Has the sun finally set on South Crofty?

SouthCrofty“Nothing’s as precious, as a hole in the ground” (Peter Garrett, Blue Sky Mine)

The story of efforts to re-start tin production at South Crofty, Cornwall’s last working mine which closed in 1998, has been a rollercoaster ride. But could the announcement a couple of days ago that the mine has been placed in administration be a fatal blow?

The trigger was the decision by 20% shareholder Celeste Mining of Canada to turn off the funding tap. Investment from Celeste appears to have been the key to financing the ongoing development of the mine. But the company is now reviewing its involvement, citing concerns on “operational complexities and higher than anticipated exploration and development expenses at the South Crofty Mine.” The mine has now been placed in administration, operations reduced to ‘care and maintenance’ status, and a substantial proportion of the workforce dismissed.

This highlights a side of the South Crofty story that hasn’t received the attention it deserves. The press has – understandably perhaps – focused on the value of the minerals in the ground beneath Pool. Talk of “billions of pounds worth” of tin and other minerals waiting to be dug out at South Crofty makes great newspaper headlines, but, this is only half the story. The other half – how much it would cost to dig that metal out – seems to be the real issue. When I wrote a story on Crofty for the now defunct Cornish World magazine in 2007, several people I interviewed warned that the costs of bringing the mine back into production would be prohibitive. The main problem is, of course, the same one that has plagued miners for thousands of years; water. The moment the pumps were switched off at Crofty in 1998, water levels in the workings started to rise; 15 years on, the task of de-watering hundreds of kilometers of tunnels would be enormous (and enormously expensive).

Management at Western United Mines, the owners of South Crofty for the last 12 years, remain resolutely up-beat about the prospects of finding new investors willing to make the necessary financial commitment. Their attitude is commendable, but it has to be said that on the face of it, the prospects don’t look good.

Capital investment in the global mining industry – to open new mines and increase production at those already in operation – saw explosive growth in the last few years. Commodity prices soared, boosted by surging demand from a rapidly growing Chinese economy. Tin prices rose from just US$6,000 per tonne when South Crofty closed in 1998 to more than $32,000 by mid 2011. That provided a very positive backdrop for a company like Western United Mines to look for new investment. However, things are very different now. The Chinese economy has slowed sharply and developed world economies are still weak. That doesn’t bode well for commodity prices. The price of tin, for example, has fallen from that $32,000/tonne high to just $20,000 currently. In the big global mining centres like Australia, investment in new production has collapsed.

This matters for South Crofty because it means that the appetite for big spending by the global mining companies  is diminishing rapidly. So the chances of finding another ‘fairy godmother’ to fund the South Crofty project are diminishing by the day. And the fact that the mine is located in the middle of a built-up urban area also pushes up the operating costs. One practical example: the proposed new ore processing plant would have to be built underground to prevent it impacting on the surrounding area, at much higher cost than a surface facility.

Other issues, for example UNESCO’s threat to withdraw Cornwall’s World Heritage Site status if mining is restarted at Crofty, are unfortunate, but are really just a sideshow. The real question, as it has always been, is one of economic viability. Basically, is it possible to re-start mining and profitably extract tin from South Crofty? It is worrying that a global mining company appears to have done the sums and decided that it is not. I really hope that I’m wrong, but it seems  unlikely in the current environment that there will be a queue of other companies waiting to replace Celeste. The sun, it seems. may finally have set on South Crofty.

Advertisements
Leave a comment

2 Comments

  1. Very interesting, if very sad, post. Thank you.

    Reply
    • CornwallNow

       /  July 1, 2013

      Thanks. Yes – I would love to be proven wrong, but it does feel like the South Crofty story might have finally reached the end of the road. We’ll see…

      Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: