07/04/2012

Miners eye an Iberian comeback - FT.com

April 6, 2012 4:13 pm

Miners eye an Iberian comeback

By Victor Mallet in Rio Tinto, Spain

The huge man-made open pits, part-filled with acidic water, that scar the landscape of western Andaluca are oddly quiet these days, as are the rock-crushing machines that once processed copper ore for Rio Tinto, the British mining company. Yet the mines and the machinery are judged by engineers to be more or less in working order, having been silent for only a decade. This is about to change. For thousands of years, even before the arrival of the Romans, people dug silver, copper and lead ore from the Iberian pyrite belt of metal-rich rock across this part of the peninsula. The Rio Tinto is the red river because of its mineral content which gave its name to the town and the company that started operations in 1873 and stayed more than a century. The mining group still says this is the greatest copper deposit ever found. Emed Mining, a small copper and gold explorer whose shares are quoted in London and Toronto, is planning to reopen part of the Rio Tinto mine, a 200m project that has run into bureaucratic obstacles from the regional government but is supported by residents eager for scarce jobs in the depths of the eurozones economic crisis. It is relatively low grade, but theres a lot of copper still here, says William Enrico, managing director of the local operation, looking over a large pit reminiscent of the open mines in northern Zambia. All our economics are done on $2 [per lb] copper, and the price is above $3 right now. Mr Enrico is a third-generation US mining and smelting expert who has worked in the US, Latin America and Bulgaria. Emed says it has invested more than 40m in Rio Tinto, backed by Chinas Yanggu Xiangguang Copper and by Goldman Sachs, the US investment bank. It is not an isolated case. Encouraged by high commodity prices, mining companies have been reopening abandoned pits or exploring afresh in long-neglected parts of western Europe Greece for gold, Spain and Portugal for copper though by far the biggest operations remain in Africa, South America and Asia.
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Miners eye an Iberian comeback - FT.com

Aristidis Harry Anagnostaras-Adams, Emeds Cyprus-based managing director, is enthusiastic about the trend. Its quite a wave of capital and people moving into Europe to resuscitate what was a strong mining sector that went into hibernation about a generation ago, he says. In the last two years, more than 20 companies have moved into Spain for exploration. Similar moves are under way across the border in Portugal. We have enormous potential and the government is now negotiating contracts for copper, gold and iron, and also for uranium and wolfram [tungsten], said Jos Maria Esprito Santo Ricciardi, head of the investment banking arm of Banco Espirito Santo, in an interview in Lisbon. Cristina Casalinho, chief economist of BPI, another Portuguese bank, says one advantage of local production is the lower cost of transport to European industries. Mines that have been shut down for some time because they were not profitable now are profitable with commodities at these prices. Mining projects are not without risks. In 1888, an unknown number of people were killed in Rio Tinto when soldiers opened fire on thousands of early environmental protesters complaining about the sulphurous smoke that blanketed their homes and fields. More than a century later, in 1998, the tailings dam of another mine collapsed at Aznalcllar, releasing acidic water into the Doana national park and accelerating local disenchantment with mining. So depressed is the local economy today, however, that few residents of Rio Tinto would oppose the reopening of the mine, so long as Emed fulfils its environmental obligations. It would directly employ 350 people and create perhaps three times as many jobs indirectly. Indeed, former mineworkers have formed a protest group to press the regional government to grant Emed permits after more than four years of negotiations, accusing landowners of trying to maximise their compensation. Rosa Mara Caballero, the local mayor, is from the centre-right Popular party, while the regional government is controlled by the Socialists. She calls the delay outrageous, adding that the population has declined as businesses close and people move away to find work. Of the workforce of 10,000 in the seven towns of the mining area, 5,000 to 6,000 are unemployed, she says. The project for reopening the mine would be fundamental for the survival of this area, she says.

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Miners eye an Iberian comeback - FT.com

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