Sedgman has secured an extension of its operating contract for the crushing circuit at Xstrata’s McArthur River lead/zinc mine in the Northern Territory. The contract is expected to generate annual total revenue for Sedgman of some A$12 million. Under the one year plus one year option contract with McArthur River Mining, Sedgman will operate and maintain the mine’s primary, secondary and tertiary crushing plants and mobile equipment and have responsibility for supplying stockpiled Run-of-Mine ore to the plant.
Managing Director and Chief Executive Officer Nick Jukes said the contract extension recognised Sedgman’s expertise in base metals operations. “We have a proven track record of delivering efficient operations at McArthur River. Sedgman has been operating the three stage crushing and screening facility for over eleven years now and I am delighted that we continue to strengthen our relationship with Xstrata, one of the world’s leading diversified mining houses.”
Located 900 km south-east of Darwin, the McArthur River Mine is one of the world’s largest bulk producers of zinc in concentrate form. In August last year Xstrata approved, a $360 million investment to more than double capacity at Xstrata Zinc’s McArthur River Mine (MRM) in the Northern Territory from 2.5 Mt of ore to 5.5 Mt/y from 2014. The MRM Phase 3 Development Project will increase annual zinc production to 380,000 t and lead production to 93,000 t. Advanced processing technology on site will enable MRM for the first time to produce a separate zinc concentrate acceptable to all smelters from its bulk zinc-lead concentrate.
The project will reduce average unit costs by over 20%, reserves will increase by around 70 Mt to 115 Mt, making MRM the largest zinc resource in the world. The mine life will extend to 2038 and the project will deliver robust returns at conservative price assumptions. The project will earn Xstrata’s cost of capital at a zinc price of $1,340/t. Following approvals, the Phase 3 Development will commission in 2013 and reach full production in 2014.
Xstrata plc Executive Director and Xstrata Zinc Chief Executive Santiago Zaldumbide said at the time that the highly capital and energy efficient, brownfield growth expansion will secure MRM’s position as one of the world’s premier zinc mines. “When we acquired the McArthur River Mine in 2003 as part of our Mount Isa Mines acquisition, Xstrata inherited an uneconomic asset with an estimated mine life of less than five years, rising costs and an underground operation that could only exploit two of the eight available ore bodies. Following our conversion of the operation into a 2.5 Mt/y open-pit mine with a 15 year life in 2010 to open up access to MRM’s vast resource, the Phase 3 project will enable us to unlock fully its potential.
“The next phase of McArthur River’s development will complete our transformation of a failing and unprofitable operation nine years ago into a world class, low cost, large scale and long life open cut mine. We expect new production to flow into the market at a time of projected deficit in the global zinc concentrate market and MRM will be well positioned to meet demands from both our own smelters and external customers. ”
The project involves:
- Expanding the current pit within the existing bund from a footprint of 145 ha to 210 ha and the depth from 210 m to 420 m
- Increasing the capacity of the existing tailings storage facility and lining the existing Cell 3 and proposed Cell 4 with a High Density Polyethylene barrier to prevent potential seepage
- Generating approximately 530 Mt of additional waste rock to be accommodated in one existing and two new overburden emplacement facilities
- Building a temporary construction camp and upgrading existing infrastructure facilities.
A 20-year electricity supply agreement has been secured with Energy Developments Ltd (EDL) to develop a new gas-fired power station at MRM generating 40MW per annum to service the expanded operations from 2014.