MINERA ESCONDIDA ANALYSTS VISIT. April 24th, 2004

Transcription

1 MINERA ESCONDIDA ANALYSTS VISIT April 24th, 2004

2 Presentation Content Escondida Overview Operations Financial Overview Business Strategy Growth Opportunities Marketing Current Activities Slide 2

3 World s Premium Copper Region Northern Chile s Atacama Desert, 160 km South East of Antofagasta Cerro Colorado Collahuasi Radomiro Tomic Michilla Lince Mantos Blancos Lomas Bayas El Tesoro Manto Verde Quebrada Blanca El Abra Chuquica mata Spence Escondida Zaldivar El Salvador La Candelaria TOCOPILLA MEJILLONES ANTOFAGASTA COLOSO CHUQUICAMATA CALAM A ZALDIVAR ESCONDIDA CHILE MONTURAQUI TATAL EL SALVADOR CHAÑARAL POTRERILLOS INCA DE ORO BOLIVIA ARGENTINA Andacollo El Soldado Los Bronces El Indio Los Pela mbres Andina El Teniente Slide 3

4 Zaldivar Aerial View of MEL Leach Pads Escondida Norte Zaldivar Pit Concentrator Main Pit Oxide Leach Pads Hamburgo Tails Slide 4 Phase IV Plant site 5 km N

5 Facilities Layout CMZ Property Limit Northern Waste Dump Limit E. Norte Waste Dump Limit E. Norte Pit Ultimate Limit Main Pit Ultimate Limit Phase IV Plant site N Hamburgo Waste Dump Limit Slide 5 5 km

6 Coloso Filter & Port Slide 6 Coloso Filter & Port Facilities

7 Escondida s Strategy Builds on its Strengths to Maximize Long Term Value Strong Credit Ratings World s Largest Copper Mine Strong Cash Flow Strong Sponsors Low Cost Producer Diversified Sales Base Stable Country Ability to Manage Expansions High Quality Concentrate Unequalled Resource Slide 7

8 World s Largest Copper Mine Leading Copper Mine Sites Leading Copper Producers Companies Escondida Laguna Seca Code lc o PT Freeport Indonesia E scond ida Lag un a Seca Chuquicamata BHP Billiton El Teniente Morenci Los Pelambres Collahuasi Radomiro Tom ic Bingham Canyon Andina Batu Hijau KGHM Polish Cu Copper Production ( Cu Payable '000 tonnes) SPCC Anglo American plc KGHM Polska Mie dz MIM Holdings A nto fag asta plc Grupo M exic o F-M cm Co ppe r & Gold Ph elps Dod ge Rio Tint o Copper Production ( Cu Payable '000 tonnes) Source: Brook Hunt & Associates, Estimated year 2003, Escondida FY03 and Escondida Laguna Seca Budget 2004 Slide 8

9 Sponsored By World s Premier Metals & Mining Houses BHP Billiton Limited 100% Rio Tinto Plc 100% Mitsubishi Corporation 60% Mitsubishi Materials Corp 20% Nippon Mining & Metals Co Ltd 20% International Finance Corporation 2.5% BHP Escondida Inc 57.5% Rio Tinto Escondida Limited 30% Japan Escon dida Corporation 10% Owners Council Minera Escondida Limitada Slide 9

10 Unequalled Copper Resource Ore Head Grades Against Copper in Concentrate Production Escondida with Cathodes Copper in Concentrate ( Payable in Mlbs) Batu Hijau Bingham Canyon Highland Valley Alumbrera PT Freeport Escondida Los Pelambres Collahuasi Candelaria Ok Tedi Andina Los Bronces Cuajones 100 0,00 0,50 1,00 1,50 2,00 Head Grade (% ) Slide 10 Source: Brook Hunt Data for estimated year Escondida FY03.

11 Total Ore Reserves and Mineral Resources: Official declaration at June 30, 2003, JORC Competent Person: Dr J M Gilligan Ore Reserves Mineral Resources Ore Tonnes Grade Metal Tonnes Grade Metal Type (millions) (%Cu) (mlbs) (millions) (%Cu) (mlbs) Sulphide 1, ,293 2, ,550 LG Float ,026 1, ,254 Escondida LG Leach ,442 Mixed ,013 Oxide , ,567 Sulphide , ,014 Escondida Norte LG Float ,190 Mixed Oxide , ,476 Sub-Totals All Sulphide 2, ,859 5, ,449 Mixed ,775 Oxide , ,043 TOTAL All Types 3,027 59,431 6, ,266 Slide 11

12 Copper Production & Head Grade 1,200 Material Milled, Headgrade and Copper Production 3.50% 1,000 Tonnes milled (00 000) Production (Cu Contained) (kt) Headgrade (%) 3.00% % % 1.50% % % 0 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 YTD 0.00% Slide 12

13 Concentrate Grade Long Term: Historic Annual Copper in Concentrate (All Production) 46% 44% Concentrate Grade (%Tcu) 42% 40% 38% 36% 34% 32% Fiscal Years Slide 13

14 Escondida Schematic Deposit Evolution Profile: Increasingly complex & variable geological conditions variability Cu - Fe Oxides cc cc+cv+cp+py py >> cp cp + py >2010 Slide 14

15 Ore-Related Concentrate Grade & Quality Drivers Copper Mineralogy Chalcocite to chalcopyrite ratios decrease with depth Pyrite Content Increasing pyrite content over last several years Sulfide-Sulfide and Sulfide-Gangue Intergrowths Dependent on alteration, lithology, and degree of enrichment Trace Element Geochemistry Zonation of trace and minor elements within ore deposit Elements such as Ag, As, and Cd contained within copper sulfides, with high recovery Slide 15

16 Phase IV Expansion Components An additional mine fleet (1) 65 yd 3 shovel, (6) 380 st haul trucks, (1) drill Support equipment and maintenance shop expansion In-pit ore crusher and conveyor to Phase IV concentrator Relocation of existing crushers 110,000 tpd Concentrator 38-ft. SAG mill and (3) 25-ft. Ball mills Conventional flotation using large cells, regrind, column cells Concentrate handling Slurry pipeline to existing concentrator, then on to the port Added concentrate filtering and storage capacity Modifications to port facility Laguna Seca Tailings Facility Tailings disposal for life of mine both mills Improved water reclaim to both mills Slide 16

17 Phase IV: Laguna Seca Concentrator: Detailed Site Layout Slide 17

18 Presentation Content Escondida Overview Operations Financial Overview Business Strategy Growth Opportunities Marketing Current Activities Slide 18

19 Escondida Organisational Structure President (A) MEL Kevin O'Kane VP External & Corporate Affairs Mauro Valdés VP Mine Larry Hartley VP (A) Process Frank Cappelli VP Human Resources Mark Stone VP Finance Alfredo Atucha VP Operations Services Jorge Muñoz Manager Health & Safety Hans Sandoval Slide 19

20 Employment Antofagasta Coloso Escondida Santiago Total Mel Expatriates Operators Technical & Admin Professional/Mgrs Total Avg workforce age 40 years Avg length of service 8 years Employee turnover 0.38% Attendance r ates 96,6%+ Female employees 3.9% Expatriate employees 0.53% Permanent Contractors Capital Projects Total Contractors Note: As at 30 September 2003 Slide 20

21 Safety Lost Time Frequency Rate (LTIFR) LTIFR per mmh YTDA 2004 YTDB Fiscal Years Slide 21

22 Dimensions Now Final E-W 2.2km 3.5km Minera Escondida Ltda. N-S 3.2km 4.8km Depth 465m 750m Escondida Mine Pit Slide 22

23 Escondida Mining Fleet FY-04 Electric Rope Shovels Total 14 - P&H 4100 XPB (73 yd Dipper) 3 - BE 495HR (67 yd Dipper) 1 - BE 495 (55 yd Dipper) 9 - BE 395 (30 yd Dipper) 1 Haul Trucks - Total 92 - Komatsu 830E (240 mt) 28 - CAT 793 B&C (240 mt) 48 - CAT 797 (380 mt) 16 Front End Loaders Total 3 - CAT 994 (23 yd Bucket) 3 Drills Total 15 - BE 49R R2s (8), IR DMM2s (2), DM45 (2), CM780 (1) & P&H 250XPs (2) Auxiliary Equipment Total 52 Slide 23

24 Mine Production 000s TPD Ex-Pit '000s Tonnes per Day Fiscal Years Histor y YTD Slide 24

25 Slide 25 Los Colorados Concentrator

26 Laguna Seca Production 000s TPD Milled '000s Tonnes per Day Fiscal Years Histor y YTD Slide 26

27 Concentrate Grade Ex-Coloso - % Cu Contained 45.0% 40.0% 35.0% Concentrate Grade % Cu 30.0% 25.0% 20.0% 15.0% 41.4% 39.8% 39.9% 39.8% 35.6% 37.3% 34.7% 10.0% 5.0% 0.0% Fiscal Years Histor y YTD Slide 27

28 Coloso Port 000ts Concentrate Shipped '000s Tonnes Shipped ,073 2,145 2,105 1,813 1,682 2,056 1, Fiscal Years Histor y YTD Slide 28

29 Copper Production 000ts Cu Contained in Concentrate '000s Tonnes of Cu Contained Fiscal Years Histor y YTD Slide 29

30 Oxide Production 000s Tonnes of Cathodes '000s Tonnes Fiscal Years Histor y YTD Slide 30

31 Copper Production 000ts Cu Contained '000s Tonnes of Cu Contained Fiscal Years Concentrate Cathodes Total Slide 31

32 Presentation Content Escondida Overview Operations Financial Overview Business Strategy Growth Opportunities Marketing Current Activities Slide 32

33 C1 Unit Costs in the 1 st Quartile Estimated 2003 Brook Hunt, Copper Industry C1 Cost Curve C1 Cash Operating Cost (US c/lb) Esc ondida Cumulative Production (Payable in Mlbs) Brook H unt Estimated 2003, Escondida FY03 Slide 33

34 C2 Unit Costs 150 Estimated 2003 Brook Hunt, Copper Industry C2 Cost Curve C2 Production Cost (US c/lb) Es condida Cumulative Production (Payable in Mlbs) Brook Hunt Estimated 2003, Escondida FY03 Slide 34

35 Only 3 Producers with a Lower C3 Unit Cost Estimated 2003 Brook Hunt, Copper Industry C3 Cost Curve 175 C3 Production Cost (US c/lb) Escondida Cumulative Production (Payable in Mlbs) Brook Hunt Estimated 2003, Escondida FY03 Slide 35

36 Optimize Escondida s Net Present Value We will optimize NPV by: STRATEGIC KEY ELEMENT NPV Taking a leadership role within the industry and adopting a flexible production profile Continually focusing on cost reduction Leveraging Six Sigma and the Maintenance Improvent Programs Using tollgating to improve our Capital Productivity Capturing the synergies of both concentrators Leveraging leach technologies Taking a leadership position in the responsible management of the use of fossil water; 10% reduction in water requirements Slide 36

37 STRATEGIC KEY ELEMENT PEOPLE Achieve Maximum Potential with Employees We willl ensure Maximum Alignment Among Employees, Organizational Structure & Performance Management Systems by: Attracting and retaining high quality employees Creating a high performance environment Focusing on the development of technical and people leaders Ensuring that learning and skills development are applied to everyone in the organization Creating a work environment where we have positive, mature, and direct working relationships Slide 37

38 STRATEGIC KEY ELEMENT CUSTOMERS To Be The Preferred Supplier of Copper in Concentrate & Cathodes We will achieve our value proposition to customers through: Achieving appropriate geographical and market diversification Utilizing the BHP Billiton Base Metals Marketing structure Reducing the impact of variable concentrate grades Emphazising continuous and proactive interaction between the Operational and Marketing areas Maintain status as a quality supplier through producing improved and predictable levels of Grade A quality cathode Slide 38

39 Presentation Content Escondida Overview Operations Financial Overview Business Strategy Growth Opportunities Marketing Current Activities Slide 39

40 Sulphide Leach Project Summary EW Copper Production - kt raffinate Solvent Extraction Electrowinning % TCu Air ktpa cathode Crush & Leach + Sulphide/ROM Leach Operations EW Copper Production EW Capacity with ROM Leach Sulphide/ROM Leach Crush Leach Crush Leach EW Capacity 1.6 billion t sulphide ore at 0.6%tcu Current stockpile 100mt Copper recovery by: ROM leaching Solvent extraction Electrowinning Expected recovery 36% Approx 50% of Cu is chalcopyrite Initial copper production 180 ktpa Increasing to 245 ktpa as ore supply increases and oxide T/H capacity becomes available Initial capital $ 870M (incl. water supply) Operating costs < $0.35/lb Cu Fiscal Period Slide 40

41 Bioleaching Technology Sulphide leaching requires ferric iron as oxidant Conversion of ferrous iron to ferric is catalyzed by bacteria Without bacteria, leaching is slow due to lack of ferric iron Main bacteria are mesophiles such as thiobacillus ferrooxidans Mesophiles occur naturally in ore and thrive in acidic conditions at temperatures from 20-40C Bacteria require oxygen as does the oxidation reactions Forced aeration is key for high bacterial activity and fast leaching The process is simple and robust Slide 41

42 Presentation Content Escondida Overview Operations Financial Overview Business Strategy Growth Opportunities Marketing Current Activities Slide 42

43 Diverse Customer Base COPPER CONCENTRATE SALES BY DESTINATION South Korea 8.9% Germ any 8.0% Merchants 7.3% China 6.1% India 4.1% Sweden 3.4% Brazil 3.3% Philippines 3.0% Chile 22.1% Other 14.3% Spain 2.8% Bulgaria 2.7% South Africa 1.6% Japan 25.8% Iran 0.4% Finland 0.4% Slide 43

44 Diverse Customer Base CATHODE SALES BY DESTINATION Chile 4.2% Canada 3.6% Italy 5.9% Spain 3.0% UK 2.0% Turkey 0.8% Intermediaries / BMAG 21.9% Brazil 6.7% Japan 8.2% Germany 12.5% Taiwan 8.5% South Korea 10.8% France 11.8% Slide 44

45 Presentation Content Escondida Overview Operations Financial Overview Business Strategy Growth Opportunities Marketing Current Activities Slide 45

46 Water Issue What caused the water problem between Novembre 2003 and January 2004: Deteriorated water-pulp separation from tailings Inability to increase fresh water supply to Laguna Seca Concentrator to compensate reduced reclaim water return Hydraulic restrictions in the tailings transport system did not allow all tailings to report to the impoundment Slide 46

47 Water Issue - How MEL is solving the water problem 1. Secured fresh water to the Laguna Seca Concentrator through an additional water line 2. Implemented an aggressive maintenance program to restore wells in various well fields 3. Identified mineral ore types that cause water-pulp separation problems, allowing the mine to better blend plant feed 4. Identified a flocculant that allows the production of higher underflow density at lower yield stress and viscosity 5. Will construct a protective wall around the pump barges in the tailings impoundment 6. Will embark on an engineering program to eliminate hydraulic problems in the tailings transport system 7. Drilled new wells, allowing MEL to pump up to legal and environmental limits 8. Established a water strategy that will secure future water supply to the operation Slide 47

48 Action Plans HSEC Simplification and streamlining proposal of the HSEC systems under the BHP Billiton Standards Employ the Landmark process to engage the workforce and ensure their commitment to a zero harm workplace Implemention of Cardinal Rules Program Development of Drug/Alcohol Policy Alignment of HSEC & RDO Encourage employee participation in Company sponsored assistance projects for the community to instill a sense of social responsibility in Escondida s employees, Adoption of DuPont Job Observation methodology Slide 48

49 Action Plans NPV Los Colorados Mill improvement program Mine to mill improvement project Light dump bodies project Develop long term water sourcing plan Inventory reduction program Flexible production plans Develop a program for coordinating plants, crushers, shovels, pipelines, filters shutdowns Development of an integrated production system Slide 49

50 Action Plans PEOPLE Implementation of an employee climate survey Continuous development of a team based work structure To build an integrated Performance Management system which links competency development, individual performance on the job and remuneration To perform the second teams check-up (HISI) Slide 50

51 Action Plans CUSTOMERS Eliminate backlog of concentrate deliveries arising from Apollo cuts Complete Sales Book restructuring Reduced sales to Merchants Increase sales to emerging smelter markets, eg., India and China Initiate spot sales Continue to push transition to global market terms for concentrates Close cooperation with Escondida Operations to address concentrate grade reduction and variability issues Slide 51

52 Head Grade - % Contained Copper 3.0% 2.5% Head Grade % Cu 2.0% 1.5% 1.0% 0.5% 2.75% 2.22% 1.95% 1.89% 1.69% 1.54% 1.37% 0.0% Fiscal Years History YT D Slide 52

53 Oxide Flowsheet ORE PRIMARY CRUSHER STOCKPILE CRUSHING & SCREENING RAFFINATE PLS EXTRACTION ORGÁNIC LEACH PAD ORGÁNIC RECOVERY CONVEYING SYSTEM AGLOMERATION SOLVENT EXTRACTION WASHING WATER SULFÚRIC ACID STRIPPING COPPER CATHODES TPA LEAN ELECTROLYTE RICH ELECTROLYTE ELECTRO-WINNING Slide 53