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The Mineral Resources of Ireland – Part I
 
Brian Guerin
 

The earliest evidence of metal mining in Ireland is provided by Bronze Age copper workings at Ross Island, Co. Kerry in southwest Ireland. These copper workings, dated at between 2,400 and 2,000 BC (O’Brien, 1996) constitute the oldest recognised in northwest Europe.
In Bronze Age Ireland, alluvial gold was also worked for the production of gold artifacts. Texts attest to iron working at Avoca (Co. Wicklow) in the 2nd century, to iron and copper mines in the 9th century, alum mining in the 12th century and lead-silver workings and copper mining around 1500.
Iron was worked from the eastern half of Ireland during the 16th and 17th centuries. During this period, almost every county had at least one metal mine producing copper and lead-silver amongst other minerals.

Mining production in Ireland expanded in the late 18th and 19th centuries, triggered by the needs of the Industrial Revolution in Britain. Copper mining developed in southwest Ireland, especially at Allihies, and there was significant exploitation of lead, copper (e.g. Avoca) silver, coal, barite, manganese and slate elsewhere. [1]
 Other industrial minerals previously extracted in Ireland include barite, dimension stone, phosphate, silica sand and slate.

Both gypsum and brick shale are currently worked from open pit operations in Co. Cavan, whilst dolomite and fireclay are exploited from two sites in Co. Kilkenny. During the early 1980s, the Ballynoe barite deposit was among the top 5 producers in the world. Coal was worked in Ireland as recently as the early 1990s, although it was most extensively worked in the 19th century. Today crushed rock, sand and gravel are exploited from in excess of 400 quarry sites across Ireland. [2]
Ireland was a leading European producer of zinc by 2001, and an important producer of lead, alumina, and, of course, peat. Mineral production by 2001 included zinc at 225,136 tonnes, compared to 262,877 in 2000 and 180,951 in 1998; lead at 44.5 million tonnes compared to 67 in 1996, 36.5 in 1998, and 57.8 in 2000; and alumina, at 1.2 million tonnes.

Other commercially exploited minerals were silver, barite, hydraulic cement, clays for cement, fire clay, granite, gypsum, lime, limestone, marble, sand and gravel, rock sand, silica rock, shales, slate, dolomite, diatomite, building stone, and aggregate building materials.
In one example of on-site exploration, Cambridge Mineral Resources PLC undertook diamond and sapphire exploration work in Ireland, identifying numerous diamond indicator minerals and recovering significant quantities of ruby and sapphire. Gold was discovered in County Mayo in 1989, with an estimated 498,000 tons of ore at 1.5 grams per ton of gold.

In fact, there was a marked increase in mining exploration beginning in the early 1960s, resulting in Ireland becoming a significant source of base metals. [3] Tara mines started production in 1977 and is the largest Zinc mine in Europe. Galmoy and Lisheen started production more recently in 1997 and 1998 respectively.

Ireland currently has three underground zinc-lead mines in production and is the largest producer of lead concentrates. Over the last 40 years a string of significant base metal discoveries have been made, including the giant ore deposit at Navan, that is, Tara Mines. Zinc-lead ores are also currently exploited from two other underground operations in south-central Ireland: Lisheen  and Galmoy. Ireland now ranks as the seventh largest producer of zinc concentrates in the world, and the twelfth largest producer of lead concentrates. The combined output from these mines, three of Europe's most modern and developed mines, make Ireland the largest zinc producer in Europe and the second largest producer of lead.


A.    Tara Mines

Tara lead and zinc mine is located at Navan, County Meath, 50km northwest of Dublin. The mine opened in 1977, and was acquired by Outokumpu (a Finnish State corporation) in 1986. In January 2004 it was transferred to New Boliden (a Swedish mining corporation), as part of an asset exchange between the two Nordic companies.
Placed on care-and-maintenance in 2001 on account of high zinc production costs, Tara was restarted in 2003 and produced 2.55Mt (million tonnes) of ore, the highest tonnage since 1995. Some of the output is delivered to Boliden’s Odda and Kokkola zinc refineries, both formerly owned by Outokumpu, and the remainder goes to various European customers.

Tara is the largest zinc mine in Europe and the fifth largest in the world. The mine currently employs 700 people.
Some 2.6 million tonnes of ore are mined annually, which yield zinc and lead concentrates containing 200,000 tonnes of zinc concentrate and 40,000 tonnes of lead concentrate.

Broken ore from both production and development at Tara is delivered to one of five underground crushers and reduced in size to less than 150mm before being carried by conveyor to a 3,600t capacity storage bin of at the base of the production shaft. Skip loading and hoisting are automatic, and ore is supplied, at an hourly rate of 570 tonnes, to the surface coarse ore storage building, with a 30,000t capacity, known as the Tepee.


B.    Galmoy

The Galmoy mine is located in the southern Midlands, on the boundary with Laois and Kilkenny, 110 km from Dublin. Arcon International Resources Plc, an Irish registered mining and minerals exploration company, has developed Ireland’s latest (and smallest) lead zinc mine. Arcon's Galmoy Mine began production in 1997, and has an estimated life of 15 years. The total resources of Galmoy have been estimated at 10 Mt, grading at 11.8% zinc and 1.3% lead. Subsequent exploration drilling led to the discovery of the G satellite orebodies and the K and CW South orebodies. Following submission of a second planning application and environmental impact statement, approval was granted to mine these additional reserves in 2002. The R zone was discovered in the second half of 2002 and a third planning application and mine license submission to mine the R zone was made in 2003. [4]
The Galmoy Mine produces 650,000 tons of ore per year at target grades of 11.3% zinc and 1% lead.


C.    Lisheen Mines
 
The Lisheen Mine is located in Co. Tipperary. The first ore was mined in 1999, and commercial production began in 2001. The initial plan was to produce 160,000 tons per year of zinc concentrate, to be increased to 330,000 tons per year of zinc concentrate and 40,000 tons per year of lead in concentrate at full production. Lisheen is expected to produce approximately 4.83 million dry metric tonnes of zinc and lead concentrates over the estimated 14-year lifespan of the mine.  
Both the Lisheen and Galmoy mines are located on the Rathdowney Trend mineralized belt, southwest of Dublin. It comprises sedimentary rocks, mainly limestone, formed approximately 320 million years ago. [5]
Ireland role as a major lead and zinc producer is expected to increase as the combined Lisheen, Tara and Galmoy operations begin full production. Ireland is now Europe's largest producer of lead and zinc and now produces 3% of the world's zinc and 2% of the world's lead each year. The Exploration and Mining Division of the Department of Communications, Marine and Natural Resources state:
“In terms of tonnes of zinc discovered per sq km, Ireland ranks 1st in the world.” [6]
 

This could only increase if the expected potential of the midlands deposits is realized. Several new projects were expected to be developed soon, but the declining prices of zinc and lead have forced several of these projects to be cancelled, at least for the time being.The Department of Communications, Marine and Natural Resources provides direct technical assistance to exploration and mining companies in Ireland. The Geological Survey of Ireland (GSI) is the national earth science agency and is responsible for providing geological advice and information and for the acquisition of data for this purpose. The GSI has conducted many projects of direct interest to the mineral industry. The GSI functions as a line division of the Department of Communications, Marine and Natural Resources. [7]

The conditions of mineral resource exploration and development are laid out in the successive Minerals Development Acts, namely the Minerals Development Acts 1940-1999. This legislation, which is considered as a unit, comprises the Minerals Development Act 1940, Petroleum and Other Minerals Development Act 1960, and the Minerals Development Acts 1979, 1995, and 1999. However, the actual terms under which minerals are explored and exploited are set down in the Finance Acts 1922 and 1999 (and the Taxes Consolidation Act 1997 as amended by the latter), and various legislative provisions.

The Finance Act 1999 was noteworthy for the introduction of a sliding scale for corporation tax. The Act mandated a 4% cut every year from 1998 to 2003, in other words, an overall cut from 32% to 12.5%. Interestingly, there is no provision for a review of this low rate, for instance after a prescribed term of years: the Act states that the rate is to remain at 12.5% for ‘each subsequent financial year’. This suggests a determination in state policy to retain this rate of tax for future years, regardless of the economic conditions.
 

In the 1999 Act there is a separate section covering the taxation rate for both oil and gas and mineral resources. The tax rate is set at 25%. Where oil and gas production is concerned, the state is entitled to no royalties, and allows a 100% write-off of operating expenses against tax.
The situation regarding minerals is different. There are no state mining companies. Minerals are developed by private enterprise, by means of a license issued under the Minerals Development Acts 1940-1999. These licenses are legally-binding contracts.
    According to the Department for Communications, Marine and Natural Resources, there is ‘wide discretion’ regarding the type of payment or royalty on a mine. Mining rights can be given free of charge if the Minister deems this to be ‘in the public interest.’ The criteria the Department employs to decide on payments to the state by private mining concerns are as follows:

•    The likely return on a company’s investment.

•    International royalty rates (no definition of what constitutes ‘international’ is provided; neither are any comparative data).

•    The ‘need to continue to attract international exploration funding’.

•    The ‘expectations of the State as the mineral owners and the developer’s achieving a fair return’, having regard to economic conditions, and ‘recognizing the need to allow for the many exploration failures.’

These criteria seem less about achieving a fair return to the taxpayer for the profits gained by mining companies from low-cost resources, than a public relations defence of the low terms that are routinely granted. For example, what would constitute a ‘fair return’ is not defined. From the few examples that are given, it seems fair to assume that, in fact, ‘economic conditions’ are not a factor, and that the main consideration is conceding terms that are overwhelmingly to the advantage of mining companies.
 

The compensation payable to the state consists of ‘Dead Rent’, a yearly payment decoupled from production volume, and royalties on the sale price of the extracted ore. The company’s transport costs are deducted from this compensation. The ‘commonest system’ for industrial minerals, according to the Department, is based on royalty payments per tonnage extracted. Rates are ‘likely’ to be 25c to 50c per tonne.Galmoy is licensed for 21 years. Dead rent for the first year is ¤63,486 ($55,500 for US companies), the same for the second year, ¤126,973 ($111,000) for the third and subsequent years, and ¤25,394 ($22,000) after closure. Royalties are payable at 1.5% for the first three years, 2.5% for the fourth, and 3% for the fifth and subsequent years. The terms for Lisheen are almost identical, except that for the third year on, dead rent is ¤380,921 ($333,000), and royalties for the sixth and subsequent years is 4.5%.     In addition to these terms, a raft of tax concessions is available to mining companies. The following are the most significant of these.

•    Allowances may be claimed for exploration expenditure, including abortive exploration dating back 10 years. An allowance of up to 120% is available.

•    Development allowances can be claimed, equal to the difference between expenditure on working the mine, and the entire worth of the mine’s assets.

•    Expenditure on plant and machinery qualifies for an immediate 20% allowance, wear and tear allowances of 32.5% for the first year, and 12% for up to eight years. This allows companies to claim a total allowance for plant and machinery of up to 120%.

•    There are allowances for industrial buildings (4% per annum), and compensation in the event that the sale value of buildings is less than their value on paper. There are also allowances for the cost of acquiring mineral assets.

•    Expenditure after closure of the mine, including rehabilitation, can be written off against profits from previous years. If a separate fund is established to provide for closure costs and rehabilitation, the contributions to the fund can be written off over the mine’s lifetime. Withdrawals from the fund are taxable, but expenditures may be offset against them. [8]

The Exploration and Mining Division (EMD), is a ‘line division’ of the Department of Communications, Energy and Natural Resources, like its counterpart the Petroleum Affairs Division, (PAD), [responsible for the exploration and development of oil and gas resources in onshore and offshore Ireland] of the Department, EMD is the reference point for the exploration and mining industry, and is available for advice and assistance ‘from arrival in Ireland through to the opening of a mine.’

EMD comprises both administrative and technical staff, and its functions incorporate the following.

•    Exploration and mining in Ireland: the regulation and permitting of exploration for and extraction of minerals (excluding petroleum, stone, sand, gravel and clay).

•    Promoting inward investment in minerals exploration.
    
•    Policy development in the area of minerals exploration and extraction.
    
•    60% of all minerals in the State, and the exclusive right to work these minerals, are vested in the Minister [9].
    
According to the Department, Ireland is ‘internationally renowned’ as a ‘major zinc-lead mining province.’  This suggests that the Department does not see its role as securing the best possible return for the people of Ireland on what are, after all, their resources. Instead, Ireland is a ‘province’, with no inherent claim to whatever minerals happen to be found there. The resources of Ireland are, according to the legislation, the ‘property of the Minister’. Therefore it is fitting that as few obstacles as possible are put in the way of the exploitation of this ‘province’ by private mining enterprises. [10]


Footnotes and References:

[1] http://www.minex.ie/Mining/Historical.htm

[2] http://www.dcmnr.gov.ie/Natural/Exploration+and+0Mining+Division/Mining/

[3] http://nationsencyclopedia.com/Europe/Ireland-MINING.html

[4] http://www.mbendi.co.za/indy/ming/ldzc/eu/ir/p0005.htm
http://www.lundinmining.com/galmoy/index.php

[5] http://www.lisheenmine.ie/index.html

[6] http://www.minex.ie/


[8] (www.minex.ie/Regulatory/Mining.htm : fiscal_0304.pdf.webloc)
 
[9] http://www.dcmnr.gov.ie/Natural/Exploration+and+Mining+Division/

[10] http://www.dcmnr.gov.ie/Natural/Exploration+and+Mining+Division/Mining/

 
 
© The Tara Foundation, 2007