CAP is evaluating mining project in the north of country for up to US$2,400 million
20-Aug-2012 El Mercurio – News
El Tofo mine development will double CAP current production figures:
CAP is evaluating mining project in the north of country for up to US$2,400 million
With Cerro Negro Norte and Valle del Huasco Expansion the company will reach 18 million tons of iron ore production capacity by the end of 2013
CAP (Pacific Steel Company) development expectations are set on its mining branch.
Through its sister company CMP (Pacific Mining Company), the company – where Mitsubishi holds 19.3% of CAP and 25% of CMP – is evaluating to develop El Tofo mining project in the north of country, a project that will allow the company double its current iron output of 12 million ton.
“El Tofo is a vast iron deposit – iron ore is a raw material for steel fabrication- with a 12 million tons per year potential. Decision has not been made yet, but we have the resources. That will be decided pursuant to the world market conditions”, General Manager of CAP, Jaime Charles, stated, while he also asserted that iron ore demand from China and other countries has been steadily robust in spite of deceleration signals.
It is his opinion that this mining project would require between US$1,800 million and US$2,400 million investment considering that developing a project like this has a US$150 to US$200 cost per iron ore ton.
For El Toro development, Charles adds, a port must be implemented north of La Serena. The latter has already been submitted to Environmental Evaluation Service (SEA) as an evidence that CAP is interested in making a favorable decision to work this deposit. This project investment would reach US$250 million.
However , this is not the only growth horizon the company lead by Roberto de Andraca envisages. Having reserves of circa 3,000 million tons, Charles foresees the company may easily produce 40 to 50 million tons of iron ore per year in the future.
On the other side, Valle del Huasco expansion project and Cerro Negro Norte development are in progress. Valle del Huasco will add 2 million tons of iron ore to the company while Cerro Negro Norte will aggregate 4 million to reach an output capacity of 18 million tons of iron ore by the end of 2013.
“This would mean sales of 18 million tons by the end of 2014 or early 2015. Valle del Huasco project should be completed by second quarter of 2013 and Cerro Negro Norte during the last section of third quarter in 2013”, Charles says.
CAP investment plan for 2012 and 2013 reaches US$1,000 million with US$700 million this year and US$300 million for next fiscal year.
World steel market is bearing a tough scenario. Charles explains that global output capacity is only being used at 80% capacity because of decreasing demand.
He says this is the result of the output capacity increasing 25% during last four years while global demand developed much less, then causing a global ore price depression.
For this reason the mining company put Huachipato iron producer (VIII Region) in a standstill condition. This iron producing plant had been considered for a US$2,420 million investment to rise liquid steel production from 1.3 million to 3 million tons.
Notwithstanding, the executive indicates that “although the steel business profitability has been affected, fortunately it has not implied a detriment to our cash flow because we have been working at full capacity”.
He also adds that US$100 million investments will be executed to maintain production capacity at 1.3 million tons of steel.
