At first glance, the silver-lead-zinc mine operated by Perubar 50 km east of here has little in common with the huge copper mining and smelting complex operated by
Aided by a national privatization program and subsequent infusion of capital from Glencore International of Switzerland, the Perubar operation has been able to boost daily production to 1,500 from 1,000 tonnes and, at the same time, slash production costs.
Meanwhile, the improved investment climate has allowed Southern Peru Copper (SPC) to finance an aggressive, US$1.2-billion modernization and expansion program that will also bring new technology and major environmental benefits.
Both projects had a modest beginning. Perubar began life in 1957 as a small barite mine, until the discovery of a volcanogenic massive sulphide deposit transformed it into a 250-tonne-per-day polymetallic mine, producing silver, lead and zinc.
During a recent tour, The Northern Miner learned that the plant had been expanded to 650 tonnes per day in 1980, and then to 1,000 tonnes per day in 1987. Initial production was from open pits, and a ramp was later driven to gain access to the two main underground deposits: Cecilia North and Cecilia South. The last-developed level is about 300 metres below surface; however, plans are in the works to develop the ramp to test the deposit at greater depths.
The infusion of foreign capital at Perubar has transformed the operation and boosted annual production to 541,495 tonnes in 1998 from 298,576 tonnes in 1992. This was achieved by mechanizing the mine and introducing hydraulic jumbo drills and mechanized blasting, new load-haul-dump machines with remote control systems, and a fleet of larger trucks.
A cement plant was built, along with a tailings treatment plant. About 80% of the tailings are used for backfill, with the remaining 20% treated and deposited in old pits. The deposit is fractured, which means bolting, screening and shotcrete are typically required for ground support.
As a result of these changes and upgrading of the processing plant, unit costs (including processing) fell to US$14.59 per tonne this year from US$22.67 in 1991. The operation now produces at an annual rate of 50,000 tonnes of zinc concentrates grading 53.4% zinc, and 6,000 tonnes of lead concentrates grading 72% lead and 30 oz. silver per tonne.
Reserves are sufficient for at least two more years, or longer if exploration continues to maintain the reserve base and new deposits are found. The average grade is now 5.5% zinc and 1.2% lead plus 30 grams silver per tonne, though values of up to 19% zinc and 2% lead were encountered in a rich, but now mined-out, deposit.
Looking ahead, Perubar is considering a regional exploration program to find other deposits. The company is also eyeing projects that are being privatized by the government, and has made no secret of its interest in Cerro de Pasco, a silver-lead-zinc mine complex in the province of Pasco.
SPC looks ahead
With retirement just around the corner, Charles Preble appears pleased by the progress of a major modernization and expansion program at SPC’s mine and smelting complex. Having spent much of his career helping SPC become a major copper producer, Preble has since focused his efforts on ensuring that it remains competitive despite continuing weak prices.
During a recent meeting with mining reporters in Lima, the outgoing president of SPC emphasized the role foreign investment and modern technology have played in transforming Peru into a major copper producer, and in making SPC one of the 10 largest private-sector copper mining companies in the world.
“We’ve become Peru’s largest mining company and the largest single exporter, generating 11% of foreign income.” Preble said. “At the same time, we’re bringing new technology and improved environmental practices.”
Founded by four American mining companies (three of which are still involved), SPC began life in the 1950s, when it started developing the Toquepala copper mine, situated in an arid, high-altitude (10,000 ft. above sea level) region more than 350 miles south of Lima. At that time, the US$237-million investment was viewed as a major commitment in a politically volatile part of the world.
When SPC began mining in April 1960, national copper production jumped to 182,000 from 38,000 tons. It grew again in 1976, to 354,000 tons, when the nearby Cuajone mine was placed in production.
By the time Toquepala started to produce concentrates, SPC had finished building the Ilo copper smelter on the Pacific Coast — then the world’s largest, with initial capacity of 1,400 tons of concentrate per day — along with a power plant and port facility at Ilo.
In the 1970s and 1980s, Peru, along with neighbouring Chile, suffered from political instability and a nationalization program that drove away foreign investors. However, the reforms of the 1990s swept away the negative sentiment and opened the doors for foreign companies to once again invest in Peru’s mining industry.
SPC answered the call and, in 1994, paid US$66.6 million for the Ilo copper refinery, thereby becoming an integrated copper producer. It also agreed to invest a further US$20.2 million in the refinery over the next five years.
Encouraged by the improved business climate, SPC began a 5-year expansion and modernization program in 1991. In order to help raise funds for the initiative, the company became a publicly traded entity in early 1996. It is now owned 54.3% by
The first stage of the program, which entailed expanding the capacity of the Cuajone mine to 96,000 tons per day, was completed late last year at a cost of US$245 million. The funds were largely directed at expanding the concentrator’s grinding and flotation circuits and the purchase of new mining equipment.
The second stage involves expanding and modernizing the company’s copper smelter at Ilo, which will consist of a new single-line flash smelting furnace and a single-line converting furnace to process 1.25 million tons of concentrate per year.
Once completed in 2003, this US$875-million program will result in a sulphur capture rate of more than 99% and improve air quality.
SPC also is expanding its solvent extraction-electrowinning (SX-EW) plant at a cost of US$45 million. This work is expected to be completed by the end of this year, and SPC reports that the expansion will boost annual production to 124 million lbs. cathode copper at a cash cost of less than 40 cents per lb.
Fortunately, SPC had previously built a sulphuric acid plant, which came on-line in 1995. Production was recently expanded to 330,00 tons of acid from 206,00 tons, providing more than enough acid for the company’s SX-EW operation. “Peru is now a net exporter of acid, mostly to Chile, which is a net importer,” Preble said.
On the production front, total refined copper production last year increased 6.7% to 647.4 million lbs., which includes 104 million lbs. of refined copper cathodes produced at the new SX-EW plant at a cost below US40 cents per lb.
Throughout all this, SPC continued a drilling program to expand reserves, with work largely focused around Cuajone. At the beginning of 1998, proven and probable reserves totalled 1.29 billion tons with an average copper grade of 0.64% at Cuajone, and 284 million tons averaging 0.83% copper at Toquepala. Mineralized material added an further 170 million tons at an average grade of 0.56% at Cuajone, and another 200 million tons averaging 0.67% copper at Toquepala. There also are 680 million tons of leachable, low-grade ore that can be processed economically by the new SX-EW operation.
With reserves to supply production for the next 40 years, SPC is eyeing a third-phase expansion at Cuajone and Ilo, at a cost of an
other US$750 million. “That one is on the books as a dream right now and will depend on metals prices and financing,” Preble said.
Privatization continues
With Peru’s privatization program largely completed, Gustavo Caillaux has taken on the role of fisheries minister in addition to being president of the Commission for the Promotion of Private Investment (Copri).
Caillaux told mining reporters that the program has revitalized the mining sector, with most companies spending more on expansions and modernizations than they had initially committed. The initiative began in 1992, when most mines in the country were operated by two state-owned enterprises.
“Privatization was important because the economy was in such bad shape,” Caillaux explained. “Back then, everything was in the hands of the government, even such things as cinemas and gas stations.”
One of the higher-profile sales was Tintaya S.A., a copper mine sold in late 1994 to Magma Copper (now part of Broken Hill Proprietary) for a total of US$273 million, plus a commitment to invest a further US$85 million over five years. Another was the 1994 sale of the Cajamarquilla zinc refinery to a consortium led by
Caillaux notes that the influx of foreign capital has brought benefits other than the expansion and modernization of existing operations; namely a boom in exploration and the development of several important new mines. Other major benefits are technology transfers and improved environmental efficiencies.
Copri still has a few mining projects on the books, including Cerro de Pasco, which has underground proven and probable reserves of 25.7 million tonnes grading 2.9% lead, 8.6% zinc and 175 grams silver. The property also has a resource estimated at 31.2 million tonnes, plus exploration potential.
The project’s two concentrators have a total capacity of 7,000 tonnes per day, producing 114,000 tonnes of lead concentrates and 361,500 tonnes of zinc concentrates with grades averaging 52% lead and 59% zinc, respectively, plus a silver content of more than 100 grams.
Proposals have been distributed to various interested parties and bids are currently being reviewed. This project is not without challenges, as it entails relocating a mining town that is home to more than 80,000 residents.
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