Southern Copper, Anglo American could partner on Peru mine

LIMA Mon Sep 23, 2013 3:05pm EDT

The AngloAmerican building is seen in Santiago January 24, 2012. REUTERS/Victor Ruiz Caballero

The AngloAmerican building is seen in Santiago January 24, 2012.

Credit: Reuters/Victor Ruiz Caballero

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LIMA (Reuters) - Two of the world's top copper producers, Anglo American (AAL.L) and Southern Copper (SCCO.N), are talking about teaming up to develop Anglo's $3.3 billion Quellaveco mega mine in Peru, Southern Copper's chief executive said on Monday.

Southern Copper CEO Oscar Gonzalez said in a telephone interview that rising costs that have hit the global mining industry led the UK-based Anglo American to reach out to Southern Copper about a potential partnership.

Quellaveco is expected to start producing 225,000 tons of copper per year once it becomes operational, as early as 2016.

The environmental impact study for Quellaveco has already been approved and Anglo American, which controls nearly 82 percent of Quellaveco, finalized an agreement with local communities last year.

Southern Copper, a unit of Grupo Mexico (GMEXICOB.MX), operates two copper mines near Quellaveco, in the southern Moquegua region, which could help save money.

"We've been working in that area for 50 years. We have a railroad there and machinery that would help cut costs," Gonzalez said.

Gonzalez said that local press reports that Southern Copper wants to buy the mine are wrong.

"There is no possibility of buying Quellaveco," he said.

Anglo American has been scrutinizing expenses at Quellaveco for at least the past year, and Southern Copper first expressed interest in helping operate the mine three or four years ago, Gonzalez said.

"Now they are revising their projects and are interested in talking with us about a joint venture to develop the Quellaveco project together," Gonzalez said.

In 2012 Anglo American boosted output by 10 percent to produce 660,000 tons of copper, and Southern Copper's output was similar, at 650,000 tones.

Southern Copper said last week it expects slightly higher output this year because of boosted production from its Buenavista mine in Mexico.

(Writing by Mitra Taj; Editing by Steve Orlofsky)

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