ets may impact on tropicana development

MiningNews - ETS may impact on Tropicana development

Colin Jacoby
Wednesday, 6 August 2008

GOLD producer AngloGold Ashanti says the development of Australia-based mining projects, including the company’s 70%-owned Tropicana gold project in Western Australia, may suffer under the Federal Government’s proposed carbon emissions trading scheme (ETS).

Speaking to journalists on the sidelines of the 2008 Diggers & Dealers conference in Kalgoorlie today, AngloGold Ashanti chief executive Mark Cutifani said the ETS may put pressure on Tropicana’s development.

“I think it will make it really difficult to get [Tropicana] up [under the carbon credits scheme proposed],” he said.

“Adding $40 to $50 an ounce [to costs] …is going to make it very difficult.”

Cutifani said the ETS, if not managed correctly, would place further costs on an industry that is already suffering.

“There has been a 20 percent decline in the [gold] industry in the last 10 years,” he said.

“It has been very disappointing to see that decline and when you look at the discussion over the carbon credits, I would much prefer to see incentives for a company to be innovative as opposed to penalties.

“If penalties were the way to go, and is the only way you are going to get practical movement, then longer date it so industry has got a chance to manage its position.

“You can’t dump $24 million of costs on a business and expect the business to remain viable or be successful.”

Cutifani remained tight-lipped over disclosing a capital cost for Tropicana.

“[The capex for Tropicana] is dependent on the power solution,” he said. “I don’t think diesel solution in terms of power – its 30c a kilowatt hour that’s the problem.

“Fuel costs are around $130 a day so there is some more work to do, but there will be a mine at Tropicana. Just what it looks like and time is what the team is working through now.”

Cutifani also said the pre-feasibility study into Tropicana would be extended by six months.

“We haven’t got the scale right,” he said.

“We are in between in terms of being able to get the real scale that we would like. We want to get up there to between 350,000 to 400,000 ounces and we are currently about 300,000 to 350,000 ounces.

“We would like to push that a little bit further and keep the operating costs down. The power is the thing that worries me at 30c per kilowatt hour.”

The pre-feasibility study was expected to be finished in mid 2008.

Tropicana, located 400km northeast of Kalgoorlie, is a joint venture between AngloGold (70%) and Independence Group NL (30% free carried to completion of the pre-feasibility study).