‘Table 4.—Commodity prices used In the economic evaluations, representing the January average price for each year listed

Commodity

Units 1964 1985 1986 1967 1988 1989

Cobalt US$/Ib $741 $11.70 $11.70 $7.00 $7.50 $8.65
Copper:

U.S. Producer-cathode* US$/Ib 66 4 70 65 1.32 158

LME grade A cash® USSitb £2 62 64 6 121 154
Gold - Handy & Harmon* US$/tr oz 37089 302.79 345.49 408.26 47658 404.02
Lead:

U.S. Producer US$/Ib- 2 9 18 28 3 0.40

LME cash US$/Ib 18 19 17 21 30 0.31
Molybdenum (in concentrate) US$/Ib 3.45 270 2.90 280 240 275
Nickel - New York Dealer US$/Ib 320 3.20 234 3.20 3.60 7.92
Silver - Handy & Harmon4 US$/tr oz B18 6.10 6.05 5.53 673 597
is. USSib 49 43 33 a Ms 79

LME - High grade US$/Ib 4 39 2B 34 40 79

“Cobalt price for shot, 98.5%,

250-kg drums.
average based on estimated U.S. refined copper production and published prices for delivered full-plate cathodes.

“Cathode grading 99.9935% Cu on the London Metal

Exchange (LME).
dan esc ciemerea 7 ers cen be obtained by Handy & Harmon for Gold and siver for nearby delvery at New Yorkin quanites suficint io mest ts

‘Source: Metals Week.

production. Copper prices over the same period are included
in the table for comparison with the average total costs
determined in the analysis. A more detailed discussion of
byproduct credits is included in the Appendix.

A separate tax records file, maintained for each particular
State or nation, contains the relevant tax parameters under
which a mining firm would operate. Tax parameters include
corporate income taxes, property taxes, royalties, severance
taxes, or other taxes that pertain to the production of
copper. Deductibles such as depreciation, depletion, de-
ferred expenses, investment tax credits, and tax-loss carry

forwards are also included in the analysis. These tax parame-
ters are applied to each mineral deposit under evaluation
under the implicit assumption that each deposit represents a
separate corporate entity.

Upon completion of the individual property analyses, the
results for all 204 properties included in the study were
aggregated onto resource availability curves. Two types of
resource availability curves have been generated for this
study: (1) total availability curves, and (2) operating cost
curves reflecting the average estimated operating cost, by
country, in January 1988 dollars.

CAPITAL COSTS TO DEVELOP NONPRODUCING DEPOSITS

For purposes of the DCFROR methodology, all capital
investments incurred 15 years before the year of analysis
(cither 1987, 1988, or 1989) are treated as fully depreciated
costs. Capital investments incurred less than 15 years before
the study date have the undepreciated balances carried for-
ward to the study date. All subsequent investments, reinv-
estments, operating costs, and transportation costs are
expressed in January 1987 dollars, updated to January 1988
or January 1989 dollars depending on the study date.

Capital cost estimates were made for each of the nonpro-
ducing copper properties evaluated for this study. Estimates
include preproduction development, mine equipment, mine
plant, mill plant and equipment, and associated infrastruc-

ture, Table 5 presents potential average annual production
and capital costs for nonproducing properties in the major
countries included in this study.

At an estimated average $7,400 per metric ton of annual
capacity, capital costs per annual metric ton of copper out-
put for surface mines evaluated are higher than for the
average for the underground mines evaluated, which have an
estimated capital cost of $5,800 per metric ton of annual
capacity. Lower ore grades for surface deposits are a major
contributing factor for higher costs on a metric ton of annual
capacity basis because more tons of ore have to be mined in
order to produce 1 ton of metal. Also, the surface deposits
evaluated tend to be in more remote locations that necessi-



and dumpers,

The foregoing discussion cannot hope to cover all of the
recent cost-saving advances that have been made in the
copper industry. However, it does demonstrate that man-
agement can continue to improve operations and reduce
costs at the same time.

DECLINING ORE GRADES

The long-term trend in ore feed grades is gradually declining
as higher grade, easier to mine material is exhausted. This is
areflection of the tendency for ore grades to decline over the
life of the mine in porphyry deposits such as in Chile, Papua
New Guinea, Mexico, Peru, and the United States. Also,
mining companies will generally try to exploit the higher
grade material in the early years of mine life in order to
shorten the payback period of capital investments and, thus,
increase the DCFROR of the project. During periods of low
prices, mine operators, in many cases, will attempt to exploit
higher grade portions of the mine to counter the lost
revenues from lower commodity prices.

Average sulfide ore feed grades, by country, from selected
mines for the years 1980-88 are shown in table A-1. The
classic trend of declining ore grades with depth is exemplified
by Chile and Peru, In Chile, there has been a rapid decline in
ore feed grades as the major Chilean mines are going
through the transition from enriched supergene ores to
primary ore. The average feed grade for Chuquicamata has
declined from 2.26% copper in 1980 to 1.6% in 1988. A more
gradual decline will continue for the CODELCO mines
with average feed grades estimated to decline to 1% by the
end of the century. Major investments have been made by

CODELCO to offset this trend in terms of total copper
production by expanding annual ore capacities. The startup
of new mines such as La Escondida will increase the average
ore grade in the future, because new mines to be brought into
production will have higher ore grades than the prevailing
average. In Peru, the two principal porphyry copper mines
exhibit a classic decline in average ore grades and are
expected to continue this decline throughout their operating
lives. The average feed grade in Mexico increased dramati-
cally in 1981 and 1982 as La Caridad achieved capacity
production mining supergene ore. Feed grades for both
Cananea and La Caridad have declined annually since 1983.

Ore grades in the United States, on average, increased
annually from 1980 through 1984, then began to decline
slightly from 1986 through 1988. Many operators practiced
high-grading during the worst of the recession of the 1980’s
in order to continue producing. High-grading is a short run
solution to economic pressures. Changes in mine plans have
a longer term effect on operating efficiency and feed grades.
Increased cutoff grades, steeper pit slopes, and changes in
mining sequence serve to enhance feed grades but will ulti-
mately shorten the life of the mine. For example, feed grades
at Bingham Canyon increased from 0.58% in 1980 to 0.75%
in 1985 (prior to the mine shutdown) as a result of high-
grading. The revamped operation reopened at the end of
1986, and operated through 1988 with an average feed grade
of 0.71% as a result of the revised mine plan.

Copper deposits in Zambia and Zaire are metasedimen-
tary stratiform deposits and are much higher grade than the
more common disseminated porphyry deposits. Feed grades
in these countries have declined only slightly over the 1980-
88 time period and should remain relatively constant in the
future. The largest Australian producers are also high grade

Table A-1. —Weighted average sulfide ore feed grades, by country, from selected mines, 1980-88

(Percent copper)
Country 1980 1981 1962 1983 1984 1985 1986 1987° 1988°
2.96 254 264 261 272 271 273 278 288
59 58 52 58 EJ 69 84 63 63
1.74 171 1.64 1.56 156 1.46 1.40 1.40 1.40
wr 80 86 78 73 70 69 64 64
46 a) AT 46 42 a2 42 47 55
1.04 1.01 1.00 1.00 98 96 i a 87
Philippines M4 45 A4 42 39 39 43 4 4
United States 58 59 61 63 68 65 66 84 63
Zaire 421 4a1 ai 4.04 410 4.06 4.04 4.09 410
Zambia 238 228 213 213 221 220 208 210 212
Estimated.

‘Averages do not include Falconbridge's and INCO’s Sudbury operations.


‘Table 3.—MEC copper properties Included in this study

Country/property name ° io Current! = Mining? ‘Milling? First % Goverment
State status method __method year ownership
ARGENTINA:
Bajo La Alumbrera Yacimentos Agua Del Dionisio E oP F NA 100
Pachon Cla. Minera Aguilar S.A. E op F NA -
Paramilios Sur Fabricacionces Militares E op F NA 100
‘AUSTRALIA:
CSA ‘Cobar Mines/CRA P os F 1907 -
Cadia Pacific CU Lid./Homestake Australia E op F NA -
Chesney ‘Cobar Mines/CRA E os F NA -
Golden Grove ‘Murchison Zinc/Esso/ Aztec D st F 1990 -
Mount isa. ‘Mount isa Mines Lid. P st F 1931 -
‘Mount Lyell Renison Goldfields Cons. Lid. P SL F 1935 -
‘Olympic Dam Wester Mining/BP Australia P SL F 1988 -
BOTSWANA: ;
‘Selebi - Phikwe BCL Lid. Pp C&FOS F 1974 15
BRAZIL:
Camaqua CIA Brazileira Do Cobre P OP,SL F 1982 100
Jaguari (Caraiba) Caralbas Metals S.A. P OP,SL F 1980 100
Pedra Verde Promisa/Caraiba Metals S.A. Pp os F 1962 100
Salobo CIA Vale Do Rio Doce (CVRD) D op F 1983 100
BURMA:
Monywa ‘Goverment of Burma, P op F 1984 100
CANADA:
Afton/ Ajax ‘Teck Corp/Metaligeseliechaft P oP F 1977 -
Ansil Minnova, Inc. D st F 1989 -
Bell Bell Copper/Div. Noranda Mines P op F 1972 -
Berg Kennco Expl. (Canada), Lid. E op F NA -
Brenda Brenda Mines/Noranda P oP F 1970 -
Casino Casino Silver Mines, Lid. E op F NA -
Catface Falconbridge Ltd. : E oP F NA -
Copper Rand ‘Northgate Exploration, Lid. P CaF F 1959 -
Coppermine River Coppermine River, Lid. E oP F NA -
Equity Silver Equity Mining/Placer Development P op F 1980 -
Falconbridge (Sudbury) Falconbridge, Lid. P SLCaF F 1928 -
Galore Creek ‘Stikine Copper, Lid. E oP F NA -
Gaspe Mines Gaspe/Noranda Pp os FL 1955 -
Geco Noranda Mines, Ltd. P os F 1957 -
Gibraltar Glbratar Mines, Ltd. P oP FL 1972 -
Great Lakes Nickel Boliden Canada, Ltd. E os F NA -
High Lake Kennarctic Explorations E SH F NA -
Highland Valley Complex» Cominco/Lomex/Highmont Pp oP F 1962/72 -
Huckteberry Mountain Kennco Exploration (Canada), Ltd. E oP F NA -
INCO (Sudbury) INCO P SLCaF F 1900 -
Island Copper Utah Mines, Lid. Pp oP F 1971 -
tzok Lake Kidd Creek Mines, Lid. E OP F NA -
JA Zone ‘Cominco, Lid. E Bc F NA -
Kidd Creek Falconbridge, Lid. P os F 1966 -

‘See footnotes at end of table.


Table 8. —Nominal and real cash operating costs in 1981, 1986, 1987, and 1988 for producing mines in selected MEC’s

grited austria Canada Chile»—«-Mexico Philippines Zaire Zambia
‘copper, km

1961 1,662 205 613 813 227 375 519 607
1986 1414 192 594 1115 189 35 517 497
1987 1,277 216 554 1,323 228 178 501 458
1988 1,351 234 564 1,371 278 211 552 449

Nominal cash cost,’ U.S. dollars/Ib:
1981 0.96 0.78 0.99 0.55 0.63 0.93 0.69 0.70
1986 63 ‘52 86 35 58 88 76 53
1987 62 AT a a7 5 79 79 72
1988 62 62 82 39 53 89 70 83
Percent change, 1988 from 1981 354% -205% 71% 29.1%  -15.9% 4.3% 1.4% 18.6%

Real cash cost? 1988 U.S. dollars
1981 1.33 84 1.35 37 49 90 30 a
1986 6 62 96 37 AT 83 4 36
1987 65 54 99 39 53 81 80 84
1988 62 62 92 39 53 89 .70 83
Percent change, 1988 from 1961 53.4%  -26.2% 31.9% 54% 82% AN% 133.3% 144.1%

‘Cash operating costs are the sum of mining, miling, smelting refining, and transportation costs in U.S. dollars per pound of copper. They do natinclude

interest,

‘taxes, Byproduct credits have not been deducted,

depreciation, profit, or
‘eal cash costs expressed 1986U.Sdolre = nominal cash costs fo cperaions as of 1981, 1986, and 1987 and adjusted for inflation and exchanges

to Jan. 1988; byproduct credits have not been

estimation of real cash costs in January 1988 dollars was
done by converting estimated average nominal cash costs for
operations as of 1981, 1986, and 1987 and adjusting for
inflation (based on the consumer price index) and exchange
rate changes up through January 1988. Byproduct credits
have not been deducted in the real cost analysis. Real aver-
age cash operating costs for the eight selected countries in
January 1981, 1986, 1987, and 1988, expressed in January
1988 dollars also appear in table 8. In January 1988 dollar
terms, the United States, Canada, and Australia experienced
significant decreases in average cash operating costs between
1981 and 1988, while the Philippines had a minor decrease in
average cash operating costs. Chile and Mexico have experi-
enced a small real increase in average cash costs since 1981,
and average cash costs in Zaire and Zambia have increased
tremendously in real terms over the same period.

The large real cost reductions in the United States, Can-
ada, and Australia and the small real increase in Chile
demonstrate the degree that cost-reducing measures have
been masked by exchange rate and inflationary movements.
Moreover, exchange rate and inflationary movements can
hide real cost increases caused by operating problems and
inefficiencies in countries such as Zaire and Zambia, whose
cost increases in nominal terms are a fraction of the real
increases in the cash operating cost over the past 8 years.

Although the Chilean operations made significant improve-
ments in productivity during the 1980's, the small real
increase in cash operating costs was caused by such factors as
declining ore grades over the past 7 years, haulage problems
at Chuquicamata, and harder ore at El Teniente. In addi-
tion, the significant decrease in nominal cash operating costs
in Chile between 1981 and 1986 indicates that the Chilean
peso was overvalued in 1981 and that the subsequent deva-
lations of the peso against the U.S. dollar in excess of
inflation lowered the average nominal cash operating cost by
a substantial amount, Similarly, Mexico, the Philippines,
Zaire, and Zambia devalued their currencies in excess of
inflation between 1981 and 1988.

In real terms, copper producers in the United States had
the greatest success in lowering average cash operating costs,
with a decrease of 53.4% between 1981 and 1988. Canadian
producers achieved a real reduction in average cash operat-
ing costs of 31.9% between 1981 and 1988, and Australian
producers achieved a real reduction of 26.2%.

Mining, Milling, and G&A Costs, On a Per Ton
of Ore Basis

Mining, milling, and G&A (general and administrative)
costs, on a per metric ton of ore basis for surface and


Methodologies and cost evaluation .

Capital costs to develop nonproducing deposits . 14
Operating costs 15
Nominal versus real operating costs for copper . 7

Mining, milling, and G&A costs, on a per ton of ore basis .
Total production costs and copper availability
Planned expansions and estimated copper production .
Conclusions

References ..
Appendix .
Cost reduction measures taken by the copper industry during the 1980's

Eliminate railroad system
Steepen pit slopes
Larger equipment units .
Rebuilding versus replacing,
Trolley-assisted haul trucks
Increased leaching of waste dumps .
Heap leaching of low-grade
In situ leaching ..
SX-EW plants ...
Column flotation
SAG mills ..
Automation .



has been charged against normal ore production. Pumping
of water or weak acid solutions to the dump is not expensive.

There are two factors, which may distract from a dump
leach operation. The first is that the rock is usually run-of-
mine, which means that it is not crushed. As a consequence,
boulders cannot be thoroughly leached, resulting in a low
copper recovery. The second factor is that exiting solutions
may sink into the underlying soil, where they cannot be
captured, but may pollute the ground water.

Some copper properties have been reviewing the status of
their waste dumps, and have been installing copper-recovery
systems. The decision is easier to make if a solvent extraction
plant is already on site.

Heap Leaching of Low-Grade

Heap leaching is similar to dump leaching in that copper is
leached out of low-grade material. However, in heap leach-
ing, the rock, either run-of-mine or crushed, is placed on a
heap in layers of a specified depth, much like a blending pile.
Placement can be by trucks or conveyors. There is usually a
bulldozer on assignment to spread out the rock, and possibly
rip the layers to avoid compaction.

Costs for heap leaching can be significantly higher than
for dump leaching in those cases where the rock is mined
specifically for leaching rather than as a part of a stripping
program. Otherwise, additional costs are incurred only for
crushing the rock and shaping the layers in the leach pile.

In Situ Leaching

Anin situ leaching operation carries the leaching solution
to the rock, rather than the rock to the leaching solution. The
in-place rock may be broken, or solid; it can be in old mines,
such as pit bottoms or block-caves, or it can be in virgin
ground. The leaching solution is usually delivered to the site
via a pipeline network and drilled holes. The solution dif-
fuses throughout the rock, dissolving copper as it spreads.
Eventually, the solution accumulates in one location, and is
then pumped to a solvent extraction plant.

The major advantage of this type of operation is that there
are no costs involved in moving the rock; for virgin ground,
there are no drilling and blasting costs, either. There is no
disfigurement of the surface, such as open pits, shaft head-
frames, waste dumps, or tailing ponds.

A major disadvantage is the potential for the leaching
solution to escape into aquifers, and render them unsuitable
for human, animal, or agricultural consumption. Thus,
many tests have to be run on the site to determine pumping
pressures and hydraulic gradients; a protective fence of wells
may have to be established. There are also a few other points
to consider for testing purposes: Is the rock leachable? Will
dissolved copper reprecipitate before it can be pumped out?

Will alkalies neutralize the acidity of the leach solution,
rendering it impotent?

SX-EW Plants

The standard method of extracting copper from copper-
bearing rock is to form a concentrate by flotation, blister
copper by smelting, and salable copper by refining. How-
ever, for the recovery of oxide ores and some low-grade
sulfides, leaching-solvent extraction-electrowinning has be-
come a viable alternative.

The first method for extracting copper from acidic solu-
tions was by deposition of the copper on iron scrap (cemen-
tation). This was initiated as a means of recovering copper
from natural mine and drainage dumps. At some properties,
this process became a valuable adjunct to the main facilities,
while at others, it was the only source of revenue. However,
iron scrap can be expensive and difficult to find, and the
precipitated copper needed further treatment at a smelter.

Research for a cheaper way to extract copper from solu-
tions resulted in the solvent-extraction/electrowinning pro-
cess, known as SX-EW. Costs are less than from conven-
tional flotation-smelting-refining of sulfide ore, and the end
product is a highly marketable electrolytic copper.

The leaching solutions treated by SX-EW can originate
from several types of copper minerals. Oxide copper miner-
als, such as malachite and chrysocolla, are the most suitable.
Native copper and some of the sulfides, like chalcocite and
bornite, are also good sources. Other sulfides, i.e., chalcopy-
rite and enargite, will leach, but relatively slowly.

Many of the major copper producers, including the Uni-
ted States, Chile, and Zambia have implemented hydrome-
tallurgical technology for treatment of oxide ores and tail-
ings. In heap leaching, the raw material is layered on
waterproof pads and a lixiviant (solvent) is applied to the top
and allowed to percolate through the layers. Dump leaching
involves the treatment of existing waste dumps. In either
case, the leach liquor is collected at the bottom and pumped
to astorage pond. From storage, the leach liquor is pumped
to the solvent extraction circuit. Solvent extraction is aform
of liquid ion exchange, which purifies and concentrates the
copper sulfate solution in a two-stage operation. The two
stages are called extraction and stripping.

In the extraction stage, the aqueous leach liquor is con-
tacted by an organic liquid ion exchange agent in a series of
vessels (mixsettlers). The two liquid phases are well mixed
and then allowed to settle. The copper is absorbed from the
aqueous phase into the organic phase. Because the aqueous
and organic phases are immiscible, they separate and the
copper ions are selectively removed with the organic phase.
The depleted liquor, or raffinate, is recycled to the leaching
operation.

The loaded organic phase from the extraction stage next


Table 5.—Average capital costs per metric ton of annual copper capacity to develop nonproducing deposits in MEC’s

(In January 1987 USS. dollars)
Surface Deposits
courny Number ‘Average annual Distribution %
of mines Mtore MtCu $imtCu Mine _—sMill_infrastructure

Argentina 3 12,200,000 63,700 $11,700 2 28 50
Canada 9 8,800,000 33,500 6,000 48 43 9
Chile 4 11,650,000 119,400 5,300 30 35 35
Peru 7 8,700,000 67,900 8,100 a 40 33
Phillippines 3 5,100,000 18,700 6500 47 34 19
Papua New Guinea 3 21,200,000 71,700 12,500 23 37 40
United States 5 8,000,000 37,700 7,900 3 57 12
Other Latin America 3 22,700,000 144,500 5,700 6 39 26

Total or average 37 11,100,000 63200 7,400 30 39 3t

Underground deposits

United States : 9 6,500,000 51,000 5,700 47 49 4
Other 13 2,000,000 18,300 5,900 49 a1 20

Total or average 2 3,900,000 31,700 5,800 a7 ry 10

tate higher infrastructure costs. Due to their remote loca-
tions, properties in Papua New Guinea and Argentina have
average infrastructure costs amounting to 40% and 50%,
respectively, of total capital cost estimates.

Average capital costs for capacity expansions at existing
mines average about $3,200 per metric ton of additional
annual copper capacity (8). This is approximately one-half
of the average greenfields capital cost estimate.

OPERATING COSTS

Production costs were estimated for 202 copper properties in
MEC’s; 107 of the evaluated mines were producing and 95
properties were either developing, temporarily shut down, or
explored as of January 1987. The Sudbury operations of
both INCO and Falconbridge in Canada are not included in
the operating cost analysis because copper values are over-
shadowed by nickel revenues in the economic analysis.
Recent increases in nickel prices cause an economic analysis
based on copper as the primary product to result in negative
total production costs for copper at the Sudbury operations.
However, the Sudbury operations were evaluated and
included in the total cost and availability section of this
report, as well as in a recently completed Bureau of Mines
Information Circular on nickel (9).

For the January 1988 operating cost analysis, 110 mines
were producing, and 92 properties were developing, tempor-
arily shut down, or explored. The January 1989 analysis
included 110 producing mines, and 91 properties that were
developing, temporarily shut down, or explored. The non-
producing properties in 1989 included eight developing
mines and nine operations that were temporarily shut down.
All of the temporarily shutdown operations included in the
study were located in the Philippines, the United States, and
Zambia.

Cash cost is defined as the sum of mining, milling, smelt-
ing/refining, SX-EW, and transportation costs in U.S. dol-
lars per pound of recovered copper. Net operating cost is
defined as cash cost minus byproduct credits per pound of
recovered copper. This definition of operating costs avoids
problems concerning interest, marketing, corporate over-
head, depreciation and taxation, all of which are highly
variable and difficult to define for each operation. Operating
costs can vary greatly depending on such factors as size of the
operation, mining method, deposit location, stripping ratio
for open pit mines, depth of the ore body, mill feed grades,
complexity of mill feed, processing losses, energy and labor
rates, and productivity. A discussion on ore feed grades is
included in the appendix.

Estimated operating costs were aggregated on a weighted-
average basis to determine the average cost of production
per pound for each producing country. Estimated average
net operating costs, by country, from producing mines in
selected MEC’s in 1987, 1988, and 1989 dollars are shown in
table 6. Table 7 presents copper production and the esti-
mated cost breakdowns for each stage of production, by
country, in 1988. The average net operating cost and 1988
copper production, by country, from table 7 is illustrated
graphically in figure 2.


During 1988, 112 of the evaluated mines were in produc-
tion (18 were in the United States) and 9 mines (2 in the
United States, 6 in the Philippines, and 1 in Zambia) were
temporarily shut down. Three mines were included in the
analysis that commenced production in 1988: the Van Dyke
operation in Arizona (now closed), Neves Corvo in Portu-
gal, and Olympic Dam in Australia.

Total refined copper potentially available from producing

‘Table 11.—Estimated average total:

|copper production costs for producing mines and nonproducing

and nonproducing mines and deposits is illustrated in figure
3 where total production costs in January 1988 dollars were
estimated at a 15% DCFROR for nonproducing properties
and estimated at both a 0% and a 15% DCFROR for
producing mines. The results of the total production cost
analyses that underlie the availability curves of figure 3 are
shown, by country, in table 11.

by country, In selected MEC’s
)

deposits,
(All costs are in January 1988 U.S. dollars per pound of refined copper over each mine's operating life)

Producing mines
Number Total kt Costs ($b)
Operating cost
Cou Of “Ore Recoverable 5 Byproduct can pen
TM conpar Mine Mil” Teineyéoparatng "Eedt “operating” capa” poten PECueN prod
Australia 4 1652725 26268 $047 $022 $019 $088 (044) $044 $005 $049 9051 $1.24
Brazil 3 ‘37,497 327 3 54 2 1.19 (01) 1.18 2 1.39 1.56 1.75
Canadat 16 1,664,746 7,403 2B 2 a 84 ( 38) AT 09 56 59 73
Chile 7 8664864 77,202 1 2 09 48 { 05) A2 Bic} AB na 56
India 3 490,257 4523 55 4 2B 1.28 { 06) 121 7 1.28 1.35 154
Mexico 2 2650447 12142 10 19 2 5 { 09) A2 08 50 87 1.01
Namibia 3 16487 «316 «40H a7 (33) Ai 7 4 80
Peru 5 1,326,972 9,341 19 x) 85 { 22) 63 10 3 80 1.10
Philippines 7 1847734 6667 2h hw) BB 85 7%
‘South Africa, Republic of 3 306106 1,828 2 2 3 EJ { 10) MA 14 58 58 68
Spain 3 151045 6051.00 87188 | 333212) 185 1.95182
‘United States 18 5,085,247 32,333 6 26 A7 59 { .09) 50 05 ‘55 57 $7
Yugoslavia. 4 = 1,014895 4,407 6 2 16 4 ( 20) a 07 50 53 3
Zaire 4 572970 17,600 2 15 J 69 (19) St 02 53 54 60
Zambia 9 988790 10577 35 28H OH] StCti«i 100
Others 19 2634999 18486 32410871) TBS Cee)
‘Total or average 110 29,035,121 230,123 23 2 19 68 (17) 50 05 55 60 14
‘Nonproducing mines and deposits

‘Argentina, 3 1,315,900 6,281 15 26 15 56 ( 24) 3 a 53 Ec: 1.70
Australia 3 79,424 969 4 21 Bad 1.09 ( 79) 30 14 M4 ST 151
Canada 15 1,956,068 7,762 28 33 ° 32 $3 (24) 69) 45 BA 128
Chile 6 2103204 21707 14 22 2 55 (08) 41D ae)
Peru 9 1,935,016 13576 2 Ww Ei) 87 (17) 69 18 87 1.16 1.69
Philippines. 10 1,006,180 3,960 8B 32 23 87 ( 57) Ey EJ 85 65 a7
‘Turkey 3 48952 1405 18 07 49 7 (8) (07 9 1 7 50
United States 90 age 23817 335k 1.1.80
Others: 13 4659805 27016 2490 2) S78 93147
‘Total or average 92 17,922,821 106,492 24 26 79 ( 20) 59 14 73 oo 141

‘Ore tonnages include feed treated in the primary concentration

process.
included here but is accounted for in Reeerves/Resources shown in table 8.
transportation costs for copper concentrates plus coproduct/ byproduct concentrates, Also includes smelting and refining costs for coproducts

‘Equal to net production costs plue loan repayments, all pertinent taxes, and retum on investment (at 15% DCFROR}.
operations.

and

“Does not include Inco and Falconbridge Sudbury
‘Note: Data may not sum to totals due to independent rounding.


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0 05 1

15 2 25 3 35 4 45 5 55 6 65

ESTIMATED ANNUAL COPPER PRODUCTION Mmt

Figure 2.—Copper production costs in 1988 for major MEC producers.

and the United States. Zaire had an average operating cost in
1988 ($0.45 per pound), which is less than the average for the
United States ($0.52 per pound), largely due to devaluation
of the local currency. On an operating cost basis, nearly all of
the major operating copper mines in MEC’s are profitable at
1988 prices. The exceptions were a few mines in countries
such as Brazil and India which continue to produce as a
matter of government policy for import substitution, employ-
ment, and savings of foreign exchange.

Nominal Veraus Real Operating Costs for Copper

Comparisons of operating costs for copper between coun-
tries over time is difficult because costs (in U.S. dollar terms)
and each country’s relative competitiveness are significantly
influenced by differing rates of inflation and fluctuating
foreign exchange rates. The major copper-producing coun-
tries have experienced very different rates of inflation during
the past decade. The United States and Canada had cumula-
tive inflation from January 1981 to January 1988 of 37.9%
and 55.4%, respectively. In Chile, cumulative inflation
amounted to 275.7% and Mexico’s was 4,625% over the

7-year period. Over the same period, foreign currencies were
devalued against the U.S. dollar at extremely different rates.
The Canadian dollar was devalued relative to the U.S. dollar
by about 14% in nominal terms over the period, whereas
devaluation of the Mexican peso amounted to 5,900%.

Nominal average cash costs of copper production (exclud-
ing byproduct credits) for eight major producing countries
(Australia, Canada, Chile, Mexico, the Philippines, the
United States, Zaire, and Zambia) in January 1981, 1986,
1987, and 1988 dollars are shown in table 8. All of the
countries shown in the table with the exception of Zaire and
Zambia experienced reductions in average cash operating
costs between 1981 and 1988. Reductions were especially
significant in the United States, Chile, and Australia. Reduc-
tions in average cash operating costs were more moderate in
Mexico, Canada, and the Philippines.

Reductions in nominal cash operating costs, however,
include the combined effect of inflation differentials and
devaluation of local currencies relative to the U.S. dollar,
which is the currency in which copper prices are denominat-
ed. Real cash operating costs expressed in January 1988
dollars were thus calculated to remove this effect. A quick


enters the second series of mix-settlers, termed the stripping
stage. In this operation, the organic is mixed with spent
electrolyte from the electrowinning operation. By virtue of
its lower pH, the spent electrolyte replaces the copper ions in
the organic phase with hydrogen ions. The strong electrolyte
produced in this operation advances to the electrowinning
section.

Electrowinning resembles electrolytic refining in many
respects. The key differences are that the copper is “won”
from a leach solution rather than recovered from anodes.
The anodes are of inert, insoluble lead. Cathodes may be
either pure copper “starter sheets” or inert stainless steel.

The SX-EW process is now recognized as crucial to
obtaining low operating costs at leach operations. Besides
dump and heap leaching, some mines are retreating their
tails, while others are prestripping and treating oxide mate-
tial overlying sulfide ores. In several cases, the whole project
is committed to leaching and SX-EW treatment.

Column Fiotation

Standard flotation cells in mills have increased in size and
efficiency. However, they are still a suitable target for cost
reduction. The column flotation cell is becoming more popu-
lar as its attributes become known. Essentially, it is a tall
cylinder that can replace two to five stages of cleaner cells. It
is not yet suitable for rougher flotation.

Operation of the column cell is simple. Feed and water
enter at the top, and compressed air is blown in at the
bottom. Concentrate froth overflows at the top, and tails
escape through a hutch at the bottom. Adjustments of feed,
water, and air inflows control the froth quantity and quality.

Advantages of the column are many. Required floor space
is much less than for normal cell banks, leading to reduced
capital costs for the mill building and ancillaries; as a corol-
lary, production expansions would also be cheaper. Power-
ing of the flotation process by air instead of mechanical
paddles cuts electricity and maintenance costs. Personnel
requirements are also lower. Best of all, concentrate grades
can improve by as much as 5%, resulting in lower concen-
trate transport and smelting costs.

SAG Mills

Semiautogenous grinding (SAG) mills are becoming more
popular and bigger. In new projects, they are installed after
the primary crusher and in front of the ball mill, replacing
the standard series of secondary/tertiary crushers and rod
mill. Capital savings can be as much as 30%. Operating cost
savings can also be as much as 30%, due to lower mainte-
nance requirements, lower media consumption, and fewer
operators.

It would not be advantageous to change an existing cir-

cuit, just for the purpose of inserting a SAG mill. However,
for production expansions and new concentrators, the SAG
mill should definitely be considered, especially for high-
tonnage operations and for damp, sticky material.

SAG mills are an intermediate design between fully auto-
genous mills, which use natural hard rock as grinding media,
and rod/ ball mills, which use manufactured steel rods/ balls
as media. The SAG mill uses a media mix of hard rocks and
balls, with the percentage and amount of each changed to
suit the particular type of ore and throughput required. Size
and hardness of the ore should be fairly uniform in order to
maintain consistent output.

As SAG mills become larger, the standard powertrain
design has become inadequate. To resolve this problem, the
wraparound motor was developed. In this system, the mill
serves as the motor rotor, revolving inside a stationary sta-
tor; i.e., the poles on the mill shell rotate within a nonmova-
ble collar containing the stator. Advantages attributed to the
wraparound motor are many. Gears, drivetrain, and clut-
ches are eliminated. There are no power surges at startup.
Mill speed is continuously variable: this permits “inching”
for maintenance purposes, and can also be used to compen-
sate for changing ore characteristics.

Automation

The main function of automation for machinery and
operations is to eliminate the chances for human error. A
welcome side effect can be a reduction in personnel, coupled
with enhanced safety. One of the major advances in mine
and mill machinery has been automatic lubrication systems
for the larger units, such as shovels and trucks. Each friction
point receives the proper amount of grease at the approp-
tiate scheduled time. Oilers, who used to be full-fledged
members of the operating crew, are no longer needed on a
full-time basis, although in some cases they have been
retained as samplers, trainees, or for safety reasons. In some
large mines, an oiler is given a pickup truck and is expected
to circulate among the shovels and drills working that shift.
From the safety point of view, the engine deck is no longer
slippery with spilled lube, which contributed to some serious
accidents when the oiler lost his footing and fell against
moving machinery parts.

Many mining activities are beyond the scope of reasona-
ble automation. Shovels are faced with numerous varieties
of digging conditions. Trucks must be expected to travel in
any direction with equal facility. On the other hand, there
have been some other successes: drilling of blastholes is now
almost entirely automatic; engines have diagnostic features
which tell the operator and mechanic where and what the
trouble is; and, concentrators are essentially completely
automated. There are also automated trains (in another
mining industry) which shuttle railcars between loading bins



‘Table 3.—MEC copper properties included in this study—Continued

Country/property name ip Curent! = Mining? Milling? First. % Government
State Ownerst status method __method year ownership
UNITED STATES:
‘Arizona:—Continued
Cyprus Bagdad Cyprus Minerals Co. Pp oP FL 1940 -
Cyprus Sierrta Cyprus Minerals Co. Pp oP FL 1959 -
Cyprus Twin Buttes Cyprus Minerals Co. T oP F 1969 -
Dos Pobres (Safford) Phelps Dodge Corp. E BC F NA -
Dubacher Canyon Occidental Minerals Corp. E op L NA -
East Helvetia ‘ASARCO, Incorporated E op F NA -
Florence ‘Conoco E op FL NA -
Inspiration Cyprus Minerals Co. Pp oP FL 1915 -
Lone Star (Safford-KCC) Phelps Dodge Corp. E In-Situ L NA -
Miami (Leach) Magma Copper Co. Pp op L 1954 -
Miami East Magma Copper Co. E car F 1993 -
Mission Complex ‘ASARCO, Incorporated Pp op F 1961 -
Morenci/Metoatf Phelps Dodge Corp./Sumitomo P oP FL 1942 -
New Comelia Phelps Dodge Corp. T op F 1917 -
Pinto Valley Magma Copper Co. P oP FL 1974 -
Ray ‘ASARCO, Incorporated Pp op F 1955 -
Red Mountain Kerr McGee Corp. E BC F NA -
San Manuel Magma Copper Co. Pp BC,OP FL 1955 -
Sanchez ‘The Arizona Copper Company D op L 1992 -
Silver Bell ‘ASARCO, Incorporated Pe op FL 1954 -
Van Dyke Kocide Chemical Pe In-Situ L 1988 -
Veko! Hills Papago indian Tribe E op F NA -
West Helvetia ‘ASARCO, Incorporated E op F NA -
California:
Lights Creek Placer Amax E op F NA -
Maine:
Baki Mountain Chevron Resources Co. E op F NA -
Michigan:
Presque Isle Synciine = Amax Inc. E REP F NA -
White Pine Copper Range Co. P Rap F 1953 -
Montana:
Butte Copper Montana Resources, Inc. Pp oP F 1952 -
Noxon Noranda/Montana Reserves E RaP F 1993 -
Rock Creek ‘ASARCO, Incorporated E Rap F 1993 -
Troy ‘ASARCO, Incorporated/Bear Creek P Rap F 1962 -
Nevada: Mining
Lyon Plexus Resources Corp. E SLREP F NA -
New Mexico:
Chino Phelps Dodge Corp/Mitsubishi Pp oP FL 1912 -
Copper Flat Several Banks E oP F NA -
Tyrone Phelps Dodge Corp. Pp op FL 1970 -
Puerto Rico:
Rio Vivi Puerto Rican Goverment E op F NA 100

‘See footnotes at end of table.


‘Table 1.—World production and consumption of refined copper, by country, in 1968—Continued
copper)

(Thousand metric tons of contained
13 4 Refined!
——
Primary and secondary
ttaly - - - o na 4373
Japan * 167 8546 1304 8546 1005 1,330.7
Korea, North 150 150 30 180 40 220
Korea, Republic of - 1235 - 1683 07 280.0
Malaysia 20 - - - - 168
Mexico: 1062
Concentration/iesching 268.8 1518 - 989 199 -
Leaching (electrowon) 14 - - 114 -
Mongolia, 160.0 - - - - -
Morocoo 145 - - - -
Mozambique 4 - - - - -
Namibia 409 422 - - - -
Netherlands - - - - - 201
New Zealand - - - - - 18
Norway 159 317 - a7 - 19
Oman 174 168 - 165 - -
Papua New Guinea 2186 - - - - -
Pent: 468
Concentration/leaching 2017 246.9 - 1786 -
Leaching (electrowon) a4 - - 24 -
Philippines. 21et 1502 - 1922 - a3
Poland 4370 385.0 250 401.0 - 2200
Portugal 52 25 20 cy - 280
Romania 280 280 Ty 300 120 420
‘Saudi Arabia 3 - - - - 170
‘South Attica, Republic of 1685 1800 - 1304 - 7A
Spain 181 968 500 1088 50.0 135.0
‘Sweden TAA 904 255 683 220 104.6
‘Switzertand - - - - - 120
Talwen - 433. . - 433 100 2175
Thalland - - - - - 282
Turkey 12 128 4 684 - 758
USSR 640.0 2000 150.0 850.0 1500 12900
United Kingdom 7 - - 493 747 3277
Unihed States: 22030!
11917 1,043.0 3202 1,178.0 446.0 -
2280 - - -



APPENDIX

COST REDUCTION MEASURES TAKEN BY THE
COPPER INDUSTRY DURING THE 1980's

The methods used to cut operating costs were numerous,
including one or more in the following categories:

1. Convince labor to accept lower wages and benefits, and

to cross-train for more than one job;

2. Install in-pit crushers and conveyors to reduce energy

costs and costly truck haulage;

3. Eliminate direct-loading of railroad cars to permit
more leeway in pit planning and waste removal;
Steepen pit slopes to delay waste handling;

Purchase larger equipment to take advantage of
economies of scale;

6. Rebuild equipment rather than replace units;

7. Establish trolley lines for trucks to reduce fuel usage;
8. Initiate leaching of old and new waste dumps;
9.
0.
1.

ye

Begin heap leaching of selected lower grade material;

Start or continue in situ leaching;

Erect SX-EW plants to treat the copper leaching
solutions;

12. Convert cleaner flotation circuits to column flotation;
13. Install new and larger SAG mills; and

14. Automate wherever possible.

Labor Costs and Training

The obvious place to slash costs for most companies,
particularly in the developed countries, was in labor. The
mining projects were overstaffed, and most wages were
higher than average wages in the local economy.

In general, the work force was asked to take a reduction in
direct wages and in benefits, such as health insurance and
cost of living adjustments (COLA). At some properties, the
workers went on strike. At other properties, a spirit of
conciliation was in the air. Most of the new contracts cor-
tained clauses which affirmed the company’s intention to
raise the wages again in a few years, or included incentive
bonuses based on the prevailing copper price.

Following a general reduction in force, the remaining
workers were asked to gain proficiency in more than one job.
For example, a drill operator could learn to handle a bul-
Idozer, and a mechanic might be expected to handle minor
electrical repairs. This action of crosstraining resulted in a
smaller, more efficient work force.

In-Pit Crushers and Conveyors

As open pits become deeper, the cost of truck hauls can
exceed 50% of the total mining cost. One method for reduc-

ing this high cost is to install primary crushers and ore
conveyors in the pit. With the primary crusher in the pit
instead of at the mill or on the pit rim, the haulage distance
for run-of-mine ore is drastically shortened, and the truck
fleet can be cut back. Conveying material is cheaper than
trucking because the conveyor uses less body weight to carry
a load (less deadweight to haul around), and the returning
empty belt can regenerate power. The conveyor also uses
comparatively fewer workers. Furthermore, power from a
central powerplant is more efficient and less expensive than
diesel truck engine power.

The in-pit crusher/conveyor does have disadvantages.
Capital costs can be high, although the depreciation period is
longer than that for trucks. The operable slope of the con-
veyor requires a flatter pit slope at one end of the mine, or a
notch in the working slope, or possibly a tunnel through the
pit wall.

The first in-pit crushers, such as at Sierrita and Twin
Buttes, were permanently entrenched on the pit slope a few
hundred meters below the pit rim. As technology advanced,
mobile or semimobile crushers became available; they were
not permanently located, and could be moved as often as
necessary, usually every 2 years.

The mobile crusher typically is composed of three main
parts. The first is a dump hopper and apron feeder, which
conveys the run-of-mine material from trucks or front-end
loaders to the crusher. The second is the primary crusher
itself, which is almost always a gyratory, and the control
tower. The third part is the discharge conveyor system,
which transfers the crushed rock to the transport conveyor.

The three parts of this system are moved by a mobile
transporter, similar to the vehicles used at Cape Canaveral to
move rockets, The transporter maneuvers under the section
to be moved, raises a hydraulic jack topped by a bolster plate
(which locks into a receiving box on the bottom of the
section) until the supporting legs of the section are raised off
the ground, and then moves off to the new site at a slow and
safe speed. The bolster plate can be angled hydraulically to
compensate for steep road grades.

Eliminate Railroad System

Both Morenci and Bingham Canyon have stopped direct-
loading of railroad cars by shovels, and have removed most
of their in-pit track systems. Parts of the systems are being
retained for the sole purpose of loading some cars from
trucks at a dock.

A railroad system imposes severe restrictions on mine
planning because of the forced sequence of track shifts, and
the space taken up by the 3% access ramps. Removal of the



10

ANNUAL COPPER PRODUCTION, Mmt per year

L m 1

——

Other

Oceania

Zambia
Zaire

Canada

United States

Chile

1 L L 1

0
1987 1988 1989 1990 1991

1992 1993 1994 1995
YEAR

Figure 4.—Changes in estimated MEC copper production between 1987 and 1995.

The United States is projected to have a slightly lower
production growth rate of 5.9% per year. Expansions are
planned at Bagdad, Bingham Canyon, Mission complex,
Ray, and White Pine for sulfide ore, as well as Cyprus
Miami, Morenci, and Pinto Valley (including Miami tailings
project) for increased SX-EW production. New projects
expected to be in production between 1992 and 1994 include
Cochise, Copper Basin} and Sanchez in Arizona; Bald
Mountain in Maine; Montanore (Noxon) and Rock Creek
in Montana; and Flambeau in Wisconsin.

Oceania, consisting of Australia, Papua New Guinea, and
Indonesia was estimated to have the highest growth rate at
10.9% per year, over the 8-year period. The increase in
production is not gradual, with an estimated 14.6% growth
rate over the 1987 through 1992 period, then dropping at a
3.2% annual rate for the next 3 years because of declining ore
grades at OK Tedi. However, with the closure in 1989 of
Bougainville in Papua New Guinea owing to terrorist activ-
ity, the original production estimates will not be realized

until Bougainville returns to full production (perhaps by
1992). Accounting for the loss of production from Bougain-
ville, estimated production from Oceania will remain rela-
tively stable through 1991, then increase dramatically in
1992 as Bougainville returns to full production. The current
loss of production from Bougainville is being offset by
increases at the Ertsberg-Grasberg complex in Indonesia.
Production at the Ertsberg-Grasberg operation increased
rapidly in 1990 due to the development of the Grasberg
deposit and is expected to increase to about 285,000 metric
tons per year by mid-1992. The Olympic Dam Mine in
South Australia commenced production in 1988 with
phased capacity increases up to 55,000 metric tons per year
planned by 1994.

Canada’s production growth is not at a uniform rate
either, with a 0.8% annual increase through 1990 followed by
an average decline of 2.9% per year over the next 5 years for
an overall 1.5% annual decline from 1987 through 1995. The
only significant production increase in Canada will be from


THE AVAILABILITY OF PRIMARY COPPER
IN MARKET ECONOMY COUNTRIES

A Minerals Avallability Appraisal

By KE. Porter,’ and G.R. Peterson?

ABSTRACT

The U.S. Bureau of Mines has estimated the potential availability of copper from 204 mines and deposits
in market economy countries (MEC’s). The evaluated properties have demonstrated resources totaling
436.4 million metric tons of contained copper and account for 90% of the Bureau of Mines reserve base for
copper in market economy countries.

Total recoverable MEC copper resources are 340.8 million metric tons, 69% of which is from producing
mines and 31% from nonproducing mines and deposits. Chile had the lowest estimated average total cost
from producing mines of $0.48 per pound of recoverable copper at a O% discounted cash-flow rate of return
(DCFROR), with estimated average total costs ranging from $0.40 to $0.81 per pound. The estimated
average total cost of production, per pound of copper, for producing mines in the United States amounts to
$0.57 in January 1988 dollars at a0% DCFROR, with estimated total costs ranging from $0.36 to $0.85 per
pound.

In both real and nominal terms, the United States has, on average, significantly lowered its copper
production costs since 1981. Rationalization of the industry and significant increases in productivity have
made a strong improvement in the competitiveness of the U.S. copper industry to the extent that the United
‘States should no longer be considered as a marginal producer of copper.

TMining Engineer.
7Mineral Economist.
U.S. Bureau of Mines, Minerals Availability Field Office, Denver, CO.



Fenner

10.

12.
A-l.

ILLUSTRATIONS

Estimates of demonstrated world copper resources ............5
Copper production costs in 1988 for major MEC producers
Total potential copper available from MEC’s
Changes in estimated MEC copper production between 1987 and 1995 .

TABLES
World production and consumption of refined copper, by country, in 1988............ 3

Summary of MEC demonstrated copper resources from evaluated properties as of
January, 1988 0... . cece cece eee eee eee eee nent ee ceceeeeeeseeeeteeeusese

MEC copper properties included in this study..............ccecceecceeceeceeeeeee 8
Commodity prices used in the economic evaluations, representing the January average
Price for each year listed ....... 0... cece eee ee cece cece eens eeeee eee eeeneeeeneees 14

Average capital costs per metric ton of annual copper capacity to develop

nonproducing deposits in MEC’s . 15
Weighted average net operating costs in 1987, 1988, and 1989, ty country, in

selected MEC’s 16
Estimated 1988 copper production and average net operating costs in 1988, from

evaluated operations in selected countries ...... seeeee beeen cence eee e eee eneen eens 16
Nominal and real cash operating costs in 1981, 1986, 1987, and 1988 for producing mines

in selected MEC countries ............0sceeeeeeeeeeeeeeeeeeeeeeeeeneeeeesenees 18
Estimated production and average mining, milling, and G&A costs in 1988 for producing

copper mines in selected MEC’s ...........0ecceeceeeeee cence eee cece eeeeeereee 19
Estimated production and average net operating cost in 1988 for producing leach

operations, in selected MEC’s ...... 0. cece cece cece ence cee eececeesececeerecees 20
Estimated average total copper production costs for producing mines and nonproducing
deposits, by country, in selected MEC’s .......... 0 eee cence eens eevee 21
MEC copper production estimates, by region and country, 1987 through 1995 22
Weighted average sulfide ore feed grades, by country, from selected mines,

1980-1988 0... cece cece cece cece eee c eee n nee e cee e nee teeeeeeeeeeeeeeeeenees AS
Average byproduct revenue from producing copper operations in selected MEC’s A6

UNIT OF MEASURE ABBREVIATIONS USED IN THIS REPORT

kg kilogram mt metric ton
kmt thousand metric ton Mmt million metric ton
tb pound troz troy ounce



Table 3.—MEC copper properties included in this study—Continued

‘Country/property name Ownership Current! Mining? —Miling?- == First. % Goverment
‘State status method method year ownership
UNITED STATES:—Continued
Utah:
Bingham Canyon Kennecott Corp. P oP FL 1906 -
Underground Kennecott Corp. E car F NA -
Washington:
Sunrise Intemational Brenmac E SL F NA -
Wisconsin: Development Comp.
Crandon Exxon Minerals Co. E os F NA -
Flambeau Kennecott Corporation oP.caF F 1991 -
Wyoming:
Kirwin ‘Amax inc. E oP F NA -
YUGOSLAVIA:
Bor RTB BOR P oPsL F 1985 100
Bucim “Bucim Rudnik Za Bakar P oP F 1978 100
P op F 1965 100
P oP F 1981 100
Pp oP F 1962 100
P SLCaF F 1925 100
P OPst F 1942 100
Sodimiza Pp SL F 1972 100
Gocamines E oP F NA 100
ZcOm P st FL 1973 60
ZCCM Pp st F 1965 60
200M Pp car FL 1956 60
Z0cM P os FL 1957 60
zcom P os F 1927 60
zoom Pp st F 1933 60
Nehanga Cobalt Ores zcom P oP FL 1980 6
Nehanga Primary Ores zoom P oP F 1936 60
Nehanga Taling & Leach Zcom P oP L 1973 60
Nkana zcom Pp OPSL FL 1932 60
ZIMBABWE:
Mhangura Mhangura Copper Mines Pp st F 1958 60
NAp Not

‘Current status: P, producing; , temporarily shut down; D, developing:

E, explored.
2Aliring method: OP, open pit BO, Bock cave, CBF, cut and fl; RAP, room and pila, SL, sublevel stoping 8, open stope; SH, shrinkage.

2Miling method: F, flotation; L, leach.
Note.—Dashes indicate no Government ownership.

set of assumptions and conditions (¢.g., mine plan, full
capacity production, and a market for all output) necessary
to perform a full economic evaluation.

A DCFROR analysis for each operation was also per-
formed at a 0% rate of return, and both sets of results are
analyzed in the “Total Production Costs and Availability”
section. Prices received for byproducts are assumed to be the

average market prices for each byproduct commodity exist-
ing in January of each year of the operating cost analysis—
1987, 1988, and 1989. Prices for major byproducts shown in
table 4 were the January averages appearing in Metals Week
for each analysis year. Prices for the years 1984 through 1986
are shown in table 4 for comparison purposes. Revenues
received for byproducts are credited against the cost of


The United States has the largest known in situ resource of
15.1 billion metric tons of ore, followed by Chile with 11.5
billion metric tons, but the average copper grade in the
United States is much lower (0.52% compared to 1.0%),
resulting in Chile having a contained copper resource that is
significantly higher than in the United States, amounting to
115.5 million metric tons compared to 78.3 million. In terms

of recoverable copper, Chilean deposits contain 98.9 million
metric tons, compared with 56.2 million metric tons for the
U.S. deposits. The Americas dominate the copper resource
picture for the MEC’s, with 67.9% of total recoverable
copper. Chile and the United States combined account for
45.5% of total recoverable MEC copper.

‘Table 1.—World production and consumption of refined copper, by country, in 1988
copper)

(Thousand metric tons of contained
Mine'2 ‘Smetter production'® Refinery production’ Refined
Country Production Primary ‘Secondary Primary Secondary coneumption
Primary and secondary
Albania 150 145 - 130 - 11.0
‘Argentina . 5 - - - - 60.0
‘Australia 2383 1778 90 1912 287 1258
Austria - - 345 36 384 370
Belgium - 12 932 3643 140.0 306.5
Bolivia 2 - - - - -
Botswana 244 - - - - -
Brazil 444 1479 - 1479 381 259.6
Bulgaria 80.0 87.0 50 750 200 710
Burma 138 - - - - -
Canada: 238.5
Concentrationvleaching 7535 537.0 140 4907 380 -
Leaching (electrowon) 50 - - - - -
Chile 1,472.0 1,189.4 - 10127 - 427
China 375.0 400.0 - 5100 - 470.0
Congo (Brazzaville) 10 - - - - -
Cuba 30 - - - - 28
Cyprus. 3 - - - - -
Czechoslovakia 5.0 5.0 224 5.0 221 96.0
Ecuador 4 - - - - -
Egypt - - - - 25 65
Finland 202 79.0 120 479 60 737
France 3 - 85 72 36.0 (395.1
German Democratic Republic 100 250 - 180 620 1315
Germany, Federal Republic of 7 115 50.0 1922 2342 796.1
Greece - - - - - 51.0
Honduras 6 - - - - -
Hungary - - 4 19.2 - 258
India 587 448 - 448 - 1300
Indonesi 1215 - - - - 330
tran 51.0 520 - 32.0 - 205



underground mines in selected MEC’s are shown in table 9,
and costs per pound of leach copper from selected countries
are shown in table 10. For some producers, such as the San
Manuel open pit and Miami leach operations, which pro-
duce leach copper exclusively, the costs for mining, crushing,
haulage, dump preparation, leaching, and SX-EW are
included in the estimated costs. Where leaching is secondary
compared to sulfide copper production, such as at Pinto
Valley and Morenci, the mining costs were arbitrarily bur-
dened against the sulfide operation. Dump preparation,
leaching, and SX-EW costs constitute the leach costs aver-
aged in the table.

Over three-quarters of the copper ore mined (and about
two-thirds of the recoverable copper) is produced by open
pit mining. Mine operating costs for surface mines are con-
siderably lower per ton of ore than operating costs for
underground mines. The cost to mine | ton of material (ore
and waste) appears to be relatively consistent worldwide
from major mines using similar technology. Variances in
open pit mining costs are largely the result of local or
regional differences in the cost of diesel fuel, labor, spare

parts, and operating efficiency (or lack thereof). Of more
importance, on a cost-per-ton-of-ore basis, is the stripping
ratio (tons of waste rock per ton of ore) of an open pit mine.
Average stripping ratios at producing surface copper mines
range from 0.67:1 in the Philippines to 13.6:1 in Zambia.
Average stripping ratios in Mexico are currently under 1:1
(excluding leach ore and the capitalized prestripping pro-
gram at Cananea), and the average stripping ratio in Canada
and Peru is currently about 1:1. The average stripping ratio
in the United States runs about 1.5:1 compared with about
2.7.1 in Chile. The highest stripping ratios occur in Zaire and
Zambia where the average stripping ratios currently amount
to7.8:1 and 13.6:1, respectively. Unlike the copper porphyry
deposits, the folded and steeply dipping African stratiform
deposits are covered at depth with thick overburden, result-
ing in high stripping ratios and high mining costs, necessitat-
ing eventual underground mining. The current average ore
grades in Zaire and Zambia are among the highest in the
world, however, enabling the economic use of open pit
mining at a number of operations.

‘Table 9. Estimated production and average mining, milling, and G&A costs in 1988 for producing copper mines, in selected MEC's
(All costs are in January 1988 U.S. dollars per metic ton of sulfide ore milled)

Suffide Sutide On site cash operating cost
County orient recoverable Mine Mill GBA Total
copper (mnt)
‘SURFACE MINES
Canada. 102,975 335200 $123 $215 $032 $370
Chile . 49,600 655,400 328 216 176 7.20
Mexico. 54,000 260,800 1.00 1.46 0.49 2.95
Peru. 34812 278,000 241 3.09 276 826
Philippines 37,100 118700 1.48 228 044 420
United States 187599 909,700 1.88 268 0.35 491
‘Yugoslavia. 33,100 153500 2.25 1.89 _ 444
Other 150,999 1,059,000 3.61 401 1.43 9.05
Total or average. 650,185 3,770,300 224 272 0.84 5.80
UNDERGROUND MINES

Australia 9250 233,600 1653 620 327 26.00
Canada. 10.685 219,800 1924 645 5.25 30.94
Chile 58,000 592,600 317 2.86 1.92 7.95
Philippines 28,398 92,200 225 261 063 5.49
United States 22,180 151,700 5.80 292 074 9.46
Zaire 8,435 249,300 1480 7.30 656 28.66
Zambia. 17,640 240,500 1290 5.46 495 23.31
Other 35,899 435,500, 1143 5.21 253 1887
Total or average. 188487 2215200 897 458 277 1632

‘included with mining and miling cost.


BUREAU OF MINES
INFORMATION CIRCULAR/1992

The Availability of Primary Copper
in Market Economy Countries

A Minerals Availability Appraisal

By Kenneth E. Porter and Gary R. Peterson

UNITED STATES DEPARTMENT OF THE INTERIOR


Table 2. —Summary of MEC demonstrated

resources from evaluated properties as of Janusry 1988"

copper
(Million metric tons unless otherwise specified)

In situ resource*

Number ‘Average Minable resource®
Country of Contained Recoverable
deposits Tonnage Renee copper Tonnage copper
North America:
Canada 33 4110 0.56 23.0 4,064 194
Mexico 3 3.933 49 193 3.933 184
United States* 48 15,127 52 78.3 14,890 56.2
Total or average 84 23,170 1206 22,887 90.7
Central and South America:
Chile 13 11,548 1.00 115.5 11,780 98.9
Peru 14 3561 7 278 3,262 29
Other 8 3.253 20 260 3,040 189
Total or average® KS 18,362 92 169.3 18,082 140.7
13 1518 74 12 1,506 9.0
9 ‘544 1.42 7 512 60
3 448 1.33 60 430 45
7 2,913 A 134 2,854 10.6
6 702 85 60 701 49
26 4,063 62 254 3,985 209
Africa:
Zaire 5 605 4.09 247 629 19.9
Zambia® 10 B15 219 178 927 14
Other 10 495, 78 39 516 3.0.
Total or average? a 1915 243 46.4 2072 340
Oceania:
Australia 7 2,225 W771 38.0 1,732 272
Papua New Guinea? 5 3562 50 178 3,352 130
Total or average’ 12 3787 96 558 5074 402
Grand total o average? 204 55,359 79 4964 54128 3408
“Includes oxide and leach material.

in situ resource is the in-place mineralized material prior to mining.

“Minable resource: Recoverable copper is that quantity thet can be extracted and recovered to a finished product ie,, copper cathode) after making
allowances for mining, concentration, and smelting and refining losses. Tonnage is that quantity of material delivered to the concentrating plant and may

have allowances for mining dilution.

“includes 6,666 ron tne ne le tl a: % Cu Se rencces averaged 8% Cu,

"Data may not add to totals shown because of independent roundi

Sincludes 352 millon mt oxide matoril at 0.87% Cun Nehanga Siage Il leach project. Primary resources averaged 3.17% Cu

7includes Namosi deposit in Fiji.

the cost of access and haulage facilities, water facilities,
power supply, and personnel accommodations. Working
capital is a revolving cash fund required for such operating
expenses as labor, supplies, taxes, and insurance, Working
capital is typically estimated as 3 months of operating costs.

Mine and mill operating costs for each foreign operation
were estimated in local currencies and then converted to U.S.
dollars. Operating costs are a combination of direct and

indirect costs. Direct operating costs include production and
maintenance labor, operating supplies, utilities, and payroll
overhead. Indirect operating costs include technical and
clerical labor, administrative costs, facilities maintenance
and supplies, and research. Other costs in the analysis are
fixed charges, including local taxes, insurance, depreciation,
deferred expenses, interest payments (if any), and return on
investment.


Table 1.—World production and consumption of refined copper, by country, in 1888—Continued
copper)

(Thousand metric tons of contained
Mine’? ‘Smelter production’? Refinery production’+ Refined®
Country oe ~ - ‘consumption,
luction Primary Secondary Primary Secondary primary and secondary
Zaire: 24
Concentration/leaching 250.0 160.0 - 2026 -
Leaching (electrowon) 280.0 3068 - - -
Zambia: 80
Concentration/leaching 2844 3089 - 3977 -
Leaching (electrowon) 1477 959 - 518 -
Zimbabwe 169 164 - 161 114 96
Others - - - - - 164
Total 85367 8.2475 1,087.1 8655.4 16762 10,6582
Of which: Of which:
Electrowon 4027 Primary 81262
Other 75131 Undifferentiated 5292
Undifferentiated 169.0

‘Source: BuMines Copper Minerals Yearbook (2,3).

Data represents copper content by analysis of concentrates produced except where otherwise noted.

Data represents total production of copper metal at the unrefined stage.

“Data roprosents otal production orened copper rom pyremetalurjca elecrolvic endelecrawinring processing andtrom primary uneined copper

<Souroe: Wd Bureau of Metal Sass (4).
*Data may not add to totals shown because of independent rounding,

Note:—A dash indicates negligible production.

METHODOLOGIES AND COST EVALUATION

To determine the potential availability and supply of
copper, geologic and operating data were collected and ana-
lyzed for each of the 204 mines and deposits evaluated. These
data include: demonstrated resource estimates; actual or
estimated mine and mill operating capacities, including
future expansions and development plans when reported;
estimated mine life based on reserves and capacity utiliza-
tion; all capital expenditures including reinvestment costs;
operating costs for mining, milling, and transportation;
material balances for each concentrate produced in the mill;
and estimates of smelting and refining charges for each
concentrate and the pay-fors (credits and deductions) asso-
ciated with each commodity treated. Smelting and refining
charges and the pay-for schedules used in the study are for
typical smelters and refineries within each country or region.
For example, one smelter schedule was used for all concen-
trates processed in Japan, another was used for all concen-
trates processed in Europe, and so forth. Smelter schedules
used for the United States were more site specific. For
undeveloped deposits, future materials flows were estimated
based on historical patterns, and estimates of where Plants

for future smelting and refining capacity are likely to be
constructed.

The costs used in this study were collected or developed
using various methodologies. Operating parameters and
cost data for producing U.S. operations were collected by
the Bureau’s Field Operations Centers in Denver, CO, Spo-
kane, WA, and Juneau, AK. Engineering cost estimates for
foreign properties were developed by personnel at the Min-
erals Availability Field Office based on data from a number
of sources including company annual reports, published
articles and reports, and personal correspondence with
company and Government contacts. Several foreign copper-
zinc mines were evaluated by Pincock, Allen & Holt, Inc.,
under contract.

For each mine or deposit included in the evaluation,
capital expenditures were estimated for exploration, mine
plant and equipment, mill plant and equipment, and all
necessary reinvestments in mine or mill. Capital expendi-
tures for mining and processing facilities include the costs of
mobile and stationary equipment, construction, engineering,
infrastructure, and working capital. Infrastructure includes



REFERENCES

1, Jolly, J.L., and D. Edelstein. Copper. Sec. in BuMines Mineral
‘Commodity Summaries 1989, p. 47

2 - Copper. Ch. in BuMines Minerals Yearbook 1988, V.1,
56 pp.

3, Jolly, Janice L.W., and Daniel L. Edelstein. Copper. Ch. in BuMines
Minerals Yearbook 1989, V.1., 54 pp.

4, World Bureau of Metal Statistics Yearbook 1989. World Bureau of
‘Metal Statistice, London, United Kingdom, 1990.

5. Sullivan, D.E., P.R. Thomas, and E.H, Yaremchuk. International
Mining Cost Indexation System. BuMines IC 9158, 1987, 52 pp.

6. Davidoff, R.L. Supply Analysis Model (SAM): A Minerals Availa-
bility Systems Methodology. BuMines IC 8820, 1980, 45 pp.

7. Stermole, F.J. Economic Evaluation and Investment Decision
Methods. Investment Evaluations Corp., Golden, CO, 1974, 443 pp.

8. Supplied by Janice L. Jolly, Copper Commodity Specialist, BuM-
ines Div. of Nonferrous Metals.

9. Bleiwas, D.1., Availability of Primary Nickel in Market Economy
Countries. BuMines, IC 9276, 1991, 52 pp.

10. U.S. Bureau of Mines. Copper. Ch. in An Appraisal of Minerals
Availability for 34 Commodities. BuMines B 692, 1987, pp. 81-94.

11, Rosenkranz, R.D., E.H. Boyle, Jr., and K.E, Porter. Copper Availa-
bility - Market Economy Countries. A Minerals Availability Program
Appraisal. BuMines IC 8930, 1983, p. 25.


Ansil mine, which commenced production in 1989, will
attain full production of about 29,000 metric tons of copper
in 1990.

Peru has the potential for major production increases if
the country’s economic, political, and labor problems are
alleviated. Taking an optimistic view, Peru could increase
production by 7% per year by bringing several properties
into production from a long list of potential candidates. The
expansion project by Minero Peru at Cerro Verde is continu-
ing, and the Tambo Grande and La Granja projects could
add about 135,000 metric tons of copper per year to Peru’s
total by 1995 if development proceeds as planned. The
unsettled political and economic climate in Peru remains a
serious drawback to major investments, however.

Zaire and Zambia are projected to maintain the status quo
with only a slight growth rate in annual production of less
than 1% estimated through 1995. Efforts are being made to
improve efficiency at operations in both countries through
modernization and cost cutting programs.

In light of the continued strong copper market, additional
properties could conceivably be brought into production by
1995 but would typically have to be smaller operations
requiring shorter lead times. A major development would
have to have been announced by 1989 with plans for devel-
opment already made in order to be in production by 1995.
Expansion plans are more difficult to project, however, and
annual production projections will have to be revised period-
ically as a result.

CONCLUSIONS

A total of 204 mines and deposits were evaluated for the
availability of copper; 112 were producing, 9 mines were on
temporary shutdown, and 8 were being developed as of
January 1988. The remaining 75 deposits were explored with
no finalized development plans. Total demonstrated copper
resources evaluated for MEC’s contain 340.8 million metric
tons of recoverable refined copper (69% from producing
mines and 31% from nonproducing mines and deposits).
The countries with the largest copper resources are Chile
with 98.9 million metric tons of recoverable copper (78%
from producing mines), the United States with 56.2 million
metric tons (58% from producing mines), Australia with 27.2
million metric tons (96% from producing mines), and Peru
with 22.9 million metric tons (41% from producing mines).

Chile not only has the largest recoverable copper resource,
but also has the lowest estimated weighted average total
production costs in MEC’s. The estimated average total cost
of production of copper from producing mines in Chile as of
January 1988 amounted to $0.48 per pound at a 0%
DCFROR, with costs ranging from $0.40 to $0.81 per
pound. Nonproducing deposits in Chile have estimated
average potential total costs of $0.68 per pound of copper at
0% DCFROR and $0.86 per pound at a 15% DCFROR.

The estimated average total cost of production, per pound
of copper, for producing mines in the United States amounts
to $0.57 in January 1988 dollars at a 0% DCFROR, with
estimated total costs ranging from $0.36 to $0.85 per pound.
For nonproducing deposits, potential average total costs of
production were estimated to be $1.04 per pound at a 0%
DCFROR and $1.80 at 15%.

Mine production of copper from MEC’sis estimated to be
9.12 million metric tons in 1995, an increase of 2.32 million
metric tons (34.2%) over 1988 production levels. The largest
increases are estimated to be from Chile (834,000 metric
tons), the United States (468,000 metric tons), Peru (336,600

metric tons) and Papua New Guinea-Indonesia (258,900
metric tons). Based on these estimates, Chile’s share of MEC
production would increase from 21.7% in 1988 to 25.3% in
1995. The United States would essentially maintain its
market share, which amounted to 20.9% in 1988 and is
estimated to be 20.7% in 1995. Oceania (Australia, Papua
New Guinea and Indonesia) would increase its share of
MEC production from 8.6% in 1988 to 9.5% in 1995, with
most of the increase accounted for by Indonesia and Papua
New Guinea.

Africa will continue its decline in market share, from
18.1% in 1988 to 14.3% in 1995 although African production
is estimated to increase slightly. Canada’s production is
estimated to decrease to 696,000 metric tons in 1995 from
production of 756,400 metric tons in 1988. Canada’s share of
MEC production would decline from 11.1% in 1988 to 7.6%
in 1995.

The largest unknowns pertaining to the production esti-
mates presented in this report involve the political and eco-
nomic situation in Peru and the future status of the Bou-
gainville operation in Papua New Guinea. If production
from these two countries in 1995 lags behind current produc-
tion estimates, the relative importance of Chile and the
United States will increase.

In both real and nominal terms, the United States has, on
average, significantly lowered its copper production costs
since 1981. Rationalization of the industry and significant
increases in productivity have made a strong improvement
in the competitiveness of the U.S. copper industry. The U.S.
copper industry’s ability to compete in the world copper
market has improved to the point that the United States
should no longer be considered as a marginal producer of
copper. The U.S. industry is well-placed to face future down-
turns in the copper market and remain a viable and growing
segment of the world industry.



INTRODUCTION

The world copper industry was severely affected by the
period of low metals prices from 1982 to 1987. The over-
supply of copper and low prices caused producers worldwide
to institute rationalizations and cost-reduction measures in
order to improve their relative competitiveness and profita-
bility. The U.S. copper industry was particularly hard hit by
the drop in consumption associated with the recession of the
early 1980's. World copper consumption had begun to
decrease after 1979, and dropped even further during the
following recession. Copper prices peaked in 1980, then
plunged almost 50% in real terms before leveling off in 1984.
Despite the slumping copper market, copper production
continued to increase in countries such as Chile, and world
inventories swelled. The strong U.S. dollar over this period
favored imported copper over domestic production.

By the mid-1980’s, domestic mine production had fallen to
its lowest level in two decades, and the United States lost its
Position as the world’s largest mine producer of copper for
the first time in a century. Between March 1981 and January
1983, 28 U.S. mines closed or cut back production, and
domestic mine capacity utilization was down to about 65%.
By the end of 1982, the domestic copper industry had laid off
about 42% of the total work force.

Caught in the vise of rising costs versus low commodity
prices, the copper industry was faced with the unwelcome

choices of cutting costs or going out of business. Although
some of the mines were closed, the majority managed to find
ways to cut costs and improve efficiencies. The initial
method used to cut operating costs was to convince labor to
accept lower wages and benefits, and to cross-train workers
for more than one job. Technological improvements includ-
ed the installation of in-pit crushers and conveyors to reduce
energy costs and costly truck haulage; the use of larger
equipment to take advantage of economies of scale; initiate
leaching of old and new waste dumps and to erect SX-EW
plants to treat the copper leaching solutions.

In concentrators, new and larger SAG mills (semiauto-
genous grinding) were installed, and many copper cleaner
flotation circuits were converted to column flotation to
enhance recoveries and to reduce energy consumption. As a
result of cost-cutting efforts, the U.S. copper industry re-
established its competitive position within the world copper
industry. Cost reduction measures are detailed in the
appendix.

This study evaluates the potential availability of copper
from 204 mines and deposits in market economy countries,
112 of which were producing as of January 1988, and 92
properties which were under development, temporarily shut
down, or explored.

ACKNOWLEDGMENTS

Much of the data for the domestic deposits and properties
analyzed in this study were developed at Bureau of Mines
Field Operations Centers in Denver, CO, Juneau, AK, and

Spokane, WA. Richard R. Beard of the Arizona Depart-
ment of Mines and Mineral Resources was extremely helpful
in providing insights into the Arizona copper industry.

WORLD COPPER PRODUCTION

In 1988, copper was mined in 51 countries, with the top six
producing countries in MEC’s accounting for almost 58% of
world mine production and more than 72% of mine produc-
tion in MEC's. The six leading MEC mine producers in 1988
were Chile (21.8%), the United States (21.0%),

Demonstrated resources of the 204 properties in MEC’s
evaluated for this study as of January 1, 1988, are presented.
in table 2. The comparison of demonstrated resources evalu-
ated in relation to the Bureau reserve base for copper is

_illustrated in figure 1 (1) The ist of properties evaluated
~ “Italic numbers in parentheses refer to items in the list of references at the _
end of this report.

RESERVES/RESOURCES

Canada (11.2%), Zaire (7.8%), Zambia (5.9%), and Peru
(4.4%). Mine production and smelter/ refinery production of
copper as well as refined consumption, by country, in 1988 is
shown in table 1.

|_appears in table 3. The total demonstrated resource _
amounted to 55.4 billion metric tons of ore containing 436.4
million metric tons of copper metal. Of that amount,
approximately 341 million metric tons of copper is estimated
to be recoverable. In terms of recoverable copper, 29.0% isin !
| Chile, 16.5% is in the United States, 8.0% is in Australia, and
6.7% is in Peru.


Table 6. —Weighted average net operating costs in 1987, 1988,
‘and 1989, by country, In selected MEC’s
(Costs In U.S. dollars per pound of refined copper)

Country 1987-1988 1989
Australia $040 $039 = $0.50
Brazil $2 119 35
Canada A 40 35
Chile a 34 38
India 124 1281.29
Mexico 43 4 rs)
Namibia 48 60 68
Papua New Guinea/indonesia’ (19) 09 a2
Peru 52 76 10
Philippines 35 39 58
‘South Africa, Republic of 3 M6 48
‘Spain 68 4 7)
United States . 53 52 52
Yugoslavia 63 35 04
Zaire 56 45 a7
Zambia 85 76 1.04
‘Net operating costs are strongly affected by byproduct credits for gold
produced at the OK Tedi Mine, Where | ‘credits are greaterthan
cash operating the average net cost is negative. Refer to the
byproduct credit column in table

Table 6 shows the relative changes in average net operat-
ing costs for copper between countries in nominal U.S.
dollar terms for 1987, 1988, and 1989. It is interesting to note
that estimated average net operating costs in the United
‘States remained constant over the 1987-89 period, whereas
the estimated average net operating cost increased $0.11 per
pound in Australia between 1988 and 1989, and by $0.28 per
pound in Zambia between 1988 and 1989, but decreased by
$0.67 per pound in Peru over the same period. Much of the
difference between changes in operating costs, in U.S. dollar
terms, between 1988 and 1989 was caused by differences in
the relative rates of inflation and currency exchange existing
in January 1989. Countries such as Brazil and Peru, which
are undergoing hyperinflation with resultant mega-devalua-
tions of their currency, show indexed net costs for January
1989 which may be unrepresentative of the actual costs of
production over the entire year. For this reason, the 1989
estimates, particularly for Brazil, Peru, and Zambia may be
misleading compared with cost estimates for 1987 and 1988.
As aresult, the total cost and availability analyses appearing
in the following section will focus on 1988 cost estimates
only.

The countries with the lowest net operating costs (per
pound of copper) in 1988 were Papua New Guinea and
Indonesia, Chile, the Philippines, Australia, Canada, Zaire,

‘Table 7. Estimated 1968 copper production and average production costs, from evaluated operations In selected countries

Estimated
production (kmt) Operating costs! Total
Country Number Mine Mil Smeter- Total byproduct Te

fines Ore Respverable ‘omen? coon cred

Australia ry 9250 234 $083 $014 $016 $062 $023) 80.39
Brazil 3 7,706 . 65 aT 5 2 1.20 ( .01) 119
Canada 16 © 113,660 564 2 28 ot (5) MO
Chile 7 1076001871 15° «4608 39 ( 05) uM
india 3 5,100 54 oe ee) ee
Mexico 2 54,000 278 w"W ‘7 25 53 ( 08) AS
Namibia 3 1,869 37 3 Ot 37 9 6.37) 60
Papua New Guinea/Indonesia 3 71,060 368 2B 3 23 84 ( 75) 09
Peru 5 39012 344 a ee) 8 (0) 6
Philippines 7 63,498 2i1 28 a7 24 89 ( 49) 39
South Africa Republic of, 3 31,925 158 23 20 413 5 (08) 6
Spain 3 9,050 48 Ba 78 92 253 (1.59) 94
United States 18 209,779 1,351 18 28 A7 62 { 10) 52
Yugoslavia 4 33,100 153 2 419 16 56 (22) 35
Zaire 4 17,035 851 27 a4 2 70 ( 25) 4S
Zambia 9 23,890 449 32 26 2 83 { 08) 16
Other 16 42,198 334 40 40 144_(_55) 39
Total or average? 110636672 __—~<OB7I? ar) 70 (22) 47

‘Cost and credits are in US. dollars per pound of refined copper.
includes transportation costs.
Data may not add to totals shown because of independent rounding.


A total of 340.8 million metric tons of copper is potentially
recoverable from 204 evaluated MEC mines and deposits
(69% from producing mines and 31% from nonproducing
mines and deposits). Chile remains the largest potential
source of copper in the MEC’s with 98.9 million metric tons
of recoverable copper (78% from producing mines), fol-
lowed by the United States with 56.2 million metric tons
(58% from producing mines), Australia with 27.2 million
metric tons (96% from producing mines), and Peru with 22.9
million metric tons (41% from producing mines).

All of the MEC copper-producing nations with the
exception of Brazil, India, and Spain have average total
production costs (0% DCFROR) from producing proper-
ties below the average LME cash wirebar price of $1.15 per
pound. Based on either the estimated 1988 operating costs
for producing mines in MEC’s shown in table 8, or the
average total costs for producing operations evaluated in
January 1988 dollars (table 12), 1988 was a banner year for
copper producers, particularly in comparison with the early
to mid-1980's.

Table 12. —MEC copper production estimates, by region and country, 1987 through 19951

(Thousand metric tons of contained copper)
Country 1987 1968 1989° 1900? 1991? 1992 1963? 1994? 1995
Noth America: °
Canada 7e41 75857081 = 8130 7808 «= 763s 768874886082
Mexico 2537 2802105 3801 2801831833183 813.3
United States 12049 14107 15517 1.5001 1,6530 1.7158 1.8178 1,881.8 1.8872
Total 23927 24584 26603 27422 2.7618 2.8054 28009 29439 2.8067
Contral and South
America: .
Chile 1,412.9 1,4720 1,636.3 1,728.4 1,874.2 2,094.5 2,222.4 2,300.0 2,306.0
Peru 4064 3228 8061514720 4806514186 «6349
Other ata 458 514 568 574 472 848 4a 848
Total 19604 18406 20270 22003 24033 26113 28226 30044 30257
Europe 200728080 CBGSSC«ARS
Middle East 100.1 99.9 157.5, 190.5, 194.7, 198.8 207.1 215.4 223.7
Asia: :
India 565 557 585 585 585 585 585 585 585
Philippines 2161 «21812257 = 2388) 2523524 278G 878288
Other 714 525 630 59.5 55.1 55.1 56.1 55.1 55.1
Total 3440 326.3 3472 3578 365.9 366.0 389.2 381.4 380.2
Altice:
Namibia 378 409 400 400 370 370 370 370 370
South Attica, :
Republicof 188.1 168.5 196.9 190.9 189.5 189.2 189.2 1825 1825
Zaire 5250 $300 5500 5500 5668 SHS) SED 5592
Zambia 463.1 4318 451.0 4472 4518 479.0 4709 468.6 486.6
Other 569 569 618 508 508 552 414 474 414
Total 12707 12281 (12007 12879 «+1049 «21,8263 «13104 (19014 1,156
Oceania:
Australia 232723832780 28102885 00S 8135 (267.0
Other 3107 34014373265 8622_— BEAD BDO 5990
Total 5524 S784 «IGT _—«GOTS «AST ~—=C«—SCT.S SBS «88
Grand total 6,751.0 6,780.7 7473.3 7,809.7 8,127.1 8613.4 8,999.7 9211.6 9,116.4
“Estimated.

1989-95 Is based on estimated projections from literature, and does not necessarily reflect capacity or actual production.

*Projected copper production.



PREFACE

The U.S. Bureau of Mines Minerals Availability Program is assessing the worldwide availability of nonfuel
minerals. The Bureau identifies, collects, compiles, and evaluates information on active and developing
mines, explored deposits, and on mineral processing plants worldwide. The program's objectives are to
classify domestic and foreign resources; to identify by cost evaluation resources that are reserves, and to
analyze the availability of mineral resources.

This report is a continuation of previous Division of Resource Evaluation reports in which the availability
of copper resources from domestic and foreign sources and the factors affecting availability were evaluated.
This report updates and expands upon the first report that was published in 1983.

Analyses of other metals and minerals are in progress. Questions about the Minerals Availability
Program should be addressed to Chief, Division of Resource Evaluation, U.S. Bureau of Mines, 810 7th
Street, NW., Washington, DC 20241.


‘Table 3.—MEC copper properties Included In this study—Continued

CCountry/property name ° io Curent! = Mining? Milling? First % Government
State status method method year ‘ownership:
CANADA:—Continued
Maggie Cominco, Lid. E op F NA -
Myra Falls Weetmin Resources, Lid. Pp CaF F 1967 -
Poleon Mountain Lac Minerals, Lid. E op F NA -
Rutan Hudson Bay Mining & Smeting Pp os F 1973 -
Schaft Creek ‘Teck Corp/Liard Copper Mines E op F NA -
Selbale BP Canada/Esso Mineral/TCPL Pp OPSL F 1981 -
Similkameen Newmont Mining Corp. P oP F 1972 -
Sustut Falconbridge, Lid. E op F NA -
Trout Lake Hudson Bay Mining & Smeting Pp CaF F 1982 -
CHILE:
‘Andacollo Enami E oP F NA 100
Andina. Codelco-Chite P BC F 1970 100
Cerro Colorado Rio Algom, Lid. E oP L 1993 10
Chuquicamata Codelco-Chile P oP FL 1915 100
El Abra Codelco-Chile E op F NA 100
El Salavdor Codeleo-Chile Pp BC F 1959 100
Ei Soldado Exxon Minerals Co. Pp st F 1800's -
i Teniente Codelco-Chile P ec FL 1906 100
D oP F 1982 -
P op F 1962 -
E SLOP F 1991 -
P op FL 1961 -
E oP F NA 10
E oP F NA -
Pp st F 1962 at
Pp R8P,C8F F 1919 100
P sLos F 1973 100
Pp oP FL 1982 100
P OP,SL F 1973 9
Pp op F 1982 100
P REP F 1965 -
P car F 1898 -
E op L NA 100
MALAYSIA:
Mamut Pp op F 1975 49

‘See footnotes at end of table.


Table 3.—MEC copper properties Included in this study—Continued

Country/property name Ownership Curent’ = Mining?-——Miling? First % Government
‘State status method method year ‘ownership
PHILIPPINES:—Continued
Basay CDCP Mining Corp. T BC F 1979 100
‘Batong-Buhay Development Bank of Philippines T Bc F 1983 100
Boneng-Lobo Westem Minolco Corp. T op F 1970 -
Copper Shield Benguet Exploration, inc. T Bc F 1969 -
Dizon Benguet Corp. P 8c F 1980 -
Far South East Lepanto Consolidated/Galactic Resources E st F 1998 -
Hinobaan Lepanto Consolidated Mining Co. E oP F 1992 -
ino-Capayang Consolidated Mines, Inc. T oP F 1978 -
Lepanto________Lepanto Consolidated Mining Co P Car F 1975 =
Marcopper Marcopper Mining Corp. Pp oP F 1969 -
Philex: Philex Mining Corp. P BC F 1957 -
‘Sabena ‘Sabena Mining Corp. T oP F 1979 -
Sipalay Maricalum Mining Corp. P oP F 1957 -
Taysan Benguet Consolidated, Inc. E oP F 1992 -
Trident Trident Mining & Industrial Co. E oP F 1992 -
PORTUGAL:
Ajusrel —~itos Alontojanas SARL D CaF F 1991 90
Neves-Corvo EDMA/RTZ Metals, Lid. Pp CaF F 1988 51
‘SAUDIA ARABIA:
Jabal Sayid Saudi Arabian Government E os F NA 100
‘SOUTH AFRICA:
Messina African Finance Corp. Pp SH F 1906 -
OOkiep Ske Copper Co, Lid. Pp st F 1965 -
Palabora Palabora Mining Co,, Lid. Pp op F 1965 -
‘SPAIN:
Aznal Collar Banco Central De Espana P OP F 1979 100
Cerro Colorado Rio Tinto Minera SA. Pp OP,R&P F 1967 -
Sotie! Enmasa P REP F 1983 -
‘SWEDEN:
Altik. Boliden Metall AB P oP F 1968 100
Vieceria ‘Outokumpu Oy P st F 1983 100
TURKEY:
Cayli —__tibank/Metall Mining Corp. E Car F 1991 st
Ergani-Madeni bank P oP L 1980 100
Espye SS htibank/Ki E COMBINE F 1980 100
Mugu _—Btibank/Black Sea Copper P op F 1972 100
Siirt Etibank/Preussag Metall E SH F 1983 51
UNITED STATES:
Alaska:
ArcticCamp Bear Creek Mining Co. E oP F NA -
Orange Hil/Bond Creek Bear Creek Mining Co. E oP F NA -
‘Arizona:
Casa Grande ASARCO/Freeport McMoran E BC F NA -
Christmas Cyprus Minerals Co. T OP,C8F F 1962 -
Cochise Phelps Dodge Corp. E op L 1994 -
Copper Basin Phelps Dodge Corp. E oP F 1993 -

‘See footnotes at end of table.



Library of Congress Cataloging in Publication Data:

Porter, K.E. (Kenneth E.)

The availability of primary copper in market economy countries: a miner-
als availability appraisal / by Kenneth E. Porter and Gary R. Peterson.

p. cm. — (Information circular)

Updated ed. of: Copper availability—market economy countries /R.D.
Rosenkranz. 1983.

Includes bibliographical references.

1. Copper industry and trade. I, Peterson, Gary R., 1948—
II. Rosenkranz, Rodney D. Copper availability—market economy countries.
IIL. Title. IV. Series: Information circular (United States. Bureau of Mines)

TN295.U4 (HD9539.C6) 622 s—dce20 (338.2743) 91-33998 CIP



stratiform deposits. Average feed grades fluctuated slightly
during the decade, but there is no indication of declining ore
grades, and with the addition of Olympic Dam, and the
closure of Mount Lyell and the CSA mine, the average feed
grades are expected to increase in the future.

Mines in the Philippines and Papua New Guinea are
copper-gold porphyry operations with relatively low copper
grades. These mines are currently mining primary material,
meaning that feed grades are not expected to decline signifi-
cantly in the future.

The large mines in the United States have reached a point
where ore grades are no longer declining rapidly, whereas
Chile is still faced with significant decreases in average ore
grades through the end of the century as operations mine
increasing amounts of primary ore. The development of new
mines in Chile will somewhat counteract this downward
trend on a country average basis, but ore grades from the
current major producers will continue to consistently de-
crease.

BYPRODUCT CREDITS

Byproduct revenues play an extremely important part in the
profitability of many copper operations. The significant
increase in base metal prices beginning in mid-1987 has had a
major impact on the net operating cost for copper. Table A-2
shows the average byproduct revenues, by country, esti-
mated for the producing mines evaluated for this study for
1986 through 1989. Average commodity prices used in the
economic evaluations were shown in table 4.

In Canada, where polymetallic deposits contribute a large
share of copper production, the increase in lead-and zinc
prices are primarily responsible for doubling of the average
byproduct revenue. Australia shows a significant jump in
byproduct revenues in 1988, partially as the result of higher
lead and zinc prices. Of more importance is the start of
production at Olympic Dam with large uranium, gold, and
silver revenues to offset the high production costs at the
mine. In the Philippines, where gold is the principal bypro-

duct, a significant increase in the gold price combined with a
modest increase in byproduct gold production resulted in a
sharp increase in byproduct revenues.

The high cobalt price in effect in early 1986 led to anomal-
ously high byproduct credits in Zaire and (to a lesser extent)
Zambia. The cobalt price dropped from $11.70 to $7.00 per
pound during 1986, and in turn caused byproduct revenues
to plummet nearly 40% in Zaire by 1987. Cobalt prices had
gradually rebounded to $8.65 per pound by January 1989.

Copper producers in Chile, Peru, and the United states
receive most of their byproduct revenues from molybdenum
and, to a lesser extent, gold and silver. Molybdenum and
silver prices have remained depressed throughout the 1986-
89 period with gold making only modest improvement from
1986-88, declining again in 1989. This has resulted in only a
marginal increase in byproduct revenues for these countries.

‘Table A-2. —Average byproduct revenue from producing copper

In selected MEC’s
(Dollars per pound recoverable copper)

Country 1986 1987

Australia 003 007
Canada’ 30 49
Chile 05 068
Peru 05 07
Philippines. 20 AT
United States 08 40
Zaire 37 2
Zambia 08 o7
Other 30 45
‘Average a7 2

‘Excludes Falconbridge’s and INCO’s Sudbury operations. Average
byproduct revenue for Canada in 1988 would be $0.92 per pound with
these operations included.



Table 10. —Estimated production and average net operating cost in 1988 for producing leach operations, in selected MEC’s
{All costs are in January 1988 U.S. dollars)

Recoverable cost
Country copper (mt) $ilb Copper
Chile. 123,200 0.38
United States. 289,400 35
Zambia 114,500 38
Others 58,200 _ 86
Total or average 585,300 39

TOTAL PRODUCTION COSTS AND COPPER AVAILABILITY

Total production costs were determined for all of the 204
copper mines and deposits evaluated in market economy
countries. The INCO and Falconbridge massive sulfide
nickel operations in Canada were not included in the total
cost analysis (table 11) but their copper output is included in
the total availability analysis (fig. 3). Costs are presented ona
dollar per pound recoverable metal basis over the life of the
operation including net operating costs as presented above

and include recovery of capital to arrive at a net production
cost. Total production cost is the net production cost as
defined previously, plus all property, severance, State or
Province, and Federal taxes plus a return on all investments
to achieve a specified DCFROR. The total production cost
represents the long-run constant dollar price that an opera-
tion would have to receive in order to recover all of its capital
investments and achieve a specified DCFROR.

2.60
2.40 4 KEY
=== Producing at 0% DCFROR
2.20 4 —— Producing at 15% DCFROR
Nonproducing at 15% OCFROA
2.00 4

1.80

1.60

1.40

1.20

1.00

0.80

TOTAL COST, Jan. 1988 $/lb copper

0.60

0.40

0.20

0.00 T T T T

RECOVERABLE COPPER, Mmt _

T T T T T T

120 160 240

Figure 3.—Total potential copper avaliable from MEC's.


Information Circular 9310

The Availability of Primary Copper
in Market Economy Countries

A Minerals Availability Appraisal

By Kenneth E. Porter and Gary R. Peterson

UNITED STATES DEPARTMENT OF THE INTERIOR
Manuel Lujan, Jr., Secretary

BUREAU OF MINES
T S Ary, Director


railroad permits more opportunistic planning, and reduces
the stripping ratio (at Bingham Canyon, a 30% reduction to
a 1:1 strip ratio).

Steepen Pit Slopes

Many mining engineering departments have been reexa-
mining their criteria for pit design. Some are finding that
their slopes have been overdesigned, and can safely be stee-
pened to a higher angle. This will result in less waste being
moved, and a lower mining cost. It is reported that Morenci
was able to change one section from 37° to 51°, thus cutting
the strip ratio from 1.7:1 to 1.4:1.

The normal way for steepening slopes is to reduce the
width of the safety benches. In some cases, every other bench
can be eliminated, especially on the final slope. Rock bolts,
cable bolts, and cable nets can be used to strengthen the pit
walls, much as they are used underground to unify the backs.
Where water is a weakening source, it can be removed by
drainpipes or pumping.

Larger Equipment Units

Asa general rule of thumb, the larger the piece of equipment,
the cheaper the operating cost per metric ton of material
handled. Thus, most mines, when ordering new equipment,
will specify the largest unit available that has undergone
thorough testing. When properly matched with the rest of
the mine equipment, the larger units will effectively contrib-
ute to lower capital and operating costs.

There are a few drawbacks to the larger units. If one
should break down in a scheduled operation, the other units
in the activity will not come close to maintaining the target
production. Also, if the larger unit is a truck, it must be able
to fit into the existing maintenance shop bays. If the unit
is a shovel or dragline, the on-site cranes must be able to
service it.

Rebuilding Versus Replacing

In the past, most mines replaced old equipment with new
units at the appropriate time. Now, under the burden of
lower budgets, the mines are finding that rebuilt units are
just as dependable, but less costly, than new ones. In some
foreign countries, the import duties alone negate the poten-
tial for acquiring new equipment.

In a typical rebuild, the machine is stripped down to the
basic frame, which is inspected and tested for cracks and
warps. New or rebuilt components are then added until the
rebuild job is completed. Usually, the rebuilds are conducted
in the shops of the manufacturer, or at the mine by the
manufacturer’s representative. Sometimes the mine itself
will undertake the rebuilding. In a few cases, the manufac-

turer will buy old units, then rebuild them and sell them
again as remanufactured machines. In all cases, the rebuild
cost is less than a new-unit cost, and the life is about the
same.

Trotley-Assisted Haul Trucks

The trolley-assist works more or less like an electric streetcar
ortrain. For a truck, electric current is fed from an overhead
wire to the truck’s electric wheel motors and blowers; the
diesel engine then has less load, and converts to the idle mode
at this time. In general, the overhead lines are suspended
from poles that are lined up along the side of the inclined
haul ramp. The loaded truck leaves the shovel and travels to
the ramp under its own power. While still rolling, the truck
driver elevates a pantograph (the connecting device) to the
cable, and electricity powers the truck while it is on the ramp.
At the top of the ramp, the cable stops, and the truck
proceeds to the crusher or dump under its own power again.
On the return downhill trip, it is possible to employ a second
cable, which can be used for regeneration of electricity.

Advantages of trolley-assist are many. Diesel consump-
tion of a loaded truck drops by about 95%, due to idle versus
full-power engine status. Central powerplants can supply
electricity much more cheaply than that furnished by a truck
engine. Truck speed is higher on the ramps with the trolley,
which means that production can be sustained with fewer
trucks. The truck engines do not work as hard, and engine
life is doubled. Wheel motors spend a shorter time on the
grade, and can last more than twice as long as in the past.
There are a few disadvantages to trolley-assist. The overhead
lines, once in place, are difficult to move, meaning that the
haul ramps must stay put for many years, which may hinder
mine planning. The lines are also vulnerable to flying rock
from blasting. Finally, truck drivers may become bored and
lose attention, which could lead to accidents.

The only mine committed to the trolley-assist is Palabora,
in South Africa. Project personnel are happy with the results
of this program, and fully intend to prolong it. Other mines
that have tested the system have discontinued it.

Increased Leaching of Waste Dumps

Much of the waste rock (not alluvium) that has been, or is
being, placed in waste dumps carries some copper values in
the form of oxides and sulfides which have grades that are
too low for profitable extraction by flotation. Normally,
dilute acid is fed to the top of these dumps, by sprinkling or
ponding, and will percolate downward dissolving some of
the copper, which is part of the pregnant solution collected at
the base of the dump. Copper is recovered from the solution
by contacting it with scrap iron or by solvent extraction.
Costs are not high, because delivery of the rock to the dump


The 92 nonproducing mines and deposits evaluated in
1988 dollars have a weighted average total cost at a 0%
DCFROR of $0.91 per pound of refined copper, increasing
to $1.41 per pound of refined copper at a 15% DCFROR.
All of the countries evaluated with nonproducing mines and
deposits have an estimated weighted average total cost at a
0% DCFROR, which is under the January 1988 LME grade
A cash cathode price. At a 15% DCFROR, Chile, the Phi-
lippines, and Turkey have weighted average total costs under
the January 1988 LME copper price.

Chile had the lowest estimated average total cost from
producing mines of $0.48 per pound of recoverable copper
(0% DCFROR), with estimated total costs ranging from
$0.40 to $0.81 per pound, Nonproducing deposits in Chile
had average estimated potential total costs of $0.68 per
pound at a 0% DCFROR and $0.86 per pound at a 15%
DCFROR. At a 15% DCFROR, nonproducing deposits in
Chile had estimated potential total costs of production rang-
ing from $0.57 to $1.88 per pound. The average estimated
total cost of production for U.S. producing mines in January
1988 dollars at a 0% DCFROR amounted to $0.57 with
estimated total costs ranging from $0.36 to $0.85 per pound.
For nonproducing deposits, potential average total costs of
production were estimated to be $1.04 per pound at a 0%
DCFROR and $1.80 at 15%.

It is worthwhile to note that the estimated average total
cost of production of $0.57 per pound in the United States at
a0% DCFROR from producing mines as of January 1988 is
$0.13 per pound lower than the average total cost estimated
in January 1985 dollars of $0.70 published in BuMines
Bulletin 692 (10). In average 1981 dollars, the Bureau esti-
mated an average total cost for producing mines‘in the
United States of $0.92 per pound (11) which is $0.35 higher
than the estimate for January 1988.

The producing operations in Canada had an estimated
weighted average total cost of $0.38 per pound ($0.59 per
pound excluding the Sudbury operations) at a 0%

DCFROR, with estimated total production costs ranging
from less than $0.00 to $0.91 per pound. Nonproducing
deposits had an estimated potential average total production
cost of $0.94 per pound at a0% DCFROR and $1.24 at 15%.

If the curve for producing mines at a 0% DCFROR in
figure 3 is divided into quartiles, approximately 51% of
potential production from producing mines in Chile lie in the
first quartile, 31% is in the second quartile, 17% is in the third
quartile, and 1% is in the upper quartile. For the United
States, 20% of potential production of copper is in the first
quartile, 29% is in the second quartile, 8% is in the third
quartile, and 43% lies in the upper quartile. In Canada, 7% of
potential production is in the first quartile, 19% is in the
second quartile, 55% lies in the third quartile, and 19% lies in
the upper quartile. None of the potential production from.
Zaire is included in the first quartile, 82% is in the second
quartile, 11% is in the third quartile, and 7% is in the upper
quartile. The distribution of potential production from
Zambia is more heavily weighted toward the upper quartile,
with 0% in the first two quartiles, 21% in the third quartile,
and 79% in the upper quartile.

The total cost distributions for each quartile discussed in
the above paragraph are as follows: The first quartile con-
tains potential production at total costs ranging from $0.00
to $0.41 per pound of recoverable copper; the second quar-
tile contains potential production with total costs ranging
from $0.42 to $0.55 per pound; the third quartile contains
potential production with total costs ranging from $0.56 to
$0.66 per pound; and the upper quartile contains potential
production at total costs exceeding $0.67 per pound. It
should be noted that 80% of the potential production in the
upper quartile has estimated total costs of under $1.00 per
pound, which remains well below the current copper price.
The highest cost producer in the United States has an esti-
mated total cost of $0.85 per pound; all of the other U.S.
producers falling in the upper quartile have estimated total
costs of between $0.67 and $0.72 per pound.

PLANNED EXPANSIONS AND ESTIMATED COPPER PRODUCTION

The following primary copper production estimates are
based on current production capacities and planned expan-
sions at producing mines and estimated production at devel-
oping mines expected to come on stream by 1995. Explored
deposits are included where plans have been announced by
companies for development and production by 1995. Prim-
ary copper production estimates, by country, through 1995
are shown in table 12. Changes in estimated production
between 1988 and 1995 for major producing countries are
illustrated in figure 4.

The average annual rate of production growth in MEC’sis
projected at 4.4% through 1994 with a slight decrease pre-

dicted in 1995. The largest production increases are pro-
jected to occur in Chile where an average annual growth rate
is estimated to be 7.9% through 1995. The largest increase in
Chile will result from the development of mines owned by
private corporations. The La Escondida Mine, which will
come on-stream in late 1990, will have a capacity of 320,000
metric tons of contained copper per year. The La Candelaria
project is planned to produce 90,000 metric tons of copper
per year by 1993. Other projects expected to commence
production by 1993 include Quebrada Blanca, Zaldivar, Los
Pelambres, El Lince, and Collahuasi. Major expansions are
planned at Los Bronces and Mantos Blancos.



140 7

1205

1007

807

60>

407

20-

Other
MEC's

Chile

Million metric tons contained copper

States

United Australia Zaire

Reserve base

484.0 million mt
Evaluated
436.4 million mt

Peru) Zambia Canada

Source: Jolly, J.L., and D. Edelstein. Copper Chapter in

_Mineral Commodity Summaries 1989, _BuMines, 1989, p. 47.

Figure 1.—Estimates of demonstrated world copper resources.

Transportation charges were derived from actual data when
available, or were estimated from data for similar cargoes in
the same geographical area. Transportation costs include the
in-country transportation cost required to ship concentrates
to the smelter or port, and ocean freight charges for exported
concentrates.

All costs were initially developed in January 1987 U.S.
dollars based on January 1987 resource estimates. These
costs were then updated for the analyses performed in 1988
and 1989 dollars using the Bureau’s International Mining
Cost Indexation System (5). The index system includes
updating factors for 12 separate components of mining and
milling costs (¢.g., mining labor, mining equipment, diesel
fuel, steel, and chemicals) for foreign countries and the
United States. The index values for each component in each
country take account of whether the expenditure is in local
or foreign currency and what the traditional sources are for
needed imports such as equipment, and certain operating
and maintenance supplies. A time series of exchange rates is
used to translate the cost index values developed in local
currencies into values expressed in U.S. dollars. Operating

costs for producing mines were estimated in 1987 dollars and
updated to 1988 and 1989 dollars. Average total costs over
the life of the mine for each operation and total availability
of copper are reported in January 1988 dollars.

After production parameters and cost estimates were
determined for each mine and deposit, all of the operating
data were entered into the supply analysis model (SAM).
The Bureau developed the SAM (6), to perform discounted-
cash-flow rate of return (DCFROR) analyses in order to
determine the long-run constant dollar price at which the
primary commodity must be sold (f.0.b. refinery) to recover
all costs of production including a prespecified DCFROR
on all investments. The DCFROR is commonly defined as
the rate of return that makes the present worth of cash-flow
from an investment equal the present worth of all aftertax
investments (7). For this study, a 15% DCFROR was consi-
dered the necessary rate of return to provide the incentive to
develop a mineral property or to continue producing over
the long run. The determined value for the primary com-
modity price is equivalent to the average total cost of pro-
duction for the operations over its producing life under the


‘Table 3.—MEC copper properties Included in this study—Continued

Country/property name Current! = Mining? Milling? First % Government
‘State Ownership status method —__method year ‘ownership
MAURITANIA:
‘Axjoult ‘Arab Mining/Maurttanian D op F 1989 100
MEXICO: Government
Cananea CIA Minera De Cananea S.A. Pp oP FL 1899 90
ElArco Indust. Mineria Mexico/Asarco E oP F NA -
La Caridad Mexicana De Cobre S.A. P op F 1979 -
MOROCCO:
E1Bleida Societe Miniere De Bou Gaffer Pp CaF F 1978 40
NAMIBIA:
Kombat/Asis West Tsumab Corp. Lid, Pp COMBINE F 1965 -
Ofjihase ‘Tsumeb Corp/Otjhase Mining P RSP F 1975 -
‘Teumeb ‘Tsumeb Corp. Lid. Pp car F 1905 -
NORWAY: .
‘Tverrejellet Outokumpu Oy P SL F 1968 100
OMAN:
Sohar Project Oman Mining Company Pp st F 1963 100
PAKISTAN:
Saindak Resource Development Corp. E op F NA 100
PANAMA:
‘Cerro Colorado Codemin/Riotinto Zinc Corp. E op F NA -
PAPUA NEW GUINEA:
Papua New Guinea Govemment/ P op F 1972 20
CRA Lid
Freida River ‘Conzine Rio Algom E oP F NA -
OK Tedi Broken Hill Pty./Amoco Pp op F 1984 20
Papua New Guinea Goverment Hi
Yandera ‘Triako/Buka/Broken Hill E op F NA -
PERU:
‘Antamina Minero Peru E op F NA 100
Berenguela Minero Peru E os L NA 100
Cerro Verde Minero Peru Pp op FL 1977 100
Cobriza Contromin P CaF F 1967 100
Coroccohuayco Minero Peru E st F 1904 100
Cuajone ‘Southem Peru Copper Corp. Pp oP FL 1976 -
La Granja Minero Peru/Metaligeselischaft E op F 1994 50
Michiquilay Minero Peru E op F NA 100
Pashpap Minero Peru E op F NA 100
Quellaveco Minero Peru E oP F NA 100
‘Tambo Grande Coframines/Minero Peru E op F 1983 25
Tintaya Minero Peru/Centromin/Cofide P op F 1985 100
Toquepala Southem Peru Copper Corp. P op F 1960 -
Toromocho. Centromin E oP F NA 100
PHILIPPINES:
‘Amacan (North Davao) North Davao Mining Corp. Pp op F 1962 -
Atias, ‘Atlas Consolidated Mining and P BC F 1962 -
Development Corp.