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Copper Projects in Latin America

Most analysts agree that copper prices are entering a period of relative stability on the basis of steady global demand and low production growth. Latin America’s importance in the future of copper production is evidenced by its share of upcoming projects. So, despite a trend of lower grades and depletion at existing mines, Latin America is still set to contribute more new capacity than any other region in the years ahead.

This is a 2-part series that will look at upcoming projects. This first article will cover Mexico, Brazil, Ecuador, Argentina. The second article to be published next week will look at Peru and Chile.

Mexico

Copper production in Mexico has more than doubled since 2009, reaching 752,000t in 2016, and 755,000t in 2017, according to the USGS. Copper reserves currently stand at 46Mt.

The sudden rise in copper production can mainly be attributed to the US$3.5 billion expansion and restart of the Buenavista del Cobre mine. Previously called Cananea, the mine had been shut down due to a worker strike for about three years starting in 2007. After regaining control of the asset, operator SCC launched the expanded mine in 2016. SCC, controlled by Grupo México, has consistently been the country’s primary producer of copper.

Mexico’s biggest copper projects in the pipeline is SCC’s 200,000t El Arco, a US$2.90billion greenfield that could start up by 2025. Production would be 190,000t/y copper and 105,000oz/y gold. The company’s 35,000t-each El Pilar and Pilares projects are both slated to start production in 2019.

Southern is also advancing its US$413 million zinc concentrator project at its Buenavista primary copper mine, with initial output planned for 2020. The project will produce 80,000t/y of the metal, along with 20,000t/y copper. SCC’s expansion plans show the company is gearing up for a new wave of growth.

Early stage copper projects in Mexico include Starcore’s El Crestón, Azure Minerals’ Alacrán project in Sonora, and Azucar Minerals with three copper projects: El Cobre, Los Venados and Yago. Azure Minerals suspended its Promontorio project and is seeking a partner to progress exploration.

Buenavista Mine

Brazil

Copper is Brazil’s third largest mineral export. The three top producers are Vale, Yamana Gold, and Mineração Caraíba, controlled by Canadian Ero Copper. Brazil’s mine production was 321,117t in 2016, the last year for which full-year of data is available. In 2017, red metal production from the three companies, which account for 97% of output, was 370,975t, with the Rio de Janeiro-based diversied giant Vale contributing nearly 80%, according to figures compiled by BNamericas. Mining association Ibram estimates 2017 output was 335,000t.

Interest in Brazil’s copper potential has increased since the recovery of copper prices. In December 2017, Vale announced it was studying the US$400mn phase 3 expansion (Salobo III) at its Salobo mine, and in October 2018 said it planned to submit the project to the board for approval. The project is intended to increase capacity by 50,000t/y. In Brazil, Vale also operates the Sossego copper mine in Canaã dos Carajás, Pará state. Output at Sossego in 2017 was 100,000t with 193,000t at Salobo, for a total of 293,000t.

In January 2017, Ero acquired Caraíba and plans to develop its Vermelhos project. Ero is also carrying on exploration and resource definition drilling programs at its Pilar, Vermelhos and Surubim mineral districts, all part of its Vale de Curaçá property in Bahia state.

The third place copper mine in Brazil is Yamana Gold’s Chapada, with 57,742t in 2017. And in May, Lara Exploration reported that Mineração Maravaia has been granted its mining license for the Maravaia copper-gold project in Pará state. The project is a joint venture between Lara (40%) and Tessarema Resources (60%).

Brazil holds significant additional copper capacity. Vale has three additional copper projects sitting in its portfolio, Cristalino (100,000t/y), Alemão (38,000t/y) and Project 118 (38,000t/y). Meanwhile, Canada’s Aura Minerals is working on an optimized plan for its Serrote project, where a 2012 feasibility study defined at US$450mn, 40,000t/y operation.

Sossego copper mine in Canaã dos Carajás

Argentina

The Alumbrera mine has been producing copper in Argentina for many years, but the output is dwindling due to depletion. Many undeveloped projects in Argentina are widely believed to hold serious copper potential but have been lying in wait for a better operating environment and price consolidation.

The most recent studies at Argentina’s big copper projects show Agua Rica could produce 135,000t/y, El Pachón 280,000t/y, Taca Taca 244,000t/y, Los Azules169,000t/y, and Constellation 150,000t/y. These major endeavors have been stalled due to the low copper prices and the overall unfavorable investment climate in Argen- tina. There is also the smaller (40,000t/y) San Jorge project in Mendoza, impacted by provincial legislation prohibiting sulfuric acid, as well as Filo del Sol, which apart from gold would turn out 50,000t/y copper.

The changing – but still challenging – political environment in Argentina under current president Mauricio Macri is slowly creating greater optimism among mining investors and has led Glencore and Yamana to reopen the book on Pachón and Agua Rica, respectively.

Ecuador

Ecuador is close to becoming a copper producer with the US$2 billion Mirador project which is being developed by Chinese consortium CRCC-Tongguan and startup was in March 2019. Mirador will produce some 100,000t/y. CRCC-Tongguan also controls the advanced exploration stage Panantza San Carlos copper project, where studies by former owners outlined production of 180,000t/y.

The country is also host to SolGold’s large Cascabel copper-gold porphyry, which has become an object of desire – and for entry into Ecuador – for certain majors. Newcrest Mining has acquired a 14.5% stake and BHP a 6.1% stake in SolGold.

Ecuador’s recent efforts to reshape its mining framework have caught many investors’ attention and will be favorable for the industry in the years ahead. Mining investment in Ecuador, which rose fivefold from 2013-2016, is expected to quadruple from 2017-2020, according to the ministry. Mining investment will also quadruple employment in the industry through 2022, according to UK consultant firm Wood Mackenzie.

Information provided by BNAmericas.

Harris Gomez Group is a Common Law firm, with offices in Santiago, Bogotá, and Sydney. Over the last 18 years, we have been supporting foreign companies with their growth in Latin America. Many of our clients are technology companies, service providers and engineering companies that focus on the mining, energy and infrastructure markets. 

To better understand how we can support your management team in the Region, please contact Cody Mcfarlane at cmm@hgomezgroup.com