Antofagasta Minerals bet for viable mining projects
The mining arm of the Luksic group intended to consolidate its investment plan for the coming years by appealing to lower energy costs and water supply
While Oxidos Encuentros, Los Pelambres’s expansion and Distrito Minero Centinela were always in its project folder during periods of last year it was doubted the ability of Antofagasta Minerals (AMSA), from the Luksic Group, in order to make possible these projects, mainly by the high costs associated with the use of electricity and water, and the prosecution of future energy supply projects.
However, and against the most pessimistic market forecasts, Antofagasta managed to turn the situation, and this is how late last year announced that it has about $ 7,500 million in investment projects for the coming years.
Why this change of position is that? Mainly Antofagasta decided to invest in solutions to the main problems of cost, making profitable investment projects.
Energy Projects
No doubt that the costs for the issues related to the use of electricity are the most complicated to mining companies. But a while now Antofagasta decided to invest in this item, thinking of lower costs in future years.
Thus, the mining company has 60% stake in Energia Andina, a Chilean company dedicated to the exploration and exploitation of geothermal energy. While not yet debuted in the generation, due to how slow the process is, it is expected that the project Tinguiririca make its debut in 2019, with an output of 80 MW.-
Antofagasta also has interests in wind energy projects , such as the 30 % stake on The El Arrayán wind farm , which will have an installed capacity of 115 MW , of which 40 MW will go to the production processes of the Mina Los Pelambres after the signing of an agreement that has a term of 20 years and an investment of U.S. $ 300 million. El Arrayán expected to start operations in the second half of 2014 . While not part of AMSA , the railroad from Antofagasta to Bolivia , belonging to the Luksic Group, own 40 % of the Los Hornitos Thermoelectric, located in Mejillones and with a power of 165 MW , supplying the productive processes of the Minera Esperanza and Minera El Tesoro. However, their most notable participation was a purchase in mid-2013 of the 40% & 1 of Alto Maipo project , which also involved as a major partner AES Gener . Alto Maipo have an installed capacity of 531 MW , of which 160MW will be allocated to the production processes of Los Pelambres . Alto Maipo’s Investment is estimated at $ 1,600 million.
Thus AMSA has about 365 MW insured for different production processes of its mining companies, higher than injecting center to SIC Bocamina II (350 MW).
Water
Another headache for companies in the mining sector is the availability of water for its various production processes. That’s why most have chosen mining projects or contracts that allow them to obtain supplies of that vital element.
Antofagasta Minerals was not far behind and took a big step in this direction after years of litigation when the Supreme Court gave the reason for the use ‘of upwelled water from “aguas del minero” in their land, implementing a feedback system to the height of the La Guardia Tunnel.
The company has also taken steps to implement elevation ponds, costing $ 1,200 million which provides drinking water to the communities of Sierra Gorda and Baquedano.
Another option, not disposable at short term, is the use of seawater in the mining process, the use of these same lift pumps to arrive from the coast to the tasks, mostly located about 1,000 meters .-
Earnings Factor
However recent results from Luksic’s Mining Company have been far from positive. Well, worth remembering that the third quarter of 2013 the company revenues reached U.S. $ 4,404 million, down 9% compared to U.S. $ 4,852 in same period of 2012 million. This is mainly due to lower metal prices, which were offset by increased production.
While EBITDA relative to mining company, this amounted to U.S. $ 2,050 million, 28% less than that recorded during the same period in 2012. As for production, the mining company said that produced 538,300 tons of copper in the first nine months of last year, representing an increase of 4.4% over the same period to close 2013 with a production of around 700,000 tons of copper.
Source: Estrategia
