Top 10 Current Mining Projects in South America

Article by EPCM World's correspondent in Lima, Peru

Photo: Barrick's bi-national Pascua Lama Project, courtesy of Miningwatch.com

Mining projects in South America produce solid benefits for investors and local governments alike, but often face social pressure at site, either by the leaders of the surrounding community, or political opposition forces. Recent market prices for minerals around the world have determined the growth in the current global demand. Nevertheless, the mining industry in the following countries have shown important signs of ongoing development.

1. Conga Project: Yanacocha's gold mine is the largest in South America located in the Cajamarca province, 800 kilometers northeast of Lima, Peru.

Operator: Yanacocha

Owners: Newmont Mining Corporation, headquartered in Denver, United States (51.35% of shares) Compania de Minas Buenaventura, a Peruvian company (43.65%), The International Finance Corporation (IFC), World Bank finance arm (5%).

Capital Cost: The total capital investment of the project is estimated to be between $4 billion and $4.8 billion dollars.

2. Las Bambas Project: Las Bambas was Xstrata Copper’s first project in Peru. Located in the department of Apurimac, the estimated initial production of 400,000 tonnes of copper in concentrate per year, include major products of gold, silver and molybdenum. Direct costs are set at the first quartile. The commissioning of the mine is estimated for the third quarter of 2014, while increasing capacity and full production.

Owner: Xstrata PLC

Operator: Xstrata Copper

Capital Cost: $4.2 billion dollars.

3. Salobo Project: Located in Pará, Brazil; this project has the biggest copper deposit ever discovered in the country, and will produce gold as a byproduct. The project will help the firm to become one of the five largest producers of the metal world by 2015. In its first phase, Salobo is expected to reach 127,000 tonnes per year of copper concentrate and 130,000 ounces of gold as a byproduct, according to the plan's investment company last year.

Operator: Vale

Owner: Vale

Capital Cost: Budgeted for 1.8 billion dollars in the first phase.

4. Cerro Casale Project: This mining project is located in Region III, in Aldebaran, south of the Maricunga gold district and 100 km (as the crow flies) east of Copiapo, Chile. The production of this field is mainly concentrated in gold (Au) and copper (Cu).

Operator: Barrick

Owners: 75% in the Cerro Casale (Chile), while Kinross Gold Corp., owns the remaining 25%.

Capital Cost: $4.2 to $5.25 billion dollars.

5. Pascua Lama Project: Pascua-Lama is the first bi-national mining project in the world and is developing an open pit gold mine, located over 4,000 meters on the border between Chile and Argentina. On the Chilean side, Easter is located in the Huasco Province, Atacama Region, while on the Argentine side, Lama is situated in the Province of San Juan.

Operator: Barrick

Owner: Barrick Gold Corp.

Capital Cost: The estimated investment in this project is $1.75 billion dollars. This site corresponds to Barrick Gold Corp. (Canada 100%)

6. Caspiche Project: Known as the Caspiche deposit, this project is located in northern Chile's gold-rich Maricunga mineral belt.

Owner: 100% owned by Exeter (with a 3% Net Smelter Royalty to Anglo American Chile Limitada).

Capital Cost: The Caspiche project displayed a strong leverage at present gold prices. These generated revenues were significant with the pre-tax Net Present Value (at a 5% discount). All of which was calculated from the starting time of the project, of $2.8 billion dollars and average operating costs of $606 per ounce gold equivalent. Gold production costs dropped to $18 per ounce when the copper and silver by-product credits were considered.

7. Quellaveco Project: The site is located in Quellaveco, 34 km north-east of Moquegua Peru. About 130 km south of Arequipa in Southern Peru.

Operator: Anglo American Quellaveco S.A.

Owner: Anglo American PLC

Capital Cost: Quellaveco will be exploited to produce open-pit copper and molybdenum concentrate. Anglo American investment in the project will be between $2.5 to 3 billion dollars. Construction of the mine facilities will last approximately 44 months.

8. Fruta del Norte Project: This underground mining project is located in the mining concession La Zarza, on the northern slopes of the Cordillera del Condor, Ecuador. The deposit was discovered in 2006 by a team of Ecuadorian and Canadian geologists.

Operator: Kinross

Owner: Kinross

Capital Cost: Kinross has an estimated investment of $1.1 billion dollars for the development of FDN, projected for a period of five years starting 2011.

9. Cerro Verde Project: Cerro Verde is an open-pit copper and molybdenum mining complex located in Arequipa, Peru.

Operator: Sociedad Minera Cerro Verde S.A.

Owners: 53.56% FCX, 21% SMM Cerro Verde Netherlands B.V., 19.3% Compañia de Minas Buenaventura S.A.A., and 6.14% owned by other shareholders, whose shares trade on the Lima Stock Exchange.

Capital Cost: Expansion of current operations is $3.5 billion dollars.

10. Toromocho Project: Located 142 km from Lima, Peru. Toromocho reserves are estimated at 1.526 million tonnes consisting mainly of copper plus molybdenum and silver. The mine will operate under the open pit method.

Operator: Minera Chinalco Perú S.A.

Owner: Aluminum Corporation of China (CHINALCO)

Capital Cost: $2.1 billion dollars.

According to Diana Rake, a Sr. Recruitment Consultant with Downing Teal in Peru, there is a deficit in human capital in most mining projects in South America. Non-governmental organizations and private firms are trying to work together to find solutions which will involve ensuring a better quality of life for the population around the mining areas, as well as offering employment opportunities to the locals.