Peru eyes $2.4 billion minerals railway as copper output rises

LIMA (Reuters) - The government of Peruvian President Pedro Pablo Kuczynski is evaluating a $2.4 billion railway project to transport mineral concentrates from a copper-rich Andean region to the Pacific coast for export, a government official told Reuters Wednesday.

Deputy Mines Minister Ricardo Labo said the proposed railway would start in the highland region of Apurimac and stretch 600 km (373 miles) to the coast, carrying concentrates from Chinese-owned MMG Ltd’s Las Bambas mine and other copper and iron projects slated to come online in the next 15 years.

Preliminary estimates suggest the project would cost at least $2.4 billion and would likely be paid for through joint public-private financing, Labo said. But the transportation ministry must first study the proposal and determine if it would be feasible, he added.

A railway might help ease tensions between mining companies and farming communities in the Andes that have complained about the dust and noise created by hundreds of diesel trucks that transport MMG’s copper over unpaved roads every week.

In 2016, a farmer near Las Bambas was killed in clashes with police in a protest over MMG’s use of local roads, and three were killed in 2015 demonstrations against the mine. Villagers sometimes block roads used by Las Bambas to demand compensation or action from the government or company.

Peru’s southern copper belt is expected to be a key source of the country’s future copper output.

The railway could transport copper from future mines in the region, including deposits such as First Quantum Minerals Ltd’s Haquira, Southern Copper Corp’s Los Chancas, Panoro Minerals Ltd’ Cotabambas and Buenaventura’s Trapiche, said Labo.

Las Bambas alone produced about 453,000 tonnes of copper last year, said Labo.

“That kind of volume...requires more efficient transportation solutions, such as a railway,” Labo said.

On Monday, Kuczynski had called for a railway to transport copper from Las Bambas as part of his government’s renewed bid to focus on key infrastructure projects after he was nearly removed from office in the wake of a graft scandal.

“For example, in Las Bambas, I spoke with the Chinese. I told them, you’ve got to put a railway there,” Kuczynski said in broadcast comments following a meeting with regional governors.

Kuczynski reiterated that his government still plans to pave roads around Las Bambas as promised.

Peru, the world’s second biggest producer, expects to produce at least 3 million tonnes of copper in 2021.

Reporting by Mitra Taj; Editing by Lisa Shumaker