Anglo American drops Peru copper project
Anglo American (LON:AAL), the world’s number four miner, has decided to abandon its Michiquillay copper project in Peru, but said it remains fully committed to Quellaveco, located in the southern part of the country.
The news comes on the heels of a report showing that less than half of existing copper projects are really needed to meet current demand.
The red metal, used by investors as a gauge of global economic strength, has dropped 3.4% so far this year, extending its worst annual loss since 2011, as a property slump in China sapped demand in the world’s biggest consumer.
Quellaveco, however, is the kind of complicated project shareholders mostly hate: It is remote, could cost over $6 billion and — Morgan Stanley— is likely to take three to four years to build.
Anglo, which acquired the project in 1992, has completely redesigned it, so such estimates could prove high, as the bill would be shared with its partners. Another advantage of Quellaveco is that it already has a social license to operate, which it surely will come handy as Peru has a record of harsh and sometimes violent opposition to large-scale mining.
Quellaveco, part of a US$60bn mining project portfolio in Peru over the next decade, is a joint venture between Anglo American (81.9%) and Mitsubishi (18.1%).
The London-based miner has said it plans to submit its revised project to the board before the end of the year.