Expansion of Chile’s Sierra Gorda open pit copper mine, controlled by KGHM Polska Miedz SA, might cost between $1.5 billion and $2 billion, according to initial estimates provided to Bloomberg (in Spanish) by KGHM International’s CEO, Derek White.
The executive warned such figure was preliminary and rough, adding that if current engineering works go smoothly, production from the second stage would begin in 2019.
A spokeswoman for Sierra Gorda in Santiago told MINING.com the firm is currently working on the engineering for Phase II and that, until final decisions have been made on the matter, it is almost impossible to provide accurate CAPEX data.
At the Prospectors & Developers Association of Canada (PDAC) convention, White also told Reuters the firm was sticking to its commitment to invest US$9 billion over the next five years.
“We’re going to invest because we are betting on the fact that this [copper price fall] is a short-term phenomenon that is financially created,” he was quoted as saying.
The mine, a joint venture 55% owned by KGHM (Europe’s No. 2 copper miner) and 45% by Japan’s Sumitomo Metal Mining Co Ltd, began production in July 2014 and it is slated to produce 120,000 tonnes of copper annually at full capacity. KGHM also expects to generate 50 million pounds of molybdenum, used to toughen stainless steel, and 60,000 ounces of gold annually in the mine.
KGHM forecasts Sierra Gorda will produce 220,000 tons of copper a year in the 20 years of its estimated life if owners decide to start the second phase of the project. The forecast also sees molybdenum production at 25 million tons and gold output at 64,000 ounces a year.
The firm acquired the project as part of its $2.9 billion takeover of Canada’s Quadra FNX Mining Ltd. in 2012.
Though it only has a market value of around $7-billion, the state-controlled company is already one of the top 10 copper producers in the world, and one of the five largest silver miners.
KGHM International is expected to publish its 2014 full financial results on March 16.
(Images courtesy of KGHM)