Rio cut takes the shine off Argyle – The West Australian

Rio Tinto has thrown fresh doubt on the future of its Argyle mine in the Kimberley, slashing the resources at the iconic diamond mine as part of a review of its future.

The updated reserves and resources statement, released by Rio along with its annual report on Thursday, shows the global mining giant has cut Argyles resources by two-thirds from 44 million tonnes of ore at the end of 2015 to 15 million tonnes this year.

Rio said the cut follows the ongoing review of potential mine-life extension options and restricts reported resources to that component of the known mineralisation which may be developed, mined and processed within the current operational mine life.

Aside from depletion from mining last year, no cut was made to Argyles reserves ore Rio can economically access under current plans. The company also confirmed that its existing mine plans, taking Argyle production through to 2021, remain in place.

About 29 million tonnes of ore remains in Argyles reserves, after the company processed 5.1 million tonnes last year.

The decision to slash Argyles resources all but rules out any extension to the existing operations beyond 2021, and even that end date could be brought forward.

Rio booked a $US241 million before-tax impairment on Argyles value at the end of 2016, and chief executive Jean-Sebastien Jacques confirmed to WestBusiness last month that Rio was still to decide whether it would invest the capital needed to build a second underground block cave at Argyle.

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Rio has talked up Argyles contribution to its understanding of block cave mining, a technique it also uses at the massive Oyu Tolgoi copper and gold mine in Mongolia.

The technique, which involves mining under an ore body to allow it to progressively collapse under its own weight, lowers operating costs but requires substantial up-front capital.

Rio has not disclosed the cost of building a second cave at Argyle, but its 40 per cent share of pre-production construction of a new block cave at the massive Grasberg copper-gold mine in Indonesia is about $US200 million, according to Rios annual report.

Last year Rio Tinto booked net earnings from its diamond operations including Argyle and its 60 per cent holding in Canadas Diavik diamond mine of $US47 million, down 40 per cent from $US79 million in 2015.

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Rio cut takes the shine off Argyle - The West Australian