PERU In light of the new sliding 1-3% concentrate royalty imposed by the Peruvian government earlier this week, potential developers of the Las Bambas copper project are dropping out. SOUTHERN PERU COPPER announced its withdrawal from the auction process on the grounds that, with a total royalty of at least 5%, the project would no longer be viable. And BARRICK GOLD, another of the initial 14 pre-selected companies, has announced its retirement from the contest, although it cited the deposit’s low gold content as the main reason for its decision.
Meanwhile, another contestant, Anglo-Australian miner BHP BILLITON, is evaluating the impact of a royalty but has not yet made a decision about its participation, said company spokesperson Francis McAllister.
The current Las Bambas bidding rules fix a minimum 2% royalty on future production and, to complicate matters further, the project will be awarded to the bidder who offers a combination of the highest initial payment and royalty for the project. A minimum of US$10 million must be put up front, US$5 million for the option right and US$5 million for "social investment". The bidding rules also require the winner to make a minimum capital investment of US$1 billion in the project and/or construct a concentrator with a minimum capacity of 50,000 tonnes/day. The deposit contain 40.5 million tonnes of proven reserves grading more than 2% Cu and exploration potential of more than 500 million tonnes. The auction, postponed on many previous occasions, is currently scheduled for July 23, 2004.
The remaining companies pre-qualified to take part in the Las Bambas auction are AUR RESOURCES, TECK COMINCO, CAMBIOR, NORANDA, CVRD, RIO TINTO, PHELPS DODGE, ANGLO AMERICAN, INDUSTRIAS PEOLES, XSTRATA and ANTOFAGASTA.