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The Southern African Institute of Mining and Metallurgy N Snchez, R Fiebig, P Perrier, A Vsquez

Surface Mining 2008

LOS BRONCES DEVELOPMENT PROJECT

Nelson Snchez; Rolf Fiebig; Pierre Perrier; Alejandro Vsquez


ABSTRACT

The Los Bronces Development Project (LBDP) was approved in October 2007 by the Anglo American plc Board at a capital cost of some US$1.74B, and is scheduled to be completed by the end of 2010. The project represents a big step forward for the Los Bronces mine since it will increase the treatment rate by 140%, the mining rate by 64% and almost double copper production during the first four years of the project. This economy of scale will also position Los Bronces as a much bigger and efficient mining operation, better prepared to face adverse market scenarios and allowing Anglo to consolidate its position in base metals. The project addressed numerous scope alternatives such as plant capacity vs mine capacity, cut-off grade strategy to maximise value based on the existing flotation and leaching process, cutback strategy, etc.

Main infrastructure aspects of the project are as follows:

Dump area with 2400Mt capacity for waste and low grade material Mining equipment: 1 x electric shovel, 12 x 300t trucks, 1 x drill Primary crusher: 60 x 89 Three new power lines (144MW capacity) Grinding plant at 87kt/day nominal capacity (includes a 4.3km tunnel with a regenerative conveyor belt) Grinding plant: 1 SAG mill 40 x 25, 2 ball mills Slurry pipeline (52 km from grinding to flotation plant) with five choke stations Flotation plant (rougher, cleaning, regrinding circuits and molybdenum flotation).

The history of Los Bronces started in 1867 when it was discovered. In 1978 ENAMI (Government company) sold Los Bronces to Exxon for US$112M. The same year a snow avalanche destroyed San Francisco Flotation Plant. In 1979 the plant was rebuilt at 4.9kt/day and from 1979 to 2002 several plant expansions were made up to 54kt/day capacity. In 2002 Anglo acquired Los Bronces for US$1.3B.

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The Southern African Institute of Mining and Metallurgy N Snchez, R Fiebig, P Perrier, A Vsquez

Surface Mining 2008

The 2002 resource and reserve statement showed reserves at 459Mt at 1.02%CuT and resources at 780Mt at 0.80%CuT. The 2007 statement shows reserves at 1,480Mt at 0.67%CuT and resources at 1,644Mt at 0.45%CuT.

Defining the size of a plant expansion is the key challenge that any expansionary project faces. The scope of this paper is a general review of the project, describing all the mining techniques that were used to define the best options that maximise value. In this context, a range of plant capacities (from 58 to 230kt/day) combined with a range of mining capacities (from 83 to 166Mt/a) were evaluated in detail, defining for each option a mine plan, Capex and Opex, and cut-off grade strategy for flotation and leaching processes and the associated Net Present Value (NPV) that was used as the selection criteria.

The Los Bronces mineral resources potential provides good growth opportunities for the mine beyond LBDP implementation, offering an exciting invitation to continue studying new initiatives that maximise the value of this deposit.

LOS BRONCES DEVELOPMENT PROJECT

1.

Background Location

The Los Bronces operation is located in central Chile and is split between two sites connected by an ore slurry pipeline.

The mine is located some 65km north-east of Santiago. Primary crushing, grinding, and related infrastructure are sited adjacent to the open pit mining operation. Marginal grade ore leaching is performed on dumps downstream of the mine site, where related solvent extraction/electrowinning facilities are located.

The mine site is in the Andean Mountains and lies in an area of steep relief in the upper reaches of the San Francisco Valley at an elevation of between 3400m above sea level (masl) and 4100masl. Access is by public roads from Santiago.

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The Southern African Institute of Mining and Metallurgy N Snchez, R Fiebig, P Perrier, A Vsquez

Surface Mining 2008

A 56km mostly buried pipeline runs from the Los Bronces grinding plant site to the flotation facility at Las Trtolas, traversing three tunnels while dropping in elevation from 3450masl to 750masl.

A R G E N T I N A

Pacific Ocean

CHAGRES SMELTER

LAS TORTOLAS FLOTATION PLANT

Santiago

LOS BRONCES MINE

CHILE

Las Trtolas is located in the Colina valley, some 40km north of Santiago. Access is via the San Martin highway or the Pan-American highway from Santiago. The flotation plant is situated in an open valley at an elevation of 750masl. Tailings impoundment is adjacent to the plant site, using sand dams and taking advantage of favourable topography.

The climate at Los Bronces is typical of the high Andes. Mean annual snowfall, concentrated mostly in the winter period (April through September), is 764cm. Temperatures range from -18C in winter to 19C in summer.

The climate at Las Trtolas is temperate. Mean rainfall is 220mm/a and temperatures vary from 0C in winter to 34C in summer.

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The Southern African Institute of Mining and Metallurgy N Snchez, R Fiebig, P Perrier, A Vsquez

Surface Mining 2008

Strategic Considerations

The Anglo American plc Base Metals Division strategy is to achieve long term sustainable maximisation of shareholder value through finding, acquiring, developing and operating large, long life, low cost base metals businesses in a zero harm, socially and environmentally responsible manner. Within the framework of this strategy, it is the objective of the copper division to grow its cost effective copper production from approximately 5% in 2005 to in excess of 7.5% of world mine production over a 10 year time horizon. This implies more than doubling existing copper production to a level of approximately 1.5Mt/a. Los Bronces is one of Anglo Bases existing two world class operations. Doubling production at Los Bronces is consistent with and the first step in the achievement of the copper division growth strategy (the Collahuasi expansions, Quellaveco and Michiquillay are the other assets which are included in the current strategic growth plan).

The long term prospects for the copper industry are particularly positive. Although current prices are presently far in excess of the long term equilibrium levels and unsustainable, a period of above average demand growth is being experienced and supply/demand fundamentals are, for the foreseeable future, more favourable than have been seen for some considerable period of time.

2.

Project Description

An investment of US$1,744M (nominal) was proposed for an 87kt/day expansion to the sulphide ore treatment capacity at the Los Bronces operation.

The expansion will increase the ore treatment rate from 61kt/day (base case) to 148kt/day. Average production of fine copper in concentrates (2011-2020) will be about 380kt/a, twice that forecast for the base case (2007 life of mine (LOM) forecast).

The proposed investment covers the following scope: Mining Fleet: Addition of 1 x 73yd3 electric shovel, 12 x 300t capacity haul trucks, 1 x 10 drill rig and support equipment (bulldozer, wheel dozer, water truck, etc.) to increase mine capacity from 84 to 128Mt/a (including the incremental 87kt/day ore).

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The Southern African Institute of Mining and Metallurgy N Snchez, R Fiebig, P Perrier, A Vsquez

Surface Mining 2008

Primary Crushing: A modified 60 x 89 (1000hp) primary crusher, to complement an identical unit currently under construction for the existing operation. Coarse Ore Transport: A downhill, regenerative conveyor system for coarse ore. The conveyor will traverse a route that includes a new 4km tunnel connecting Los Bronces with the new grinding plant site at Confluencia. Grinding Plant: Coarse ore stockpile, conventional semi-autogenous grinding circuit, ore thickeners and ore slurry preparation tanks. The new plant will operate concurrently with the existing grinding plant at Los Bronces. Ore Slurry Transport: A new, 28 diameter, 51km long pipeline, installed along the existing ore slurry pipeline route to Las Trtolas. Flotation: New copper and molybdenum flotation equipment at Las Trtolas (near the existing flotation plant). Tailings: Tailings thickener, transport systems (pumps, pipelines and flumes), cyclone station expansion and modification, extensions to sand dam drainage and new borrow dams consistent with a design to achieve ultimate tailings impoundment capacity of 2,100Mt. Water Supply: Expansion of pump stations and pipelines to increase capacity to recirculate process water from Las Trtolas to Confluencia. Expansion to fresh water intake and pump system in the Riecillos valley. Power Supply: Additional high-tension supply lines, two new substations and modifications to existing power lines and substations

The project was approved in October 2007, with advanced commitment for critical path grinding equipment and interim engineering. On this basis, project start-up is forecast in January 2011.

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The Southern African Institute of Mining and Metallurgy N Snchez, R Fiebig, P Perrier, A Vsquez Figure 1: General layout of main expansion areas

Surface Mining 2008

CONFLUENCIA

LOS BRONCES (3450 masl)

EMERGENCY POND CHOKE STATION HOLDING TANK 28 SLURRY PIPELINE CS 0A ORTIGA TUNNEL

CS 1A

Discharge Box

From Confluencia 51 km
CS 3A

CS 1.5A CS 2A

VIZCACHAS TUNNEL EL DURAZNO BRIDGE

Laguna Seca

LAS TORTOLAS (750 msal)

By Pass Peldehue

COLINA BRIDGE

3. 3.1

Mining Design Terms of Reference

Mine design starts with the Terms of Reference, which include: Minimum life of mine required for the company for a feasible expansion. Long term price forecasts of main products and consumables. Preliminary estimates of operating costs, fixed and variable, for indexation to associate with different plant treatment and mining capacities. Block model with copper and molybdenum grades. Mining and property restrictions. Geotechnical design criteria. Geometallurgical parameters: copper recovery, copper concentrate grade, plant treatment rate (dependent on rock hardness), molybdenum recovery, etc. Area for waste dumps and tailings dam. Technology to be used, size and type of mining equipment, primary crusher, grinding, flotation, etc.

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The Southern African Institute of Mining and Metallurgy N Snchez, R Fiebig, P Perrier, A Vsquez 3.2 Mine Design

Surface Mining 2008

Based on the Terms of Reference and always considering the answer to the main question Which is the optimum expansion?, various options of possible expansions in plant treatment rate and associated mining capacity were designed, considering existing technology.

The determination of the optimal expansion was developed during the pre-feasibility study, allowing the analysis in detail of only the optimal case in the feasibility study, with some sensitivities.

The pre-feasibility study considered that, based on the types of grinding system available in the market, a new grinding plant could add between 15 and 120kt/day to the existing plant capacity. Thus the Los Bronces plant could reach a total treatment rate in the range 75 to 180kt/day. The higher capacity was the maximum possible expansion due to restrictions of minimum mine life associated with the existing ore reserves at the time of the study.

For each plant capacity option, mine plan alternatives were analysed to determine the mining capacity and the copper cut-off grade strategy that maximised the Net Present Value NPV) in each case. Figure 2 depicts the sequence that was followed to obtain the NPV for each mine-plant combination.

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The Southern African Institute of Mining and Metallurgy N Snchez, R Fiebig, P Perrier, A Vsquez

Surface Mining 2008

Figure 2: Design & evaluation stages for each Mine-Plant combination

Terms of reference

Optimal mining sequence definition

Rutine Lersch & Grossman Design parameters (Slope Angle,...) Block Model (CuT, MoT, CC, etc) Initial Topography Metallurgical parameters

Economic model

Final Pit Pushback selection

Whittle Mine-Sight Datamine

Mining Plans, production level, Cost and investment

Economic evaluation (NPV - RRI - ROCE) Optimal alternative selection

Accesses and pushbacks design Mine and plant alternatives definition Cut off grade strategy (by Opticut / COMET K. Lane) Mining plans (by Mine-sight / M821) Fine Cu and Mo production Equipment fleet calculation, labor, operation cost and investment.

3.3

Final Pit Selection, Mine Extraction Sequence (Phases)

For each mine-plant alternative, the final pit and optimum reserve extraction sequence were determined (volume of resources economically exploitable). The basis for the optimisations were economic (given long term metal price forecasts, operating costs, associated initial and replacement capital expenditures) and technical ( grade model, metallurgy, geotechnical parameters, etc). The Whittle software used in this task applies the Lerchs & Grossman optimisation algorithm. For final pit limit selection, Whittle analyses the incremental NPV according to the methodology shown in Figure 3.

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The Southern African Institute of Mining and Metallurgy N Snchez, R Fiebig, P Perrier, A Vsquez

Surface Mining 2008

Figure 3: Final pit shell selection


Incremental NPV graphic:
Best Case: Pit by pit extraction until final pit.

VAN Incremental INCREMENTAL NPV

ase tC Bes e Cas ied f i c Sp e

Worst Case: Bench by bench until final pit wall, extraction.


Zona de eleccin Area of the optimal del Pit ptimo pit criteria

Wors

t Cas

# Elegido

Rev F=1

PITs

Specified Case: is defined, thinking in a possible extraction and treatment rate. This gives a more realistic case then the best ore the worst case.

range of interest Rango Pit de pits que nos interesa analizar

Taking into consideration the size and operational constraints of the selected equipment and the desired production level, the design process was carried out in phases up to the final pit design, including the required access ramps. The project used MineSight software in this design stage, and the result of this work is presented in Figure 4.

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The Southern African Institute of Mining and Metallurgy N Snchez, R Fiebig, P Perrier, A Vsquez Figure 4: Design of operational phases

Surface Mining 2008

3.4 Definition / Determination of the Optimal Expansion Opti-Cut software, based on Kenneth F. Lane theory, was used to optimise cash flows depending on the mine and plant capacities, through adjusting cut-off grades for the ore feed to the grinding plant. Considering the design phases, the maximum NPV was calculated for different combinations of mining capacity and ore fed to the grinding plant. The NPVs from these analyses were used as a guideline for more detailed study of the most economically attractive options. These cases required the development of detailed mine plans and related economic analysis using the companys financial model. Table 1 and Graph 1 show the combinations of plant treatment rate and mining capacity studied.

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The Southern African Institute of Mining and Metallurgy N Snchez, R Fiebig, P Perrier, A Vsquez Table 1: Matrix of Mine-Plant combinations

Surface Mining 2008

Mill Capacities Capacidades Plantas

Capacidades Mina (Mton/ao) Mine Capacities (Mton/year)

Sulphide Sulfuros

(MTPA)

(58 KTPD)

22

(90 KTPD)

33

(120 KTPD)

44

(135 KTPD)

49

(180 KTPD)

66

(230 KTPD)

84

(227 KTPD)

83 91 99

Cathode Ctodos

(Kton Cu Fino ao) (Kton Fine CU year)

XX

XX

XX

XX

XX

XX

(250 KTPD)

(270 KTPD)

(300 KTPD)

110 128

Preliminary estimation EstimacinNPV Preliminar del for VAN every combination mine-mill de cada combinacin

(350 KTPD)

of K. Lane Uso Use de Teora de K.Theory Lane


(Determinar el mejor VAN dadas las mximas (Best NPV determination based on maximun mill and capacidades Mina y Planta definidas OPTICUT ) mine capacities OPTICUT)

(400 KTPD)

146

(450 KTPD)

166

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The Southern African Institute of Mining and Metallurgy N Snchez, R Fiebig, P Perrier, A Vsquez

Surface Mining 2008

Graph 1: Final NPV for the different combinations

Resultados Opti Cut (MUS$) (VAN MUS$)


1500

NPV Results

Mayor de interest Casos Mayor cases inters 2 1

NPV (MUS$) VAN (MUS$)

1300 1100 900 700

Mayor Casos de interest Mayor cases inters 1 2

58

90

120

135

180

230

Tratamiento Planta (KTPD) (KTPD) Plant Treatment


Movimiento Mine Movement Mina
227 270 300 350 400 450

M o v im ie n to M T P A 8 3 9 9 1 1 0 1 2 8 1 4 6 1 6 6

M in Mine Movement K T P D 2 2 7 2 7 0 3 0 0 3 5 0 4 0 0 4 5 0

Plant Movement
a T r a ta m ie n to 4 4 1 2 0 1 0 8 3 1 2 8 1 1 3 2 1 1 3 4 9 1 3 3 9 1 3 1 5 M T P A K T P D 2 1 5 8 1 0 3 5 9 6 2 9 6 9 9 6 9 9 7 3 9 0 9 3 3 9 0 1 1 9 2 1 2 0 2 1 1 4 5 1 2 1 1 1 1 5 8 1 1 7 8

P la n ta 4 9 1 3 5 1 0 1 0 1 2 7 9 1 2 7 3 1 3 6 0 1 3 6 5 1 4 0 4 6 6 1 8 0 8 2 9 1 0 5 5 1 2 0 4 1 4 0 5 1 5 0 5 1 5 3 0 7 7 6 9 2 6 1 1 3 4 1 3 0 4 1 4 7 4 8 4 2 3 0

3.5 Plant Capacity Definition After this extensive analysis it was determined that, under the defined Terms of Reference, the best mine-plant combination for Los Bronces was 132Mt/a total mining capacity and 54Mt/a treatment at the sulphide plant, resulting in an increase in fine copper production from an average of 220kt/a to 400kt/a. Graph 2 compares the mining and plant treatment rates, copper grades and copper cut-off grades for the Los Bronces Base Case and the Optimum plan, the Los Bronces Development Project plan.

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The Southern African Institute of Mining and Metallurgy N Snchez, R Fiebig, P Perrier, A Vsquez

Surface Mining 2008

Graph 2: Mining rate, plant treatment, copper grade, cut off grade: Base case vs.

4.

Future of the Los Bronces Mine District

As discussed earlier, the Los Bronces Development Project defined the best expansion option according to the Terms of Reference and reserves available at the time. During the course of this study, the mine has continued with a core drilling campaign in the boundaries of the operation, increasing the available resources around the pit. This could eventually support further expansions, giving Los Bronces a very bright future.

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The Southern African Institute of Mining and Metallurgy N Snchez, R Fiebig, P Perrier, A Vsquez

Surface Mining 2008

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