The Ok Tedi mine, in the remote Star Mountains of Papua New Guinea, is going into a temporary shut down as copper prices drop and water levels run low on the Fly River, the only transport route for ore.
The former BHP mine, now run by the PNG state, says dry weather is significantly impacting operations with river traffic to the port at Kiunga unreliable due to low water levels.
It means copper ore can’t get down the river and mine supplies, including diesel for power generation and food stocks, can’t get back up to the mine site.
“Transport of copper concentrate product to Port Moresby for on-shipment has also been unreliable creating uncertainty with regard to cash inflows,” the company said.
Hydroelectric power is also running down.
The weather pattern is similar to that in 1997-98 when operations shut for more than six months. Weather forecasts for the next six months indicate a only a 20% probability of normal rainfall.
Ok Tedi Mining Limited says the workforce and their families are being progressively sent back to their home towns.
The mine digs up about 70 million tonnes of combined ore and waste material each year.
Revenue of Kina 291 million ($AU142 million) during the first quarter of 2015 was 58% lower compared to the same three months in 2014. This was mainly due to 48% lower shipments and lower metal prices.
The average copper price was down by 16% $US2.64/lb during the quarter.
Royalty payments to the government for the three months were Kina 5.1 million ($AU2.5 million), far lower than the Kina 13.3 million ($AU6.4 million) in the same quarter of 2014.
BHP ran the mine, based at a giant gold topped mountain of copper, until 2001 when it was handed over to a local trust.