Bloomberg News

Southern, Anglo to Ease Water Shortage to Spur Peru Projects

November 29, 2012

Anglo American Plc (AAL) and Southern Copper Corp. (SCCO) may reactivate stalled copper projects in Peru next year by resolving water shortages, the Andean country’s main mining group said.

Anglo’s $3.3 billion Quellaveco copper project and Southern’s $900 million Tia Maria deposit, halted by environmental concerns, aim to use treated seawater instead of tapping farmers’ water supplies, said Pedro Martinez, president of the National Society of Mining, Petroleum & Energy.

Peru’s mining industry, the world’s third-largest copper producer and No. 6 in gold, will cut investment by 33 percent to $4 billion next year as social unrest delays projects, according to the Society. Protests have postponed projects such as Newmont Mining Corp. (NEM:US)’s $5 billion Minas Conga gold project and Zijin Mining Group Co.’s $1.5 billion Rio Blanco copper deposit.

“The Conga experience sent investors and authorities a clear message,” Martinez said yesterday in an interview in Lima. “As water is the biggest problem for the population, this has to be solved first.”

Newmont and HudBay Minerals Inc. (HBM), which aims to build the $1.5 billion Constancia copper mine in the southern Andes, plan to build water reservoirs before commencing mine construction, Martinez said.

New Study

Phoenix-based Southern planned to submit this month a new environmental impact study for Tia Maria, which is slated to start producing 120,000 metric tons of copper annually by 2015, and then hold public hearings for the project, Chief Executive Officer Oscar Gonzalez Rocha said in an Oct. 1 interview.

Gonzalez Rocha didn’t immediately return telephone calls and e-mails seeking comment. Anglo American spokesman James Wyatt-Tilby declined to comment in an e-mail.

President Ollanta Humala, who was elected last year on pledges to raise mining royalties and tighten state control over natural resources, is now counting on private investment to help finance social spending programs, Martinez said. Monthly meetings between business leaders and government officials ’’to exchange ideas’’ have resumed after Humala’s government initially distanced itself from investors, he said.

“The authorities are absolutely convinced of the importance of the mining industry,” Martinez said. “The government has understood that resources are needed to create jobs and invest in infrastructure, education and nutrition.”

Southern Copper gained 1.6 percent to $36.74 today in New York Stock Exchange composite trading. Anglo American rose 3.3 percent to 1,764 pence in London.

To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net


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    (Newmont Mining Corp)
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