Antofagasta to Combine Two Copper Mines to Reduce Cost

SANTIAGO (Scrap Monster): The copper producer, Antofagasta Plc (ANTO) owned by Chile’s billionaire Luksic family, planning to combine their El Tesoro and Esperanza mines under its new company Minera Centinela, will costs and jobs.

The two mines will come under one management next week, said the director of Antofagasta, Andrew Lindsay. As the part of unification, about 25 management positions will be removed and the process will get finished in October.

Under the development of its new firms, the company plans to develop two projects named Esperanza Sur and Encuentro projects. Mr. Lindsay said that for producing a further 140,000 metric tonnes of copper, they estimates an investment of around $2.7 billion. They decided to investment by 2016 and start the production by 2019.

The company decides to retain its annual output at around 700,000 tons and to increase it to 900,000 tons only in 2018. The production at its Antucoya project will commence next year to balance the production as its plans to shut down its Michilla mine in 2015. Antucoya project has a capacity of about 85,000 tonnes.

Lindsay said that the company forecasted its total production costs to surge 6.6% to $1.45 per pound this years, due to the expected copper price rise by next year. He added that present price of about $3 per pound is “the floor level”. Lindsay said, “We think we are at the bottom of the copper price cycle and it will recover in the next couple of years and it will go up again and we are lucky that Antucoya will start production just when copper prices are taking off.”

The current general manager of Esperanza is Andre Sougarret. Antofagasta is looking for an alternative energy sources and are planning to supply about 20 percent of the electricity needs for its largest mine, Los Pelambres from a wind power plant, which will start at the second half of this year. Last year, Los Pelambres produced about 405,300 tons of the company’s net 721,200 tons of copper.