Performance
Key achievements
Copper
In 2008 the Copper group realised substantial increases in mineral resources from work completed by Rio Tinto Exploration.
Brownfield exploration in the Bingham Canyon mine area provided a 640 million tonne increase in resources from those reported in 2007. The resource is located beneath the current Bingham Canyon pit and is currently under study for extraction by open pit mining methods. A recently discovered molybdenum orebody beneath the existing pit could provide additional options for future development.
The Resolution copper project in Arizona (55 per cent Rio Tinto, 45 per cent BHP Billiton), reported an initial inferred resource of over one billion tonnes in May 2008. Investment of US$652 million in prefeasibility studies was approved in August 2008. Production could commence in 2020, eventually increasing to 500,000 tonnes per annum.
At the La Granja project in Peru, an inferred resource of over 2.7 billion tonnes was reported in May 2008. A pre-feasibility study is considering options around an open pit with heap leach processing, solvent extraction and electrowinning production of both copper and zinc as high purity cathode.
An inferred nickel-cobalt resource of over 160 million tonnes was reported in May 2008 at the Sulawesi project in Indonesia. An order of magnitude study was updated in 2008 and is expected to be optimised in 2009.
Inferred resources increased at Oyu Tolgoi in March 2008, bringing total measured, indicated and inferred resources to 3.3 billion tonnes including the new Heruga deposit.
A number of investments were also approved during 2008 to enhance the Copper group's options for future copper, molybdenum and nickel mine production.
In June 2008, Rio Tinto approved a US$270 million investment in the Molybdenum Autoclave Process (MAP) at KUC. As part of the Group wide decision to reduce capital expenditure in response to recent economic developments, this project will be delayed while retaining the option to restart development when economic conditions improve. The facility is expected to increase molybdenum recovery, produce chemical grade molybdenum products and recover by-product rhenium.
A US$82 million expansion and modernisation of the bulk flotation process at KUC's Copperton concentrator was completed during 2008. A US$73 million investment in mining equipment has also been agreed in order to accelerate mining and allow possible mine extensions beyond 2019.
Environmental Impact Assessments were filed during the year to support a Phase 5 expansion, a new desalination plant and a power plant at Escondida. In light of current economic conditions, these investments have been reviewed and will be delayed.
PT Freeport Indonesia Company (PTFI) has several projects in progress throughout the Grasberg district, including developing its large scale underground orebodies located beneath the Grasberg open pit. The expansion of the currently operating Deep Ore Zone (DOZ) mine to 50,000 tonnes per day is complete with third quarter rates averaging 61,000 tonnes per day. A further expansion to 80,000 tonnes per day is under way with completion targeted by 2010. Other projects include the development of the high grade Big Gossan mine, currently designed to ramp up to full production of 7,000 tonnes per day in 2011, and the continuing development of the Common Infrastructure project. The infrastructure project will provide access to the Grasberg underground orebody, the Kucing Liar orebody and future development of the mineralised area below the DOZ mine.
Diamonds
An order of magnitude study was completed at the Bunder project in India. The study defined an inferred resource of 37 million tonnes containing 27.4 million carats. The results confirm the Bunder project as the largest hard rock diamond discovery in India. There is additional exploration potential at depth. Evaluation work including the processing of surface bulk samples from the next largest pipe is underway and results are expected in early 2009. A pre-feasibility study is also planned for 2009.
A number of cost saving initiatives were adopted by the group during 2008. The Diavik business improvement process was a notable success delivering cost reductions across the operation. The Diavik underground project transition successfully commenced with improved asset performance and staff reductions.
Rio Tinto also successfully implemented a new sales and marketing organisation in both Antwerp and Perth with the completion of the centralisation of all sorting activities in Antwerp.
The Murowa mine was successful in eliminating the bottleneck at the process plant, resulting in record annual ore processed and record carat production, despite lower ore grades.
