Shougang set to complete Peru expansion by mid-2018

Chinese-owned Shougang Hierro Perú, the South American country's only iron ore producer, is on track to complete a US$1.5bn expansion by the second half of next year, a senior executive said.

The company plans to finish the 10Mt/y San Nicolás processing plant and desalination plant at Shougang's mine in the southern coastal district of Marcona to double the firm's production capacity to 20Mt/y, deputy general manager Raúl Vera said.

The new plant will feature an HPGR system, four ball mills, concentrator and flotation facilities and 22 additional conveyor belts, Vera said. The mine's 20,000m3/d desalination plant will be the largest in Peru, he added.

Shougang has already brought onsite 20% of the 36,000t of machinery and structures, he said. The company last year completed the first stage of the project, including primary and secondary crushers, three ore pads and 25km of conveyor belts.

"We're going to optimize our production processes," Vera said at the Perumin mining conference held in the southeastern city of Arequipa. "We currently use seawater and now we're going to use desalinated water, which will ensure our product has no impurities, improving its value."

The mine, which also produces copper and zinc, has proven and probable reserves of 2.180Bt grading 55% iron ore.

The company doubled its first half profit to 283mn soles (US$87.1mn) after sales jumped 42.7% to 830mn soles due to higher iron ore prices. Iron ore sales slid 7.3% to 5.86Mt in H1.

Hierro Perú produced 7.66Mt last year, according to the energy and mines ministry. The mine, bought from the state by Shougang in 1992, saw iron ore exports fall 1.8% to US$344mn last year due to a 19-day strike, according to the central bank.