During April 2013, the mining business suffered some setbacks. As can be seen on the cover of this month’s edition, the miners at Kennecott Utah Copper’s Bingham Canyon mine now face an uncertain future. Prices for most metals declined during the month, but it was the falling price of gold that garnered the most attention. Many new mining CEOs were preparing first quarter earnings reports, announcing their plans for the future, deciding what paths to pursue, and which projects to table. Scaling back ambitious plans is never easy for mining engineers. Sometimes the market or natural forces make the decision for them.
Bingham Canyon symbolizes the advances the open-pit copper mining and processing industry has made over the last century. Starting with Daniel C. Jackling, who was a visionary as far as the approach to mining and processing a massive low-grade porphyry deposit, the engineers that earned their stripes at the mine and the Copperton mill revolutionized the copper industry. That’s why it should come as no surprise that the engineers knew it was going to happen and they were able to prepare for it.
The management team organized a press conference to discuss the situation (See Leading Developments, p. 4). The best news to come of this is that no loss of life or injuries were sustained. Widely considered the largest man-made excavation, the pit wall failure brought more than 100 years of collective mining expertise to its knees. The recovery plan will have to be equally ambitious. You can rest assured that the mining engineers at Rio Tinto and KUC are looking at all available options. One of the recovery options might be a new approach to haulage (See Open-Pit Skips, p. 48). Pit wall failures are the sort of things that keep mining engineers awake at night. Many mines have invested heavily in pit monitoring systems specifically for this reason (See Careful Monitoring: The Key to Pit-wall Safety, p. 32).
A few days after the events unfolded in Utah, the price of gold fell dramatically on two consecutive trading days as hedge fund managers began liquidating gold holdings in exchange traded funds. At the beginning of April, gold stood at $1,580/oz. It dropped below $1,350/oz, before recovering to $1,460/oz by month’s end (See Markets, p. 120). All of the metal prices lost ground in April, silver fell to $23.65/oz and copper fell from $3.45/lb to $3.15/lb. The traders that buy and sell based on daily prices had an exciting month.
So is it the end of the world? No, not hardly, but it does mean that mining companies will have to be more vigilant about costs. The weakness in metal prices will have a ripple effect through the ranks from engineers looking at production strategies to CEOs looking at future investments to either sustain and grow the company’s position. Once again the industry finds itself in a situation where it has to be prepared to hit the accelerator or apply the brakes. Hopefully, when we look back a few years from now, the dip in metal prices will be a blip on an upward path that continues for a long time. What we will remember about April 2013 will be the landslide at Bingham Canyon.
Steve Fiscor, E&MJ Editor-in-Chief,