PNG copper mine likely shut until Q1 2016 as El Nino set to worsen

ok tedi

Reuters

Ok Tedi Mining Ltd’s Papua New Guinea copper mine is likely to stay shuttered until the first quarter of 2016 as an intensifying El Nino worsens a drought that has cut off river transport links to the project, an executive said.

The state run firm last week put its mine under ‘care and maintenance’, the latest example of copper mining around the Pacific rim to be hit by changing weather patterns.

“We don’t expect to be up and running until the first quarter. It could be as much as a 7-8 month suspension of operations,” executive manager for marketing Garry Martin told Reuters in an interview on Wednesday.

The current El Nino weather phenomenon is expected to strengthen before the end of the year, potentially making it one of the strongest since 1950, the World Meteorological Organization said on Tuesday. El Nino can lead to scorching weather across Asia and heavy rains in South America.

The miner, which declared force majeure on its sales contracts on Aug. 17, expects to lose 65,000 tonnes of copper in concentrate if the weather conditions persist, Martin said. It has stood down most of its staff on reduced salaries to conserve capital as it conducts maintenance on the mine.

Analysts say the mine produced about 76,000 tonnes of copper last year.

Low water levels have meant river traffic on the Fly River into Ok Tedi’s main river port at Kiunga have been unreliable and have also affected operation of the Ok Menga power station, the mine’s main source of power.

European copper smelter Aurubis flagged the potential for El Nino to cut copper supply as worsening storms in South America disrupt output in Chile and Peru, the world’s top two copper mining countries.

Heavy rain and winds forced the precautionary closure of some mines in Chile earlier this month, while floods in late March cut the country’s copper production that month and in April.

1 Comment

Filed under Financial returns, Papua New Guinea

One response to “PNG copper mine likely shut until Q1 2016 as El Nino set to worsen

  1. Albert

    Fly river is in drought and the risk for life of people has gone very high for food and water, the rain water for consumption has finish in the tanks and bush cricks and now people are drinking polluted water from around fly river and there is no assistance to this situation. The authorities who should react to the situations are always at their relax zones. To make the live of single village people worse, Oktedi has paid dividends to certain individuals early last month and more than one thousand families have not received there share. The poor families are confused and are coming to Brown haus Kiunga every day to be told “check your account tomorrow” and account account seems to have no fund. Please can authorities to natural disaster take this issue to their account or who is accountable.

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