LATIN AMERICAN ROUND-UP (Part One) – Buoyant Prices Yield Strong Performance, Big Plans

Mining companies have rediscovered how to rake in the really big bucks, led by Latin America's big three: Chile's s...
Mining companies have rediscovered how to rake in the really big bucks, led by Latin America's big three: Chile's state copper corporation CODELCO, Santiago-based copper miner MINERA ESCONDIDA and Rio de Janeiro-based conglomerate COMPANHIA VALE DO RIO DOCE (CVRD). The companies posted net profits of US$816 million, US$1.25 billion and US$1.75 billion, respectively, for the first nine months of the year.

Each of these companies carried out important expansions in 2004. Minera Escondida, which operates the world's largest copper mine in northern Chile, has two major expansion projects underway. The US$400-million, 502-million-tonne Escondida Norte pit will allow the mine to keep copper production above 1.2 million tonnes/year (t/y) through the end of 2008, after which output will taper off. Pre-stripping is underway and the first ore from Norte is due to be processed in the fourth quarter of 2005. A US$870-million sulphide leaching project that will add 180,000 t/y of cathodes is also nearing completion.

In November, Codelco submitted to authorities the environmental impact assessment (EIA) for the US$900-million Mansa Mina project. Part of Codelco's northern division, the project envisages a mining rate of 50,000 tonnes/day (t/d) with an average grade of 1.18% Cu to produce approximately 188,000 t/y of the red metal. The ore will be treated at Codelco Norte's Chuquicamata facilities, which will be modified to deal with the different type of mineralization.

Also at Chuquicamata, the company is carrying out a scoping study for a transition to underground mining. Codelco anticipates investment of US$522 million will be required to initiate underground mining in 2013, with an overlap of up to three years with open pit operations. Latest estimates indicate underground resources of 2.4 billion tonnes grading 0.81% Cu plus molybdenum. Construction will take five or six years, and the plan is to mine using panel-caving methods. Operations will ramp up gradually to about 125,000 t/d, producing some 30,000 t/d from each of four different zones.

There is yet more: Codelco awarded a US$170-million engineering-construction-procurement-management (EPCM) contract to the BECHTEL-ARA consortium in July for the crushing, conveying and leaching facilities related to the northern expansion of Chuquicamata's satellite deposit Mina Sur.

At Codelco's El Teniente underground mine in central Chile, the company is carrying out a US$700-million development plan to boost output to 450,000 t/y of copper by the end of 2005. This includes a 30% production increase to 439,000 tonnes this year. One of the initiatives involves utilizing remote-controlled load-haul-dumper units supplied by Sweden's SANDVIK in some extraction areas.

And while open-pit Chuquicamata has an underground future, at El Teniente they plan to go the other way. Codelco has started conceptual engineering studies to start open pit mining at Teniente by 2010. Preliminary open pit studies focus on ore zones west of the underground mine and indicate "potential reserves" of 1 billion tonnes grading 0.75% Cu. Open pit mining would boost daily throughput rates to 390,000 tonnes from 130,000 tonnes.

CVRD's 2004 highlights included the signing of a joint venture with the ALUMINUM CORPORATION OF CHINA (Chalco) to study the construction of a 7.2-million-t/y alumina plant, known as the ABC REFINERY, in northern Par state. The first phase alone is expected to cost US$1 billion and will have capacity of 1.8 million t/y alumina, with operations due to begin in 2007.

In early July, CVRD formally inaugurated its first copper mining venture, the US$413-million Sossego mine in the Carajas district of northern Brazil. The mine has reserves of 245 million t of ore. Output will be 140,000 t/y of copper contained in 467,000 t/y of concentrates.

CVRD also came out of 2004 with three handy auction wins. In its first foray into Africa, the company won a concession to explore and develop Mozambique's enormous Moatize coalfields with a US$123-million bid, which could lead to total investments of some US$1 billion there.

A few days later, CVRD won an international concession to explore for and develop bauxite on lands held by fellow Brazilian metals company Paranapanema in the Pitinga region of the country's northern Amazonas state with a US$20-million cash offer.

CVRD then beat out all comers with a US$15-million investment offer to secure the rights to potassium reserves in central-southern Argentina's Neuqun province. Once operational, production could ramp up to 1 million t/y of potassium for Brazil's fertilizer market.

(Next week in Part Two, Latin American Exploration)


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