Southern Copper (NYSE: SCCO) the world’s fifth-largest producer of the red metal, expects to kick off operations at its $2.5 billion Michiquillay project in Peru by 2022, three years earlier than what it said in April.
The company, which won the public auction for the project in February by offering Peru’s government investment agency Proinversión $400 million and a 3% royalty rate, said it would begin talks with local communities as soon as possible.
Chief executive, Oscar González, said reaching agreements with residents near the project, in the northern Andean region of Cajamarca, would take about a year and construction another three years, Andina news agency reported.
For Peru’s government, securing the investment was one of its biggest mining-related accomplishment since taking office in July 2016, mining minister Francisco Ismodes said in a separate statement.
The bidding process itself, he noted, was as a milestone for the mining sector and the Cajamarca region, since it’s the first mega project awarded in the last seven years.
The Michiquillay copper project was originally scheduled to be auctioned off in November last year, but Proinversión pushed the date back twice amid political turmoil in the South American nation. Peru is the world’s second biggest copper producer behind Chile with annual output of 2.4m tonnes of the orange metal.
Anglo American (LON:AAL) acquired the rights to Michiquillay in 2007 for $400 million, but the mining giant pulled out of the project in December 2014. In its 2011 annual report, Anglo envisaged a 187,000-tonnes-per-year operation at Michiquillay with expansion potential to 300,000 tonnes copper per year.
But Southern, which is controlled by Grupo Mexico, has said that once up and running, Michiquillay will yield 225,000 tonnes of copper a year for an initial productive life of more than 25 years.
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