The owners of the Escondida copper mine in northern Chile have approved a US$870mn sulfide leach project, majority-owner BHP Billiton (NYSE: BHP) said in a statement.
The project will produce 180,000t/y of copper cathode for more than 25 years and will start production in the second half of 2006, the company said in a statement. Full capacity is expected within 18 months of first production.
The company has developed the lowest cost opportunities in the industry and the operation would be profitable even at the low end of the copper-price cycle, company spokesperson Francis McAllister told BNamericas, without providing estimated production costs.
Fluor Chile has been awarded an EPCM contract to develop the project. It is forecast to take 25 months to build with 5,000 workers required at the peak of construction.
The project will use a new bacterially assisted leaching process on low-grade run-of-mine sulfide ore from the existing Escondida pit and Escondida Norte pit, currently under development, which would otherwise be mined as waste.
"Escondida has been stockpiling low-grade sulfide material since its inception and has been conducting studies on leaching this material since the mid 1990s," said BHP Billiton's president of base metals Diego Hernández.
New technological developments now allow the company to process the material. Some 100Mt of low-grade sulfide ore has already been stockpiled.
BHP Billiton has not yet applied the technology at any of its other operations but it does hold opportunities for some in the United States, according to McAllister. The company has patented part of the processes involved, although companies such as Phelps Dodge (NYSE: PD) are using similar technologies, he added.
The total combined sulfide leach ore reserve from both Escondida pits is estimated at 1.134Bt at an average copper grade of 0.52%, with a minimum cut-off grade of 0.3% and a maximum of 0.7%.
The investment includes the construction of a leach pad; solvent extraction-electrowinning (SX-EW) production facilities; a sea-water desalination plant; two 16km stainless steel pipelines to transfer the copper electrolyte solution between the SX and EW plants; warehouses; electrical power supply; camp facilities to accommodate an increased workforce; and additional mine haulage equipment.
McAllister said BHP Billiton would finance its share of investment of US$500mn with cash flow.
In a reference to the current political debate around Chile's mining investment and taxation framework, the company said it had agreed to the investment based on its long-term presence in the country, its confidence in local political players to reach "reasonable outcomes," and the clarity of their rights as investors under Chilean laws.
Melbourne and London-based BHP Billiton has 57.5% of Escondida, London-based Rio Tinto (LSE: RIO) has 30%, a Mitsubishi-led Japanese consortium 10%, and the World Bank's International Finance Corp the remaining 2.5%.
Located in northern Chile's Region II, Escondida is the world's largest producing copper mine. It has current installed capacity of 1.25Mt/y but output is forecast to come in at 5-10% less than that this year, due to water supply deficiencies. It started operations in 1990.