Copper Production and Development
A steady stream of development activities counteracts low ore grades
Chile’s production levels fell in 2022, reflecting larger productivity issues. On February 3rd, 2023, Cochilco announced a monthly drop in copper production of 0.5% for December of 2022, to 495,800 t/m. This short-term drop was part of a full-year decline of 5.3% in copper production on a year-to-year basis, to a total of 5.33 million t/y produced in 2022. This includes a 10.1% drop in output from Codelco and a 9.4% fall from Collahuasi on a yearly basis, although Escondida’s yearly output rose by 4.2%.
The outlook for next year is more positive: Cochilco estimates that in 2023, copper production will grow by 7.5% to 5.7 million t/y. Several brownfield projects are expected to be completed this year, increasing production. Yet from a more long-term viewpoint, production levels are unsatisfactory.
A government report, viewed by Reuters, showed that copper output is expected to peak at 7.14 million t/y in 2030, two years later than expected due to project delays (a decade ago, the regulator had predicted a 7.62 million t/y peak in 2028). This projection for the future reflects the present reality; production is below where it should be as productivity lags. After the 2030 peak, production is expected to drop, because mines will close and there are insufficient greenfield projects coming up to replace them.
However, across the Chilean mining sphere, significant investment in expansion and development projects demonstrates the momentum that exists behind copper in Chile today. At the heart of this investment in mine growth is Teck’s Quebrada Blanca Phase 2, which announced first copper in March of 2023, and is continuing to advance the commissioning and ramp-up process to full production through 2023. “QB2 is the flagship of our copper growth strategy and will double our consolidated copper production when it reaches full capacity with the operation targeted to achieve 285,000 to 315,000 t/y copper production in 2024 – 2026,” explained Jonathan Price, CEO. “What is also very exciting is that QB2 uses only approximately 18% of the 2022 reserves and resource tonnage so there is significant potential for future expansion.”
Teck is moving ahead full throttle. In addition to QB2, it has a suite of development projects worldwide in Peru, Mexico, Canada, the U.S., and others. In Chile, in addition to QB2, the company is involved in the Quebrada Blanca Mill Expansion (QBME) project, which will increase concentrator throughput by approximately 50% by adding an identical, semi-autogenous grinding line. The company expects to complete QBME’s feasibility study, initiated in mid-2022, during the second half of 2023, and a permanent application was submitted to the Chilean regulator in 2023 and accepted for review. “QBME is expected to be a significant contributor to our near-term copper growth portfolio with potential first production as early as 2026,” said Price.
Antofagasta Minerals is currently in the commissioning stage for its desalination system and fourth milling line at Los Pelambres, expecting to complete the project by year-end, allowing Pelambres to operate at increased capacity and utilizing desalinated water from 2024 onwards. Iván Arriagada, CEO of Antofagasta, described the project as a necessary response to the drought that has ravaged the central part of Chile and stated: “This project is crucial as it provides a source of seawater for running Los Pelámbres, enabling it to operate at full capacity independently of continental water sources.”
The company is also intending to expand operations at Centinela by building a second concentrator, which would allow the company to increase copper production to close to 900,000 t/y of fine copper across both Los Pelambres and Centinela.
Codelco is carrying out a significant number of development activities across its various projects, with the aim of counteracting reducing ore grades. Production in 2022 dropped by 10.6% compared to 2021, while production costs rose by 24.6%. Andre Sougarret, CEO of Codelco, described the challenge of carrying out projects in the current economic environment: “Delays have generated greater demands on our current operations, generating little flexibility and assets with greater maintenance needs, resulting in operational discontinuities and treatment of lower-quality minerals in terms of copper content and by-products.
The company is prioritizing projects that will benefit production, ramping up structural projects. Additionally, Codelco has adopted a variety of digital and automation technologies, including fleets of remotely controlled equipment at El Teniente.
At Escondida, results approved by 4% over the previous year in 2022, while production at Pampa Norte increased by 13%, a rise that Rag Udd, president Americas at BHP, attributed to the new Spence concentrator opened in 2020. BHP continues its forward momentum in the country. Udd said: “We are also working on the design of new projects, such as a new concentrator at Escondida, leveraging new technologies in sulphide leaching, and implementing innovations in tailings management.”
Meanwhile, Capstone Copper’s Mantoverde development project to enable Mantoverde, an open pit copper-gold mine in the Atacama region, to transition from its historic oxide mining to sulphide copper mining, is moving forward on-time and on-schedule. The ramp-up is expected to commence late in 2023. As of late March 2023, the project’s progress stood at 83%. This transformative shift is part of the industry-wide focus on developing brownfield efforts to extend the mine life of mines. “At Mantoverde, sulphide reserves in the mine plan represent only approximately 20% of overall resources, indicating the opportunity for both mine life extension and expansion,” said John MacKenzie, CEO. “We are advancing studies to increase the throughput capacity from 32,000 to up to 45,000 kt/d (MVDP optimized), while also evaluating an even larger increase in the throughput capacity (perhaps double MVDO optimized) via Mantoverde Phase II.”
For Capstone, the area is ripe with opportunity. The company is advancing an updated feasibility study at the neighboring Santo Domingo project, with results expected to be announced by year-end 2023. Additionally, it is evaluating a district cobalt plant for Mantoverde-Santo Domingo, which may unlock cobalt production from the region while producing a by-product of sulphuric acid, which can then be used internally in the leaching of the oxide copper ore to lower operating costs. In a period of intense costs-related pressures, exploring opportunities that can bring down costs in the long-term provides a positive outlook for the future.
In the large mining sphere, interest from global companies continues despite Chile’s current challenges, demonstrating the country’s enduring reputation as a stable and reliable copper producer. At the end of March 2023, Lundin Mining announced that it will purchase a majority stake in the Caserones copper-molybdenum mine from Japan’s Nippon Mining & Metals. The deal, valued at US$950 million, demonstrates the Canadian company’s confidence in the country. In a statement, Lundin’s chief executive, Peter Rockandel, said: “The initial controlling interest increases our exposure to what we believe is a growing top-tier copper mining district.”
For brownfield expansion to fill the gap of the lack of incoming greenfield projects in the country, the Chilean regulators must provide those companies with the necessary approvals. At Glencore’s Lomos Bayas, the necessary approvals came through for the mine’s operational continuity project. “This investment of US$254 million will extend the useful life of Lomos Bayas, allowing copper cathode production of approximately 80,000 t/y,” said Andrés Souper, general manager of Glencore Chile. He continued: “This will utilize new mining resources in the leaching and supply phases of the plant from 2024 to 2029, and will enable us to utilize existing facilities throughout the useful life of the project.”
Lomos Bayas is an example of the potential of Chilean mines, even in a time of decreasing ore grades. The mine has always had comparatively low-grade ore, and when it initiated operations, it was expected to have a useful life of only 12 years. As of 2023, the mine is going on 25 years in operation, and still growing. Souper described: “This anniversary demonstrates our ability to adapt to changes in the industry by incorporating new technologies and establishing innovative projects and programs.”
The rate of innovation and advancement across the mining sector is such that the industry can, and will, continue to adapt to challenges and ensure continued profitability as copper demand increases. Mines are taking steps to improve processes not only to improve costs, but also to meet increasingly strict standards. At the Caserones mine, SCM Minera Lumina Copper Chile (MLCC) has built on its renewable energy PPA signed with Enel in 2022 by initiating the transition to electric powered trucks in the mine, with the preliminary study expected to conclude in July 2023. In early 2023, Lundin Mining acquired 51% of MLCC, and the new agreement offers further room for development. Gonzalo Araujo Alonso, CEO of MLCC, said of the acquisition: “One of the considerable advantages of this transaction is that we can integrate and learn from the other mines that Lundin has, and from our site, we can provide our own know-how to them.”
As different mining companies continue to incorporate new and diverse processes into their operations, the opportunities to exploit synergies to advance effective and sustainable mining continue to grow.
Despite investor concerns, majors in Chile maintain notable confidence in the jurisdiction. Indeed, Udd of BHP lauded the continued reliability of the country: “During our 30 years here, Chile has provided stability and institutional certainty, two essential elements for developing a business that is capital intensive. The country is now facing a period of increasing social demands and changes, but we have seen these demands are starting to be solved in an institutional and democratic manner.”
Turning to tailings
As mining companies return to the drawing board, seeking to find opportunities to increase production output, a surge in interest in secondary mining is sweeping the international mining industry. Historic extraction processes were unable to capture significant amounts of minerals, resulting in waste that is full of copper all over the world. With today’s technology, that copper is waiting to be unlocked.
Indeed, Amerigo Resources’ Minera Valle Central project has been recovering copper from copper tailings since 1992. MVC produces around 30,000 t/y of copper, roughly equivalent to a mid-sized copper mine. “We had solid operational results in the first quarter of 2023 from Minera Valle Central (MVC), with a production of 16.5 million pounds of copper and 300,000 pounds of molybdenum,” explained Aurora Davidson, CEO of Amerigo Resources. “Over the last three years, our operational results at MVC have become highly consistent, which is extremely important in our industry given that we always need to deal with changes in commodity prices.”
Chile has immense resources sitting in tailings dams, and as copper demand increases, it is these tailings dams that hold the key to maintaining production. Davidson sees secondary mining as central to Chile’s future. She said: “Given that Chile is the world’s largest copper producer, and each copper mine produces tailings, the opportunities for economically recovering copper through secondary mining in this country are apparent, and the time will come when they are pursued.”
Freeport McMoRan is looking at its tailings dams worldwide, in partnership with multiple technological partners, including Jetti, with the intention of implementing new leaching technologies to extract copper from Freeport’s decades of stockpiles. “With traditional leaching technology, you could typically only extract 15% to 60% of the copper, depending on the mineralogy of the copper contained in the rock,” said Joshua Olmsted, president and COO – Americas at Freeport McMoRan. “We have approximately 38 billion pounds of copper still sitting in our stockpiles that previously were deemed unrecoverable.”
Freeport McMoRan has already started a pilot study at one of its North American operations, working on several operational initiatives both internally and with external partners. The company has identified El Abra as an area of opportunity to use the same technology. Olmsted said: “We are definining the capital needs now and are hopeful to start construction of an on-site catalyst facility by the end of 2023 and see incremental copper production in 2024 or 2025.
In the context of the ordinarily exceptionally large timelines of any major project to increase copper production, this is a remarkably speedy and easy way to maximize the mine’s existing resources.
As leaching processes continue to improve with greater investment in innovation, the momentum behind secondary mining will only increase, bringing a more sustainable and green way to dramatically increase output at a time when the world is in desperate need of greater production.
Article header image courtesy of BHP