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Kennecott making plan to recover from mine landslide

BINGHAM CANYON — Giant trucks, each capable of hauling 340 tons of ore, sat crumpled or idle Thursday nearly a mile deep in Kennecott Utah Copper's mountainside mine.

The equipment hasn't moved since an estimated 165 million tons of rock and dirt thundered down the mine's terraced northeast wall two weeks ago, nearly filling the bottom of the 2 ¾-mile wide pit.

"When I look down there, what I see is a fantastic challenge," said Matt Lengerich, Bingham Canyon Mine general manager. "Now, we have to get back to producing copper. How do we do that?"

Kennecott will try to answer that question and many others over the next few months as it looks to recover from what chief executive officer and president Kelly Sanders said was one of the largest landslides in mining history.

"I believe that our employees and our organization will rise to the occasion and will rewrite history as we come out of this challenging event in front of us," Sanders said. "Our legacy is resilience, and I believe resilience will prevail."

Company executives spoke publicly for the first time since the April 10 slide during a media tour of the crippled mine Thursday.

Kennecott earlier said it expects production at Bingham Canyon to drop 50 percent in 2013. Sanders acknowledged that will impact workers, but he would not say whether it means layoffs. The company has asked 2,100 employees to take vacation or unpaid time off.

"We must reduce our cost in accordance with the production reduction," he said. "As a result of that, there will be some difficult decisions for us."

Some mining industry analysts estimate repairing the mine could take at least $1 billion.

Sanders would not say how much the landslide has cost the company to date, nor would he speculate on recovery costs. Kennecott, owned by London-based international mining company Rio Tinto Group, has not released any financial information related to the slide.

Rio Tinto suffered its first yearly financial loss in 2012, and as a result appointed a new CEO, Sam Walsh, in January. Walsh has already cut hundreds of jobs and earmarked underperforming copper, coal and aluminium assets for sale or closure. He also anticipated cutting capital costs by $4.5 billion in 2013.

Sanders said Walsh supports getting Bingham Canyon back on its feet.

Kennecott produced about 25 percent of the nation's copper and 2 percent worldwide in 2010 and 2011, Sanders said. Output slowed last year. In addition to copper, the mine produces gold, silver and molybdenum, a metal used in steel alloys.

Sanders said work in the upper southeastern portion of the mine started again two days after the slide, and workers have set records in the amounts of waste material removed in that area since then.

"We have equipment in the pit that is ready to move ore. We have yet to set a safe operation plan to do that," he said.

The company had tracked earth movement in the mine for months and removed workers in the days prior to the slide. Sanders said 90 percent of the company's equipment wasn't damaged.

Kennecott intends to take a "methodical approach" to ensuring the mine is safe before sending workers into the pit.

Over the next 30 days, geotechnical experts will assess the impact of the landslide, and over the next 60 days, Kennecott will develop recovery and staffing plans, he said. Sanders said it will take about four months to develop a long-term plan for returning to full production.

"Our intent is to increase the output of copper over that time," he said.

Sanders said the upper part of the slide would have to be removed to make mining safe, but he didn't know whether the material in the bottom of the pit would be hauled out. The majority of the ore lies under the slide, he said.

"It's a big challenge to get back in and dig out the material that's slid," Sanders said.


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