Xstrata Copper announces a definitive estimate of US$5.2 billion for the Las Bambas project in southern Peru reconfirming the updated estimate reported in August 20121 and the project’s status as a world class, Tier 1 copper asset that will deliver substantial value. Las Bambas is now in full construction phase and is set to produce 400,000 tonnes of copper per annum from 2015 for at least the first five years, with a very competitive capital intensity of $13,000 per annual tonne of copper, first quartile cash costs and a mine life of more than 20 years from at least three open pit mines.  The project delivers robust financials, earning Xstrata’s cost of capital at a life of mine flat copper price of US$1.89 per pound. The highly prospective Las Bambas Mineral District provides significant further brownfield growth potential.

Xstrata Copper Chief Executive, Charlie Sartain, said: “Las Bambas represents the next major stage in Xstrata Copper’s Peruvian development plans that will result in combined annual production levels in the country of around 700,000 tonnes of high margin copper from 2015. Following the successful commissioning of five projects in just over a year, including our new US$1.5 billion Antapaccay mine and the major plant expansion at our Antamina joint venture also in Peru, this latest review of Las Bambas confirms the progressive realisation of Xstrata Copper’s ambitious organic growth strategy.

“Antamina has consistently surpassed nameplate throughput capacity of 130,000 tonnes per day since it completed plant commissioning in March 2012. At Antapaccay we are already achieving throughput rates of over 60,000 tonnes per day through the concentrator and expect to ramp up to design capacity of 70,000 tonnes per day in the first half of 2013.  “Las Bambas will benefit from synergies and the experience derived from our Antapaccay project development and operations and will consolidate Xstrata Copper’s position as a leading producer of copper concentrates and one of the world’s largest copper producers.”

Las Bambas continued to make significant progress during 2012 with over 90% of engineering works and 80% of procurement and contracts completed by the end of the year. Construction advanced on both the main project site and the re-settlement townsite of Nueva Fuerabamba and all major process plant equipment is committed and either in-country or in transit from global suppliers. As of December 2012, almost 65% of the project’s construction capital cost had been committed including process plant equipment, bulk materials, mining fleet, EPC/CM services as well as third party engineering and site construction contracts. The project is expected to commence commissioning at the end of 2014 with production ramp-up occurring during 2015. Almost 14,000 people are currently employed on the project in construction and operational roles, with 100% of unskilled labour positions being filled from local communities. Importantly, Las Bambas achieved almost 20 million man-hours without a Lost Time Incident (LTI) by the end of 2012, exceeding all previous LTI injury-free records in Peru across all industries.