World number four miner Anglo American announced Friday that its wholly-owned subsidiary, Anglo American Michiquillay SA, has given notice to the government of Peru to terminate the 2007 privatisation agreement which will result in it withdrawing from the exploration phase Michiquillay copper project.
Under the terms of the 2007 privatisation agreement, Anglo American Michiquillay S.A. has begun the appropriate legal processes to return the project to Activos Mineros S.A.C, the company said in a statement.
In the current economic environment, in which Anglo American is bringing increased focus to its portfolio and prioritising its capital to drive greater returns, Anglo American believes that the prospects for the development of the Michiquillay project would be improved under different ownership.
Anglo American’s immediate priority is to ensure a responsible exit from the Michiquillay project, which includes the successful transfer of its role in the existing Michiquillay Social Fund to the government.
Duncan Wanblad, CEO of Anglo American’s Base Metals and Minerals business, said: “While Michiquillay represents an attractive copper deposit, we have made the decision to withdraw following a comprehensive evaluation of the potential of our long-dated project options. We have reduced the capital required to sustain projects during the pre-approval phases of their development as we focus the portfolio and prioritise our capital on the projects and assets that offer the greatest source of potential value to us, over the short and long term.”
Anglo American continues to progress its Quellaveco copper project in southern Peru and is targeting submission of that project to its board in 2015 according to the statement.
Peru has been the favoured destination for copper investment in recent years. New mines in Peru, led by China Minmetal’s $6 billion Las Bambas project, coming on stream next year and in 2016 will double production to 2.8 million tonnes, placing the South American nation in second place globally behind Chile.
It was recently revealed about 1,000 of the 55,000 active mining concessions in Peru, or a 1.8%, are currently in full swing, according to a study by the country’s Ministry of Energy and Mines (MEM).
While the South American nation has 7 billion tonnes of copper reserves and 74 million ounces of gold waiting to be extracted, according to USGS data, only a few companies are actually going ahead with their planned exploration and extraction activities.