The Red Dog zinc-lead mine in northwest Alaska has proved challenging for Cominco (TSE), which owns and operates the facilities under a lease agreement with NANA Regional Corp.
Between startup in late 1989 and 1992, the ore was found to be “considerably more complex and the orebody less homogeneous”than anticipated. Although Cominco managed to sustain production levels (owing to high grades close to surface), recoveries were low, and concentrates contained impurities above levels desired by smelters.
Little wonder, then, that the company has been working to improve Red Dog’s production performance. Since 1991, for example, extensive research on the ore enabled the deposit to be classified into several different types. By feeding ore of a consistent type, in a method appropriate to that type, recovery has been maximized.
As a result, zinc concentrate production in the first quarter of 1993 totalled 110,000 tonnes, and zinc recoveries increased to 81% in concentrates. This compares with zinc recovery in concentrates of 65% in 1991 and 73% in 1992.
Production is reported as sustainable at 36,000 tonnes per month or better, which is still below design capacity of 42,000 tonnes per month of zinc concentrates.
High production and sales, along with reasonable metal prices, “are essential for profitability,”Cominco said. This is because of the fixed-cost nature of the operation.
In its annual report, the company admits that recovery of lead and bulk concentrates from Red Dog “continued to be unsatisfactory”in 1992. Research is ongoing to improve lead quality and production, with efforts focused on the lead circuit.
Last year, head grades averaged 19.9% for zinc, 6% for lead, and 99 grams silver per tonne. The grade of zinc concentrate averaged 57% while that of lead concentrate averaged 57%. Bulk concentrate grade averaged 23% for zinc and 27% for lead.
During the 1992 shipping season, 429,100 tonnes of concentrates were shipped to Canada, Japan, Korea and Europe, compared with 473,600 tonnes in 1991. The mine’s financial performance was described as “disappointing,”the result of low prices and sales volumes for all products.
Weak zinc prices and inventory writedowns at year-end contributed to an operating loss of $26 million at Red Dog for 1992, compared to a profit of $3 million in 1991.
About half of Red Dog’s employees hold shares in NANA. The company also receives an annual royalty payment.
Cominco reported a loss of $30.2 million for 1992. This is a reflection of writedowns, including those against the capitalized cost of the QSL lead smelter at Trail, B.C.
The metals business segment reported an operating profit of $37 million. Losses were reduced significantly at the Sullivan mine and Trail smelter while the Highland Valley copper mine and Snip gold mines produced higher returns than in the previous year. But improvements at these B.C. operations were offset by the losses at Red Dog and the Glenbrook nickel operation in Oregon, as well as by lower profits at the Polaris mine on Little Cornwallis Island, N.W.T.
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