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The project, located in Peru's Moquegua region, will initially produce 127,500t/y copper and begin production in 2022 before ramping up to full production the following year, the London-based company said in a statement. The mine is expected to produce 300,000t/y over its first 10 years of full production at a cash cost of US$1.05/lb.
The company, which sold an additional 21.9% stake in the property for US$600mn to partner Mitsubishi last month, said development of the project will get underway once the transaction is completed. Anglo now holds 60% of the project and Mitsubishi 40%.
The company has secured key permits and the project has "strong support" from both Peru's government and the local community, CEO Mark Cutifani said. Anglo agreed to 26 commitments including water management, the environment and social investment programs after an 18 month consultation process, according to the company.
Quellaveco, which will draw water from a local river, also has low haulage costs and "competitive" labor and energy rates, Cutifani said.
"Clearly, we've had a long time to bake this cake," Cutifani said in a webcast presentation to investors in London. "It's a long life project, where we see significant potential for beyond 30 years. Longer term we think our exploration work will position ourselves even further in the industry."
Anglo, which has invested US$1bn in Quellaveco since it was privatized, has built the 7.6km Asana River diversion tunnel, the cement platform for the processing plant, a 2,000-bed workers camp, six water reservoirs with 1.9Mm3 total capacity and a 120,000m3 capacity high mountain area pond and is working on the 53km access road, Domenico Pelliccia, head of base metals projects, said last year.
Anglo, which pulled out of Peru's Michiquillay copper project in 2014, will finally gain a foothold in Peru's mining industry, which over the past 25 years has attracted major players such as Freeport-McMoRan, Glencore, BHP, Teck Resources, Newmont Mining and Barrick Gold. Over the past six years, Freeport, Glencore, China Minmetals, Chinalco, Antamina, Southern Copper and Hudbay Minerals have all completed coper mines and expansions in Peru.
Five Peruvian governments have come and gone since Anglo acquired Quellaveco as the company repeatedly missed price cycles and focused efforts on regional assets in Colombia, Chile and Brazil.
Anglo, which has operations in Asia, Africa and the Americas, in recent years has reduced capex, shed assets and delayed projects in a bid to improve its balance sheet, halving its debt to US$4.5bn over the past year.
Peru's President Martín Vizcarra, who replaced Pedro Pablo Kuczynski in March, was one of the project's biggest backers when he was president of Moquegua region from 2010-2014. His recently appointed justice minister Vicente Zeballos is also a former mayor from the Moquegua region.
"Quellaveco won't just benefit the area of direct influence like Moquegua region. It will have dynamic effect on the entire country," President Vizcarra said at a press conference at the Presidential Palace in Lima. "It adds to Toromocho and Mina Justa in the great mining reactivation in the country and of private investment in general."
The recovery in metals markets enabled many miners to reactivate projects, but permitting in Peru is still too time-consuming, Luis Marchese, Peru country manager for Anglo, told BNamericas previously.
Peru is counting on Anglo, Newmont, Chinalco, Jinzhao Mining, Minsur and Bear Creek Mining to start up US$14bn in mining projects this year. The government also awarded the Michiquillay project to Southern in February. Peru, the world's second largest copper miner, produced 2.35Mt copper last year.
However, a series of corruption scandals in Peru's Executive and Judiciary may delay other investments unless the government implements reforms, warn industry groups such as the mining society (SNMPE).
"The decision of the Anglo American-Mitsubishi consortium is a positive sign for other companies that are interested in developing projects in the country," SNMPE said in a statement. "Mining investment in Peru will grow as long as we continue to guarantee juridical stability, respect the rule of law and strengthen governability and social peace."