Name and Location
Las Bambas copper project, Apurímac region, Peru.

Client
China’s MMG bought Las Bambas for $7-billion from Glencore Plc in August this year.

Project Description
Las Bambas will be a world-class copper mine, with an initial production of 400 000 t/y of copper in concentrate, including significant gold, silver and molybdenum by-products, as well as first-quartile cash costs.

Ore will be mined at a rate of 51.1-million tons a year from three openpit mines (initially the Ferrobamba and then the Chalcobamba and Sulfobamba pits) and processed in a 140 000 t/d sulphide grinding/flotation concentrator.

The $1.47-billion Antapaccay expansion to the Tintaya operation paves the way for the development of the major Las Bambas greenfield project.

Located 150 km apart, the Las Bambas and Antapaccay projects will benefit from important synergies. Concentrates from Las Bambas will be pumped through a 215 km pipeline to a molybdenum and filter plant, close to Tintaya-Antapaccay, and then transported on the same railroad to the Matarani port.

Value
The Las Bambas capital budget has been established at $5.2-billion.

Duration
Production has been delayed to 2016.

Latest Developments
China's MMG has said it will spend about $3-billion on completing the Las Bambas copper mine, more than previously expected, and will slightly delay the start of production to the first quarter of 2016.

Glencore forecast last year that a further $2.4-billion would need to be spent ahead of first production in the second half of 2015. Of that sum, $1.15-billion was reflected in the final price MMG and its partners had paid for the mine.

That implies that the remaining capital cost of up to $3.2-billion is more than double of what has previously flagged, although at least part of that increase had been expected.

"The revised capex might be a little higher than most in the marketplace expected," says Andrew Driscoll, an analyst with CLSA in Hong Kong, adding that the company is taking all the right steps, and the delay into early 2016 is no surprise.

MMG CE Andrew Michelmore has declined to predict how quickly Las Bambas will reach full capacity or what that rate will be. Under Glencore, it was expected to produce more than 450 000 t/y in the first five years.

"We'll ramp up as fast as we can through 2016 to get to full production and see whether we can squeeze it further," Michelmore has said.

Early work at the mine has recovered ore in areas that were not in the original mine plan.

Most of the mine's output will go to MMG's parent, Minmetals, and one of its partners at the mine, State-owned CITIC Metal Co, which owns 15%. The remaining partner is Guoxin International Investment Corp, with a 22.5% stake.

Cash costs of production are still expected to be about 90 c/lb. Copper is  trading at about $3.00/lb.

Key Contracts and Suppliers
ThyssenKrupp Robins (overland conveyor) and Siemens Drive Technologies Division (gearless drive system for overland coveyor).

On Budget and on Time?
The capital budget for Las Bambas has increased by 7% to $5.2-billion. This includes a $130-million increase, as a result of uncontrollable cost increases arising from delays in the granting of permits, following the change in government, and an additional amount for community relocation, infrastructure costs and community agreements to mitigate the risk of further delays.

The project remains on track for commissioning at the end of 2014.

Contact Details for Project Information
Xstrata Copper, Domingo Drago, tel + 51 1 372 2233 or email ddrago@xstratacopper.com.pe; or Emily Russell, tel +56 2 478 2204 or email erussell@xstratacopper.com.
ThyssenKrupp Robins, tel +1 303 770 0808  or fax +1 303 770 8233.
Siemens media relations, Stefan Rauscher, tel 49 911 895 7952 or email Stefan.rauscher@siemens.com.