Antamina to hit stride in 2002

The mineral wealth of South America is attracting investment from Canada and around the world. A prime example of this is the Antamina copper-zinc deposit in north-central Peru. The operator, Compaa Minera Antamina, is a partnership of Rio Algom Ltd. and Noranda Inc. (each with 33.7%), Teck Corp. (22.5%) and Mitsubishi (10%). Annual production from Antamina will average over 272,000 tonnes of copper and 163,300 tonnes of zinc. Mine life will be approximately 20 years. Sixty per cent of the US$2.29-billion price tag will be project financed at US$1.32 billion, making this project the largest greenfield mining financing ever.

The deposit contains 494 million tonnes of reserves (proven and probable) grading 1.3% Cu, 1.0% Zn, 12 g/t Ag and 0.03% Mo. Antamina will be the globe’s seventh largest copper mine, the third largest zinc mine, and the third largest concentrate producer.

This is a very large deposit at a very high altitude in a very poor region of the world. Local inhabitants rely on subsistence farming without much in the way of “modern” conveniences. The project lies at 4,300 metres elevation in the Andes Mountains. The camp is located at 3,300 metres, making the health of workers a primary concern at this altitude.

The deposit is located next to a United Nations World Heritage Site and Biosphere Reserve that is also a Peruvian national park. The World Heritage Committee has cited Antamina as a model for reconciling environment and development needs, according to Rio Algom. Keeping it that way requires a multi-faceted community outreach program. During the feasibility study, consultations were held with government agencies, local authorities, community leaders and residents to determine their needs and to ensure the project is integrated into local and national objectives.

A resettlement plan was developed to minimize disruption to residents’ lives: their way of life will be preserved and their living conditions improved. Antamina has initiated a community development program to provide financial and technical support for small business and social programs. The village of Huaripampa has received assistance in bringing electricity into homes, building a small technical school, and creating a medical clinic. A community workshop on electrical safety (with emphasis on children who in rural Peru have no experience with this sort of thing), was organized. The company also sponsors training and scholarship programs, cultural events, and with the aid of international organizations seeks to bring additional resources to the area.

At the end of last year, the total investment in the Antamina project was US$728 million. There were approximately 5,000 construction workers at the mine site and working on the roads, town site and port. Work at the port facilities in Huarmey has begun and construction of the pipeline between the mine and port will begin early this year. Rio Algom’s share of the costs for Antamina was $275 million in 1999, and will be $411 million this year, $250 million next year, and $84 million in 2002. Net of project financing, Rio Algom’s cash commitments are expected to be $8 million this year, $80 million in 2001 and $25 million in 2002.