Xstrata Copper announced in early December 2009 corporate approvals for investment of $542 million to develop a 6-million-mt/y underground mine at its Ernest Henry operations near Cloncurry in northwest Queensland, Australia. Production from underground mining will replace current open-pit operations, which are nearing the end of their mine life, and will extend mining at Ernest Henry at least until 2024. A hoisting shaft will be sunk to a depth of 1,000 m to bring ore to the surface.

Construction of the Ernest Henry underground mine is expected to begin in the first half of 2010, with first production in late 2011 and full-scale production from early 2013. Development of the underground mine is being based on a revised ore reserve estimate of 72 million mt, grading 1% copper, 0.5 g/mt gold, and 22% magnetite, a 600% increase over previously published underground reserves.

The existing concentrator at Ernest Henry will be reconfigured to align with the underground production rate, resulting in lower throughput levels and improved metallurgical recoveries and energy efficiencies. A separate extraction circuit will be installed to produce magnetite concentrates, which are not currently produced at the mine.

At full production from 2013, the underground mine is expected to produce about 50,000 mt/y of copper and 70,000 mt/y of gold in concentrates, plus 1.2 million mt/y of magnetite. Copper-gold concentrates will continue to be hauled by trucks to Xstrata’s Mount Isa copper smelter, with anode from Mount Isa then railed to Xstrata’s refinery in Townsville, Queensland. Magnetite will be exported to Asian steel mills.

The project is dependent on government environmental approvals.

| More...