Mineralurgy Pty Ltd

Base Metals Concentrate Sales Contracts –

Change Pavlov and the Dog

P D Munro – Senior Principal Engineer

S E Munro – Process Engineer 1

Mineralurgy Pty Ltd

Base Metals Concentrate Sales Contracts Terms Ossified• As the French say “plus ça change, plus c'est la même

chose”

= literally “The more it changes, the more it’s the same thing”

• Virtually no change in last 20-30 years

• Contracts have 19th and 20th century technical terms and “outcome drivers” vs 21st century issues!

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Mineralurgy Pty Ltd

The Proposition

• Wrong to make concentrates containing excessive waste and toxic elements moving the associated disposal and containment issues from a remote mine site to a smelter located near a population centre.

• A significant proportion of concentrates are low quality as measured by weight % valuable mineral.

• The base metals industry is inherently flawed if current commercial arrangements encourage the miners to make low quality concentrates without appropriate incentives to use the best available technologies to make better ones.

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Mineralurgy Pty Ltd

Base Metal Concentrate Quality –Assays Can Deceive• Quality of base metals concentrates almost invariably

measured by chemical content of the valuable constituent e.g. % Cu, % Zn etc.

• A more appropriate measure of the efficiency of the mineral beneficiation process (flotation for sulphide minerals or mostly gravity in the case of tin) is by % valuable mineral in the concentrate.

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Mineralurgy Pty Ltd

Concentrate Quality – 85% w/w valuable mineral benchmark• Particular case of sulphide mineral concentration we use

the benchmark that an industrial flotation process should be able to make a concentrate with 85% w/w valuable mineral from a feed with >80% mineral liberation (liberation is defined as particles of composition ≥98% w/w of the target mineral).

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Mineralurgy Pty Ltd

Base Metal Concentrate Quality as % Valuable Mineral

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Concentrate Mineral % w/w Valuable Mineral Grade

Molybdenum Molybdenite 59.9% Mo 85 50.9% MoZinc Sphalerite 67% Zn 85 56.9% Zn

Copper Chalcopyrite 34.6% Cu 85 29.4% CuLead Galena 86.6% Pb 85 73.3% Pb

Nickel Pentlandite 34.2% Ni 85 29.1% Ni

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Molybdenum concentrate

• Quality is emphasised Due to use as an alloying element in steel

Few “converters” roasting the sulphide concentrate to molybdic oxide MoO3

• By-product molybdenum concentrates from porphyry copper mines are often subjected to a chloride leach at the mine site to reduce copper and lead levels

• Molybdenum concentrates are often ≥55% Mo

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Zinc concentrate

• Sphalerites in volcanogenic massive sulphide and Mississippi Valley-type deposits are relatively “pure”,

• Others concentrates contain significant amounts of iron with the zinc mineral being more appropriately described as marmatite ([Zn, Fe]S). Is the case for Broken Hill, Dugald River and Mount Isa

Manganese can also be present in the sphalerite as for Broken Hill, Dugald River and Gamsberg

• Preceding flotation step(s) for copper and/or lead usually limits other sulphide minerals misreporting to the zinc concentrate.

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Mineralurgy Pty Ltd

Copper concentrate

• Surprisingly poor quality with some of the world’s largest producers having <60% w/w copper sulphides in their products despite hubristically quoting grades over 30% Cu This is because of the presence of the high copper value

supergene copper minerals chalcocite-digenite (79.9% Cu), covellite (66.4% Cu) and bornite (63.3% Cu).

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Lead concentrate

• Mississippi Valley-type and carbonate-hosted ores can be high quality

• Texturally complex ores struggle to reach 50% Pb Sedex-type deposits in the Carpentaria – Mount Isa Inlier of

Queensland and the Northern Territory,

Certain volcanogenic massive sulphide deposits such as Hellyer and Woodlawn

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Nickel concentrate• Concentrates from ores with a significant amount of

pyrrhotite (Sudbury) vs. komatiite-hosted nickel deposits

• Komatiite-hosted nickel deposits are sulphur-poor and magnesium-rich with altered phyllosilicate minerals talc, and the end products of the serpentine subgroup

(chrysotile, antigorite, lizardite etc.) can be a problem

• High pyrrhotite nickel deposits can have a significant amount of nickel associated with the pyrrhotite i.e. rejecting pyrrhotite decreases nickel recovery.

• High % Fe to maintain the required Fe:MgO ratio for flash smelting

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Myths, Misconceptions and Misunderstandings – Miners 1• Smelting and refining is a profitable business that makes

money by “gouging” the miner.

• Smelters “want sulphur in the concentrate because it is free fuel”.

• Smelters “want silica because it slags out the iron thus removing the need to buy flux”.

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Value Split Between Miners and Smelters

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Copper Smelter Charge Proportion of Copper Price

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0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

% of C

oppe

r Pric

e

Total Smelter Charges % of Copper Price)

Mineralurgy Pty Ltd

Myths, Misconceptions and Misunderstandings – Miners 2• Ignorance of increasing environmental and industrial

hygiene pressures applied to the Smelters

• New issues arise

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Myths, Misconceptions and Misunderstandings - Smelters• Many Miners could make better quality concentrates

given appropriate incentives

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Copper Concentrate Metal Payments• Normal payment is for 96.5% of the copper content

subject to a minimum deduction of 1 unit

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Concentrate copper content (%)

Copper In concentrate paid for (%)

Copper content paid for (%)

50 48.25 96.545 43.425 96.540 38.6 96.535 33.775 96.530 28.95 96.525 24 9620 19 9515 14 93.3

Mineralurgy Pty Ltd

Copper Concentrate – Arsenic 1

• “World scale” smelters produce 300 000 - 500 000 t/y. At 25% Cu concentrate grade, a 500 000 t/y unit requires >2 000 000 t/y of concentrate <0.5% As = 10 000 t/y of arsenic or 13 200 t/y as arsenic trioxide

• Arsenic’s only technical function is to be of sufficient concentration in the electrolyte when electrorefining

• Some very large copper deposits such as La Granja and Tampakan remain undeveloped because metallurgical test work has shown unacceptably high levels of arsenic in the copper concentrate

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Mineralurgy Pty Ltd

Copper Concentrate – Arsenic 2• Arsenic penalties are generally in the range US$2.50-

5.00 per 0.1% As over 0.2% As

• Concentrate >0.5% As cannot be imported into China with the Japanese and South Korean smelters unwilling to take material above 0.15-0.2% As

• High arsenic concentrates enter the market by incurring a negotiated higher treatment charge reflecting the cost of shipping to a destination and the cost of supplying “clean” material to blend down the arsenic content

• Industry has a passive response to the arsenic issue of rejecting “high arsenic” material and limited attempts at blending down the arsenic level

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Lead Concentrate Metal Payments (after Sinclair 2009)• Normal payment is for 95% of the lead content subject

to a minimum deduction of 3 units

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Concentrate lead content (%)

Lead In concentrate paid for (%)

Lead content paid for (%)

75 71.25 9565 61.75 9560 57 9555 52 94.550 47 9445 42 93.3

Mineralurgy Pty Ltd

Tin Concentrate

• The deductions and charges for tin concentrates are generally more variable than for other base metals concentrates. Tin contents varying from 20% Sn to 70% Sn; a range

rarely encountered in other concentrates

Charges for penalty elements such as US$120-150 per 1% As and $300-500 per 1% Cu are very high compared with other concentrates

• Tin concentrate sales contracts increase the base deduction with increasing iron content which is logical considering the difficulties of recovering tin from the tin-iron alloy called “hardhead”

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Zinc Concentrate Metal Payments (after Sinclair 2005)• Zinc concentrate sales terms pay for 85% of the

contained zinc subject to a minimum deduction or free metal allowance of eight units

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Concentrate zinc content (%)

Zinc content paid for (%)

Zinc content as free metal to smelter (%)

Zinc content paid for (%)

46 38 8 82.648 40 8 83.350 42 8 84.052 44 8 84.654 45.9 8.1 85.056 47.6 8.4 85.0

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Typical Pricing Clause – Zinc Concentrate

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A New Zinc Concentrate Contract?• Treatment charge reflecting the actual cost of producing

zinc metal from concentrate

• Realistic payment for contained zinc eliminating the “hocus pocus” of “8 units of free metal” and adjustments to the treatment charge

• Iron penalty commensurate with the cost of dealing with the leach residue A concentrate with 50% recoverable zinc and 8% Fe

generates at least 0.3t of residue per tonne of zinc metal produced

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Winners and losers

• Miners with deposits of high-iron sphalerites will receive a lower return than miners able to make high grade concentrates However, this is required to achieve a better overall industry

outcome

• Ameliorating the iron issue does not resolve the problem of elements such as cadmium, mercury and thallium which are usually too closely associated with the sphalerite/marmatite to be removed by physical beneficiation

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Mineralurgy Pty Ltd

Greater Use of Existing Technologies and Practices• Miners can often make higher grade base metals

concentrates from flotation by: Increasing mineral liberation of the target mineral feed

going to the cleaner flotation block; too often the benchmark condition mentioned above of >80% mineral liberation for the valuable mineral in the feed is not achieved

Improving mineral separation; this is evidenced by the presence of excessive amounts of free diluents such as iron sulphide minerals and non-sulphide gangue

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Mineralurgy Pty Ltd

Greater Use of Existing Technologies and Practices

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• Better understanding of pulp chemistry together with using ultrafine grinding and washed froth cleaning Successful at Century Zinc, McArthur River, Mount Isa,

George Fisher, Phu Kham, Prominent Hill etc.

• Reverse flotation Successful at Brunswick Mining and Kidd Creek

• Fine grind Smelter will have to deal with finer feeds

Dust problem

Miners will have to deal with froth pumping and concentrate dewatering issues Solid-liquid separation issues – especially since wet tailings

dams are becoming a permit issue

Mineralurgy Pty Ltd

Arsenic Problem – Solutions 1?

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• High arsenic levels in copper concentrate are usually caused by the presence of the copper arsenic sulphide minerals enargite (Cu3AsS4) and tennantite ([Cu, Fe]12As4S13 or Cu13As4S13) These minerals behave like other copper sulphide minerals

• Arsenic in the form of arsenopyrite should be readily dealt with as it behaves like pyrite.

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Arsenic Problem – Solutions 2?

• The proven mine site solution to high arsenic concentrates is roasting to remove the element as arsenic trioxide

• A less appealing solution from both the point of view of the miner and custom smelter is for the former to produce copper metal on site by smelting or the pressure oxidation + solvent extraction + electrowinning route.

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Mineralurgy Pty Ltd

Arsenic Problem – Solutions 3?

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Onsite Solution:

Product of a copper concentrate by conventional or enhanced means as mentioned in previous slide

Separation of the copper concentrate into a high tonnage lower arsenic portion and a low tonnage higher arsenic portion by exploiting Eh-pH flotation separation “windows” for the different copper mineral present

Hydrometallurgical treatment of the high arsenic concentrate by POX + SX- EW or an emerging technology such as the Toowong Process which uses an alkaline leach.

Mineralurgy Pty Ltd

A Parable - Motor vehicle deaths in Australia• 1970

the number of vehicles had increased twelve-fold over the number in 1926

road toll had increased about four times to reach a peak of 3,798 deaths

number of fatalities per 100,000 people peaked at 30.4.

• 2014 road toll of 1,156 deaths less than one third 1970 number of fatalities per 100,000 people at 4.9 was less than a sixth

that of 1970 the road fatalities per 100,000 registered vehicles was an order of

magnitude lower than 1970.

• Wide ranging road safety changes and initiatives, and heightening of community awareness, have reduced the road toll.

Moral – with appropriate incentives you can change outcomes.31

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The Future

• Recognise the industry has problems

• Understand what solutions are available

• Provide incentives to change Both “Pavlov” and the “dog”

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Acknowledgements

• Co-author Suzanne Munro

• Colleagues Dr Bill Johnson, Jorma Tuppurainen

• Craig Walter of formerly of MIM Holdings Limited and later Trafigura for >30y of mentoring in the concentrate sales business

• Peter Lewis as co-author of a landmark 1978 paper on concentrate sales terms

• Rod Sinclair as author of AusIMM publications Extractive Metallurgy of Lead and Extractive Metallurgy of Zinc

• Contributors to marketing section of AusIMM Cost Estimation Hand Book (Monographs 20 & 27)

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