Ravell Call, Deseret News
SALT LAKE CITY — Kennecott Utah Copper asked mine workers Monday to voluntarily take vacation or unpaid leave while the company considers its next move in the wake of a massive landslide that brought mining to a halt.
Employees who don't want to take time off will be provided work but may be assigned to jobs outside their usual roles. Someone who drives a truck might be asked to paint a building or do maintenance work, said Kyle Bennett, spokesman for Rio Tinto's Kennecott Utah Copper.
Meantime, the Mine Safety and Health Administration has not allowed Kennecott's geotechnical team into the open-pit mine to asses the size of the slide and the damage it caused.
"Once our folks are able to get in, then we will monitor the slide pattern and make a determination on what it means long term," Bennett said.
An enormous wall of dirt rumbled down the northeast section of the Bingham Canyon Mine last Wednesday night. No workers were injured, but roads, buildings and vehicles inside the pit were damaged. The University of Utah seismograph station recorded the slide as a 2.4 magnitude shake.
The worldwide copper industry now has a watchful eye on immediate and future operations at the mine. The landslide could also impact other copper mines expected to come online this year around the globe.
One analyst estimates cleaning up and repairing the Bingham Canyon Mine could cost Rio Tinto $1 billion in earnings before interest and taxes, depending on how long it takes, said Brian Hicks, a global natural resources fund portfolio manager with U.S. Global Investors in San Antonio.
Kennecott has roughly 20 days of stockpiled copper ore available for refining, Hicks said.
"I believe they're going to be living off stockpiled material," he said. "Really, until that gets dwindled down, I don't see an impact on supply right now."
The Bingham mine provides about 1 percent of the world's copper in what generally has been a very tight market the past few years.
That market, Hicks said, was anticipated to change with new mines preparing to open in Mongolia, South America and Africa later this year.
"However, with this incident I think it just reminds investors as well as people within the industry just how difficult it is to get that material out of the ground and how difficult it is to start new mine," he said. "So, perhaps that expectation might be not as strong after this incident."
Hicks, who has visited the mine in the past and had two grandfathers who worked there, said the landslide also could hurt Kennecott's effort to extend the life of the mine. In 2010, Rio Tinto announced plans to dig deeper into the open pit to reach more copper ore.
"That actually can make it quite tricky because the integrity of the pit walls could be in question further as you go deeper and deeper and you have to take the mine out wider," he said. "That definitely could be in question."
Having the mine out of commission could also hurt Utah.
Rio Tinto's Utah operations contributed $1.2 billion to the state's economy, including $270 million in salaries and benefits, $765 million in purchases with Utah firms and $140 million in state and local taxes in 2011, according to the University of Utah Bureau of Economic and Business Research.
The company directly employed 2,801 people and 14,971 indirectly that year.
"You have a large industry that brings a lot of money into the state. I don't know how many gallons of diesel they use every day, but it's a lot," said Richard Giraud, a landslides expert with the Utah Geological Survey.
Giraud sees furloughs as a real possibility.
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