Showing posts with label Chile. Show all posts
Showing posts with label Chile. Show all posts

Wednesday, January 30, 2013

Chile copper output falls in December, up 3% in 2012

Chile produced 513 344 t of copper in December, a 1.8 slip from a year earlier, but boosted its output of the red metal by 3% to 5.45-million tonnes during all of 2012, the government said on Wednesday.    

December output in the world's No 1 copper producer fell on lower ore grades and maintenance work in certain mines, the INE statistics agency said. Annual output rose last year to its highest since 2007, according to data from state copper commission Cochilco and the statistics agency.    

"Among the factors that explain this rise are better ore grades in some deposits, production increases in mines that began operating in 2011 and a low base of comparison due to a strike that affected an important mining company in July 2011," the agency said.    

World No 1 copper mine Escondida's union stunned the copper market in 2011 by staging a two-week strike, sending the mine's output tumbling and raising the specter of an increase in labour action.    

Cochilco had estimated 2012 copper output at 5.45-million tons in November, but Mining Minister Hernan de Solminihac had said in April that production would reach a whopping 5.7-million tons. Many analysts at the time had called his forecast too ambitious.     

On Monday Cochilco said Chile's copper output in 2012 reached 5.43-million tons.          

Chile is expected to produce 5.59-million tons of copper this year, up 3% from 2012 levels, as heavy investment in mines pays off, Cochilco also said on Monday.      

Cochilco said a pick-up at state copper producer Codelco's century-old Chuquicamata deposit and the launch of its Ministro Hales mine at the end of the year will help lift output of the metal, which is used in construction and power generation and transmission.     

But analysts have warned that several factors threaten forecast jumps in production, including deteriorating ore grades, delays to key energy and mining projects, and operational woes.    

Chile's molybdenum output nosedived 25% in December year-on-year to 2 008 t.

Production posted a 16.6% tumble to 30 155 t in 2012 from 2011 levels.

Edited by: Creamer Media Reporter

Friday, December 28, 2012

Antofagasta suspends its Chilean Antucoya copper mine

Chilean miner Antofagasta has halted development at its $1.7-billion copper mine Antucoya, as it reviews escalating costs of the project.

Antucoya, which was forecast to produce 80 000 t of copper cathodes a year, is one of the most capital intensive projects in the industry.

The cost of the mine was estimated at $1.7-billion by the time construction work was due to finish in 2014. The cost per ton of yearly production would have been over $21 000, analysts previously estimated.

"We remain concerned about the level of capital and operating costs in the industry," said Diego Hernandez, Antofagasta's CE, in a statement on Friday.

Antofagasta shares are listed in London and the statement came out after the market had closed.

"We believe Antucoya's decision to temporarily suspend and review the project reflects an appropriate and measured approach to addressing these concerns," added Hernandez, who took the helm at Antofagasta earlier this year.

Antofagasta approved the project last year, selling a 30% stake to Japanese trading house Marubeni to help shoulder the burden of the costs.

Decisions on the suspension and review were made by the Antucoya council, with representatives from both companies.

Chile, which produces roughly a third of the world's copper, is struggling with dwindling ore grades in many of its ageing deposits.

Like many of its peers fighting over a limited pool of skilled workers and equipment, Antofagasta is also having to battle the rising cost of building projects from scratch.

Antucoya is the same size and uses the same technology as the company's existing El Tesoro mine, but will cost over $1-billion more to develop just a decade later.

The company said notices of termination for the project's construction contracts were being issued immediately.

Edited by: Creamer Media Reporter

Monday, December 17, 2012

Chile Codelco's Chuquicamata miners to vote on contract

Workers at Chilean state copper giant Codelco's massive Chuquicamata mine could approve the company's proposed new labour contract in a vote on Saturday, a union leader said.

"We've reached an initial agreement with the company. We hope this deal is approved to maintain labor tranquility at Chuquicamata," Jaime Graz, spokesperson for Union 1 at the mine, told Reuters on Friday.

"We're going to recommend approving the proposal," he added.

Most unionised workers at Codelco's century-old Chuquicamata deposit voted to start early contract negotiations in November.

Thomas Keller, CE of Codelco, the world's No 1 copper producer, told Reuters earlier this month that the company was hopeful it would reach a new labour deal at the mine.

The current contract at Chuquicamata, which produced about 443 000 t of copper in 2011, is set to expire on February 28.

The new, four-year contract would grant workers a 3.7% yearly wage increase and give them a bonus package of about $42 000, including about $6 330 in cheap credit.

Collective labour talks are closely watched by the mining industry after an uptick in labour action hit Chile's copper output in 2011. During the last contract negotiations in 2009/10, Chuquicamata's union staged a two-day strike.

Chuquicamata is symptomatic of Chile's aging mines. The deposit's production has been cut in half since 2007 by sharply dwindling ore grades, while costs have doubled.

The mine's transformation into an underground operation will trigger layoffs, but the union said health benefits were the key issue in negotiations.

In late November, unionised workers at the world's biggest copper mine, Chile's Escondida, voted in favour of early labour talks with the mine's controller, global miner BHP Billiton .

Edited by: Creamer Media Reporter

Tuesday, December 4, 2012

Chile approves Endesa 740 MW coal-powered project

A Chilean ministerial group has lifted a suspension on energy firm Endesa's 740 MW Punta Alcalde coal-fired thermoelectric project, the company said on Monday, in a boon for miners in the mineral-rich north of the world's No 1 copper-producing nation.     

An environmental commission in June blocked Endesa's  $1.4-billion complex, citing the project's potential to cause water and air pollution.     

Government sources were not available to comment on Endesa's statement or explain why the suspension had been lifted.   

Environmental groups are increasingly opposing power projects ranging from coal-fired thermoelectric plants in Chile's northern Atacama, the world's driest desert, to hydropower dams in the pristine Patagonia region.      

"With the aim of canceling emissions of material particles, Endesa Chile will be the first electrical company in Latin America to use domes to cover the two fields that will be used for the stockpiling of coal in Punta Alcalde," Endesa said in a statement.     

Once in operation, the project will have the capacity to supply around 12% of energy demanded in Chile's central energy grid.     

Chile's power grid has a capacity of 17 000 MW. The government aims to add another 8 000 MW by 2020.     

The ministerial committee, made up of six ministries, meets to review appeals against environment-related decisions. Chile's energy, environmental and economy ministries were not available for comment.     

Marine conservation group Oceana has decried Punta Alcalde, saying the project will saturate the coastal area of Huasco, already home to thermoelectric plant Guacolda and a factory belonging to steelmaker CAP.   

"This is a completely arbitrary decision, tainted by pressure from the mining sector," said Oceana's executive director Alex Munoz. "We're waiting for further details to figure out how to follow up in court or via other paths."      

The two 370 MW units are planned in Chile's Atacama region, close to Antofagasta Minerals' Los Pelambres mine, Barrick Gold's Pascua Lama and Lumina Copper's Caserones mine, among others. Several energy and mining projects in the Atacama region are reeling from legal setbacks.    

Chile's energy and mining sector is putting pressure on conservative businessman and president Sebastian Pinera's administration to clarify regulatory rules surrounding mega projects. During the annual mining council dinner late last month, Pinera said "we need ... to face the topic of increasing lawsuits against approvals given to projects that this country needs ... We need to urgently advance in materialising energy investment."    

The Andean country is banking on attracting $100-billion in mining investment and boosting annual copper output by more than 30% to over seven-million tons by 2020, but many analysts and even miners themselves have called into question the investment aim.     

Shares in Endesa rose 0.9% on Monday, outpacing a 0.45% increase on Santiago's blue-chip IPSA stock index.

Edited by: Creamer Media Reporter

Wednesday, November 28, 2012

Chile Escondida copper mine union agrees to early labour talks

Unionised workers at the world's No1 copper mine, Chile's Escondida, have voted in favour of early labour talks with the mine's controller, global miner BHP Billiton, a union leader told Reuters on Tuesday.

Escondida's union stunned the copper market last year by staging a two-week strike, which sent the mine's output tumbling and raised the specter of an increase in labour action. Holding early talks this year suggests improved chances that the firm and workers can clinch a deal.

"We were invited by the company (to hold negotiations) and the workers accepted," Marcelo Tapia, a union leader at Escondida, told Reuters.

BHP declined to comment. Escondida's labour contract is set to expire next June.

BHP and Rio Tinto, which owns 30% of the mine, have approved plans for a $4.5-billion expansion of Escondida to boost output.

Escondida's third-quarter output surged 72.4% from a year earlier to 253 800 t, boosted by better ore grades and a low base of comparison from the year-ago quarter. Output in the January-September period was 787 000 t, up 31.6% from a year earlier.

The mining industry in Chile, the world's leading copper producer, is also bracing for collective negotiations at state copper producer Codelco's massive Chuquicamata mine. Most unionised workers at the century-old deposit have voted to start early contract negotiations, a union source told Reuters earlier this month.

Edited by: Creamer Media Reporter

Friday, November 16, 2012

Yamana Gold insists on risky project in northern Chile

Canadian miner Yamana Gold Inc. (TSX:YRI) (NYSE: AUY) is refusing to give up on its plans to re-open the old “Agua de la Falda” gold mine in Chile’s northern Atacama region, a particularly sensitive area in terms of energy costs.

The Toronto-based company, which has a 57% stake in the project named “Jeronimo,” submitted last week a new environmental impact assessment (EIA), which increases the proposed mine total cost to $423 million, and said it expects start construction in early June next year.

The Jeronimo mine will have a projected production capacity of 5,000 tons of gold a month and an expected life of 13 years.

About eight years ago, the same area was home of a few gold mines now closed, including El Hueso (“The Bone”) and Agua de la Falda (“Water Skirt”), which old facilities have been well preserved and will be used by Yamana, according to El Diario (in Spanish).

The Jeronimo project, located about 10 kilometres from where Chile’s state-own Codelco was hoping to build its San Antonio Oxides, may face the same energy supply issues that force the biggest copper mine in the world to shelve San Antonio and the touted expansion of El Salvador copper mine.

Last month Yamana Gold reported a third-quarter profit of $60 million, down from a year ago, as the miner was hit by increased Chilean tax rates.

The gold company, which keeps its books in U.S. dollars, said the profit amounted to eight cents per share for the quarter ended Sept. 30, down from $115.8 million or 16 cents per share a year ago.

Revenue grew to $611.8 million, up from $555.2 million.

Other than Chile, Yamana has mines as well as development stage and exploration properties in Brazil, Argentina, Mexico and Colombia.


Sunday, November 11, 2012

Andina Minera accepts takeover bid by Hochschild

Andina Minera has accepted a takeover bid by Hochschild after the company offered $103.4-million in cash.

Hochschild bid $103.4-million in cash for Andina, or 80¢ a share. That is double Andina’s closing price on Wednesday, though it comes after a year of poor stock performance for the junior company. Andina shares traded above the offer price early this year, and were above $5 back in 2007 and early 2008.

Andina chief executive George Bee noted that cost inflation is a key industry concern that dragged down the stock price. There were also concerns about dilution as the Toronto-based company looked at how to finance its Volcan gold project in Chile.

“After reviewing the alternatives available to our company, we believe that the offer is the best option for Andina shareholders,” he said in a statement.

The Volcan project holds 6.6 million ounces of gold reserves. Capital costs were estimated at US$547-million early last year, though other companies have reported significant cost inflation since then.

In addition to Volcan, Andina has joint ventures on two early-stage projects in Chile, one of which is a partnership with Hochschild.

Hochschild has already entered lock-up agreements with insiders and investors holding 13.7% of Andina’s shares. The London-listed company expects to mail its takeover circular by Nov. 22nd, and keep the bid open for acceptance for at least 36 days.

BMO Capital Markets and Fraser Milner Casgrain LLP are advising Andina on the deal, while Hochschild is working with RBC Capital Markets and Stikeman Elliott LLP.

Wednesday, November 7, 2012

Copper mine Escondida's output surges 72.4% in Q3

Output from Chile's Escondida, the world's largest copper mine, surged 72.4% in the third quarter compared with the same period of 2011, to 253 800 t, according to state copper commission, Cochilco.

The strong performance was helped by better ore grades and a low base of comparison from the year-ago quarter.

Escondida, which is 57.5% owned by global miner BHP Billiton and extracts about 7% of the world's copper, produced 787 000 t between January and September, up 31.6% from the same period of last year.

The mine's copper output plummeted 24.6% in 2011 to 819 261 t, its lowest level in nearly a decade, on sinking ore grades and a two-week strike.

Escondida Ore Access project set out to boost ore grades and a low base of comparison with the strike-hit third quarter of 2011 are seen having buoyed output in the July to September period of this year.

BHP and Rio Tinto, which owns 30% of the mine, have approved plans for a $4.5-billion expansion of Escondida to boost output.

A new 152 000 t/d concentrator plant and new mineral handling system will boost production to more than 1.3-million tons a year by June 2015.

Several mega deposits in Chile, the world's No 1 copper producer, are struggling this year, most notably world No 3 copper mine Collahuasi, amid stubbornly dwindling ore grades and operational trouble.

But the Andean country's copper output has picked up in recent months on improved ore grades and increased output at operations that started up in 2011.

Edited by: Creamer Media Reporter

Monday, November 5, 2012

Southern Hemisphere Mining completes US$5M placement at 47% premium

Southern Hemisphere Mining has completed the recently announced US$35 million farm-in agreement and aUS$5 million share placement with the C$3 billion Lundin Mining Corporation.

The two companies recently executed a deal that will see Lundin Mining spend up to US$35 million (A$34 million) on exploration at Southern Hemisphere’s flagship Llahuin Copper-Gold Project in Chile to earn a direct stake of up to 75% over a six-year period.

Lundin Mining has now also taken a strategic 11.5% stake in Southern Hemisphere by way of a US$5 million share placement at C$0.25 (A$0.25) per share on the TSX-V, representing a 47% premium to Southern Hemisphere’s current share price.

Importantly, the initial joint venture budget provides for an accelerated drilling campaign at Llahuin.

Lundin Mining is a diversified Canadian base metals miner with operations in Portugal, Sweden, Spain and Ireland, producing copper, zinc, lead and nickel.

The company’s development project pipeline includes an expansion at its Neves-Corvo mine in Portugal and an equity stake in the world class Tenke Fungurume copper/cobalt mine in the Democratic Republic of Congo, which is currently undergoing a major expansion.

Trevor Tennant, managing director, said the agreement would bring a host of benefits for the company and the Llahuin Project.

“This is a significant event for Southern Hemisphere. Lundin is a C$3 billion company and its extensive experience in exploration, mine development and mine operations, as well as its immense financial standing, brings major benefits and validates our work at the Llahuin Copper-Gold Project over the past 15 months.

“Our joint venture partnership with Lundin shows our shareholders a clear path forward with the Llahuin Project.

“The Llahuin joint venture with Lundin Mining is and will remain our key focus but we are also aware of other copper-gold opportunities within the Coquimbo Region of central Chile which may provide additional future opportunities for Southern Hemisphere.”

Friday, November 2, 2012

Barrick Gold profit dips, again lifts capex of S American project

The world’s largest bullion producer Barrick Gold reported a 55% decline in third-quarter profit as lower sales volumes and lower realised gold prices weighed, and the comapny again lifted the capital expenditure (capex) allocation for its Pascua-Lama project, straddling the Chile/Argentina border.

During a quarterly earnings call on Thursday, Barrick CEO Jamie Sokalsky said the company had lifted the capex allocation to complete the massive Pascua-Lama project to between $8-billion and $8.5-billion, up from the $7.5-billion to $8-billion announced at the end of the second quarter. Production was also delayed to the second half of 2014.

Barrick said it was undertaking a top-to-bottom review of the project with engineering, procurement and construction management firm Fluor, which it contracted to oversee the project, after initially attempting to manage construction of the project internally. The results of this review are expected early in 2013.

The company also said it had renewed its focus on increasing shareholder value through its disciplined capital allocation framework, which had resulted in the company cutting or deferring about $3-billion in capex that was budgeted over a four-year period, which it said was the result of recalibrating longer-term production to higher-quality levels.

This had resulted in about $1-billion cut from 2013 capex spending, with next year’s capex structure expected to look the same as that of 2012.

Barrick expected gold production of between 7.3-million and 7.5-million ounces, within its original guidance of 7.3-million to 7.8-million ounces, but total cash costs for gold were expected to increase to between $575/oz and $585/oz, up from the previous guidance of $550/oz to $575/oz.

The company said this was mainly the result of higher cash costs from Australia Pacific and its 73.9%-owned Africa-focused subsidiary African Barrick Gold. It confirmed it was in talks with China National Gold Group about the sale of African Barrick.

The miner also lowered its full-year outlook for copper to 450-million pounds as production was delayed at Jabal Sayid, in Saudi Arabia. This was down from the initial estimate of 600-million pounds. The company was notified in the third quarter by the Saudi government that the $400-million project did not comply with the required safety and security measures, resulting in the company being restricted from using explosives at the mine.

Equinox Minerals, the previous owner of the copper project designed the safety and security system to Western Australian standards, which differ from Saudi Arabian standards. This would prevent the company from mining the deposit in 2013, prompting the company to lower its copper production guidance to between 500-million and 550-million pounds of copper.

Barrick expected to be in full compliance by 2014. The project was expected to produce 100-million to 130-million pounds of copper within its first five years of production. The company acquired the project as part of its $7.5-billion acquisition of Equinox in 2011.

The company’s overriding goals are to attain production of eight-million ounces of gold by 2016, and yearly copper production of about 600-million pounds by 2015, which could increase to more than a billion pounds if it chose to proceed with the Zaldívar-sulphides and Lumwana expansions.

During the quarter ended September 30, Barrick’s net profit fell to $618-million, or 62c a share, down almost 55% from $1.37-billion or $1.37 a share in the comparable period a year earlier. On an adjusted basis, Barrick earned 85c a share, down from $1.38 a share a year earlier. Analysts, on average, had expected adjusted earnings of $1.01 a share.

The TSX- and NYSE-listed miner’s revenue was down 13.5% year-on-year in the quarter to $3.4-billion, compared with $3.9-billion a year earlier.

Barrick produced 7.7% less gold at 1.77-million ounces, and sold 6% less gold at 1.79-million ounces during the period compared to a year earlier.

The company’s Toronto-listed shares traded down 8.89% at C$36.80 apiece on Thursday.

Edited by: Creamer Media Reporter

Thursday, November 1, 2012

Antofagasta Q3 copper output rises, Esperanza helps

Chilean miner Antofagasta said third-quarter copper output rose almost 9% year-on-year, boosted by improved production at its trouble-plagued flagship mine Esperanza and steadier volumes elsewhere.

The London-listed mining group's third quarter was broadly within analysts' expectations, producing 179 800 t of copper, up almost 4% on the second quarter.

Antofagasta said that put it on track to meet its full-year target of 700 000 t, having produced 515 800 t in the first nine months of the year.

"Production is stable and we're advancing towards 700 000 t which is the aim this year and probably the level of production for the next two years," CEO Diego Hernandez told reporters as he presented results in Santiago.

Gold production also increased in the quarter, again in line with full-year targets, rising almost 43% to 77 400 oz, thanks to Esperanza.

Esperanza, a key growth project for Antofagasta, has been hit by nagging operational trouble as it ramps up production and in August the miner said it would need to spend another $200-million to $250-million over 2013 and 2014 to improve processes at the copper/gold mine.

Group cash costs, net of by-product credits, came in at 99.3 cents a pound, flat on the previous quarter.

Over the nine months, cash costs were down almost 5%, helped by increased by-product credits from higher gold production at Esperanza and improved molybdenum production at Los Pelambres.

"We are expecting Group production of 695 248 t of copper at cash cost of 102.5c a pound of copper after by-products, after adjusting for the better performance at Esperanza," Scotia Capital analyst Tom Meyer said in a note to clients.

Volume growth and healthy margins compared with the rest of the sector have helped Antofagasta outperform its peers in the past months. Copper prices have helped, rising over the reporting period, though they have since eased.

Hernandez said the copper market should remain tight at least until the first semester of 2013.

Under Hernandez, who took over as chief executive in August, Antofagasta has outperformed the UK mining sector this year by more than 8%, recovering from the hiccup-prone ramp-up for Esperanza.

Edited by: Creamer Media Reporter

Tuesday, October 23, 2012

Anglo reaches labour deal with Chile Los Bronces - union

Global miner Anglo American and unions at its Los Bronces copper mine in south-central Chile reached a labor contract after five months of difficult negotiations, a union source told Reuters on Monday.

Anglo's flagship Los Bronces deposit produced 245 000 t of copper last year. Chilean state miner Codelco and Japanese trading houses Mitsubishi and Mitsui also have stakes in the mine.

"The vote was very divided," Eduardo Rocco, president of the MSA union, told Reuters. He said 51% of workers in his roughly 600-strong MSA union voted in favour of the deal.

The four-year agreement includes a 4% salary increase as well as bonuses and loans worth around $33 000, Rocco added. He said another union, known as Union No 2, with about 500 members, had also agreed to the deal.

A spokesman for Union No. 2 confirmed it had reached a deal with Anglo, but could not give further details.

Anglo was not immediately available for comment.

Los Bronces plans to double its annual output and could produce a peak of 490 000 t of copper a year, positioning itself as the world's No 5 copper mine.

Anglo ended a bruising ten-month legal battle with rival Codelco in August by agreeing to sell a stake of its south-central Sur properties at a discounted sum of $2.8-billion.

Chile, the world's leading copper producer, was hit by a wave of work stoppages last year, as record prices for copper triggered demands for higher pay and improved benefits.

Edited by: Creamer Media Reporter

Friday, September 28, 2012

Chile manufacturing, copper output leaps, jobless falls

Chile's manufacturing and copper output soared in August from July and the country's jobless rate sank to its lowest in six months, buoyed by domestic consumption and increased import demand, primarily from Brazil and the US, the government said on Friday.

Chile's stronger-than-expected economic performance has helped drive its peso currency up more than 9.5% against the US dollar this year. Together with the Hungarian forint, it ranks as the strongest performer against the dollar among the 152 currencies tracked by Reuters.

Early Friday, after the release of the surprisingly strong production data, the central bank warned it was not ruling out intervening in the foreign exchange market, which it did last year, to stem the peso's rise.

Following the remarks, the peso retreated against the dollar, and was trading about 0.6% lower on the day at about 474 to the dollar. Manufacturing output increased a seasonally adjusted 6.8% in August from July and rose a larger-than-forecast 3.6% from a year earlier on improved domestic and external demand conditions, according to the National Statistics Institute (INE) report on Friday.

Chile's jobless rate for the June to August period fell to 6.4% on jobs in public administration and defense, teaching and mining, easing from May to July's 6.5% level to its lowest since December to February's 6.4% rate. "We think the data released today shows favorable growth in local activity and doesn't display evident signs of contagion on the back of international problems," BICE Inversiones said in a note to clients.

Copper is the backbone of the Chilean economy, making it highly export-dependent. But so far it has resisted the fallout of euro zone debt woes and slowing demand from China, its leading copper customer, better than previously forecast.

INE cited improved conditions for "external demand are explained by the exports of products like salmon and trout, mainly to Brazil and the US."

Domestic demand was boosted by the use of metal-based products, such as railings and fences, in real estate projects, it added.

A low unemployment rate, brisk domestic demand and strong economic activity, weighed against a threatening global backdrop, are seen pressuring the bank to keep its key interest rate at 5% in the near future, and not reduce it to stimulate economic growth, as has been the case recently in Latin American peers Colombia and Brazil.

The central bank is seen holding the rate at 5% again at its monetary policy meeting on October 18, and it is also seen at that level in three and six months, the bank's fortnightly poll of traders showed on Wednesday.

A Reuters poll had seen manufacturing output growth at 1% in August from a year ago on waning external demand and a strong domestic currency exporters say dull their competitive edge globally. The unemployment rate was forecast to have remained unchanged at 6.5 percent, according to the median response of ten analysts and economists polled by Reuters.


Chile lynchpin copper output jumped in August, both compared with the same month of last year and with July 2012. Chile produced 462 643 t of copper in August , jumping 7.8% from the same month a year earlier due to a low base of comparison and a higher current productive capacity, the government also said on Friday.

Copper output in August of last year was hit by the tail-end of a massive strike at world No 1 copper deposit Escondida, majority owned by BHP Billiton.

Production of the metal rose 11.7% in August 2012 from a month earlier, boosted by higher rates of mineral-processing and better ore grades, the INE added.

Red metal production reached 414 339 t in July, a 9.8% jump from the same month a year earlier, also due to a low base of comparison and higher productive capacity, the government said last month. But copper output sank 8.5% in July compared with June on the maintenance of conveyer belts and grinding equipment.

Chile, which produces around a third of the world's copper, is struggling to boost its key copper production despite stubbornly dwindling ore grades in old mines, labour action, energy woes and operational troubles.

The Andean country produced 3.52-million tons of copper in the January to August period, a 4% increase from the same period of 2011.

Chile is seen mining 5.4-million tons this year, significantly down from a previous projection of 5.7-million tons.

But analysts and industry players are increasingly questioning whether Chile will be able to meet its ambitious mining production and investment aims. "Considering that no new operations are due to start before year-end, maintaining August's rhythm would mean an annual output of 5.34-million tons (+1.5% year-on-year), which is difficult if one takes into account Collahuasi's problems and generalised decreases in ore grades," said Pedro Fuenzalida, a senior analyst with LarrainVial in Santiago.

Collahuasi, the world's No 3 copper mine, expects its red metal output to improve in the second half of the year versus the first six months, but its full-year output will likely still be below last year's, as lower ore grades and accidents hit operations.

Edited by: Creamer Media Reporter

Wednesday, September 5, 2012

Chile’s Codelco kicks off $3.5 billion copper mine expansion

Chilean state-own Codelco, the world's largest copper producer, began construction of the access tunnels to the new level of its El Teniente copper mine on Tuesday. The expansion is part of a $3.5 billion project that will allow the company to extend the mine life for another 50 years.

The 108-year-old operation, located about 130 kilometers southeast of the country’s capital Santiago, is the largest underground mine in the world, with 2,400 kilometers of tunnels and a copper production that reached 400,297 tonnes last year.

The new mine level, located 300 meters deeper than the current one, will enter production phase in 2017, said the company in a statement (available only in Spanish).

The miner added that the expansion project of El Teniente includes the construction of a mining town and the essential infrastructure Codelco needs to access the new mineral reserves – about 2,020 million tonnes with an average grade of 0.86% and important molybdenum content.

Thanks to this project, El Teniente will produce about 430,000 tons of copper a year, said the division general manager, Octavio Araneda.

The expansion of this copper mine is only one of Codelco’s five major structural projects announced recently. Together, they will require an investment of $20 billion in the next four years, but will allow the Chilean mining company to remain the world's #1 copper producer, with a current production close to 1.6 million tons of fine copper per year.

Friday, August 31, 2012

Codelco CEO: $100 billion mining investment in Chile by 2020 unlikely

Chile's goal of attracting $100 billion in mining investment by 2020 is unlikely to be achieved because of setbacks to several planned mining and energy projects, Thomas Keller, chief executive of state copper giant Codelco, said on Thursday.

Many analysts had already called the target unfeasible, citing Chile's ballooning energy problems, dwindling ore grades and volatile world copper prices -- all of which may cause companies to reconsider projects.

On Tuesday, Chile's top court rejected the planned $5 billion Central Castilla thermoelectric power plant, citing environmental reasons and potentially jeopardizing a string of new mines planned in the mineral-rich Atacama region.

"The portfolio of $100 billion appears very ambitious. Clearly it's a little optimistic to make it materialize within the time frame initially forecast," Codelco's CODEL.UL CEO said during a news conference.

"Indeed some projects have already been delayed and likely won't be achieved in line with what was originally programmed," he added.

Chile, once Latin America's investor darling, is also experiencing an increase in environmental and social opposition to mega projects that is gaining traction in courtrooms.

While mining helped Chile's economy grow 5.4 percent in the first half of this year, the country has the highest level of income inequality among the 34 OECD countries, according to a report by the body last year, and many Chileans feel they have been left out of the country's copper boom.

Chile's government will on Thursday send a bill to Congress intended to connect its two main energy grids to soothe criticism, soften high energy prices and bolster the country's shaky transmission system.

Lumina Copper's Caserones mine and Barrick's Pascua Lama mine are among the mines gearing up to operate in the area near where Castilla was planned.

But the rejection of Castilla may lead to delays in Codelco's small Salvador project as energy prices will be hard to stomach, Keller said in an interview with Chile's Diario Financiero on Wednesday.

Keller is overseeing the state miner's own challenging investment plans to boost copper output to more than 2 million tonnes from around 1.7 million tonnes. Chile, which produces about one-third of the world's red metal, mined 5.24 million tonnes of copper last year, down 3.2 percent from 2010 levels.

July's copper output sank 8.5 percent from June due to maintenance of conveyer belts and grinding equipment, the INE statistics agency also said on Thursday.

More than $22 billion and over 8,000 megawatts in energy investment in Chile have been suspended, according to Libertad y Desarrollo, a conservative Chilean think-tank.

Brazilian billionaire Eike Batista, whose MPX Energia SA was spearheading the Castilla project, reportedly said via Twitter that investing in Chile "was becoming impossible," according to local media, which added that the tweet was later deleted.

Source: Reuters

Thursday, August 30, 2012

Antofagasta reports 16.5% increase in 1H copper output

Chilean copper miner Antofagasta's Board of Directors has authorized the payment of an ordinary 8.5 cents dividend payable on Oct. 4, 2012.

Copper miner Antofagasta reported Wednesday that net income fell nearly 8% from US$696.2 million or 70.6 cents per share in the first half of 2011 to US$646.1 million or 65.5-cents per share during the first half of this year.

Meanwhile, the company is sticking with its 2012 full year production guidance of 700,000 tonnes of copper, 280,000 ounces of gold and 11,000 tonnes of molybdenum, thanks to a 16.5% increase in copper output and almost a doubling of gold production during the first six months of this year.

In his first meeting with analysts since he assumed chief executive's post, Diego Hernandez said the price of copper is likely to remain volatile in the near term. Copper demand has been hit by uncertainty over the growth of China and the global economy.

However, Hernandez also observed that tight copper supplies are likely to persist for many more years. Global copper supply and demand remain finely balanced despite the slowdown in the global economy, he observed.

Antofagasta reported first half copper production increased 16.5% from 288,500 tonnes of copper in the first half of 2011 to 336,000 tonnes. Group gold production was up 92.5% during the same period from 70,000 ounces in first half of 2011 to 136,100 ounces. Moly production increased 35.4% from 4,800 tonnes for the first six months of last year to 6,500 tonnes during the same period of this year.

Hernandez attributed the increases to "increased production from Esperanza, which had been ramping up during the first half of 2011, along with continued strong performance from our other existing operations." As a result, revenues increased to $3.16 billion despite a decrease in average copper market prices.

"This increase in low-cost production from Esperanza has allowed us to maintain a relatively stable cost position, within the context of an industry environment which remains tight," Hernandez noted.

During the first half of the year, Esperanza has continued to optimize the reliability and performance of the operation. The mill's lower than average throughput in the first quarter of the year was due to damage that occurred in the primary crusher feed conveyor during February and March.

Meanwhile, Antofagasta's board declared an ordinary dividend of 8.5 cents per share for the first half of this year, which will be paid on Oct. 4, 2012.

Thursday, August 23, 2012

Anglo American, Chile's Codelco settle dispute

Anglo American and copper giant Codelco ended a bruising ten-month long dispute on Thursday, with the global miner agreeing to sell its Chilean rival a stake in its coveted south-central Chile properties at a discount to the market price.

The cash deal, worth more than $2.8-billion excluding land, will see Anglo reduce its ownership of its Anglo American Sur properties to 50.1%, as the miner and fellow shareholder Mitsubishi sell a combined 29.5% to Codelco and its financing partner, Japan's Mitsui & Co.

Codelco will also get unspecified land adjacent to its flagship Andina mine. A source familiar with the deal said on Wednesday the land was worth around $400-million.

Under the agreement, reached a day before the agreed deadline, Anglo will sell 24.5% to a Codelco-controlled joint venture between the Chilean powerhouse and trading house Mitsui for $1.7-billion in cash.

The Codelco-Mitsui partnership will buy an additional 5% shareholding for another $1.1-billion, with shares made up 0.9% from Anglo and 4.1% from Mitsubishi. The 4.1% will be bought by Anglo from Mitsubishi for $890-million, and subsequently sold on.

The deal has been done at a discount to a previous valuation of the option, which suggested a price for the 24.5% at around $2.8-billion, reduced from an earlier $3-billion after copper prices fell.

Last October, Codelco said it would exercise its option to buy a 49% stake in the Anglo Sur mining complex when the option window opened in January 2012.

It secured a $6.75-billion bridge loan from Mitsui to exercise its option, with the right, but not the obligation, to pay off part of the loan through the sale of an indirect stake of half the shares acquired.

Weeks later, Anglo dented Codelco's ambitions and surprised the market with a pre-emptive sale of a 24.5% stake in Anglo Sur to Mitsubishi. Anglo said the $5.4 billion deal secured better value for investors.

Since then, the companies have been tussling for the properties.

Source: Reuters

Monday, July 30, 2012

Chile Collahuasi says 2012 copper output won't reach last year's

The world's No 3 copper mine, Chile's Collahuasi, expects its production of the industrial metal to improve in the second half of the year versus the first six months, but its full-year output will likely still be below last year's, a company executive said on Friday.

Output at Collahuasi, which is jointly controlled by Anglo American and Xstrata, tumbled 10% in 2011 from a year earlier. Work stoppages, bad weather and accidents pulled copper output down to about 453 284 t, its lowest production since 2007.

"Regarding what we're expecting for the second half, we're going to have an improvement over the first half ... there's an improvement in ore grades," Xstrata's appointed president for Collahuasi, Roberto Darouiche, told reporters.

When asked if Collahuasi could make up for its shortfall in production to beat last year's output, Darouiche said "given the situation, it's not going to be possible."

Anglo reported earlier on Friday that attributable production at Collahuasi, from its 44% stake in the mine, fell 38% to 63 900 t during the first six months of the year, due partially lower ore grades.

Total first-half output at Collahuasi therefore likely reached 145 000 t, or less than a third of what the mine produced in 2011.

Two workers accidentally lost their lives at Collahuasi in separate incidents earlier this year, prompting the mine to temporarily suspend some operations.

Collahuasi expects to have ready in the second half of the year an environmental impact study for its expansion plans which seek to double annual production, Darouiche added.

The expansion aims to boost annual output to between 800 000 t and one-million tons.

Source: Reuters

Friday, July 13, 2012

Mitsubishi to help defuse Anglo, Codelco row - sources

Japanese trading house Mitsubishi could cede part of its stake in coveted Chilean copper properties to solve a bitter row between Anglo American and Codelco, sources said, as the miners sought more time for talks.

Codelco, the world's largest copper producer, said on Thursday that the parties would seek to extend until mid August a break from litigation that was due to end on July 17, adding that a deal had not yet been clinched.

Sources familiar with the matter said one option on the table would involve Mitsubishi reducing its share in Anglo's prized Sur properties in south-central Chile, which could give room for Codelco to buy a larger stake in the assets.

"It is possible Mitsubishi could sell some of its stake," one of the sources familiar with the matter said.

A source familiar with Mitsubishi but not directly involved in the Chilean negotiations said the trading house took a long-term view and would be "open to compromise", including giving up part of its stake to ultimately boost Codelco's holding.

"They would (consider it) if this was the key to unlocking the situation," the second source said.

State-owned Codelco, which has been at odds with Anglo since October, declined to comment on possible deals to end the dispute. "If Mitsubishi was to give up part of its interest, you'd think Mitsubishi wants to profit in some way; its not a benevolent move," analyst Des Kilalea at RBC Capital said.

"The overriding thing is that a solution that is negotiated is positive providing the valuations make sense."

Anglo and Codelco have been at odds since last October over an option to buy a 49% stake in Anglo American Sur (AAS).

Codelco said in October it would exercise the option to buy the AAS stake when the option window opened in January this year and secured funding from Japan's Mitsui & Co. But weeks later, Anglo surprised the market and Codelco with the pre-emptive sale of a 24.5% stake in AAS to Mitsubishi, in a $5.4-billion deal that dented Chilean hopes, but which Anglo said secured better value for investors.


The sources said that among the possibilities being negotiated, Mitsubishi would sell down that 24.5%. Even a small stake could potentially prove a face-saving solution for Codelco, which would then have the largest share after Anglo.

"Legal matters can be undone in the same way they are done. There's no legal problem in doing a sell-back," said Inigo de la Maza, a law professor at the Universidad Diego Portales in Santiago.

"The problem is more economic. What happens with what was already paid? What happens with the other obligations?"

Several sources said new Codelco CE Thomas Keller - considered by some analysts to be more amenable to a deal than his predecessor - was in Japan last month for talks, as was Anglo.

Chilean newspaper La Tercera said Mitsubishi could cede 5% of its 24.5% stake in the asset to make room for Codelco to buy 29.5%.

But the sources told Reuters on Thursday that the two sides were still talking, while Codelco dismissed reports on the details of a deal as "journalistic speculation."

Codelco, Mitsubishi and Anglo American all declined to comment on a potential solution involving Mitsubishi.

"Discussions are confidential and ongoing," an Anglo spokesperson said.

Anglo's Los Bronces, part of the disputed unit, could at its peak be the world's fifth-biggest copper mine and stands out in a red-metal market defined by a lack of new deposits. Anglo expects its ramped-up mine to more than double annual copper output from 2010 levels in its first three years of full production, before ebbing on dwindling ore grades.

It could produce as much as 490 000 t/y. A slice of the prized properties would be a major boost for Codelco - which faces dwindling ore grades in its own deposits - as it seeks to boost its yearly output to over two-million tons by 2020.

Monetary compensation would also be welcome as Codelco builds up its massive investment plans. Anglo shares closed 2.21% lower on Thursday, outperforming a 2.78 percent fall on the broader FTSE 350 mining index.

Edited by: Reuters

Wednesday, July 11, 2012

Teck weighs future of its $5.6 billion expansion project in Chile

Canadian miner Teck Resources (NYSE: TCK) has temporarily withdrawn the Social and Environmental Impact Assessment (SEIA) application for its $5.6 billion Quebrada Blanca II expansion project in northern Chile.

The Vancouver-based company said in a statement that it is reviewing comments from the regulator and will later resubmit the application for its copper-molybdenum project.

According to the documents submitted, the withdrawal ends the environmental evaluation process of the expansion of Quebrada Blanca mine, located 1,500 kilometers north of capital Santiago.

The development involves an open pit and construction of a 135,000 t/d copper concentrator to process the hypogene ore below the mined-out supergene deposit for an average output of 200,000 t/y copper and 5,000 t/y molybdenum.

As a result, copper production will more than double and the mine life will be extended to over 39 years.