Rio Tinto To Invest In Molybdenum Plant

The plant will be based at its Kennecott Utah Copper (KUC) Bingham Canyon operation and is scheduled to begin production in the third quarter of 2010.

Molybdenum is used in metal alloys like steel to increase strength, tolerance to high temperature and corrosion resistance.

Rio Tinto said molybdenum has proved profitable for the company's copper group in recent years and that new plant will increase the company's revenue, simplify production and contribute to development initiatives.

The mining giant also said the facility will allow it to recover rehnium (a transition metal also used in alloys) and become a long-term supplier. It will have the capacity to produce up to 9,000lbs of rhenium per year.

"This is a high-margin market where the average spot price in the last three months was US$4,300 per pound," the company said.

Rio also promoted the environmentally-friendly aspects of the new planet, saying it will include a steam recovery system that will be used in downstream processing and supply about 40 per cent of the plant's heat needs. The plant will also emit less sulphur dioxide and carbon dioxide than alternative processing.

The resource base at the Kennecott copper mine, the biggest openpit operation in the world, has been reinvigorated with the addition of some 628 million tonnes to its inventory.

The project now has a resource of 637 million tonnes at 0.48 per cent copper, an increase of almost 7000 per cent from the last announced estimate in December last year.

The resource is beneath the current Bingham Canyon pit and Rio is currently looking at extending the existing pit to access the new resource via a cutback to the existing pit. Rio Tinto also said converting the resources to reserves was a high priority and it plans to have this completed by the end of 2009.

The massive Kennecott mine has been in operation for over 100 years and has already produced 16.4 million tonnes of copper ore – more than any other any mine in the world.

The mine produces around 272,000 tonnes of copper, 500,000 ounces of gold, 4Moz silver and 30 million pounds of molybdenum, along with 0.9Mt of sulphuric acid as a by-product of smelting.

CopperCo and MinSec to merge

Earlier this year, ASX-listed CopperCo made a friendly takeover bid for ASX-listed Mineral Securities (MinSec). CopperCo is offering MinSec shareholders 2.2 CopperCo shares for each Minsec security.

A KPMG report has valued MinSec at between $386.4 million and $592.8 million, with a preferred value of $496.4 million, with the company's shares valued at $2.05-$3.01 each. MinSec's current market capitalisation is around $182 million.

The company's key assets include shareholdings in resource plays listed in Australia, London and Canada. Holdings across Australia, South Africa and China include CopperCo, Platmin and Tianshan Goldfields.

If the merger goes ahead, CopperCo's Brian Rear will become the managing director of the merged company and will be in charge of the base metals division, while CopperCo's non-executive chairman and MinSec's chief executive officer – and ex-Aquarius Platinum managing director – Keith Liddell will take on the role of chief executive and will manage the precious metals division.

CopperCo shareholders have voted in favour of the resolutions required to go ahead with the merger. Rear was reported as saying the merger would move CopperCo away from the single mine, single commodity business and create diversification and a stronger balance sheet.

CopperCo's net assets are currently valued at around $A64 million. Post merger, the new company will have around $350 million in assets.

“That balance sheet is very strong on the asset side and a lot of the assets on the balance sheet will be highly liquid [equities], and that balance sheet will be very low geared, which again in this current market is very desirable,” Rear reportedly said.

“It (MinSec) doesn't have any producing assets at the moment but it is heading down the road of arriving at that point through various mechanisms,” he said.

This includes a 25 per cent stake in the Lady Loretta deposit with Xstrata holding the remaining 75 per cent. Lady Loretta contains around 2.3Mt of zinc metal and it is thought the decision to mine the resource will be taken in the medium term.

MinSec also holds 100 per cent of the Sappes gold project in Greece, which could be worth up to $100 million, should the 100,000 ounce per annum project go ahead.

The other key shareholding for MinSec is a 27 per cent stake in Platinum Minerals, a Canadian-listed play. Its flagship project, Pilanesberg, in the Bushveld complex in South Africa, is planned to begin production in early 2009.

“In its first cycle of development (Platmin) should produce around 250,000 ounces of platinum group metals, and with the current price of platinum you're talking a revenue base of $450-500 million, and that's one of only three stages…

“You've got to become relevant in the equity markets and the industry and this is where we're trying to go as quickly as we can,” Rear reportedly said.

According to Rear, the merger will accelerate the development of the two companies, creating a company that is a producer with revenue in place and projects in development and pre-development.