CuDeco report lifts lid on mine’s design, equipment failures
A 42-page report on the processing plant at CuDeco’s Rocklands copper mine near Cloncurry detailed a litany of issues.
The management of copper miner CuDeco was preparing for the arrival on site of a host of Queensland politicians when a disturbing internal report lobbed on their desks.
The 42-page assessment of the new processing plant at CuDeco’s Rocklands copper mine near Cloncurry detailed a litany of major issues at the project — problems that would ultimately lead to last week’s collapse of the one-time high-flyer.
The report, which had never seen the light of day before now, detailed a procession of problems, including blown-out piping, ineffective repairs, poor design and the failure of motors and equipment simply not up to the demands of the project.
If the pages of issues were not enough to catch the attention of CuDeco management, the attached photographs should have been. They showed pipes with holes big enough for a man to fit through, piping that appeared to have been patched up with tape, twisted and broken pieces of equipment that had only been in use for weeks, and piles of rocks and liquids spilt around the plant when components failed to function as designed.
The report lays blame for the problems at the feet of the company responsible for the plant, China’s Sinosteel Equipment and Engineering, and a lack of supervision from CuDeco during the plant’s design and construction.
The report says there was no evidence of quality assurance or quality control at the plant, noting there appeared to be no suitably qualified owner’s representative during the design and construction of the plant.
“There is evidence that the general engineering standard and operational readiness (design, construction, equipment assembly, commissioning, business systems etc) are not consistent with the standard normally insisted on by large to mid-tier operators in the mining and minerals processing industry,” it says.
CuDeco formally appointed administrators yesterday, just days after its biggest shareholder and backer, China Tonghai International Finance, called in receivers. Investment bank Argonaut has been appointed to try to find a buyer for the asset.
The latest revelations about the state of the project suggest any would-be buyers will have to be prepared to take on a sweeping overhaul of the plant, which has now been on care and maintenance for more than a year.
High-level issues identified during the review included poor design practices, inferior construction materials and inadequate holdings of spare equipment. It recommended a shutdown of the project and a comprehensive re-engineering of the operation.
The internal report was prepared in late October 2016, less than a week before dignitaries including federal MP Bob Katter, his son and then-state MP Robbie Katter, and Palaszczuk government minister Coralee O’Rourke were due to arrive on site for Rocklands’ formal opening.
The $300 million Rocklands mine and plant produced its first copper concentrate in July 2016. Just three days after CuDeco announced the milestone to the ASX, however, one of the pipes into the plant’s scrubbing circuit failed.
Those failures would continue and repairs could not fix the problems.
In one instance, a hole was patched up with fibreglass. That repair lasted a single day.
An overflow pipeline from the gravity thickener burst after two days of operation. One month after the first concentrate was produced, the tunnel feeder into the processing plant suffered a “catastrophic” failure.
Pumps servicing the process water pond started failing within three months. Two of three flotation blower motors had failed by October, as well as the gearboxes of two agitators in the floatation conditioning tanks.
On October 21, a week before the official opening and just before the report was finalised, part of a conveyor belt failed and a counterweight dropped to the ground.
Despite all that, by October 28, the Katters, Mrs O’Rourke and Chinese Consul Jiqing Jiang, director of the economic and commercial office of the Brisbane consulate, were touring the mine and the processing plant as CuDeco managing director Dianmin Chen spoke about the “significant employment, investment and economic growth opportunities” from the project and the wealth it would deliver for the company’s shareholders. CuDeco shares have been suspended since March last year and now look likely to be all but worthless.
The demise of CuDeco and Rocklands marks the end of one of the most extraordinary and controversial chapters from the last mining boom.
The company enjoyed one of the market’s most stunning runs on record in mid-2006, when it soared from less than 30c a share to more than $10 in a matter of weeks.
It attracted intense scrutiny from the ASX, which forced the company into a significant downgrade of its resource estimates.
The story was helped along by CuDeco’s colourful founder and long-term leader Wayne McCrae, who said the company’s project would become the “biggest copper mine in the world” and who openly spoke of his belief that Swiss mining giant Xstrata would take the company over “as sure as the sun comes up tomorrow”. The Gold Coast-based CuDeco’s early backers included game show host John Burgess.
To join the conversation, please log in. Don't have an account? Register
Join the conversation, you are commenting as Logout