Lundin Mining is bolstering its presence across Europe and beyond with a number of promising expansions, along with exploration and mine construction projects which will see the company head towards its 500,000-ton production target in the next two to three years.
Such ambition is amply demonstrated by the drive to more than double zinc output at Lundin’s Neves-Corvo mine in Portugal, while a $715 million investment into a new nickel-copper mine in Michigan, USA, is now operational.
The American acquisition from Rio Tinto extends the company’s reach beyond its European heartland, where mines in Portugal, Sweden and Spain are also performing well and have life ahead of them.
Away from wholly-owned operations, Lundin Mining also holds a 24 percent stake in joint ventures with Freeport in a high quality copper-cobalt operation in the Democratic Republic of Congo (DRC) and in a cobalt refinery in Finland, granting vertical integration into the world of cobalt mining.
While current performance and growth has been steady, CEO Paul Conibear is aware that the business needs to keep exploring for the next high-grade copper discoveries and bring more assets on board.
“Our metal production is around 300,000 tons this year and I would like to get us up to 500,000 tons in the next two to three years which means an additional one or two more mines,” he said. “This will lift Lundin Mining to the sort of scale we want to be at, operating five or six strong mines.”
Approximately 220 kilometres southeast of Lisbon in the Alentejo district of southern Portugal lies Neves-Corvo, Lundin Mining’s most significant European asset run by its native subsidiary Somincor, and one which could have up to 30 more years of life ahead of it.
Already producing 50-60,000 tons of copper and 60-65,000 tons of zinc annually from five separate ore deposits, the company is conducting a feasibility study which could see it more than double zinc output by 2017.
“The study is not complete yet but we are optimistic,” Conibear added. “The global resource is more than 100 million tons of better than six percent zinc and only 1.2 million tons a year is being processed.
“There is huge potential if we can get the capital investment right. Worldwide there are very few western companies who have an asset base like this, so it is a unique opportunity for us to look at something which has been underexplored over the past decade.”
The study should be completed by the end of Q1 2015, with Lundin keen to get construction underway which would involve deep bottlenecking, improving shaft capacity and doubling the zinc plant above ground. The company is also looking to expand tailings management storage and advanced water treatment facilities.
Despite the upcoming focus on boosting zinc production, copper will continue to provide 50 percent or more of revenues from this asset, home to 2,000 of Lundin’s 3,000 global workforce.
Into the Americas
Lundin Mining’s newest Michigan asset fits perfectly into Conibear’s plan to find new deposits of the highest quality.
Having acquired the nickel-copper site from Rio Tinto in July 2013 for $315 million, a further $400 million has brought the project to operational status ahead of schedule with a view to it becoming the company’s eventual biggest earner.
Conibear said: “This is an extremely high-grade deposit, and nickel has taken a big step forward recently as a highly valuable commodity so we are hitting the cycle at an ideal time.
“Currently the life is eight years and there is a satellite deposit we are drilling now to see if we can expand the life beyond this. There are not many new mines being built these days so we are very pleased with how this has developed.”
The CEO said that Lundin should be able to produce at around $2 per pound of nickel, and with prices currently sitting at roughly $8, the margins are extremely encouraging, especially given annual production is expected to reach respective amounts of 23,000 and 20,000 tons of nickel and copper.
The 300 metre long, 85 metre wide and 340 metre deep high grade deposit will also produce some cobalt, platinum, palladium and gold by-products.
Just recently announced is Lundin Mining's acquisition from Freeport of an 80 percent stake in the renowned Candelaria copper/gold mine in Chile. This $1.8 billion acquisition vaults Lundin up into the top 20 copper producers, more than doubling 2015 copper production.
Lundin is pursuing upside opportunities at Candelaria with an aggressive exploration programme to extend the life of the large open pit and three existing underground mines that make up the Candelaria Mine Complex.
Closer to home
Back in Sweden, Lundin Mining is celebrating its 10th anniversary of operating the Zinkgruvan zinc and copper mine, which has at least another decade of life to run.
This was the company’s first major asset following the Lundin Family’s discovery of its first mine at Storliden, in northern Sweden. The business started out as a junior explorer in the 1990s before making this high-grade zinc and copper breakthrough in 1999, which went into production in 2002 and provided essential capital for acquisition of additional mines.
At Zinkgruvan, in the central-south region of the country, Lundin Mining has managed to ramp up extraction of ore from 700,000 annual tons to 1.2 million, with Conibear looking to gain another five to 10 percent by maximising current capabilities.
“Each year we have been successful in discovering more than we’ve milled,” Conibear added. “And as well as producing 75-80,000 tons of very clean zinc, the 30-35,000 tons of lead and 3-4,000 tons of copper by-products makes this mine very cost effective.”
Elsewhere in Europe, Lundin is looking to shift production from seven years of open pit to underground extraction of better-quality nickel and copper at Aguablanca in southern Spain.
This will commence at the turn of the year for an initial life of three years with the option to go deeper.
Lundin Mining also holds a 24 percent interest in a joint venture with Freeport at Finland’s Kokkola cobalt mine.
A similar stake of a Freeport partnership at Tenke Fungurume in the DRC, one of the world's largest known copper-cobalt resources, has also been established and it delivered $140 million to Lundin in cash flow last year.
As well as developing its portfolio of high-grade assets, Lundin Mining is also eager to make the most out of both tried and tested and new innovations to help see it reach future production targets.
The company is trialling two enormous 60-ton Atlas Copco underground haul trucks at Neves-Corvo, where advanced dewatering of tailings is also being put into practice alongside smart technologies to help give enhanced visibility of important mining processes.
Eagle Mine is also home to pioneering techniques. Conibear added: “Water treatment is an area which the company is stepping up its activity. At Eagle Mine we have two state of the art water treatment plants which I have not even seen in the base metals industry before. These have reverse osmosis capabilities and cost around $60 million.
“Over in Sweden heat recovery has become a priority and something which has helped us conserve energy – we are looking into deploying this in other locations too.”
In all areas of operations Lundin Mining is committed to working responsibly and to the benefit of the localities in which it is based.
The company’s corporate goals include ‘development of a high performance, motivated culture, achieving a safe, productive and healthy work environment, and to conduct business activities ethically and transparently’.
Each year Lundin Mining publishes a detailed Sustainability Report, outlining achievements and areas for improvement in sectors from environment and corporate governance to social and health and safety.
During 2013, overall safety record for the year included a Total Recordable Incident Frequency (TRIF) of 2.01, which represented an improvement of 20 percent over the prior year TRIF of 2.50. The target for 2014 is 1.8.
The company has a strong reputation as being a good corporate citizen, underlined by its support of social programmes including the Zinc Saves Kids initiative.
Zinc Saves Kids is an initiative to improve the survival, growth, and development of undernourished children by funding UNICEF's zinc supplementation and treatment programmes.
This was one of many schemes funded by Lundin Mining, with overall company spend on social programmes exceeding $9 million for 2013.
As of January 2013, 0.1 percent of company revenues are being channelled into the Lundin Foundation.
Conibear explained in the Sustainability Report 2013: “In addition to the provision of traditional community investment programs in the areas of health, education and community infrastructure, the Lundin Foundation provides seed grants, technical assistance and risk capital to high-potential small and medium-sized businesses and social enterprises with a view to generating wealth and employment needed to alleviate poverty on a sustained basis.”
Such ongoing work will only continue to strengthen the company’s reputation as a sustainable miner, something which the CEO is determined to preserve and enhance moving forward.
As well as helping to improve the lives of others, Lundin Mining also invests heavily into developing its own base of employees and prospective workers. This often involves offering work to locally-based people, providing an instant economic boost to the areas operated in.
Equally as important as adopting the latest proven mining techniques and training existing workers is nurturing the mining engineers and directors of tomorrow, something which the company’s successful graduate scheme is actively pursuing.
“We hire a lot of young people; last summer we had 58 students and when they come on board we cycle them through our mines to gain on the job training,” Conibear said. “It has been extremely successful, as every new grad has been deployed and we don’t get them back as they really demonstrate their value to the operations.
“Quite a lot of our graduate hiring comes from Portuguese and Swedish universities and we will attract American and Canadian students with the Eagle Mine. We are based in some outstanding locations for young people to start their working careers.”
Uncovering new high-grade deposits is also key to future growth, with Lundin Mining spending $35-50 million a year on exploration, primarily in pursuit of copper. Around half of this is spent around the company’s existing sites with the rest being invested in the likes of Peru, Chile, Turkey and Romania.
The outcomes of these works could be pivotal to Conibear’s ambitions. He concluded: “Being growth oriented brings its challenges, the greatest of which being to find quality investment targets. There are plenty of affordable exploration projects but the grades are hard to find.
“That said the group has a great exploration record over the past 15 years but Mother Nature is tough – it takes time.”
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