MINERAL REVIEW AND FORECAST: BASE METALS; COPPER

Copper prices remained relatively strong during 1991. Despite some weakening of demand and an increase in supply, the market was buoyed by the threat of serious supply disruptions around the world. Prices, which averaged US$1.06/lb on the London Metal Exchange (LME) in 1991 compared with $1.21 in 1990, were also supported by concerns relating to the possible shortage of world copper smelting capacity.

Canadian developments

Several producing mines in Canada were closed in 1991; output at others was reduced by labor problems. Nevertheless, total shipments of recoverable copper rose slightly to about 773,600 tonnes from 771,400 tonnes in 1990. The estimated value of 1991 shipments was $2.10 billion versus $2.43 billion in 1990. During 1991, refined copper production increased to 535,000 tonnes from 516,000 tonnes in 1990.

While Canadian production is expected to fall in the medium term (as new capacity is unable to match expected closures or declining capacity at existing operations), encouraging exploration results in recent years point to a recovery of output levels by the end of the decade.

British Columbia

The Goldstream copper-zinc mine near Revelstoke, which is owned by Bethlehem Resources and Goldnev Resources, resumed production in May. Annual output is expected to total 16,000 tonnes of contained copper and 3,000 tonnes of contained zinc.

In July, Minnova and Rea Gold announced that they would proceed with the underground development of the polymetallic Samatosum mine, located northeast of Kamloops. Although reserves are expected to be depleted by the end of 1992, mining activity could continue in the area with the possible development of the Chua Chua deposit.

Because of high operating costs, Afton Operating Corp. closed its Ajax copper mine in August for an indefinite period.

Westmin Resources announced it was eliminating 98 positions from its Myra Falls copper-zinc operation on northern Vancouver Island. The company discovered several new high-grade ore zones on its property that could increase the mine’s life.

In the northwestern corner of British Columbia, Geddes Resources continued work on its Windy Craggy deposit, which hosts reserves of 272 million tonnes grading 1.44% Cu, 0.07% Co, 0.2 g/t Au and 3.8 g/t Ag. At a planned mining rate of 30,000 t/d, the mine would have an average annual output of 140,000 tonnes of contained copper during the first 14 years of operation.

The Windy Craggy project has provoked considerable public debate on the issue of environmental protection versus economic development. At year-end, Geddes was still awaiting comments on its environmental and socioeconomic impact reports submitted under the province’s Mine Development Assessment Process.

Also in northwestern British Columbia, Redfern Resources is exploring the Tulsequah Chief property. Preliminary reserves of the deposit total almost 8.0 million tonnes grading 1.6% Cu, 1.2% Pb, 6.5% Zn plus silver and gold.

For details on Placer Dome’s Mount Milligan copper-gold property, see the accompanying story on gold.

Taseko Mines obtained encouraging exploration results at its Fish Lake gold-copper prospect southwest of Williams Lake. Preliminary reserve estimates for the deposit now total almost 600 million tonnes grading 0.32% Cu, and 0.55 g/t Au.

In 1992, PRM Resources plans to undertake a full feasibility study for its copper smelter and refinery project at Kitimat. It is expected that the $500-million facility, which would likely have a capacity of 200,000 t/y, would process both Canadian and offshore concentrates.

Manitoba

During 1991, exploration work continued on new zinc-copper zones at the Trout Lake mine, which is owned by Hudson Bay Mining & Smelting, Granges and Manitoba Mineral Resources. While further work will be required to fully delineate the actual size of the new ore zones, the addition to reserves should be sufficient to extend the life of the mine by several years.

During 1991, HudBay began work on a $187-million modernization program at its Flin Flon smelting complex. For copper processing, Noranda’s continuous converter technology is being installed. While sulphur dioxide emissions will not initially be captured at the copper smelter, the volume of off-gases will be reduced, making collection at some point in the future practical.

Ontario

Falconbridge experienced a 200-tonne metal leak in September at its copper converting furnace at the Kidd Creek copper smelter near Timmins. Refinery operations continued at a reduced rate, resulting in the loss of at least 3,500 tonnes of cathode production.

Inco suspended production at three mines, resulting in about a 4% reduction in the company’s Sudbury area copper production. The company also announced the discovery of two new high-grade copper/nickel/precious metal deposits in the Sudbury area (see Nickel review).

In mid-January, 1992, Inco was forced to declare force majeure on copper cathode shipments from its Copper Cliff refinery. The failure of an anode furnace forced the declaration. The company estimated that the problem would take six weeks to rectify, during which copper output would be reduced by about 7,700 tonnes.

At Inco’s Sudbury operations, work is under way to reduce sulphur dioxide emissions to below 265,000 t/y by 1994. Among changes being made to the smelter is the installation of a novel oxygen flash smelting converter for the production of blister copper.

Meanwhile, at Falconbridge’s operations in the Sudbury area, the focus of work is on increased pyrrhotite rejection and greater roasting. Falconbridge plans to reduce emissions to 75,000 t/y, at capacity production, by 1998.

Quebec

At the end of June, Minnova ceased production at its Opemiska Division, due to the depletion of reserves. The company will maintain the mill on a stand-by basis in the event that another mine in the area is developed.

Faced with low metal prices, Breakwater Resources suspended operations in June at its Estrades polymetallic massive sulphide mine near Joutel.

Aur Resources announced in October that the final feasibility study for its 55%-owned Louvicourt deposit in northern Quebec had confirmed the viability of the proposed development. The mine, which will likely begin production in 1994, is expected to cost $326 million. When completed, the mill will produce approximately 55,000 t/y of contained copper in concentrate, 17,000 t/y of zinc as well as gold and silver. Geological reserves at Louvicourt are estimated at 39 million tonnes grading 3.3% Cu, 1.8% Zn, 21.6 g/t Ag and 0.7 g/t Au.

At the Mobrun mine near Rouyn-Noranda, an agreement was reached between owners Audrey Resources and Minnova regarding the development of the new 1100 (B) lens. Production from above the 4850 level, which may begin as early as mid-1993, will be at a rate of 1,500 t/d. Ore reserves of the 1100 lens above the 5000 level total 21.6 million tonnes. This includes 17 million tonnes between the 4600 and 5000 levels grading 0.79% Cu, 3.69% Zn, 33 g/t Ag and 1.2 g/t Au and 4.6 million tonnes between the 4500 and 4600 levels grading 0.85% Cu, 2.84% Zn, 35 g/t Ag and 1.2 g/t Au.

In January, 1992, Audrey announced that it had suspended production at the Mobrun mine due to the exhaustion of reserves. It is expected that production will not resume until such time as the 1100 lens comes on-stream.

In the Chapais area, work continued on the Lac Frotet copper-gold deposit that is owned by Minnova and Kerr Addison Mines. Geological reserves at Lac Frotet are estimated at 42.3 million tonnes grading 1.6 g/t for gold and silver each, as well as 0.12% Cu.

During 1991, Falconbridge continued work on its Raglan nickel-copper deposit in the Ungava region of Quebec. (For more details, see story on nickel.)

Prices and stocks

Copper prices declined slightly during the course of 1991 although less than anticipated a year ago. The average LME settlement price in 1991 was US$1.06/lb compared with $1.21 in 1990.

Combined copper stocks on the LME and Comex, which totalled almost 197,000 tonnes at the beginning of 1991, increased steadily to more than 354,000 tonnes at the end of December.

The American Bureau of Metal Statistics reported that total refined copper stocks held by U.S. refineries at the end of November totalled 30,700 tonnes compared with 47,250 tonnes at the end of 1990. Copper stocks at other Western World refineries totalled 313,560 tonnes in October, 1991, compared with about 217,000 tonnes at the end of 1990.

Market outlook

While industrial demand for copper has remained reasonably strong during the current economic downturn, it is unlikely that there will be significant improvement for the remainder of 1992. It is expected that copper prices in 1992 will average between US88 cents/lb and 92 cents. Prices to 1995 are likely to be adversely affected by further increases in copper mine capacity. After 1995, it is expected prices will strengthen due to a slowdown in the growth of supply accompanied by strong demand.

For the period 1992 to 2000, copper prices are expected to average between US75 cents/lb and 95 cents (constant 1990 dollars), assuming that copper consumption grows at an annual average rate of between 1.5% and 2%.