Antofagasta approves $1.3 billion Los Pelambres copper mine expansion

SHANGHAI (Reuters) - The board of directors of Chilean miner Antofagasta has approved a $1.3 billion expansion of the company’s flagship Los Pelambres copper mine in Chile, Chief Executive Ivan Arriagada said on Thursday.

FILE PHOTO: Ivan Arriagada, chief executive officer of Chilean miner Antofagasta Minerals Plc, attends an interview with Reuters in Santiago, Chile October 25, 2017. REUTERS/Pablo Sanhueza

The expansion will produce additional ore equal to an extra 60,000 tons per year of refined copper over the first 15 years of the expansion project, lifting the mine’s output for the first time in over a decade, Arrigada said.

Construction will start in January, Arriagada told Reuters in an interview at Antofagasta’s Shanghai representative office. The work involves adding an extra milling line and a desalination plant, he said. The company has previously said production would start in 2021.

“It’s a very important project for us. It’s putting Pelambres back into growth after 14 years and we’re very excited about this,” Arriagada said.

The comments come as global miners are gathered for the annual Asia Copper Week in Shanghai, where they are negotiating benchmark treatment and refining charges (TC/RCs) to process their copper concentrate into refined metal.

Chile is the world’s biggest copper producer, while China is the top consumer of the metal.

The Pelambres expansion will increase treatment capacity from 175,000 tons to 190,000 tons per day of ore, Arriagada said. “In terms of fine copper, copper-contained, it’s going to be 60,000 tons extra per year ... which is around a 15 percent increase in production,” he said.

On a company level, Antofagasta has forecast copper output at 705,000 to 725,000 tons this year, rising to 750,000 to 790,000 tons in 2019 on higher ore grades at its Centinela and Zaldívar mines.

In key market China, Arriagada sees strong growth of 5 percent to 6 percent in refined copper consumption this year, helped by some “temporary tail winds.”

These include the possibility of consumption in the manufacturing sector being brought forward to avoid potential new tariffs on exports to the United States next year, as well as a boost from Chinese economic stimulus, he explained.

“But if you remove those temporary factors we still believe core consumption is growing at rates of 2 to 2.5 percent,” he added, projecting 2 percent growth next year.

The direct impact on China’s copper demand from the trade row with the U.S. will be limited because 80 percent of the copper China imports stays in the country, Arriagada said.

Reporting by Tom Daly; Editing by Christian Schmollinger