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Peru, the world’s second largest copper producer, is benefiting from billions of dollars of investments from the worlds largest mining companies. The investments may boost copper and molybdenum production that could rival Chile, the world leader in copper production. Also, a new use for moly as a semiconductor may increase demand for the metal in the future.
In what Peru’s president called the “contract of the century,” Xstrara, is investing an initial $4 billion for the Las Bambas copper project. It is part of the company’s $14bn plan to boost production by 50 percent by 2014. Alongside Australia’s Strike Resources Ltd. (ASX:SRK), Xstrata “may build a railroad to transport copper and iron ore to a port from Peru’s southern Andes,” reported Alex Emery for Bloomberg. The railway will be vital for the profitable extraction of copper, gold, molybdenum, and iron ore from the country.
Many projects in Peru have encountered resistance due to concerns over pollution and water shortages; however, the Las Bambas project has encountered few problems. The project is targeted to produce 400,000 tonnes of copper per year, starting in the second quarter of 2014. Reports do not mention the amount of molybdenum, but based solely on the size of the project the figures should be sizable. “Peru is the world’s No. 2 copper exporter and Las Bambas would boost its annual output by about 30 percent,” stated Marco Aquino, for Reuters Africa. The $4bn contract is equal to 3 percent of Peru’s GDP, and Xstrara’s Chief is optimistic despite it being an election year in Peru.
There are other companies boosting production in Peru as well. Metminco Ltd. (ASX:MNC), which holds a 72 percent share in Hampton Mining, has increased resource figures by 350 percent on its Los Calatos project in Peru. The project has a base of 3.24 million tonnes of copper and 235,000 tonnes of molybdenum with the potential to grow even larger given similar projects in the region. “”Peru is known for 2 to 4 billion tonne ore bodies and Los Calatos is shaping up as possibly that big,” stated Warwick Grigor of BGF Equities.
Another project ramping up production in Peru is a joint venture between Xstrata, BHP Billiton, Mitsubishi Corp, and Teck Resources Ltd. (TSX:TCK.B)(NYSE:TCK). The companies are investing $1.2 billion into their Antamina mine in Peru. The plan is to boost production by 30 to 40 percent by the second half of 2011, and extend the mine life to 2029. In 2009, the mine produced 343,179 tonnes of copper, while figures for molybdenum are hard to find, the mine in 2006 produced 7,730 tonnes of moly.
The move of many companies to ramp up production of copper, and molybdenum as a byproduct, in Peru will affect the total supply of moly worldwide. The overall size of the investments shows optimism on the part of many of the world’s largest mining companies that the world economy will rebound and demand for metals will increase. Xstrata alone is betting $14 billion that the demand for metals will surge in the future.
New Uses for Molybdenum
Researchers from Japan and Brunei have partnered to build a plant to manufacture a semiconductor material from molybdenum as an alternative to expensive silicon. Semiconductors made of silicon are essential to all types of low voltage electronic products. The new material made of “molybdenum trioxide, is a product of years of research in Japan, and the construction of a plant to process it in the Sultanate [Brunei] is estimated to cost $50 million,” stated a recent article in The Brunei Times.
Much like the new market for moly as a catalyst in hydrogen production previously reported on by Moly Investing News, this new use for the metal may drive the market in the future. If the two technologies take off, as they are a low cost alternative to the industry standards, the fate of moly might not rest solely on world steel demand.