Southern Copper reviewing Tía María’s budget
Southern Copper’s VP of Finance, Raúl Jacob, said this week that the company is evaluating the possibility of making changes to the Tía María project’s $300-million development budget.
According to Jacob, the financial reassessment follows the temporary suspension of the project’s construction
In early August, the ministry’s Mining Council made public a communiqué where it explained that the suspension was based on a request made on July 19, 2019, by the regional government of Arequipa, the Association of Workers of the Chucarapi Pampa Blanca Sugar Processing Plant, and the Board of the Tambo Valley residents, to review Southern’s proposal. Such a review has to be carried out within the next four months.
The petitioners believe a review is needed because the Tía María site sits on a protected area known as the ‘Lomas de Cachendo’ ecosystem, where extractive operations should be forbidden.
But Southern Copper (NYSE:SCCO) says that while the decision on the review is being made, it cannot move forward with its plans for this year, which included social programs for the nearby communities.
During the Jueves Minero event, organized by the Institute of Mining Engineers of Peru, Jacob also said that the company -a subsidiary of Grupo Mexico- is planning to present solid legal arguments before the Mining Council to properly explain why the project should go ahead.
The exec also suggested that Southern will put forward ‘legal measures’ to deal with the review of the project requested by the Arequipa government.
In terms of the protests that farmers from the Tambo Valley have been carrying out against the copper project since mid-July, Jacob said that the company is proposing an ‘environmental insurance policy,’ which would be in place from the construction phase onwards.
“For example, if a farm is affected [by Southern’s operations], the insurance company would take care of the damages and reimburse farmers for the lost profits,” he said.
According to Jacob, the miner is also willing to set up an online solution so that authorities can monitor the project and verify whether or not it is complying with environmental regulations.
This is not the first time Southern Copper, which is the world’s fifth-largest producer of the red metal in terms of output, experiences a setback related to Tía María.
The construction plan has been halted and readjusted twice since it first came up, around 2010, due to fierce opposition by locals who are worried about its environmental impacts and the possibility of an open-pit mine damaging crops.
Southern executives, however, are hopeful that the project will be developed by 2020. Once completed, the mine is expected to produce 120,000 tonnes of copper a year for an estimated 20-year lifespan.