume of copper concentrate shipped from the mine by about 50%-plus and the associated logistics costs, export taxes and concentrate treatment charges.
The smelter also will produce sulphuric acid as a by-product, creating a new revenue stream for Kamoa Copper. According to Ivanhoe, there is a strong demand and market for sulphuric acid in the DRC to recover copper from oxide ores.
Kamoa-Kakula currently is producing an extremely high-grade, clean copper concentrate containing approximately 55% copper and low levels of arsenic by world standards – about 0.01%. Approximately 35% of Kamoa-Kakula’s Phase 1 concentrate is sent to the local Lualaba smelter for processing into blister copper ingots – containing approximately 99% copper – while the remainder is transported via trucks and ships to international smelters for treatment.
Kakula is projected to be the world’s highest-grade major copper mine, with an initial mining rate of 3.8 million tonnes per annum at an estimated average feed grade of more than 6% copper over the first five years of operations and 5.9% copper over the initial 10 years of operations.
Phase 1 is expected to produce about 200,000 tonnes of copper per year, while the Phase 2 expansion is forecast to increase production to about 400,000 tonnes of copper annually. Kamoa Copper is on track to complete the Phase 2 expansion in the second quarter of 2022.
Based on independent benchmarking, the project’s phased expansion scenario to 19 million tonnes per annum would position Kamoa-Kakula as the world’s second-largest copper mining complex, with peak annual copper production of more than 800,000 tonnes.
The operation yielded its maiden profit in the first full quarter of operations. On November 15, the company reported a profit of $85.4 million for the three months to September 30.
The Kamoa-Kakula project is a joint venture between Ivanhoe Mines (39.6%), Zijin Mining Group (39.6%), Crystal River Global Limited (0.8%) and the Government of the DRC (20%).
