Boliden doubles ore production at Aitik and creates one of the world’s most efficient mines
Boliden’s Board of Directors approved today an investment of SEK 5.2 billion in expanding operations at the Aitik copper mine outside Gällivare. The investment will involve, among other things, building a modern new concentrator that will double ore production capacity from 18 million tonnes to 36 million tonnes. Other benefits offered by the investment include:
• Improved competitiveness and a substantially lower cash cost
• A tripling of ore reserves from 219 to 630 million tonnes
• An extension of the mine’s lifespan from 2016 to 2025
• Increased production of copper, gold and silver, and new production of molybdenum
• Improved environmental performance
• The potential for further expansion in the future
“This is one of our biggest investments to date. It is fully in line with our strategy of improving the balance within Product Segment Copper. The investment will make Aitik one of the most efficient mines in the world, and will substantially improve its competitiveness. This will, in turn, generate the preconditions for healthy profits and cash flows in the future,” says Boliden’s President and CEO, Jan Johansson.
Investments in a new concentrator
The decision by the Board will see Boliden invest a total of SEK 5.2 billion between 2007 and 2011. The investments include, amongst other things, a new concentrator, facilities for crushers and inward freight, along with other infrastructure such as roads and buildings. A decision was also taken to invest in ore conveyor belts between the crusher stations and the concentrator, thereby minimising the need for truck-based transports. The higher investment cost for the 7 kilometre long conveyor belt transport solution is compensated by improved operational reliability and operating costs that are considerably lower than those for truck transportation.
Production to start in 2010
Construction of the new concentrator is scheduled for completion at the end of 2009, with production scheduled to start in 2010, provided that the necessary permits have been obtained. The capacity will initially be 33 million tonnes, but this is expected to increase gradually, reaching full production of 36 million tonnes by 2014. Aitik will be able to produce at full capacity (18 million tonnes) during the investment phase (2007-2010), in accordance with previous production plans.
At full production, the new copper metal production capacity is expected to average approximately 100,000 tonnes per annum. Gold production will double from existing levels of approximately 2 tonnes as a result of increased capacity and the metal recovery offered by the new facility. Boliden will also start processing molybdenum, a metal which is greatly in demand in the steel industry where it is used as a metal alloy.
Increased productivity
The average copper level will be 0.29 per cent. Aitik will continue to be a low-level mineralisation but will, as before, compensate for this through high levels of productivity. Aitik is already high on the list of the world’s most productive copper mines, with 43 tonnes/man hour in comparison with a global average of 15 tonnes/man hour. The expansion will increase the mine’s productivity to 55 tonnes/man hour, making Aitik one of the most efficient copper mines in the world.
The previous production plan for Aitik ran until early 2016. The expansion plan now approved will extend the mine’s lifespan to at least 2025.
Competitiveness boosted
The expansion will yield a significant improvement in Aitik’s profit and cash flow. The return on capital employed will be well over 20 per cent, even with a copper price 50 per cent below the current level. Boliden anticipates being able to reduce the cash cost by over 40 per cent at the mine, from existing levels of approximately 80 US cents per pound to 43 US cents per pound. This will enable Aitik to generate positive cash flows with copper prices as low as the new cash cost level. This will, in turn, generate better preconditions for profitable operations, with positive cash flows, even during periods when metal prices are low.
Increased ore base
The investment will yield a substantial increase in the ore reserve from its previous level of approximately 200 million tonnes to just over 600 million tonnes. The investment will ensure that almost 60 per cent of Aitik’s total mineral reserve can now be mined, thereby extending the mine’s lifespan by 10 years. The remaining mineral reserve coupled with the increased exploitation potential, creates the potential for a further expansion of the mine in the future.
Mtonnes Cu Au Ag
Previous ore reserve % g/t g/t g/t
Proven 207 0.31 0.2 2
Probable 12 0.31 0.2 2
New ore reserve
Proven 520 0.29 0.2 2
Probable 110 0.28 0.1 2
The ore reserves are calculated using Boliden’s planning prices for metals: Cu 1USD/lb, Au 400 USD/oz and Ag 5.5 USD/oz and SEK/USD 8.5, based on a valuation carried out on 1st January 2006.
The estimate of ore reserves was carried out by Boliden personnel under the supervision of Matti Sallert, a member of AusIMM, and Gunnar Agmalm. Both are registered by SveMin as Qualified Persons.
Better environment
Boliden currently holds environmental licences for 28 million tonnes of production per annum. A new application will be submitted in December 2006 for a permit for 36 million tonnes. A new permit from the Environmental Court is expected in 2007/2008, at the earliest. The project offers a number of environmental benefits that will come in conjunction with the introduction of newer and more modern technology, including increased energy efficiency, better water usage, and reduced airborne emissions.
For additional information on the investment at Aitik, please see Boliden’s website at www.boliden.com. You can also contact:
Jan Johansson, President and CEO, Boliden AB, tel +46 8 610 16 02, +46 70 555 02 02
Ulf Söderström, Senior VP, Group Communications, Boliden AB, tel +46 8 610 15 57,
+46 70 618 95 95
Jan Moström, President, BA Mines, Boliden AB, tel +46 910 77 42 10, +46 70 673 52 99