Copper Production

Copper production in Peru decreased in 2020, but a rebound has started in 2021

After three years of steady copper production, where Peru’s annual output averaged 2.45 million tonnes per year (mt/y) from 2017 to 2019, the Covid-induced lockdown in 2020 caused production to decrease by 12.5% to 2.15 million mt/y, according to figures from the Ministry of Energy & Mines (MINEM). Despite this expected drop, figures from October to December revealed production in Q4 2020 was almost identical to the corresponding quarter in 2019; an illustration of the recovery and a positive sign for 2021.

There was a change to the leaderboard of Peru’s largest copper producers in 2020, as Southern Copper Corporation took the top spot (up from third in 2019) with 423,796 mt/y, accounting for 19.7% of the country’s output. As Southern was the only company able to keep producing throughout lockdown, its position should come as no surprise. However, the copper major also benefited from a first full year of production after the expansion of its Toquepala mine. “The new concentrator at Toquepala added 100,000 mt/y of copper contained in concentrates, which represents approximately an increase of 30% in our production capacity,” revealed Oscar González Rocha, Southern's president and CEO.

Antamina (a BHP-Glencore-Teck-Mitsubishi joint venture) remained in second place, with 396,247 mt/y, followed by previous leader Cerro Verde, the mine operated by Freeport McMoRan in Arequipa, with 387,928 mt/y. Las Bambas, operated by MMG, was the fourth biggest copper producer with 312,776 mt/y. Cerro Verde and Las Bambas both suffered 18.2% drops compared to their 2019 production, in contrast to fifth place Chinalco, which grew by far the most of Peru’s top 10 copper producers, reaching 202,771 mt/y, a 6.7% increase from its 2019 mark.

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Peru experienced sharp growth in its copper production between 2014 and 2017, moving from an annual average of less than 1.5 million mt/y to 2.45 million mt/y. After a period of stability preceding the new decade and the black swan event of 2020, a near-term pipeline is about to come online which will push annual production towards 3 million mt/y.

Minsur’s Mina Justa operation is due to start commercial production in July 2021, and once ramped up will add 100,000 mt/y of copper, including 58,000 mt of copper cathodes. Anglo American’s Quellaveco will contribute 300,000 mt/y and is expected to start production in 2022.

Mina Justa, Peru’s newest copper mine, is operated by Minsur’s subsidiary Marcobre, and has two plants – one for oxides and one for sulphides. Gonzalo Quijandría, Minsur’s corporate affairs and sustainability director, elaborated on the processes to be used for each plant:

“In the case of oxides, we are using a new production process for Peru, which is VAT leaching. Taking advantage of our proximity to the sea, we are using untreated seawater for the leaching process. In the case of sulphides, we have a conventional sulphide concentrator plant.”

Acknowledging the impact Covid had on Las Bambas’ production in 2020, general manager Edgardo Orderique spoke of the opportunity it presented to accelerate the implementation of technologies, such as the company’s recently inaugurated Digital Operations Center (DOC) in Lima. “Our DOC has the aim of operating Las Bambas from Lima, controlling the whole value chain, from the mine to the Matarani port,” he explained, adding that the current mini DOC controls dispatch as well as trucks, shovels and drillers, but MMG aims to extend this control to the transportation of concentrate and the storage points.

Orderique went on to outline the company’s plans to begin operating the Chalcobamba pit in June 2021: “Our goal is not to expand production, but rather, to compensate for the lower copper grades at the Ferrobamba pit as we drill deeper and to achieve sustained production in the coming years” he said, noting that after Chalcobamba, MMG will continue development at Sulfobamba.

Another of Peru’s main copper producers, Hudbay Minerals (TSX: HBM), also highlighted technological advances that have been implemented to optimize its operations. Javier Del Río, Hudbay’s VP business unit South America, explained that to optimize production, you need to know in real time the specific characteristics of the ore that is going through your processing plant so the operator can provide the best metallurgical response possible.

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“Right now, we are taking advantage of the US$4/lb+ copper price to invest in capital initiatives focused on the optimization of all the processes from the pit to the port,” he said, giving the example of particle size sensors that send data in real-time to optimize the processing plant throughout the Expert System. “We are also looking to automate our drill rigs so they can be operated remotely, and reinforcing our digital infrastructure with an LTE network, including at Pampacancha.

Hudbay completed the pre-stripping phase at its Pampacancha satellite deposit in 2021, and expects to achieve full production at Pampacancha by the end of Q2, revealed Del Rio, but commented that the real benefits of the operation will be felt in 2023/24. “This deposit will overcome the declining head grade at Constancia and compensate the hardness of the Constancia rock. Pampacancha has 40 million tonnes of reserves at 0.60% Cu, which will be blended with the Constancia production resulting in an average grade of 0.40% to 0.45% Cu for our operation, so it will contribute considerably."

One of Peru’s private copper producers, Southern Peaks Mining (SPM), is in the process of expanding its Condestable mine in the Cañete province. The staged expansion of Condestable will initially increase throughput from 7,000 mt/d to 8,400 mt/d, with construction for this stage due to be finished in Q3 2021, revealed Adolfo Vera, SPM’s president and CEO. Vera noted that this will result in a 20% increase in copper production from the mine, before adding that the following stage will be to increase throughput to 12,000 mt/d after SPM has prepared a new EIA and obtained the necessary permits.

On the subject of the surging copper price, Vera mentioned that the context gives SPM a robust case for expansion. “This will bring about cheaper capital for brownfield copper projects, and has also stimulated M&A interest,” he said.

Although Vera stated that an IPO is not a short-term priority for SPM, he admitted that listing is on the cards in the not so distant future. Summarizing where he would like to see the company in 2022, Vera added: “I would like to see Ariana back in construction, Condestable’s first expansion fully completed, and the permitting process underway for the second stage of the expansion. In an ideal world, I would also like at least one more asset in the SPM portfolio.”

Image courtesy of Gold Fields

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