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Analysis

Cost Competitiveness Key in Extraction Processes

Mon, 10/21/2013 - 09:22

Barclays reported in August 2013 that the average cash cost of gold mining rose 0.8% in the second quarter of the year, while marginal costs sprung up 5% due to the fall in the precious metal’s price. According to the bank’s estimations, the cost of producing an ounce of gold in Mexico averages US$775 per ounce. A company’s ability to extract the highest amount of marketable mineral at the lowest cost possible is what determines a mine’s profitability and viability. Therefore, many mining companies are focusing on “cost per ounce” instead of “cost per tonne”, in a clear sign that the core business is not just the extraction of ore, but also the metallurgic extraction processes.

Since 1972 Kappes, Cassiday & Associates (KCA) has specialized in providing metallurgical processing services to the international mining community. The company is highly specialized in processes such as cyanide metallurgy for the treatment of gold and silver ores, copper and base metal leaching, solvent extraction, gravity concentration, and electrowinning. KCA also provides construction management, develops ADR plants (AdsorptionDesorption-Recovery plants), and performs environmental testing and analytical services, supported by its laboratory in Reno, Nevada. As a result of its efforts in research and development, KCA also provides new solutions for the industry, such as an on-site system that converts carbon fines and used carbon to a clean dry ash. This system also captures mercury through a revolutionary absorption system, thus making mining processes more sustainable.

Through its procurement and logistics subsidiary in Mexico, Servicios Especializados de Compras y Logísticas del Norte (SECL del Norte), KCA provides EPCM (Engineering, Procurement and Construction Management) services and supports efficient and environmentally responsible metallurgic extraction processes in the Mexican mining industry. SECL provides integrated support to its clients from the earliest stages of mine development, beginning with prefeasibility studies, which are conducted by highly experienced engineers based in Reno. The results of these studies are sent to clients for approval prior to starting EPCM activities.

After only six years of operation SECL has gained the trust of important precious metal producers in the country. Carmina García, General Manager of SECL del Norte, mentions that this has been possible thanks to the company’s focus on its clients’ needs. “In every case, I work with our team of engineers who are based onsite - very close to the clients - in order to perfectly understand their needs. We have always selected the right material and equipment, and our prices are very competitive. We call our service llave en mano (turnkey service), through which we provide a full solutions package,” García explains.

The engineering expertise provided by SECL ensures that the company’s services adapt to the needs of each mine. Horacio Páez, General Manager of Kappes, Cassiday del Norte (KCN), mentions a recent project within a gold mine in Chihuahua, in which the company provided its EPCM service for leaching, mills and washing processes. “This was an interesting project from the engineering aspect. For example, the mine employed backwash instead of selective flotation,” he begins. Páez explains that KCN and SECL also knocked down rock formations and built a vertical natural wall in order to set the mine’s primary crusher more efficiently. “Due to the mine’s characteristics, we eliminated the need to use mills in the design of the absorption plant, which lowered our client’s investment capital,” Páez continues. “The company was very pleased with our performance, and this has motivated them to ask for our services on two other projects. We are pioneers in what we do. Moreover, our broad experience in leaching processes distinguishes us.”

In order to offer attractive prices to its customers, SECL maintains good relationships with its suppliers. “We listen to each other and comply with each other’s requirements,” explains García. “The same thing happens with our contacts in transportation and customs brokers. Our competitive prices are a result of our team work,” she states. These commitments have allowed the company to grow organically and offer its services to an increasing number of mining companies all over Mexico, regardless of the remoteness of their location. “We are currently working on a project in Sonora, that is expected to conclude by the last quarter of the year, and we are working as well on an ADR expansion project in Guerrero,” mentions García. “We are waiting to secure an expansion contract in Sonora, and it is almost certain that our services will also be required for an expansion project in Durango. The market is still growing, and so is the company,” she states.