Mount Lyell copper mine sale misses time target, talks ongoing

Owner Vedanta Resources had aimed to have a sale agreement in place by June and said as recently as May it remained committed to that.

June passed without a deal for the veteran Queenstown mine, which has been on care and maintenance since 2014 following the deaths of three workers in two separate incidents.

Copper Mines of Tasmania acting general manager Clint Mayes on Wednesday said: "CMT is happy with progress of negotiations with interested parties to divest ownership of the Mount Lyell copper mine, but it is taking longer than expected.

"Due to the confidentiality of the negotiations, we are unable to comment further at this stage, but will make an announcement in due course".

Strong copper prices would be adding to the mine's appeal.

Prices have roughly doubled since mid-2020, although they eased back slightly in the past few weeks.

They hit an all-time high in mid-May.

Vedanta spent big dollars after the production halt aimed at preparing the mine for a restart, and on care and maintenance work.

The state government in 2017 contributed $9.5 million for work towards a potential restart.

It also offered a $25 million assistance package to be made available once mining resumed.

Resources Minister Guy Barnett last year said that founding would remain on the table for a new owner, subject to appropriate due diligence.

If the mine closed for good, someone - probably taxpayers - would be left with a big environmental remediation bill.

Tasmanian Minerals, Manufacturing and Energy Council chief executive Ray Mostogl said the organisation was optimistic about a sale.

He understood there were some interested potential buyers, and said they were quite reputable from all accounts.

"I think the market fundamentals for copper remain particularly strong, given the need for batteries and renewable energy products ...," Mr Mostogl said.

"The market fundamentals would suggest copper's a good business to be in."

He said Mount Lyell was a readymade mine which had been on care and maintenance and much good work had been done underground in that time.

There was "a fair bit" of work to be done above ground, he said.

Mr Mostogl said a resumption of mining would have a very positive impact, but a lot of engineering resources would be needed over a couple of years.

"It would be money being spent in the middle of the West Coast," he said.

"And it's about the confidence that everyone has when they know something that's been sitting there idle is going again.

"It gives confidence to small business to grow, and would have quite a big spin-off effect for the rest of the supply chain."

He said the benefits would be far reaching, extending to catering businesses, taxis, couriers and so on.

The federal Environment Department in 1997 estimated neutralising all acid drainage sources could cost more than $10 million in capital expenditure, plus yearly operating costs of about $2 million.

"Importantly, site remediation would enhance Tasmania's clean, green image and send a message to local, national and international mining and environmental communities that Tasmania is serious about the environmental impacts of mining," scientist Lois Koehnken said in her report for the department on Mount Lyell remediation.

"Implementing remediation plans is a major step in fulfilling Australia's international responsibility to protect, conserve and preserve World Heritage Areas for future generations."

Her report said copper had been mined and processed at Mount Lyell for a century, "but it was not until Copper Mines of Tasmania (now a Vedanta subsidiary) took the Mount Lyell mine over in 1994 that more than scant regard was paid to protecting the environment".

The report said environmental effects included:

A state government spokesperson said: "The government understands negotiations for the sale are continuing and we would welcome a positive conclusion in the near future."

"The government is a strong supporter of the resources sector and the thousands of jobs it supports in regional communities and a successful sale of the mine would create significant employment opportunities on the West Coast."

The government did not answer questions about what would happen if there was no sale, who would be left with the clean-up and what it would involve and how much contact there was between the government and the company.