* Antucoya now seen costing $1.9 billion
* Miner says has renegotiated key construction contracts
* Antucoya annual output seen 85,000 tns for first 10 yrs
LONDON/SANTIAGO, March 27 Chilean miner
Antofagasta said on Wednesday it was resuming
construction of its Antucoya copper mine after halting the
expensive project in December to carry out a review of its
Antofagasta said the full review gave it greater certainty
over development costs, citing a "renegotiation of principal
construction contracts for the project, additional detailed
engineering, and an updated resource model following further
drilling of the deposit."
The London-listed miner said Antucoya was now expected to
cost $1.9 billion, up from a previous estimate of $1.7 billion,
and produce an average of 85,000 tonnes of copper cathodes
during the first ten years of its mine life.
That would put the cost per tonne of annual production a
little over $22,000, making it one of the most capital intensive
projects in the industry.
"The detailed review of the Antucoya project and the
measures we have taken since December 2012 have provided us with
the level of certainty in relation to the development costs for
the project that we sought, thereby enabling us to resume
construction," said Antofagasta's CEO Diego Hernandez.
The company said on Wednesday mining operations are expected
to start during 2015.
Antofagasta, which is controlled by Chile's wealthy Luksic
family, approved the project in 2011, selling a 30 percent stake
to Japanese trading house Marubeni Corp to help
shoulder the burden of the costs.
The project located in the arid, northern Atacama region,
around 45 km east of Antofagasta's Michilla mine, is emblematic
of soaring costs in mining.
For miners in world No.1 copper producer Chile, steep power
prices are one of the biggest headaches.
Antofagasta said roughly $500 million had been spent on the
project before it was suspended. Part of the remaining costs
could be partially funded via "project finance at the asset
level," the company added.
Antofagasta warned when it published 2012 production
numbers earlier this year that it would not increase output this
year, while costs would jump by over a third due to greater
spending at two key mines, Esperanza and Los Pelambres.
Copper production last year came in at 709,600 tonnes,
beating Antofagasta's full-year forecast of 700,000 tonnes, and
11 percent higher than the previous year.
Shares of Antofagasta closed 0.39 percent stronger on
Wednesday, before the announcement to resume Antucoya's
development was made, outperforming a broadly flat sector.