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Collahuasi’s CEO says shared resources between copper miners could include water, power, maritime facilities and associated infrastructure.
The Collahuasi copper mine in Chile is looking to share resources with Teck Resources (TSX:TECK.A,TSX:TECK.B,NYSE:TECK) to streamline projects for both companies, according to Collahuasi CEO Jorge Gómez.
Speaking to reporters in Santiago, Gómez said that the Collahuasi mine and Teck — with its Quebrada Blanca project nearby — could seek “synergies” in developing their projects.
“We have many things in common that we have been talking about over time and which is helping both them and us in terms of construction and future developments,” said Gómez.
He proposed that shared resources could include water, power, maritime facilities and all the infrastructure that goes along with them.
“It does not make much sense that two companies so close together should double-up on these things.”
He even went as far as suggesting Collahuasi could construct an aqueduct between Quebrada Blanca and the Collahuasi mine to use leftover water from Teck’s operation. Teck’s expansion project scope includes a new desalination plant in what it calls the “first large-scale use of desalinated seawater in the Tarapacá Region to eliminate freshwater use in operations.”
Goody, says Gómez: “[e]ventually they will have a surplus which we can use.”
Water has proven to be a problematic area for miners in Northern Chile, with locals often protesting against mining operations over access to water.
Collahuasi, which is a joint venture between Glencore (LSE:GLEN) and Anglo American (LSE:AAL), applied with Chilean authorities at the end of December to increase its production through a massive expansion program, which would see the mine produce 710,000 tonnes of copper a year.
In 2017, Glencore reported its share of copper production from Collahuasi was 230,000 tonnes, while Anglo American claimed 223,000 tonnes.
The expansion plan would cost US$3.2 billion, and be shared between the joint venture partners.
Anglo American was reported this week to be singling out South America as its star performer when it comes to expansion plans for base metals output. Besides its 44-percent share of Collahuasi, the company also has a majority stake in the Quellaveco project in Peru, slated to come online in 2022.
Harkening back to water, Anglo American highlighted its water management processes in pitching Quellaveco to locals when it announced the project would go ahead.
For Teck’s part, in December the Canadian company reported that it had sold part of its Quebrada Blanca expansion project to Japan’s Sumitomo Metal Mining (TSE:8053) in a bid to share costs.
The Quebrada Blanca expansion will see the aging facility produce 316,000 tonnes of copper annually — a massive increase from recent years as the mine has rapidly depleted.
In Q3 2018, Quebrada Blanca produced 6,500 tonnes of copper. In 2016 its output was 35,000 tonnes, and in 2017 it was down to 23,000 tonnes — necessitating the expansion.
On the London Stock Exchange, Glencore was trading slightly up on Thursday at GBX 295.15, while Anglo American was also slightly up at GBX 1,808.20 by market close.
In Canada, Teck was trading at C$30.06, down 0.82 percent.
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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.
