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Rio Tinto Energy in South Africa

Rio Tinto has been undertaking coal related exploration in Southern Africa for a number of years and has engaged TWP Consulting to manage a pre-feasibility study on its Chapudi project in South Africa’s Limpopo Province.

Chapudi is a joint venture between Rio Tinto Energy and BEE partner Kwezi Mining, with Rio Tinto as the manager. The pre-feasibility study was initiated during the second half of 2008, on what will be a large scale greenfields project in the Soutpansberg coalfield located between Makhado (Louis Trichardt) and Musina (Messina) in northern Limpopo. Rio Tinto has chosen to outsource certain aspects of the pre-feasibility study to a number of specialist consulting companies in the fields of resource estimation, mine design and coal beneficiation. Besides TWP’s responsibility as overall pre-feasibility project manager, the company is also responsible for the design of the surface infrastructure and facilities of the envisaged mine.

In early 2008, Rio Tinto announced it had discovered an open-pittable coal resource of 1.04 billion tonnes at Chapudi. The SAMREC compliant resource has 90 million measured tonnes, 220 million indicated tonnes and 730 million inferred tonnes. Concurrent with the prefeasibility study a second exploration drilling programme is underway which is expected to increase both the magnitude and confidence of the resource estimate.

Rio had initially been exploring for coking coal as its primary target, but the order of magnitude study showed that the Chapudi coal deposit is more suitable as a primary thermal coal product with a coking coal fraction as a by-product.

The target coal seams are No 6 and No 7, with each being some 20 to 30 metres in thickness and there are various coal plies contained within the seams, separated by shale and stone. The coal deposit dips northwards at 10O to 14O from a sub-outcrop north and parallel to the Soutpansberg mountains. The lateral extent of the deposit is some 34 kilometres, with a zone of approximately 12 kilometres being of particular interest.

At this time the coal deposit up to, 200 metres deep, is considered economically viable by opencast mining and various methods are being considered for overburden stripping. These include the use of draglines, truck and shovel or even in-pit crushing and conveying. The last is a method considered but not yet employed on coal mines in South Africa but successfully used on Rio Tinto Energy operations in Australia.

Brad Rip, senior mining consultant at TWP and the pre-feasibility study project manager says that the mine design must take into account not just the mega-sized mining equipment currently available on the market, but must provide for the future and for what is still on the drawing boards of the original equipment manufacturers.

Rip, who notes that this is a world class coal resource which can support a life-of-mine in excess of 40 years at more than 10 million tonnes a year, expects that the project could have a double-stage DMS processing plant that would cream-off the coking coal fraction and separate the thermal coal from the reject material, together achieving maximum product yield from the run-of-mine coal. This two-product option could potentially offer the best marketing strategy.

Chapudi was discovered in an area that had previously been seen as having little economic geological potential, and now has sufficient resources to support an Independent Power Producer (IPP) under the auspices of Eskom’s Power Purchasing Programme (PPP).

“Rio Tinto has aligned itself with a potential IPP producer that has initiated a bid under Eskom’s PPP programme,” Rip says. Information from the pre-feasibility study will be used for that purpose as the technical studies are quite well advanced.

The two key infrastructural challenges for any major project in northern Limpopo relate to water and power, and one of the keys to the success of a mine and power station project will be securing a sufficient water supply. The challenge of power to site should also not be underestimated as the grid in that region is fairly limited and additional electricity reticulation infrastructure would be required to supply such an operation. “We have had preliminary discussions with Eskom and other authorities including Limpopo Trade and Investment which has been particularly supportive.”

Rip also says that the baseline environmental and social studies have been initiated under the direction of Rio Tinto Energy and Rio Tinto Technology & Innovation. These matters are considered particularly important by Rio, and interested and affected parties are being identified and consulted on a carefully planned ongoing basis.

Willem Buhrmann, South African Rio Tinto Energy manager, adds that the project team (including all consultants) enjoy ongoing guidance and support from specialist technical advisors within Rio Tinto Technology & Innovation in both London and Australia.