Rio Tinto delays production because of falling market prices

HUMBOLDT – Rio Tinto officials said Tuesday they plan to shift first production of nickel and copper at the company’s Eagle Mine and Humboldt Mill to the second half of 2014.

Rio Tinto spokesman Dan Blondeau said Tuesday an aggressive construction season had been planned for this year and production was initially slated for early to mid-2014, but the decision has now been made to “moderate” the pace of construction in response to “economic headwinds” and volatility in commodities markets.

“We’re not the only ones going through this tightened schedule, it’s across the industry,” Blondeau said. “Everyone is taking a more disciplined approach in where they’re spending their money and where they’re getting their capital.”

Construction at the mine is 80 percent complete, with the project overall – including the Humboldt Mill – about half done.

“A lot of work this coming year was going to be at the mill,” Blondeau said.

Any current construction work will be completed, but new construction will be rescheduled.

Blondeau said a primary objective will be to minimize any impacts of the new schedule to company staff. Even with the decreased construction efforts, Rio Tinto will continue to spend about $10 million each month on the mine and mill projects.

Plans are being finalized over the next few weeks. Until then, Blondeau said he wouldn’t speculate on any potential workforce reductions.

“It continues to be a really good project for Rio Tinto,” Blondeau said.

Meanwhile, Rio Tinto is continuing to work on a contract with the Marquette County Road Commission to upgrade existing roads for transportation from the mine to the mill. Blondeau said he hoped a contract could be finalized within a month.

After that, more details should be available on exactly how county road AAA, 510 and 550 would be upgraded, including information on bridges, road widths and numbers of lanes. The mining company is expected to spend between $36 million and $40 million on the improvements.

Rio Tinto is continuing exploration through drilling at the Eagle Mine site and is using drilling and aerial surveys to look for more nickel and copper in southern Houghton County.

At the mine site, drilling is being used to better delineate the extent of the ore body.

“We’re trying to increase the value of the ore body and find other chunks that might be associated with this ore body,” Blondeau said.

The exploration in Houghton County is in the Covington and Sidnaw area.

“Right now, it’s aerial (exploration),” Blondeau said. “There are some boots on the ground, but there hasn’t been a lot of drilling.”

Rio Tinto is not currently working on exploration north of U.S. 41 in the Baraga and L’Anse area.

In a related item, a Michigan Department of Environmental Quality public hearing has been scheduled for March 12 for Rio Tinto’s revised air use permit for the Eagle Mine.

Several design changes have been made at the Eagle Mine site since the original permit was granted in 2007.

Among them:

  • Electrical service was extended to the mine, greatly reducing emissions from on-site electrical generation. Three 1,825-kilowatt primary generators were removed and replaced with one 2,000-kilowatt standby generator.
  • With Rio Tinto’s purchase and refurbishing of the Humboldt Mill, ore crushing equipment is no longer planned for the mine site in Michigamme Township.
  • Coarse ore storage and handling at the mine will be done in an enclosed building.
  • Aggregate delivery and handling will also take place in an enclosed building.
  • A backfill plant will be built on the mine site, above ground, and will be vented through a cartridge filter.
  • Paving of road surfaces has reduced dust

According to Rio Tinto’s application materials, mining is scheduled to occur over a period of six to eight years, with the maximum ore production rate predicted at 2,425 tons per day.

The Eagle Mine is an underground mining operation that will mine and backfill the ore body, which contains nickel and copper. Rio Tinto will use drilling and blasting to remove the ore in stopes.

At the mine, underground trucks will move the ore to a coarse ore storage area, above ground. From there, the ore from the mine will be trucked to the Humboldt Mill, crushed and taken by rail to Canada for further processing.

John Pepin can be reached at 906-228-2500, ext. 206.