Gold

An earthquake measuring 8.8 on Richter scale hit Chile on Saturday and this has hit the global gold markets also and how.

Chile is one of the biggest mining economies in the world. Chile is a leader in copper mining and it has several gold mines also. With the huge quake hitting the nation killing at least 214 people, ripping apart buildings and bridges and sending tsunamis surging across the Pacific, the nation will be fighting the disaster in the coming months and this will impact its almost all mining operations.

In fact, recently exploration drilling at the Ojo de Agua East zone of the Volcan gold project in Chile had confirmed the presence of significant mineralization.

Andina Minerals had announced that it completed five holes at the site to a combined depth of 1,730 metres to follow up on a surface trenching program carried out in December. Intercepts from this work included a section measuring 70 metres graded at 1.2 grams per tonne (g/t) of gold, which was encountered at a depth of 176 metres. This intersection was encountered in Hole 3, which was graded at 0.52 g/t of gold over its entire 336-metre depth. In addition, this hole featured an intercept graded at 0.53 g/t of gold over the upper 84 metres.

Other intersections from the drilling included a two-metre vein interval graded at 4.0 g/t of gold and a 60-metre section graded at 0.5 g/t gold. The company was planning to carry out further exploration drilling in the area.

But this operations will be hit badly by the quake which left Chile in a very bad shape. Pictures shown on television channels told a tragic tale of a nation which was all set to become a big economy with the help of its minerals.

In Chile, officials said the 8.8-magnitude quake displaced more than 1.5 million people and severely damaged 500,000 homes. President Michelle Bachelet called the quake one of the worst tragedies in the last 50 years and declared a state of catastrophe.

The quake, tied for the world’s fifth-largest since 1900, set off tsunamis that swamped nearby islands before moving across the Pacific, prompting warnings in all 53 nations ringing the ocean. It was the first hemisphere-wide tsunami warning since 1964.

Chile is the world’s largest producer of copper. It has the world’s most productive mine at Chuquicamanta. Northern Chile also has rich, high-grade iron-ore deposits, mainly in the Coquimbo area. Most of the ore is exported, and the rest is used by the local iron and steel industry.

Chile has the largest deposits of nitrate, in the Atacama Desert in the north. The mining and exporting of nitrate (used for fertilizers and for the production of high explosives) flourished during the last quarter of the nineteenth and first quarter of the twentieth centuries.

Other minerals produced nowadays include: gold, silver, molybdenum, manganese, zinc, lead, bauxite, sulfur, and potash. Uranium, cobalt, antimony, and tungsten are also mined.

Oil and natural gas fields, near the eastern outlet of the Strait of Magellan and the northern coast of Tierra del Fuego, produced 1,940,000 tons of oil and 4,358 million cubic meters of gas in 1986. In 1989 Chile’s oil fields produced an average of 24,000 barrels per day. Coal production was 1.3 million tons in 1986.

Copper

Chile witnessed its worst earthquake in 100 years on Saturday and hundreds of people were killed. Thousands of building collapsed and roads and power lines were also damaged in the 8.8 earthquake which even caused a tsunami in the Pacific.

However, the Chile quake is all set to cause a major boost in copper prices. Chile is a nation with rich mineral deposits. But the quake has caused major power cuts and the damage in several cities will hamper production plans of almost all major copper producers in the country. This will affect the market and if China continues its buying plans, copper will see a bull run in the coming days.

Chile is the world’s largest producer of copper. It has the world’s most productive mine at Chuquicamanta (in the northern region). Northern Chile also has rich, high-grade iron-ore deposits, mainly in the Coquimbo area. Most of the ore is exported, and the rest is used by the local iron and steel industry.

Chile has the largest deposits of nitrate, in the Atacama Desert in the north. The mining and exporting of nitrate (used for fertilizers and for the production of high explosives) flourished during the last quarter of the nineteenth and first quarter of the twentieth centuries. Other minerals produced in the country include gold, silver, molybdenum, manganese, zinc, lead, baixite, sulfur, and potash. Uranium, cobalt, antimony, and tungsten are also mined.

According to reports at least four copper mines which produce about 16 per cent of the country’s output and two oil refineries have already halted operations.

Codelco, the world’s biggest copper producer, said its El Teniente and Andina copper mines halted operations after the temblor disrupted electricity supply. Anglo American Plc said its Los Bronces and El Soldado mines in Chile stopped operating for the same reason. Empresa Nacional de Petroleo shut its Bio Bio and Aconcagua refineries.

Copper exports made up about half of Chile’s $53 billion of exports last year. State-owned Codelco produces about 600,000 tonnes of the metal a year from El Teniente, the world’s biggest underground copper mine, and from Andina.

However, copper mines in northern Chile operated by BHP Billiton Ltd weren’t affected by the earthquake.

Transportation will be impacted by damage to highways and from a lack of fuel. The country’s main highway has been severed and bridges destroyed. Mine workers’ apartment buildings have also been destroyed.

Most of Chile’s key mining industry is based in the north of the country. The quake struck in central Chile. Many of the more distant mines rely on diesel to power generators to provide electricity and disruption to supply – either due to problems at the nations oil refineries, near the epicenter of the quake, or because the fuel is diverted to help with the relief effort – could have implications for output.

Chile hosts about 30% of the globes known copper resources and accounts for over 35% of global copper production. Owing to a global increase in copper prices, Chile and other major copper-producing countries have experienced notable economic growth in the last decade.

The country’s copper production accounts for 40% of the world’s annual output, with state owned Codelco remaining one of the country’s largest copper producers, producing 74% of the country’s copper in 2003 compared to 33% in 2002.

Chile earthquake to hit gold and copper prices
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