Southern Copper to invest more in Peru

By Teresa Cespedes

LIMA (Reuters) - Southern Copper <PCU.N, a leading global copper producer, expects to invest about $1.3 billion in its Peruvian copper project Los Chancas, Chief Executive Oscar Gonzalez said on Tuesday.

The investments would be in addition to some $2 billion the miner announced late last year for Peru, Gonzalez said at the Reuters Latin America Investment Summit.

"We estimate it could be a total investment of approximately $1.3 billion," he said. "It's an investment that wasn't included in the $2.1 billion we mentioned last October."

Southern Copper, a unit of Grupo Mexico (GMEXICOB.MX), has completed a pre-feasibility study for Los Chancas that shows annual copper production of 80,000 tonnes a year, Gonzalez said. The feasibility study, to start in May or June, should be completed by the end of this year.

"What we don't know yet is if it will be in copper concentrate or copper cathodes," he said.

Another of its copper projects in Peru, called Tia Maria, should see construction start in early 2009 for a mine that would produce about 120,000 tonnes of copper a year, he said. Production would likely start in 2010.

Gonzalez also said Southern would produce 650,000 tonnes of copper this year at its mines in Mexico and Peru, up from 592,000 tonnes last year.

Molybdenum output should fall slightly this year to 14,000 tonnes from 16,190 tonnes last year, because of lower grade deposits, he said.

Before accounting for potential new output from Los Chancas, Southern Copper expects to boost Peruvian copper production over the next few years to 270,000 tonnes a year.

About 120,000 tonnes would come from Tia Maria, 100,000 tonnes from an expansion at its Toquepala mine, and 50,000 extra tonnes from its Cuajone mine.

"We are talking about 270,000 tonnes of fine copper which in Peru would represent an 80 percent addition to the 320,000 tonnes we are producing now," he said.

"On an overall level, looking at Peru and Mexico, this represents a 40 percent increase."

Peru is the world's second-largest copper producer after Chile.

($1 = 2.73 soles)

(Writing by Terry Wade; Editing by Braden Reddall)