Sierra Gorda to begin shipping in November

October 3, 2014

The first copper shipments from KGHM Polska Miedz's new Chilean mine will reach customers next month, the company said as it inaugurated the project that marks the Polish industry's attempts to expand internationally, Reuters reported.

Sierra Gorda is targeting 220 kt/a of copper by the time it ramps up to its second phase.

That should be around 2018 or 2019, project head Maciej Sciazko said in an interview at the mine launch. Sierra Gorda is slated to produce 120 kt/a copper by the end of its first ramp-up phase next year and has a projected life of 23 years.

About 6 kt of copper concentrate from the mine is expected to arrive at the Toyo Smelter and Refinery in November, KGHM said. Sierra Gorda began operating on July 30.

KGHM confirmed that the final cost of launching production at the project reached about $4.2 billion, over a third more than initially expected.
Sciazko said the cost overrun was due to "a mixture of extra engineering work" needed to prevent delays.

"In order to complete it on time, that cost us extra money," he said, adding that the budgeting for running costs was still being hammered out and it was not yet possible to say if the original cash cost target of $1.15 per pound had changed.

A falling copper price and high-energy costs, which have squeezed margins for producers of the base metal throughout Chile, were both a concern, said Sciazko.

Sierra Gorda is a joint venture that is 55 percent owned by Europe's No. 2 copper miner KGHM and 45 percent by Japan's Sumitomo Metal Mining.


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