Aditya Birla Minerals’ Mt Gordon copper mine will be placed under care and maintenance mode at the end of April 2013.
The decision comes just over two year after the company announced it would re-open the Queensland site in January 2011 when copper prices were around US$9600 /MT.
Located about 120 kilometres north of Mt Isa, the Mt Gordon operation was producing copper in concentrate at an annual production rate of almost 20000 tonnes.
Aditya Birla said the move to shut the mine was made because of falling copper prices but according to BHP, copper’s long term outlook remains compelling.
While robust supply growth is expected to result in a more balanced market in the short term, the longer term outlook suggests that on average 1 million tonnes of new supply will be required to keep up with demand.
Meaning prices will need to remain high enough to stimulate the development of lower grade, higher cost supplies.
Aditya Birla also cited Europe’s uncertain economic conditions and a slowdown in the Chinese housing market as other reasons for reverting Mt Gordon.
The company said Mt Gordon’s production has been lower than expected, resulting in the unit operating cost per pound of copper produced becoming “unacceptably high”.
Last week the company released a scoping study which stated there was an opportunity to transform the mine into a “high-production operation with lower per unit operating cost” by converting the present truck haulage method into a sub level caving operation with hoist shaft haulage.
But the company has decided not to go ahead with this conversion.
“The company has decided not to deplete the existing high-grade resources at the current high unit cost,” Aditya Birla Minerals said in a statement today.
Reverting Mt Gordon to care and Maintenance is expected to deliver the company a saving of between $12 and $15 million annually.
Nothing was mentioned about staffing arrangements in the statement, and at the time of publication the company was unavailable for comment.