- Octogenarian Finding Most Copper With China as Biggest Customer
- Titanium Find in Paraguay May Be World’s Largest.
Titanium Find in Paraguay May Be World’s Largest (Update1)
2010-11-04 11:32:59.58 GMT
(Updates with details of potential production and mining
company comments from 4th paragraph.)

By Elliot Blair Smith, Nathan Crooks and Wing-Gar Cheng
Nov. 4 (Bloomberg) -- The American explorer who discovered
the world’s biggest copper deposit in Chile has staked a claim
in Paraguay to what he says may be the largest titanium find.
David Lowell, 82, the president of closely held CIC
Resources Inc., controls mineral rights to at least 185,000
hectares (457,000 acres), according to Paraguay’s sub-ministry
of mining and energy. That is an area the size of London.
“Our deposit could control the world titanium market, a
big enough piece of production that whoever operates it would
dictate what the price is going to be,” Lowell said in an
interview. “And the price, presumably, would be reduced by
having higher-grade ore and large tonnage.”
The geologist is in Hong Kong this week presenting his
discovery to investors at a conference on the global titanium
market sponsored by TZ Minerals International, a Western
Australia consulting firm that specializes in the mineral. The
project could produce between 5 and 10 million tons of titanium
ore per year with a potential operating life of 100 years, he
said today outside the conference.
Chinese companies were among potential buyers he said he
was talking with. The nation’s manufacturing and construction
industries are driving demand for ore that produces the white
pigment found in paint, paper, plastic and even toothpaste as
well as light-weight aerospace materials. Boeing Co.’s new 787
Dreamliner, which is slated to enter service this year, and the
construction of industrial plants such as water-desalination
facilities, also boost demand for the metal.

Save Costs

The mineral “has a high strength-to-weight ratio,” Lowell
said. “If you could reduce the price sufficiently, you could
build all commercial airliner bodies out of it and save fuel
costs on long flights. The same goes for automobiles.” His
company, CIC Resources, is based in Vancouver.
While the material is abundant in the earth’s crust, the
2008 financial crisis delayed new ore production, says Gary
McMahill, a senior consultant at DuPont Titanium Technologies,
the world’s largest manufacturer of titanium dioxide pigment. It
is a unit of DuPont Co. in Wilmington, Delaware.
“Now what we’re seeing is a tightening of supply,”
McMahill said in an interview.

Economies of Scale

Lowell’s claim is in the Alto Parana district in eastern
Paraguay near the border with Brazil. The ore he says he has
found is known as ilmenite, the type predominately used in
China. Some of the world’s largest known deposits of ilmenite
are in Mozambique, Madagascar and South Africa, according to Ben
Coetzee, a TZMI consultant based in Durban, South Africa.
Continental Africa accounts for half the world’s supply of the
material, he said.
“If you find an ilmenite deposit that is rich enough and
large enough, that would be interesting to us,” Victor Hugo,
general manager for product and technical development at
Australia’s Iluka Resources Ltd., said at the conference. Iluka
is a Perth-based titanium miner and processor.
Mining ilmenite needs economies of scale because it’s a
low-cost input in a range of products, said Trevor Arran,
executive general manager for mineral sands and base metals at
Exxaro Resources Ltd., a South African producer of titanium,
zinc and coal.
“It depends on the price,” Arran said. “If you’re going
to physically mine it, a deposit like that is going to take 10
years.”
The project would require a $500 million investment to get
5 million tons a year of ores, Lowell said.

Price Projection

Two of the world’s largest mining companies, Melbourne,
Australia-based BHP Billiton Ltd. and London-based Rio Tinto
Group, jointly operate the Richards Bay Minerals titanium
dioxide mines in South Africa, among the world’s biggest. Rio
Tinto also owns a titanium dioxide operation in Quebec.
Producers include Huntsman Corp., based in Salt Lake City,
Kronos Worldwide Inc. in Dallas and National Titanium Dioxide
Co., part of Saudi Arabia-based Cristal Global.
The price of ilmenite was expected to increase 33 percent
to $96.52 a metric ton next year, according to a forecast
published in January by London-based Consensus Economics Inc.
Asia-Pacific demand for pigment was expected to grow 30 percent
to 2.16 million metric tons between 2008 and 2013, according to
a TZMI estimate published earlier this year by Cristal Global.

Paraguay Legislation

In March 1981, Lowell unearthed the Escondida copper
deposit, the world’s largest, in Chile’s Atacama Desert. It
produced $6 billion of copper last year, according to majority
owner BHP. Two Chinese companies paid a combined $1.5 billion
for two copper discoveries he made earlier this decade in Peru
and Ecuador.
In September, the lower house of Paraguay’s congress passed
a law to strengthen mineral claims in a country that has no
history of large-scale mining. Juan Antonio Denis, head of the
mining and energy committee in the Chamber of Deputies, said in
an interview that Lowell requested the legislation.
Lowell “told us we had to adjust our legislation to
regional standards, and that’s what we set out to do,” Denis
said. “We want David Lowell to come work in Paraguay.”
The legislation is now before the senate.
“There will be a time lag inevitably to get the mine
constructed, at least three to five years,” said Reg Adams, a
titanium analyst at Artikol N.L. in London. “In a place like
Paraguay, they may be into making infrastructure improvements as
well.” He described Lowell’s discovery as “huge.”


Octogenarian Finding Most Copper With China as Biggest Customer.
By Elliot Blair Smith
Nov. 5 (Bloomberg) -- In the snake-infested jungle of
southeastern Ecuador, the American explorer David Lowell found
himself sliding over a waterfall and heard his head bounce off a
rock “like a melon being hit by a hammer,” he says.
Lowell was 72 and prospecting for copper that day in May
2000. He stepped into the slippery streambed for a vantage point
free of vipers and vines. A broken rib and throbbing head
diverted him to a nearby hamlet in search of help.
“There was one man in the village who was a combination
chiropractor and mortician,” Lowell says. “We decided to just
buy a little tin of liniment with the picture of a dragon on
it.” The expedition carried on.
In the clear water of the stream, Lowell saw enough to help
him find one of South America’s richest copper deposits. This
May, a joint venture of Chinese state-owned companies paid $652
million to buy Lowell’s partner in the exploration, Vancouver-
based Corriente Resources Inc. Lowell kept a stake there for
himself, though local opposition has prevented mining.
In a career spanning six decades and 44 countries, Lowell
has made 14 major discoveries, including the world’s largest
copper deposit in Chile. He found treasures where others
detected nothing worth mining. Lowell revolutionized exploration
and unearthed metals that helped the U.S. build the world’s
largest economy. He also made investors billions.

Titanium Discovery

Now, China is his biggest customer as it develops faster
than any country in history. Chinese state-owned companies paid
$1.5 billion for two of Lowell’s biggest prizes -- the riverbed
of ore in Ecuador and a copper-filled mountain in Peru. The
geologist is in Hong Kong this week telling potential investors
about what he calls the world’s largest discovery of titanium,
in eastern Paraguay. Lowell says he controls mineral rights
there to at least 185,000 hectares (457,000 acres). That is an
area the size of London. Titanium dioxide produces the white
pigment found in paint, paper, plastic and light-weight
aerospace metals used to build Boeing Co.’s new 787 Dreamliner.
China is shopping for mineral resources around the world.
Its copper use is growing so quickly that by 2035 global demand
for the metal may outstrip supply by 11 million tons, according
to CRU, a London-based mining and metals consulting firm.

‘He’s a Legend’

That will keep Lowell’s services in demand. As a
globetrotting explorer-turned businessman, he founded and sold
two publicly traded companies. He has also survived grizzly
bears in British Columbia, a helicopter crash in Peru,
insurgents in the Philippines, and a murderous mule while
distracted by a half-naked woman in the Dominican Republic.
“He’s a legend,” says Marcel DeGroot, the chairman of
Luna Gold Corp. in Vancouver, which retains Lowell as a
consultant on a Brazilian mining project. “There’s a lot of
people who have plumbing and copper because of him.”
Humans have been digging up the world’s oldest metal and
using it in coins, cooking pots, pipes and roofs for 10,000
years. Today, copper provides the electrical nervous system for
the cars, computers and microwaves that China cranks out for its
own 1.3 billion people and the rest of the world.
Lowell’s influence is widening even as America’s industrial
might has declined. U.S. copper production peaked at 48 percent
of world supply in 1945, his freshman year at the University of
Arizona in Tucson. It accounts for 8 percent today. American
iron-ore extraction topped out in 1970, lead in 1973 and uranium
in 1980. While the U.S. economy is still almost three times
larger than China’s, Lowell says he worries that America’s
reliance on finance and technology will stretch only so far.

‘Greatest Explorer’

“You also have to have the nuts and bolts -- and the
copper and the iron, and the rare earths, and make copper wire
and make television sets and make automobiles -- to be important
in the world,” he said during an interview at his pomegranate-
shaded 19th-century ranch in Arizona. Two English springer
spaniels, Ginger and Spooky, lie at his feet. Plaques and
certificates cover one wall. The American Mining Hall of Fame
inducted him in 2002 and the Australian Journal of Mining named
him “World’s Greatest Explorer” in 2004.
Lowell isn’t through at the age of 82. Surrounded by a
collection of antique mining lanterns, including the carbide
lamp that saved his life in 1949, he says he is leading
explorations in five South American countries, including
Paraguay. They are mostly armchair expeditions in a concession
to age, after a lifetime of riding canyon trails.

Boot-Leather Muleskinner

“He’s one of the last, best, boot-leather and muleskinner
geologists in the world,” says John Guilbert, 79, a retired
University of Arizona professor of exploratory geology. Guilbert
and Lowell developed a theory of minerals exploration that bears
their names. Guilbert estimates that Lowell has found more
copper than anyone who ever lived.
Lowell’s treasure-hunting began at age seven, during the
Great Depression when Franklin Delano Roosevelt was president.
Accompanied by his dog Rags, he hand-sorted silver samples in
Arivaca, Arizona, for his father, Arthur Currier Lowell, a
perennially cash-strapped, self-employed miner. The Lowells
descended from a New England family that gave the country a
Harvard University president and poets James, Amy and Robert.
Skinny, rebellious and indifferent in the classroom, Lowell
says his mother Lavina considered him the least promising of her
children. He was competing in rodeos and finishing high school
when his older brother, a Marine officer, died in the Battle of
Iwo Jima.

Calculus Do-Over

His undergraduate degree from the University of Arizona’s
College of Mines hinged on scoring a B in a calculus course he
was retaking. The teacher was a young woman. He recounts handing
her an orchid with his final exam and explaining his
predicament.
“I got the B,” he says. “I may have deserved it. I’m not
totally sure of that.” Lowell later endowed a master’s degree
program at his alma mater. In 1957, he earned a master’s in
geology at Stanford University in Palo Alto, California.
On his first job as a mining engineer in 1949, at a silver
and lead mine in Mexico, Lowell survived a near-disaster that
set the tone for his career. A mile underground, the waning
light from the flame in his carbide lamp signaled a life-
threatening shortage of oxygen, he says. While clambering to
safety on a ladder, Lowell temporarily lost consciousness and
dropped the lucky lantern down a shaft, recovering it later.

Murderous Mule

In the early 1960s, Lowell was prospecting for copper on
muleback in the Dominican Republic when he spied a half-naked
woman washing clothes on a distant river bank.
“I thought, well, part of my mission is to be able to
describe the flora and the fauna, so I’d better take a good
look,” he says. The mule sensed his distraction and galloped
toward a tree branch in line with the saddle. “I was able to
throw my feet out of the stirrups and lay back on the saddle,
and the limb just scraped across the front of me.”
Between close calls, Lowell was taking note of mineral-
formation patterns in large, low-grade deposits known as
porphyry copper. His observations would change the way
prospectors read geological clues and lead to some of mining’s
most spectacular finds. Lowell theorized that porphyry
formations share a common geology that can be used to detect
commercially productive copper deposits around the world.

Copper Prospecting Theory

Lowell’s insight drew from his understanding of how copper-
containing rock formed 150 million years ago when dinosaurs
walked the earth and the planet was undergoing violent change.
Copper and other minerals rose from the earth’s hot, high-
pressure mantle on prehistoric molten waves of magma called
plutons. A bubble of water, silica, copper and gold formed at
the tip of each mass as it migrated toward the cooler surface.
Materials with the highest melting points solidified first and
farthest down, creating a floor for copper, gold and other
minerals, which cooled and crystallized in layers.
Copper is deposited along with some of these minerals in
concentric rings, or halos. They are gray in the center, white
in the surrounding zone of quartz sericite and green in the
outer zone, as Lowell explains the theory. The rings can extend
for miles and tilt at any angle, making the clues hard to see
and interpret.
Nyal Niemuth, chief mining engineer at the Arizona
Department of Mines and Mineral Resources in Phoenix, likens the
principle to the story of three blind men who discover an
elephant by identifying its tail, ear and tusk.

Finding an Elephant

“It lets us see part of the elephant, and know where the
rest of the elephant is,” Niemuth says.
Lowell applied this thinking while working as a consultant
for Newmont Mining Corp. at its underground San Manuel copper
mine in Arizona in 1965. He collected rock samples to support
his idea that the recurring mineral halos, previously
unrecognized, could be used to find copper.
Yet as Lowell roamed the mine, which was situated along a
geologic fault, the pattern “didn’t make sense” unless the ore
body had been turned on its side and severed by a violent
realignment of the earth’s surface, he says. He surmised the
deposit was part of a larger copper cylinder that had been
sliced in two, leaving the rest to be found.
Newmont wasn’t interested in his idea, Lowell says. So he
sold the proposition to a unit of the Texas oil company Quintana
Petroleum Corp., founded by the late industrialist Hugh Roy
Cullen. Lowell led the exploration in clear view of the San
Manuel mine. He found the missing section, which Quintana’s
chief named Kalamazoo, for the Glenn Miller swing tune, “I’ve
Got a Gal in Kalamazoo.”

Kalamazoo Discovery

“He drilled 26 holes into that fault-displaced portion of
the San Manuel ore body, and 25 of them were in ore,” says
Guilbert, whom Lowell brought on as a consultant. “That’s
unprecedented. And it’s because he knew from the shape and size
of the San Manuel side what the shape and size of the Kalamazoo
side would be.”
Quintana paid Lowell a finder’s fee of $120,000, his
biggest payday yet, and sold Kalamazoo to Newmont in 1968. Its
ultimate owner, now part of Melbourne, Australia-based BHP
Billiton Ltd., shut the project down and dismantled the works
three decades later amid falling copper prices.
Lowell and Guilbert went on to study 27 porphyry copper
deposits around the world. In June 1970, they published their
minerals-zoning theory in the journal Economic Geology.

Boots of Soldier

With the mind of a detective and the boots of a soldier,
Lowell used the theory over and over again in ensuing years. The
biggest strike came a decade later when Lowell put the idea to
work while living in a tent and exploring Chile’s Atacama
Desert. It is the driest place on earth. Some parts haven’t had
a drop of rain in centuries. Movie makers use the sterile
landscape to portray Mars. NASA has tested exploration equipment
there.
This treasure hunt was for a partnership of companies later
absorbed by San Ramon, California-based Chevron Corp. and BHP,
the world’s largest mining company by market capitalization.
As Lowell’s team trudged across the desert gathering rock
samples, he wasn’t seeing the usual surface clues consistent
with his theory. He found traces of lead, zinc and molybdenum,
which are signs of copper enrichment, but not the form of a
yellowish stone called limonite that he was seeking.
Lowell theorized that moisture had risen from a water table
deep in the earth and evaporated on the surface, leaving
corrosive salt crystals that destroyed the mineral patterns he
was accustomed to finding. Hand-dug pits showed those mineral
rings existed just beneath the surface.

La Escondida

On March 14, 1981, drilling confirmed a mother lode of
copper. Named Escondida, Spanish for “hidden,” it is the
world’s biggest copper deposit. Two open pits cover an area
almost four times the size of New York City’s Central Park and
is almost a third again as deep as the Empire State Building is
tall. Escondida has yielded 16.6 million metric tons of copper
over the past two decades, worth $138.2 billion at today’s
price, based on data compiled by the Chilean Copper Commission.
Sales last year totaled $7.1 billion, according to BHP.
During the exploration, Lowell feuded with geologist
Siegfried Muessig, one of the project managers, both men say
now. Muessig challenged Lowell’s decision to drill test holes in
an area where five other companies had failed to find copper.
“Sig Muessig had decided that I was incompetent and the
project was ill-advised,” Lowell says. In a 1998 interview for
the University of California at Berkeley’s Bancroft Library, he
said, “We were having louder and louder decibel arguments.”
After unpromising results from the first five holes, the
sixth proved Lowell right. Yet the companies backing the search
replaced Lowell as project manager, he says, under “the
pressure of Sig Muessig.”

‘Difficult Guy’

“Dave is an excellent explorationist,” says Muessig, 88,
now retired in Claremont, California. “But I’ve also told him
he’s a very difficult guy.”
Lowell has rubbed other colleagues the same way. His
independent streak clashed with Corriente’s management controls
in Ecuador, says Ken Shannon, the company’s former chief
executive officer.
“David is a lone-wolf operator, and I’m a collaborative
kind of guy,” said Shannon, 56, in an interview. The men
negotiated a split of Lowell’s discoveries, with Corriente
retaining the deposits acquired in May by China’s Tongling
Nonferrous Metals Group and China Railway Construction Corp.
Lowell kept rights to a more remote 20,000 hectares.

Education of Entrepreneur

For finding Escondida and the adjacent Zaldivar copper
field, Lowell was paid $4.5 million. It wasn’t until he met
Catherine McLeod-Seltzer, a Canadian investment banker, at a
cocktail party in Santiago, Chile, in 1992, that he began to
leverage his mine-finding acumen into management control and
even bigger cashouts.
McLeod-Seltzer, now 50, showed Lowell how to build publicly
owned companies around his adventures rather than just taking
consulting fees. In January 1993, she followed Lowell to Peru
and formed Arequipa Resources Ltd. to sponsor and own his next
project. That set up Lowell as chairman and a stockholder to
profit from whatever he found.
While McLeod-Seltzer raised investor capital, he hunted for
gold in Peru’s Cordillera Negra range. The mountains were
occupied by Shining Path terrorists, and accessible only by foot
or on horseback, at a time when political instability and state
ownership of mining had scared off most prospectors.
Three days after Christmas 1995, Lowell says he received
laboratory confirmation of a major gold find. The following
July, as he mapped out the extent of the claim, Toronto-based
Barrick Gold Corp. made a hostile takeover bid. Lowell says he
drilled faster to expand the discovery and his company’s value.
A month later, Barrick raised its offer and bought Arequipa
for $790 million, an almost 30-fold increase in the shares’
value from a year earlier. Lowell owned stock worth $63 million,
according to published accounts at the time. The deposit held
about 8 million ounces of gold, Barrick says. That would be
worth $11.1 billion today.

Wedding Rings

As part of the deal, Barrick agreed to turn over Lowell’s
original gold samples to McLeod-Seltzer. She used them to make
wedding rings for herself and husband Tom.
After five decades of dodging snakes, bears and
revolutionaries, Lowell says he went looking for a “swan song”
by mining the records of undeveloped deposits. In his office in
a converted barn, he pored over stacks of old technical reports.
These were pre-1980 discoveries considered uneconomic to mine.
They led him to a mountain in the Peruvian Andes known as
Toromocho, Spanish for the bull without horns.
“The Toromocho discovery was built on a kind of a new
slant to exploration,” Lowell says. “In this case, using a
change in metallurgy as a way to possibly turn up a sleeper.”
Advances in extraction and refining after 1980 had changed the
economics for some old prospects.

Toromocho Discovery

In 2002, Lowell visited the peak, 15,000 feet (4,600
meters) above sea level. There had been small-scale mining on
Toromocho for more than a century, but the deposit had lain
dormant since General Juan Velasco Alvarado nationalized mining
in 1973. Government geologists decided there wasn’t enough
copper to dig.
On May 14, 2003, Lowell paid the government $2 million for
an option on the property after an auction held at his request.
Lowell says he was the only bidder. The government had failed to
attract any buyers at least twice before, according to Peru’s
Ministry of Energy and Mines.
From a bar in Lima where he was celebrating, Lowell phoned
McLeod-Seltzer in the Canadian hospital where she was recovering
from the birth of her first son. She named him Graham Jeffrey
Lowell Seltzer in Lowell’s honor.
Then she set up Peru Copper Inc. to take ownership of the
claim and raised $12 million through a private placement to fund
test drilling. In September 2004, the company generated C$48.2
million in an initial public offering.

Old Assay Books

While working the claim, Lowell found a pile of old assay
books in an abandoned installation left behind more than a
quarter-century before. His reinterpretation of the records and
new drilling led him to conclude there was seven times more
copper in the mountain than the government had known.
He sold Peru Copper in August 2007 to Beijing-based
Aluminum Corp. of China for $810 million. The selling price was
four times the shares’ IPO value three years earlier. Toromocho
will generate about $1.5 billion in payments to local and
regional governments over the 30-year life of the mine,
according to Chinalco’s environmental impact assessment.
Lowell’s shares were worth about $78.7 million, according to
Securities and Exchange Commission filings.

Unfinished in Ecuador

Prospecting has earned Lowell more than $150 million for
himself and Edith, his wife of 62 years, based on interviews and
securities filings. He says he has given most of it away,
including his endowment of the Lowell Program in Economic
Geology at the University of Arizona.
Lowell’s work in Ecuador isn’t finished. His 20,000-hectare
claim there is potentially rich but hard to reach, he says. The
national government shut down development in the region after
protests in November 2006 organized by the Shuar Federation, an
ethnic grass-roots group, he says.
Although the government lifted the ban in March 2009 as
Corriente’s talks with the Chinese companies intensified,
provincial Governor Salvador Quishpe continues to lead
resistance. He will refuse to negotiate with foreign investors,
he said in an interview.
Lowell hasn’t written off the project, though he may yet do
so, he says. He isn’t through prospecting.
“If your primary purpose in life was finding sunken
Spanish galleons full of gold and treasure, what would you do?”
Lowell says. “I’m a professional treasure hunter.”