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Monday, May 20, 2024
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.

Copper

Marubeni and Antofagasta invest $4.4B in Chilean copper mine

The expansion is set to elevate Centinela into the top 15 copper mines globally by output

Centinela Mine Marubeni
Centinela mine. Photo via Marubeni.

Marubeni Corp. (TYO: 8002) and UK-based Antofagasta plc (LSE: ANTO) are set to invest $4.4 billion in an expansion project. The expansion is planned for the renowned Centinela copper mine in the Republic of Chile.

The companies plan to construct a new concentrator plant approximately 7 kilometres south of the existing facility. The objective is to double the production capacities for copper concentrate and address the impending global copper supply shortfall.

While the existing plant processes ore from the Esperanza deposit and Esperanza Sur deposits, the new plant will focus on ore from the Esperanza Sur and the Encuentro deposits. This contributes to an annual increase of approximately 140,000 tons of copper production. This expansion is set to elevate Centinela into the top 15 copper mines globally by output.

“The aim of the expansion project is to scale up the operations of the Centinela copper mine,” Marubeni said in a statement, “which is renowned as being among the world’s leading copper producers, in terms of both volume and cost competitiveness.”

Marubeni’s equity copper volume is expected to increase by around 40,000 tons annually, positioning it as a significant contributor to the project. Gold production, a by-product of copper mining, is anticipated to make Centinela one of Chile’s leading gold producers.

Copper is facing increasing demand as a vital component in the electrification of developing nations, infrastructure development and the burgeoning electric vehicle and renewable energy sectors.

However, the supply side is challenged by diminishing ore grades and the complexities of developing new mining operations. Long-term projections indicate potential supply shortfalls, creating a significant gap between supply and demand.

Read more: Chile and United States discuss benefits of Inflation Reduction Act

Read more: Rio Tinto and world’s largest copper producer forge exploration joint venture in Chile

Centinela expected to contribute to stability of copper supplies

The Centinela copper mine, located in the Antofagasta Region of Chile, has reserves of 2 billion tons of ore as of December 2022, with a production period spanning from 2001 to 2059. Antofagasta holds a 70 per cent interest in the mine, while Marubeni holds the remaining 30 per cent.

The copper concentrate produced at Centinela is expected to play a crucial role as a low-impurity raw material for smelters globally, contributing to the stability of copper supplies.

Shareholders anticipated to cover approximately 40 per cent of the costs through project financing. Construction is scheduled to start in 2024, with production set to begin in 2027.

The company says the Centinela copper mine’s operations prioritizes environmental stewardship and aims for sustainable copper production. Its operations utilize seawater for operational needs, source all renewable energy for electrical power and employ thickened tailings storage methods. In 2021, the mine was awarded the Copper Mark certification, affirming its adherence to sustainable practices.

Since joining the development of the Centinela copper mine in 2008, Marubeni has collaborated with Antofagasta to explore the potential for expansion. Marubeni’s green strategy emphasizes the pursuit of a stable supply of sustainable copper alongside broader business growth.

 

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