More problems emerging in copper supply this week. With workers at the Grasberg mega-mine in Indonesia announcing a one-month strike slated to begin May 1.
But elsewhere, one of the world’s biggest copper miners gave the green light to a massive new project. One that shows a major shift underway in global investment patterns for the red metal.
The company is Anglo American, and the project is the Quellaveco mine in Peru — which local officials said over the weekend now has the go-ahead to move to production.
Local press quoted Peru’s Minister of Economy and Finance Alfredo Thorne as saying that Anglo American has decided to proceed with a massive investment at Quellaveco. With Minister Thorne saying he met with company executives and been personally informed of the plans.
The project reportedly involves a $5 billion capital cost for the mine and associated infrastructure. With planned output to reach 225,000 tonnes of copper per year — making it one of the biggest new projects going ahead anywhere in the world.
The decision to proceed with the mine is a major boost for Peru. Coming just weeks after Anglo American walked away from the Michiquillay deposit here — which the company said is uneconomic because of tough fiscal terms.
But Anglo’s executives apparently see Quellaveco as a moneymaker — with construction of the mine planned to start very quickly, in July 2018. And first production coming by 2021.
The $5 billion outlay is a big vote of confidence in the future of copper mining in Peru. Coming at a time when the country is challenging Chile to become the world’s top producer of the metal.
Anglo has in fact been pulling away from Chile recently — having announced it will abandon an expansion of the El Soldado mine in the country. And this week’s vote for Peru shows the company sees better prospects in this nation’s rising copper sector.
That could encourage more investment to shift to Peruvian projects, with a number of deposits here pending development. Some of those like Michiquillay will be auctioned by the government later this year — watch for rising interest in those bids rounds, and keep an eye on Peru’s surging copper output as it closes in on Chile.