Block cave challenges increase supply risks
Block cave mining is the intended mining method for a number of significant copper projects under development. CRU expects block cave projects to account for over a fifth of the growth in potential copper supply by 2025. Past block caving projects have encountered a range of challenges, which have typically led to delayed ramp-up and higher costs. The current crop of caving projects should benefit from these learnings, as they are being developed by the same majors, each with decades of block caving experience. However, the new operations are much larger scale, typically in harder rocks, and are at deeper depths. Block caving also has less flexibility to respond to any issues that may arise compared with conventional mining methods.
While PT-FI has over three decades of block caving experience at Grasberg, the risk now is the scale: Grasberg is almost 100% reliant on block caves. Codelco’s Chuquicamata plans to use macroblocks up to seven times larger in area than conventional blocks. The Oyu Tolgoi block cave (company start up guidance revised (16 July, 2019) to between May 2022 and June 2023) will be more than 50% larger than any other block cave Rio Tinto has previously operated and it is in a relatively weak and heavily faulted rock mass. In the longer term, the Resolution block cave will be the deepest block cave in the world at around 2km and one of the hottest mines at 76° to 82° Celsius.
Depletion of near surface orebodies sparks interest in underground cave mining methods
Block caving is an underground mining technique that allows for the bulk extraction of large, relatively lower grade ore deposits with substantial vertical dimension. The technique involves undercutting a large section of ore by drilling and blasting, which then intentionally starts to collapse under gravity. The broken ore falls into a series of pre-constructed funnels, known as drawbells. The ore is then removed from access tunnels underneath the caving rock mass.
The interest in cave mining is being fuelled by the depletion of near surface orebodies, relatively high production rates and low operating costs. Also, open pits often have a continuation of the orebody below their economic depth, the extraction of which would not be economic using conventional underground mining methods.
While the capital cost for block caving is significant – typically over US$5 bn for current large-scale block caves – operating costs are significantly lower than for traditional underground mining methods. Block cave mining operating costs, at around US$4-8 /t of ore mined, are a fraction of the cost of other underground mining methods, largely driven by high production rates that for some of the new “supercave” projects are expected to reach 100,000 tonnes of ore per day. In addition, drilling and blasting costs are far less, and there are no backfilling costs. The lower operating cost of underground block cave mining can be comparable with higher cost open pit operations and can either be a viable alternative to develop a new mine or to extend the life of an existing mine.
Cave mines can have a significantly smaller footprint than a comparable open-pit, since waste mined is only limited to underground infrastructure development. The minimal amount of waste is also a key permitting advantage. Other benefits include limited use of explosives to fragment the ore and reduced greenhouse emissions through minimising ore re-handling. Block cave mines are also very suitable for highly automated equipment like remote control loaders, trucks and crushers.
The caving industry is now moving toward the next generation of caving geometries and scenarios where current practice and knowledge is likely to be tested. A shift is underway towards block caves at greater depths over small footprints and in competent rock-mass environments. Operators are planning higher cave columns in order to maximise profitability. These operating environments are likely to be less predictable and present new challenges.
Current and planned block cave mines
Block caving has been used for over a century, having first been applied at iron and copper mines in the US in the late 19th and early 20th centuries. However, it is only within the past 20 years that this method has spread more widely. There are currently approximately 18 cave mining operations in 11 countries. In addition, there are at least another 20 cave mining projects globally, in various stages of studies and development.
The key players involved in the major block cave copper projects each have decades of experience in block caving. Rio Tinto has owned and operated block caves at Northparkes (copper-gold), Palabora (copper-gold), and the Argyle diamond mine, the experience and lessons from which will be applied in the development of its Oyu Tolgoi, Resolution and Bingham Canyon block caves. PT-FI has operated block caves at Grasberg since 1980. Codelco, the owner of the El Teniente NML and Chuquicamata projects, has operated block caves at El Teniente in Chile for decades.
Aside from greenfield projects, block caving is often used as a replacement mining method at an earlier open pit that has reached its economic limit. Examples include the Palabora copper-gold mine in South Africa, the Argyle diamond mine in Australia, and the forthcoming transitions at large copper-gold mines such as Grasberg in Indonesia and Chuquicamata in Chile. Caving methods can be used with any type of commodity since it is the geological and geotechnical context that is important. Most cave mines involve copper or diamonds. reflecting the method’s suitability for working porphyry and pipe-type deposits, respectively.
Block caving is the intended mining method for several significant copper projects under development. The five largest projects that have either commenced production this year or are forecast to commission over the outlook will all use block cave mining. These are Grasberg Block Cave (GBC) which commenced in Q1, Grasberg Deep Mill Level Zone (DMLZ) – a restart, which commenced in Q1, Chuquicamata Underground, Oyu Tolgoi Phase 2, and El Teniente New Mining Level. Other candidates include Rio Tinto’s Bingham Canyon, where a sequence of caving operations has been under evaluation for several years, and Rio Tinto and BHP’s Resolution Copper project in Arizona.
On CRU estimates, block caves are expected to account for over a fifth of the growth in potential copper supply by 2025, increasing from 4% of current global mined copper production, to around 10% of unadjusted copper mine supply by 2025.
Copper market deficits likely if block caves fall short
Our base case estimates for the global refined copper market balance are for a largely balanced market over the next three years, before turning to deficit from 2023 onwards. Our forecasts factor in relatively conservative expectations, versus company guidance, for copper block cave project production start timing and ramp-up. However, if they experience any further delays or a slower than anticipated ramp-up of production, the copper market could shift to deficits sooner than we currently anticipate.
Copper Market Outlook
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