Despite low grade, new mining operations will have less costs than several existing operations
2014 will be a milestone for mining: three projects designed and implemented will begin operations amid copper price boom, with a current cost structure to the new scenario. And yet, it will be more profitable than several old mines
In 2014 will come into operation three of the so-called mining projects 2.0: Ministro Hales (Codelco), Sierra Gorda (KGHM and Sumitomo) and Caserones (Pan Pacific Copper).
2.0? The name reflects the fact that these initiatives are designed, conceived and executed in the middle of the copper price boom. In other words, it is in their design projects that incorporate two key elements: higher costs, because the high price of the metal ensured profitability, and laws that are much lower than existing operations.
But over time the cost of the rest of the majority of the current tasks has risen sharply, enough to turn the ranking of costs: the new projects will be cheaper than many of the operating sites in Chile. This is compounded by the decline of the local mining laws, that between 2002 and 2012 were down 31% according to an analysis by Codelco, based on data from Wood Mackenzie.
This applies, for example, the Sierra Gorda project. This initiative, according to the latest report of the client company, enter a cash cost (or cost C1) of U.S. $ 1.5 per pound, a figure higher than the U.S. $ 1.3 per pound initially projected, but in line with the costs industry has today.
In 2012, the average of the Chilean mining industry operated with C1 of $ 1.72, which compares up to U.S. $ 0.4 in 2002 or U.S. $ 0.92 to Peruvian mining averaged last year. According to an industry source, the Ministro Hales mine, the state copper company released in 2014, will produce at a cost closer to C1 today have efficient operations of Codelco (as El Teniente or Radomiro Tomic) and would be cheaper than Chuquicamata or Salvador, for today the most expensive operations of Codelco. The state copper company has not cost projections for MH.
In the industry warn that these investments have not been exempt from rising, especially in construction. “The three projects (MH, Caserones and Sierra Gorda) have not been exempt from increases in investment amounts on their budgets and, therefore, have been exposed to the factors that have prevailed during the period of significant cost increases” , says Cesco’s CEO, Juan Carlos Guajardo.
However, the three initiatives that will begin operations during 2014 will contribute with almost 600 000 tons to annual production capacity in Chile, in what will be the largest increase since the 90s, when it happened the Escondida project revenue, The Pelambres, Collahuasi and others.
The coming steps
Codelco reported that the MMH project will become operational next year, while the 2013 will start the implementation process. Ministro Hales in solitary produce 183 000 tons of fine copper per year and is the first of five Codelco’s structural projects to get underway and is the third site developed entirely by Codelco after Radomiro Tomic and Gaby. Among the new features include the incorporation of new technology to treat high arsenic present in the ore and silver production.
Source: Pulso
