Investors pile into Peru’s $2 billion Michiquillay copper project

Michiquillay is located at an altitude of nearly 4,000 meters (13,000 feet) in the northern Peruvian region of Cajamarca. (Image courtesy of Proinversión.)

More than 20 companies are hoping to grab one of Peru’s hottest copper assets, as the country readies to auction off the rights to develop it in December, authorities said Monday.

The $2 billion Michiquillay copper project, located in the country’s northern Cajamarca region, was originally scheduled to be auctioned off next month, but state bidding agency Proinversión decided to push back the date so that interested companies have more time to submit offers, it said in a statement (in Spanish).

Companies have until Nov. 2 to sign up for the auction. A contract for the project, said the agency, will be awarded on Dec. 20.

Companies have until Nov. 2 to sign up for the auction and the winner will be announced on Dec. 20.

Michiquillay, projected to process close to 80,000 tonnes of copper ore a day, used to belong to Anglo American (LON:AAL), but the mining giant pulled out of the project in late 2014 due to capital constraints.

Milpo, controlled by Brazil’s Votorantim Metals, later evaluated the project. But the miner withdrew from Michiquillay in March this year after Proinversión asked Milpo to modify its proposal for the mine’s development.

At the time, the company said the proposed revisions were not compatible with market conditions.

But much has changed in the copper sector since then. In fact, the timing for the planned auction couldn’t be better, as prices for the metal are rallying. On Monday, copper hit a fresh three-year high at $7,111.50 per tonne on bullish Chinese economic data.

According to Proinversión, mineral resources at Michiquillay are estimated at 1.1 billion tonnes of copper with an average grade of 0.629% and a cut-off of 0.4% copper. The asset also holds gold, silver and molybdenum.

The project is the first sizable mineral deposit to be offered up in a public auction in Peru in more than ten years.

While the government didn’t reveal any bidder’s name, precious metals miner Buenaventura has publicly expressed interest in Michiquillay, adding it could develop it by sharing infrastructure with two other proposed mines in the northern region of Cajamarca – Conga, which it owns with Newmont Mining, and the China Minmetals copper-gold project Galeno.