The dearth of mineral exploration in Western Australia is costing the state millions of dollars in rapidly escalating world copper earnings.
The dearth of mineral exploration in Western Australia is costing the state millions of dollars in rapidly escalating world copper earnings.
There is currently precious little copper production in WA, something that will change dramatically in the next few years, but right now just a handful of companies and projects is cashing in on record copper prices that have jumped 75 per cent since the beginning of the year to around $US7,655 a tonne.
As is the case with many other commodities, the supply shortage is being driven by China and India, where copper is being consumed in the construction, electricity supply and communications sectors.
BHP Billiton, the world’s biggest mining company, said disruptions to copper supply due to labour disputes at major mines, equipment and worker shortages were exacerbating the problem.
International investment funds, buying the actual metal, have also entered the market, leaving market observers to believe the deficit is likely to continue at least until 2008.
Like the iron ore industry, the extent of international consumption was missed and explorers and producers are running hard to catch up.
As these factors begin to hit home, refined copper production in Australia is forecast to increase by just 2 per cent, to 486,000t, in 2005-2006. Copper sales from WA actually fell 27 per cent last year to 43,000t.
Many WA explorers have forsaken the state for the successful copper pastures of Queensland’s Cloncurry and Mt Isa regions, and overseas, particularly Africa.
However, the WA production profile will change dramatically from late 2008 when the world-class Boddington gold project, 100 kilometres south-east of Perth, comes on stream and produces a planned 850,000 ounces of gold and 200,000t of copper concentrate a year.
The state’s major current producers include Newcrest Mining Ltd’s Telfer mine in the north, soon-to-be-listed Aditya Birla Minerals Ltd’s expanding Nifty mine near Telfer, Straits Resources Ltd’s Whim Creek between Karratha and Port Hedland, and Oxiana Ltd’s Golden Grove project, 280km east of Geraldton.
Telfer is on track to produce more than 36,300t of copper this year and between 650,600 and 700,000 ounces of gold following its recent expansion.
In a well-timed move, Indian aluminium and copper giant Hindalco Industries Ltd plans to raise almost $300 million this month via Birla’s listing.
Birla’s Nifty mine is expected to produce 17,000t of copper in the current financial year, rising to 80,000t the following year, with production out to 2017 from a resource containing 750,000t of copper.
Straits Resources Ltd is also on the expansion trail, buying back under-performing NSW producer Tritton Resources Ltd to increase overall copper production from 45,000t/year in 2006 to 70,000t/year within three years. Straits’ Whim Creek operation is expected to contribute up to 17,000t this year.
Oxiana Ltd’s Golden Grove underground project looks like exceeding 2006 production of 140,000t of zinc, 12,500t of copper, 45,000 ounces of gold and 3.5 million ounces of silver.
Sally Malay Mining Ltd produces about 4,000t/year of copper and 8,000t/year nickel from its namesake mine, 240km south of Kununurra, which is also expected to increase significantly during 2006-07.
Fox Resources Ltd’s Radio Hill mine near Karratha produces 1,700t/year of copper and 3,000t of nickel, but is expected to bring its nearby West Whundo copper prospect into production next month and has had some good zinc intercepts there.
Also on the radar is Jabiru Metals Ltd’s $56 million Jaguar zinc/copper project near Leonora, which is scheduled for production from mid 2007 and expected to produce 20,000t/year of zinc, 8,000t/year copper and 800,000 ounces/year of silver over a five-year mine life.
