Xstrata rethinking Argentina copper mine over tax
mining-journal.com
Xstrata plc is rethinking its expansion in Argentina now that the government has imposed stiff export duties affecting some of the world`s largest mining companies.
Charlie Sartain, chief executive of Xstrata Copper, said that the tax of 5-10% which came when the government scrapped tax breaks for mining companies in December, could make Xstrata`s US$2 billion El Pachon copper project uneconomical and raised concerns about profitability and stability for mining in Argentina.
Sartain contrasted Argentina, where Xstrata has joined at least four other companies in a legal challenge to the duties, with its expansions in Peru and Northern Chile.
"We like to think we can expand in all the regions, but we need to be very cautious and think about those geographies where the environment is changing and perhaps becoming less stable than we would want," the executive said.
Xstrata operates the Alumbrera mine in Argentina, which produces 180,000t/y of copper and increased output 16% in the second half of last year even though it is an older mine with a finite life. "A mine which is a bit more mature like Alumbrera - obviously high metal prices do allow you to extend the mine life," Sartain said. "It`s still a very important contributor to us but it`s in a country where we are having some difficulties."
It purchased Canada`s Falconbridge in 2006 and has since become the fourth largest copper producer in the world. With a 44% stake in the giant Collahuasi mine in Chile, the Tintaya mine in Peru and a 33.75% share of Peru`s Antamina mine, Xstrata`s portfolio includes some of Latin America`s best mining and smelting operations.
It is developing two major projects in Peru near Tintaya, Las Bambas and Antapaccay. Since Xstrata acquired Tintaya from Falconbridge, it has started to transport copper concentrates from Tintaya down the coast to its Altonorte smelter in Antofagasta, Chile.
"The other thing about Altonorte smelter is that we`re expanding that by around 30%, which we see as a smart thing to do in the biggest copper-producing region in the world," he said. "We`re also broadening the metallurgical business there," said Sartain, specifying increased sales of sulfuric acid produced as a by product of its copper smelting operations.
"Acid prices, as you know, are pretty good." Xstrata is planning to expand a molybdenum roasting facility at Altonorte and is looking at putting in a molybdenum leaching facility there. "That`s because we see the potential for further margins for the business at Altonorte. It also extends our approach to product integration. We have a number of mines that produce moly as a concentrate," he said.
(Reuters, April 9) |
