Fall in copper prices force Australian miner Anvil to suspend operations in Congo

08 December 2008

Anvil Mining Ltd., an Australian producer of copper in the Democratic Republic of Congo (DRC), said it would halt output at its Dikulushi mine until the price of the metal rebounds. The company will postpone underground development work and begin a care and maintenance programme at the mine in the Katanga Province, Anvil said today in a statement to the Australian stock exchange.

''The Dikulushi total cash cost per pound of copper is presently well above the current prices. Although copper grades from underground sources would be higher from January next year, and cost reduction measures including curtailment of certain capital expenditures have been put in place recently, a copper price of about $1.40 a pound renders the Dikulushi mine uneconomic at present,'' Anvil president and CEO Bill Turner stated.

Turner added that as a result, it was decided to place the Dikulushi mine on care-and-maintenance. ''This decision has not been an easy one to make and is regrettable for our Dikulushi employees, communities surrounding the mine, and our stakeholders, but we believe that this is the best option to preserve our cash resources until market conditions improve.''

Late last month, Australian miner Straits Resources Ltd said it was scaling back its copper production target and postponing expansion work to lift output 75 per cent to 35,000 tonnes because of the drop in prices. Copper prices have dropped more than 60 per cent since reaching a record in July to about $3,200 a tonne. It is currently trading at $1.37 per pound.

The decision to put the DRC mine on care-and-maintenance would deliver a savings of about $2-million a month, after associated costs are factored in, which would include plant shutdown, a continuation of pumping of the underground workings, ongoing plant and equipment maintenance, and site security and community relations, were deducted.

As Anvil owned the plant, supporting facilities, and critical equipment at Dikulushi, the costs associated with the suspension of operations was largely confined to demobilisation of the underground mining contractor and staff redundancies. Also, the company stated that operations at Dikulushi could be readily restarted, the timing of which was primarily dependent on the mobilisation of required staff.