COAL, URANIUM & OIL SANDS — Southern Peru funds expansion

A 15-year loan agreement with Mitsui of Japan will enable Southern Peru Copper (PCU-N) to expand its operations.

The US$100-million deal is linked to a long-term contract to sell copper.

Southern Peru is in the second stage of a US$1.2-billion expansion. The first stage, completed late in 1998 at a cost of US$245 million, entailed buying new equipment and modifying the concentrator. As a result, the mining capacity at the Cuajone operation increased by 40%, to 440 million lbs. copper.

Next, the company will upgrade its Ilo smelter by installing new single-line furnaces to process 1.25 million tons of concentrates annually. The total cost of this stage is estimated at US$875 million, with completion scheduled for 2003.

Meanwhile, Southern Peru Copper is expanding the solvent extraction-electrowinning plant to produce 124 million lbs. copper per year at a cash cost below US40 cents per lb. The projected cost of this undertaking, which should be finished by year-end, is US$45 million. The company, which has US$600 million in available bank credit and a cash balance of US$198 million, is 54%-owned by Asarco (AR-N).