Production & Commercial Update

Transcription

1 Production & Commercial Update Lassi Lammassaari, Chief Operations Officer Marja Riekkola-Vanhanen, Chief Technology Officer Leif Rosenback, Chief Metallurgist Pekka Erkinheimo, Chief Commercial Officer 4 December 2008

2 Mining and materials handling

3 First metal production achieved on time ramp-up continues Overview of mining infrastructure Operational surface area 61 km 2 Surface area of construction 20 km 2 Mine area roads 25 km Mine area pipelines 100 km Bioheapleaching irrigation and recycling pipelines 6,700 km Circulated solutions 30,000 m 3 /h Buildings 770,000 m 3 Environmental permit; earthworks Leveling of ore Mining Materials handling Metals recovery Gypsum Pond Kolmisoppi open pit Waste Dump Secondary Heap Stage 2 Secondary Heap Stage 1 Metals Recovery Primary Heap Kuusilampi open pit Waste Dump Waste Dump Work commenced on schedule 1

4 Operational areas November 2008 Main access road Railhead and powerline Metals Recovery & Offices Secondary pad Waste dump Mine Workshop Gypsum Pond Primary Heap pad 1 Irrigation Ponds Open pit PLS Ponds Pads 2 & 3 21

5 Process flow sheet Low unit cost of production Bypasses traditional and energy intensive processing Economies of scale 3

6 Mining First blast, 1 April 2008 Open pit, September 08 4

7 Mining Mine equipment Production equipment at open pit Fleet at max Capacity Drill rig Sandvik DP Sandvik DX Hydraulic shovel Hitachi EX m 3 /bucket Dump Truck Hitachi EH t Front end loader Komatsu WA m 3 /bucket Contractors at open pit Forcit Ltd Explosives supply Destia Waste rock load and haul Mtpa Rotator ltd Mobile equipment maintenance 5

8 Mining - Production update Mining capacity exceeds planned need Ground water and rock conditions in the pit as expected Technical and management staff in place for full production Overburden removal progressing well; mining areas to be exposed by year end Approx. 3.3 million tonnes, of which more than 2 million tonnes of ore, blasted YTD Ramp-up continues 6

9 Mining Mine plan 1(2) Year 2010 = Brown Kuusilampi Mining plan Planview Crusher Year 2009 = Cyan Pilot plant 500 m Year 2008 = Red Ore Talvivaara Proj J. Kankkunen

10 Mining Mine plan 2(2) Year 2010 = Brown Year 2009 = Cyan Year 2008 = Red Main Ramp Ore Section Ore Ni_feed Cu_feed Co_feed Zn_feed Waste Total Mining Waste to Year tonnes % % % % tonnes tonnes ore ,600, ,595,856 8,295, ,600, ,771,938 21,271, ,000, ,792,687 22,792,

11 Materials handling Production facilities 1(2) Ore stockpile Fine crushing Conveyor Agglomeration 1 4 Conveyor Primary heap 2400 m m 9

12 Materials handling Production facilities 2(2) Materials handling equipment Capacity Materials Handling Primary Crusher contr. mobile crushers 4 TPO FLS Smidth gyratory t/h Kuusilampi Conveyor Sandvik 1 Ore Stockpile Sandvik t Screening Sandvik 2x6 Secondary Crushing Sandvik Hydrocone 2x1 Tertiary Crushing Sandvik Hydrocone 2x t/h Stacking conveyor FAM t/h Reclaiming conveyor FAM t/h Secondary stacking conv. FAM t/h 10

13 Materials handling - Production update Materials handling slightly behind schedule due to system design issues Primary crushing contracted out for the time being, as planned; own primary crusher expected to be operational early 2009 Sandvik secondary and tertiary crushing operational since July 2008 Ramp-up supported by additional contractor crushing to supplement Sandvik output FAM stacking equipment operational since August 2008 Status of heap construction as of 19 Nov

14 Operating personnel Mine Materials Handling Metals Recovery Water Management Administration Maintenance 12

15 Infrastructure All infrastructure needed for operations in place Roads Powerline Water management Rail road construction progressing ahead of schedule Tracks already in place Scheduled opening for traffic July

16 Bioheapleaching

17 Bioheapleaching - Production update (1/2) Bioheapleaching has got off to a good start; early results in line with those obtained from the pilot heap Thermal reactions very strong; heap temperatures up to 90 C, leach solution from the heap at approx. 50 C Due to heavy rains, the relative amount of liquid in circulation is approx. 5 times the amount used in the pilot heap Sulphuric acid consumption substantially less than in the pilot heap positive OpEx effect Leach solution temperature (C) Acid consumption (tonnes) Leach solution temperature and ph Leach solution temperature (left Y-axis) ph (right Y-axis) 25/09/ /10/ /10/ /10/ /11/ /11/2008 Acid consumption Assumed acid consumption Realised acid consumption 01/07/ /08/ /09/ /10/ /12/

18 Bioheapleaching - Production update (2/2) tons in PLS Metals in Pregnant Leach Solution Ni Zn (1) (1) 0 20/08/ /09/ /09/ /10/ /11/ /11/ /12/2008 (1) Some solution removed from circulation. Ni (mg/l) Nickel in PLS in the growing heap m m m m m 0 11/07/ /08/ /09/ /11/ /12/

19 Metals recovery

20 Metals recovery - Production update Metals plant ready for production First metal sulphides produced on 1 Oct 2008 Further small scale production runs planned for the remainder of 2008 Commercially significant amounts to be produced Q

21 Metals recovery process Bioheapleaching Metals recovery Copper sulphide Sulphur H 2 S Ore feed H 2 SO 4 PLS Zinc sulphide AIR Gypsum precipitate Al(OH) 2 precipitate Nickel & cobalt sulphide NaOH Limestone Oxygen Plant Gypsum Fe Precipitate Burnt Lime Lime Effluent 17

22 Commercial Update Pekka Erkinheimo, Chief Commercial Officer 4 December 2008

23 Talvivaara nickel/cobalt concentrate Offtake with Norilsk Nickel Harjavalta Oy in place: Covers the entire Ni/Co output and ca. 75% of the projected turnover of Talvivaara Contract term 10 years or 300,000 tonnes of Ni metal delivered, extendable by Norilsk, at market terms, with additional 150,000 tonnes in metal content Treatment charges for both Ni and Co at market level Calcium extraction circuit at the Harjavalta refinery to be commissioned during winter/spring

24 Talvivaara zinc concentrate European Zn market: No significant new Zn mine projects in Europe foreseen besides Talvivaara Zn mine capacity of existing mines is decreasing There will be a longer term deficit of Zn concentrates in Europe Will all (European) buyers of Zn concentrate survive the slump? Talvivaara s Zn concentrate: High quality and grade with Zn content > 62% Low in all major harmful elements for Zn metal production (mercury, cadmium, arsenic, lead, germanium, thallium etc.) Due to low Fe content of only < 0,5%, smelters will have less environmental problems in depositing iron residues 2

25 Talvivaara zinc concentrate Marketing strategy: Nearest Zn smelters are all potential customers: low freight cost from mine to smelter is a mutual benefit Contractual discussions are ongoing with Boliden Kokkola, Nyrstar, Xstrata in Germany and Spain, and Chelyabinsk Kazakhstan Aim is to have 2-3 long term customers and to leave some free tonnage for the spot market 3

26 Update on chemicals supply calcium compounds Limestone Multiyear contracts in place with Nordkalk Oyj and SMA Minerals Oy on the entire demand Burnt lime Chalk Multiyear contracts covering the second CO 2 emission period in place with SMA Minerals Oy and Rheinkalk GmbH (Lhoist - Germany) on the entire demand Contract in place with Omya on the supply of chalk prior to commissioning of Talvivaara s limestone grinding circuit in winter 2008/2009 4

27 Update on chemicals supply sulphur compounds Sulphuric acid A contract covering the demand for in place with Kemira Oyj Longer term supply arrangements awaiting normalisation of the acid pricing Sulphur Short term spot-type contracts with CIECH, Lukoil, Tengizchevroil and Gazprom Elemental, granulated and flaked sulphur forms are being tested to optimize the process Discussions ongoing with several producers and trading houses on longer term arrangements Long term supply arrangements awaiting normalisation of the sulphur pricing and conclusion on the optimal sulphur form for the process 5

28 Update on chemicals supply sulphur price development 6

29 Update on chemicals supply sulphuric acid price development US-$ / to PentaSul prices since Jan in US-$ (average low/high) Chile cfr North. Term. Tampa (st) cfr customer Hamburg-ARA fob Export NW Europe cfr consumer Chile spot cfr Mejillones Meditarranean fob Export 7

30 Update on chemicals supply caustic soda Multi-year contracts in place with Kemira Oyj and Tessenderlo, covering substantial part of the demand for the ramp up period Pricing based on references to Harriman indices (Nordic FOB low) Longer term aim is to have 2-5 suppliers delivering under multi-year contracts Short term market movements on the caustic soda pricing are difficult to predict, as European demand for both chlorinated derivatives and caustic soda are dropping, squeezing both the supply and demand side of the caustic soda markets Longer term outlook is for the tighter caustic soda markets, as the mercury grade production is likely to be prohibited in Europe by 2020, forcing many producers to either make substantial investments or exit the business 8

31 Update on chemicals supply caustic soda price development 9

32 Update on chemicals supply - propane A multi-year contract in place with Teboil/Lukoil Pricing is based on monthly averages of Platt s CIF7000+ index and EUR/USD exchange rate fluctuations (delivery month average) Talvivaara is in advanced talks on engaging another international supplier to share the volume demand on similar terms 10

33 Electricity supply A spot price agreement in place with Vattenfall Forward purchases under consideration 11

34 Update on legal & environmental status Talvivaara s environmental and water regulation permit issued on 29 March 2007 became final and binding through a decision by the Supreme Administrative Court (SAC) published on 24 November 2008 The SAC ruling rejected all the appeals and upheld the terms of the permit issued by the Northern Finland Environmental Permitting Agency, as amended by the Appellate Court of Vaasa (with no or only insignificant cost consequences) A separate environmental permit applied for the oxygen generation plant became final and binding earlier in November 2008, as no appeals were launched against the decision A few processes of lesser significance are still ongoing at various appellate courts/sac 12

35 Permitting considerations for expansion Environmental permit update The operations and functions have already been approved under a final and binding environmental permit of 29 March 2007 Expansion would only call for a limited number of updates regarding discharge/emission levels etc. provided in the current permit A standard permitting process with a possibility to appeal to the appellate court and supreme administrative court (total processing time of the original permit 2.5 years) 13