KGHM expects production at Sierra Gorda to begin this month

July 18, 2014

Production at the Sierra Gorda Mine in Chile could begin as early as this month, mine owner KGHM said.

The mine is one of the largest copper projects in the world. Polish mining company KGHM KGHM, Europe’s second-biggest copper producer, acquired the then unfinished project two years ago. It became a symbol of the move by Polish industry to the global stage after years of struggling with the transition from Communist rule, Reuters reported.

The ramp of the project has cost more than $4 billion, more than a third than KGHM initially expected, while falling global copper prices have hit its profits.

"Construction is finished. I think that this month we'll see the first production of copper ore, and maybe we'll also see the first sales," KGHM Chief Executive Herbert Wirth told a news conference in the Polish capital.

KGHM acquired the project in 2012 as part of a C$3 billion ($2.8 billion) purchase of Canada's Quadra FNX, now named KGHM International. That deal allowed it to book the world's fourth-largest copper deposits.

KGHM controls 55 percent of the Chilean project, and Japanese partner Sumitomo holds the rest.

The plan is for Sierra Gorda to produce 217 kt of copper by 2018, which would account for one third of the group's copper output.

KGHM sees the mine's 2014 output at 110 kt/a of copper. It will also produce 11 kt/a of molybdenum a year, or 10 percent of the global supply.


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