An aerial shot of the Argyle mine. (Courtesy: Rio Tinto Diamonds) |
From the time it was built in 1982 till about five years ago, Australia’s Argyle mine was indisputably the world’s largest ever in terms of output volume. It has been in steady decline however, ever since it peaked some four years ago. Its very survival was thrown into doubt as the now open-cast mine reached the end of its economically viable life and needed to be taken underground to extend its life – something the mine’s current owner Rio Tinto at first thought might not be worth the while.
Rio Tinto had originally estimated the cost of taking the mine underground at $600 million and balked at the cost. After much deliberation on their part along with earnest representations to them and the Australian government by Indian clients who didn’t want the mine shut down, Rio decided to go ahead with the underground project in 2005 – after signing contracts with clients binding them to buying three years’ rough supply at a minimum fixed price and taking the payment for it up front. The contracts included escalation clauses that allowed Rio to increase the price if market conditions allowed it.
But even this securitised project seemed in danger of coming unglued as a technical study came up with a cost nearly three times the original estimate. Finally, Rio announced that it was indeed going ahead with the project and has been assuring clients that the underground operation is on track to go on stream in 2010.
Explaining the reasons for having to go underground, Ed Tota, Argyle’s underground project manager, stated in a presentation last year that the transition to underground mining has come about because there is no longer scope to expand the open pit. To mine the ore that is beneath the pit, it would need to become wider as it’s made deeper. This means a lot more ore would have to be dug out to achieve the same amount of diamonds currently being produced. In technical terms the stripping ratio is too high. For this reason the open pit operation is not viable as the sole source of ore beyond 2008.
The two-year gap in supply between the stoppage of open cast mining and initiation of underground extraction will apparently be made up by sales from a stockpile Rio is building up from the current output of the mine. Sales from the stockpile in the interim between open cast and underground should be in the 10- to 15 million carats per annum range.
Rio has opted for technique known as block caving for the underground project. In essence, block caving entails excavating tunnels under the ore body – the ‘block cave’ – and then using an initial blasting to let sections collapse into pre-positioned funnels, called draw bells. After the initial explosion, the collapse continues of its own accord and the draw bells allow ore to continuously funnel through. Conveyor belts then take the ore to the processing plant.
According to Tota, block caving facilitates a high level of automation and therefore does not expose large numbers of workers to hazardous mining conditions. The technique is said to be the lowest cost underground mining method and would allow Rio to excavate a minimum 8 million tonnes of ore annually. Rio’s Palabora and Northparkes copper mines have successfully proven the method. Finally, he said, the Argyle AK1 pipe is ideally suited for block cave mining due to its shape, rock properties and configuration.
Argyle AK1 Orebody. |
The Argyle underground block cave is 270 metres deep from the floor of the current open pit to the underground extraction level and has an estimated ore reserve of 60 million tonnes, according to Rio. Progress with the project has allowed the original 8 million tonnes per annum extraction estimate to be now increased to 9.5 million tonnes per annum, giving a life of seven years with full production starting in 2011.
The huge cost overruns are put down mainly to higher than expected volumes of underground water that required immensely larger ducting and pumping facilities. Tota said the scope of the underground project consists of developing the access tunnels; extraction level and undercut level tunnels and construction of the ore handling infrastructure to take the ore to surface. In addition, power, ventilation fans, a refrigeration plant, pumping systems and workshops are required to be installed to enable the mine to operate.
According to him, the mine will be operated, using state of the art technology, from a remote control centre where the production process can be monitored and controlled by video and process control screens.
Rio Tinto says some segments of the project have actually moved slightly ahead of schedule and that it foresees no problems in initiating extraction in 2010. Most Indian diamantaires will be relieved to hear this. |
