Pressure Leaching of Copper Concentrates John O. Marsden Senior Vice President Technology & Product Development 2004 Phelps Dodge Corporation
Presentation Outline Safety share Introduction Global copper reserves/resources Phelps Dodge production & reserves profile Commercial drivers for copper concentrate leaching The copper concentrate market and TC/RCs Phelps Dodge copper pressure leaching developments High temperature Medium temperature Critical success factors for commercialization Conclusions 2 2004 Phelps Dodge Corporation
Safety Share - Bagdad Concentrate Leach Project Construction Safety Record (total project) Total man hours 330,000 Lost time injuries 0 Recordable injuries 3 First aid treatment 9 Near miss incidents 7 Recordable Injury Frequency Rate = 1.86 (per 200,000 man hours) Operations & Maintenance (project to date) Lost time injuries 0 Recordable injuries 0 First aid treatment 2 Near miss incidents 18 (2004 YTD) Recordable Injury Frequency Rate = 0 651 Zero days since project start 3 2004 Phelps Dodge Corporation
Global Copper Industry by Process Type 2003 Production (Est.) Remaining Reserves (Est.) 10% 11% 10% 9% 80% 80% Mill, Smelt (cpy/cc) Leach, SX/EW (cc) Leach, SX/EW (ox) Mill, Smelt or Con Leach (cpy/cc) Leach, SX/EW (cc) Leach, SX/EW (ox) 4 2004 Phelps Dodge Corporation
Technology Transformation of Copper Production (PDC share; millions of pounds) 2,500 2,000 1983 100% conventional 2003 70% SX/EW 1,500 1,000 500 0 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04F Conventional SX/EW 5 2004 Phelps Dodge Corporation
Drivers for Concentrate Leaching Cost effective alternative to conventional smelting & refining Capital cost versus greenfield smelter/refinery projects $1,000-2,000 versus $3,000-6,000/annual tonne Ability to utilize existing SX capacity ($300-400/annual mt) Ability to utilize spare EW capacity ($500-600/annual mt) Ability to utilize existing infrastructure TC/RCs Commercial third party smelting & refining rates Operating cost Oxygen requirements & cost Altitude Acid balance Freight rates, distances, handling Copper recovery By-products (Au, Ag, other) Smelter penalty elements (As, Sb, Bi, other) 6 2004 Phelps Dodge Corporation
Chalcopyrite Concentrate Pressure Leaching Options Atmospheric sulfate media Attrition grind & ferric leach Silver-catalyzed ferric leach Biological ferric leach Pressure sulfate High temperature (>200 o C) Medium temperature (>100 o C <200 o C) Chloride-assisted Halide system Chloride Chloride-bromide Ammonia 7 2004 Phelps Dodge Corporation
Factors Affecting Process Selection Deposit characteristics Concentrate mineralogy Concentrate grade Location Stand-alone versus integrated at mine site Site acid requirements Regional acid market Availability and cost Acid neutralizing material Availability and cost 8 2004 Phelps Dodge Corporation
The Copper Processing Technology Today Stockpile Leaching (Oxide) (Chalcocite) Mine Primary Crushing Sec/Tert Crushing Heap Leaching (Oxide) (Chalcocite) Solution Extraction Electro- Winning Acid Customers Milling (Chalcocite) (Chalcopyrite) Flotation Smelting Electro- Refining 9 2004 Phelps Dodge Corporation
Real TC/RCs and Copper Prices ($2002) Copper Prices ( /lb) 300 250 200 150 100 50 Japanese TC/RCs TC/RCs ( /lb) 45 40 35 30 25 20 15 0 10 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 Copper Prices TC/RCs Linear (Copper Prices) Linear (TC/RCs) 10 2004 Phelps Dodge Corporation
TC/RCs versus Price Long-term Japanese TC/RCs (1975-2003) 50.0 45.0 TC/RC- /lb (Constant 2002$) 40.0 35.0 30.0 25.0 20.0 y = 0.1401x + 10.415 R 2 = 0.7257 * 15.0 10.0 60 80 100 120 140 160 180 200 220 240 260 Copper Price - /lb (Constant 2002$) 11 2004 Phelps Dodge Corporation
Forecast Real TC/RCs as a Percentage of Copper Price 35% 33% 31% 29% 27% 25% 23% 21% 19% 17% 15% 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Source: Brook Hunt 12
Near-Term Shortfall in Copper Supply (Cu kmt) 25,000 20,000 Shortfall in mine production expected to be filled by concentrate production 3.8 MMt/a 15,000 10,000 Existing concentrate production w/ majority of restarts & all financed projects 5,000 0 1997 Source: Brook Hunt 1998 1999 2000 2001 2002e 2003F Scrap/Other SX/EW Production Copper Consumption 2004F 2005F 13 2006F 2007F 2008F Concentrate Production SX/EW New Production 2009F 2010F
Primary Smelter Capacity vs. Mine Production (Cu kmt) 18,000 17,000 16,000 86% 15,000 14,000 13,000 12,000 82% 11,000 10,000 9,000 84% 8,000 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Source: Brook Hunt Smelter Capacity Smelter Production Mine Production 14
Primary Capacity Utilization Primary Capacity Utilization 88% 86% 84% 82% 80% 78% Combined TC/RCs ( /lb) 40 35 30 25 20 15 10 5 76% 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 0 Primary Capacity Utilization TC/RCs 15 2004 Phelps Dodge Corporation
Phelps Dodge Copper Pressure Leaching Developments Phelps Dodge (& Placer Dome) have developed a suite of proprietary processes, including: High temperature process (HT) Converts essentially all sulfide sulfur to acid Maximizes acid production Suitable for locations where dilute acid can be used beneficially Medium temperature process (MT) Converts a significant portion of sulfide sulfur to elemental sulfur Lower oxygen costs Minimizes acid production Suitable for locations where dilute acid cannot be used beneficially 16 2004 Phelps Dodge Corporation
Phelps Dodge Concentrate Leaching Milestones 2Q 1998 Sulfate-based concentrate leaching development started 1999-2000 Batch testwork at Hazen Research, Dawson and Phelps Dodge Process Technology Center 2000-2001 3Q 2001 Nov 2001 Nov 2001 Mar 25, 02 Mar 6, 03 Mar 20, 03 July 2003 Continuous Pilot Plant Testing Technology Development Agreement executed with Placer Dome Bagdad HT Project approved Engineering awarded to Kvaerner Construction started by KIC Wet commissioning begun Start-up: First concentrate feed All design parameters met, steady state operation Four years from first testing to commercial demonstration 17 2004 Phelps Dodge Corporation
Phelps Dodge Concentrate Leaching Milestones (cont.) April 2004 July 2004 1Q05 Bagdad MT-DEW Conversion approved Construction of MT-DEW started Commissioning of MT-DEW scheduled 18 2004 Phelps Dodge Corporation
Concentrate Leaching Alternative to Smelting & Refining Stockpile Leaching (Oxide) (Chalcocite) Acid Mine Primary Crushing Sec/Tert Crushing Heap Leaching (Oxide) (Chalcocite) Solution Extraction Electro- Winning Customers Milling (Chalcocite) (Chalcopyrite) Flotation Concentrate Leaching Smelting Electro- Refining 19 2004 Phelps Dodge Corporation
Bagdad Concentrate Leach Plant August, 2003 20 2004 Phelps Dodge Corporation
Concentrate Leach Performance Summary Operated since March 2003 18 months continuous operation All key design criteria achieved Above design throughput Above design availability Above design copper extraction Operating costs in line with expectations Demonstrated technical and economic viability of high temperature process in the appropriate application, where the dilute acid can be used beneficially 21 2004 Phelps Dodge Corporation
Bagdad Concentrate Leach - Copper Production 1,800 1,600 1,400 1,200 1,000 800 600 400 Production (tonnes) 200 0 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 Production (metric tons) Design Basis Production 22 2004 Phelps Dodge Corporation
Start-up Data (adapted from McNulty, 1998) 160% 140% % of Design Capacity 120% 100% 80% 60% 40% 20% 0% 0 5 10 15 20 25 30 35 40 Months Since Commissioning Bagdad BCLP 3 Mo. Avg. Category 1 Category 2 Category 3 Category 4 23 2004 Phelps Dodge Corporation
Concentrate Leaching & Direct Electrowinning Stockpile Leaching (Oxide) (Chalcocite) Mine Primary Crushing Sec/Tert Crushing Heap Leaching (Oxide) (Chalcocite) Solution Extraction Electro- Winning Customers Milling (Chalcocite) (Chalcopyrite) Flotation Concentrate Leaching Electro- Winning 24 2004 Phelps Dodge Corporation
Concentrate Leach - MT-DEW-SX Process Concentrate Super-fine grind Pressure Leach Tails S L PLS from stockpile leach DEW SX Stockpile Leach EW Cathode Cu 25 2004 Phelps Dodge Corporation
Concentrate Leach The Path Forward Conversion of Bagdad to medium-temperature and direct electrowinning mode of operation under consideration Construction started in 3Q04 Start up scheduled in 1Q05 Commercial demonstration complete by 4Q05 26 2004 Phelps Dodge Corporation
Phelps Dodge Concentrate Leaching Developments High temperature (>200 o C) and medium temperature (140-180 o C) pressure leaching in sulfate media Low cash cost alternative to smelting and refining Safe, environmentally-sound Acid balance is a critical cost driver Concentrate, cathode and acid freight considerations Ability to utilize existing SX and EW capacity Utilize existing infrastructure 27 2004 Phelps Dodge Corporation
Production Decisions Impacted by Concentrate/Acid Balance External concentrate source North American Concentrate Bagdad Sierrita Chino (partial capacity) Cobre Morenci (off line) Candelaria concentrate Chino Smelter 650,000 tpy capacity (off line) Miami Smelter 750,000 tpy capacity (operating) External acid source North American Leach Morenci Bagdad Sierrita Chino Tyrone (partial capacity) Miami (partial capacity) External acid consumer 28 2004 Phelps Dodge Corporation
Concentrate Leach Potential Applications Morenci Preliminary feasibility study in progress Scheduled for completion 4Q04 Cerro Verde primary sulfides Preliminary feasibility study scheduled for 1Q05 El Abra primary sulfides Other 29 2004 Phelps Dodge Corporation
Copper Pressure Leaching Critical Success Factors TC/RC market conditions Long term view? Ability to understand and exploit acid balance at site(s) Materials of construction Operating control Mineralogy Competitive advantage Speed of implementation Scale of implementation Ability to apply to greater proportion of production Other technical developments Improve capital and operating costs Environmental permitting Intellectual property A complex environment 30 2004 Phelps Dodge Corporation
2004 Phelps Dodge Corporation