LONDON Jan 25 Xstrata said on Friday
its Las Bambas copper project in Peru would cost $5.2 billion,
keeping to 2012 estimates as the miner prepares for a merger
with Glencore that will see many of its growth projects
come under scrutiny.
Xstrata is the world's fourth-largest producer of copper
and, among the diversified miners, has the largest exposure to
copper, a metal that is expected to benefit from tight supply,
as mine grades deteriorate and new projects lag.
Copper, however, is also likely to be a battleground with
Glencore when mining projects are reviewed once the tie-up is
complete. Commodities trader Glencore favours expanding existing
operations in the promising, though tough, Congolese copper
belt, over plans in Latin America, where miners have battled
with delays, community protests and escalating costs.
Analysts expect a review of the combined Glencore-Xstrata
group's projects by the incoming management, led by Glencore
Chief Executive Ivan Glasenberg, could result in cuts to
Xstrata's pipeline of greenfield projects, particularly in
locations like Argentina, where costs have soared and political
risks are seen to be high.
Xstrata increased the cost of Las Bambas by more than 20
percent last year to $5.2 billion after permitting delays held
back construction, but it stuck to that on Friday despite what
some analysts had flagged as the risk of further costly delays,
due to community unrest in Peru.
The project - with a capital intensity of $13,000 per annual
tonne, at the mid to lower end of the spectrum - is now expected
to ramp up during 2015. Xstrata expects combined annual copper
production from Peru of around 700,000 tonnes from 2015, 400,000
of that from Las Bambas.