Chinalco Mining sets sights on copper projects in Latin America
Source: www.chinamining.org Citation: scmp.com Date: Apr.25, 2014
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| Peng Huaisheng shrugs off the impact from Peru`s suspension order on the output of Chinalco Mining`s Toromocho project. Photo: Nora Tam |
Chinalco Mining, the non-ferrous and non-aluminium metals unit of aluminium giant Chinalco, is seeking acquisition opportunities in Latin America for copper projects with long-term return rates of more than 10 per cent.
Chief executive Peng Huaisheng said the region presented more development potential, especially Peru, where the company has been developing the Toromocho copper project since 2007.
"Our understanding is that Peru offers greater potential within Latin America," he said. "Peru has a strategy to catch up with Chile in metals and mining development, so it provides an overseas-investor-friendly investment environment."
Chile is the world`s largest producer and resource holder of copper, which is used widely in the power distribution and construction sectors. China imports about 70 per cent of its raw copper ore needs.
Hong Kong-listed Chinalco Mining`s US$3.5 billion Toromocho project, about 140 kilometres from Lima, started trial commercial production in December.
But power shortages, caused by a three-month delay in power connection, meant the company had to first process ore with lower copper content than originally planned. This caused the firm to slash in December its output target for this year to between 120,000 and 150,000 tonnes from 190,500 tonnes.
In March, heavy rainfall resulted in muddy water being discharged from the project`s quarry mine to a lake. Peru`s Ministry of Environment ordered on March 28 the project to stop operation for alleged non-compliance with environmental laws relating to water discharge. After building a water tank to collect rainfall and a draining system, the ministry allowed production to resume on April 11.
Peng said the suspension would not hinder the project from achieving the revised output target since it was not expected to reach full capacity utilisation until the third quarter.
He said his firm was "surprised" by the suspension order, but he would not comment when asked if he thought foreign and domestic firms had been treated differently on similar issues.
In July last year, Chinalco Mining decided to use US$120 million from its initial public offering proceeds, originally for acquisitions, towards phase two expansion of Toromocho.
The US$1.32 billion expansion will be 80 per cent-financed by bank loans and will raise annual output capacity by 45 per cent to 310,000 tonnes when completed in the first half of 2016.
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