Xstrata in ‘deal of the century’

[miningmx.com] — ANGLO-SWISS miner Xstrata signed a deal with Peru on Thursday giving it rights to start building its Las Bambas copper mine, a $4.2bn project president Alan Garcia called “the contract of the century.”

Xstrata’s investment is about equal to 3 percent of Peru’s gross domestic product and – unlike hundreds of other projects in Peru that have been delayed by local residents worried about pollution or water shortages – Las Bambas has encountered little resistance.

Xstrata Copper chief executive Charlie Sartain has pushed ahead with the mine even though Peru will hold presidential elections in April and June of next year. At least two leftists are running for office, but polls indicate a centrist or conservative candidate will win and keep mainstream economic policies in place.

“The completed and announced investments are possible because Peru has maintained a good investment climate based on macroeconomic, judicial and political stability, with clear and stable rules,” Sartain said at an event at the presidential palace attended by dozens of peasants from the region of Apurimac, where the mine will be built.

The company says Las Bambas will be a world-class mine with initial production of 400 000 tonnes a year of copper in concentrate, including significant gold, silver and molybdenum by-products.

Its initial mine life is forecast at 18 years. It is forecast to open in mid-2014, with construction starting in the third quarter of 2011.

Peru is the world’s No. 2 copper exporter and Las Bambas would boost its annual output by about 30%.

Xstrata, which built itself up through acquisitions but has more recently shifted its focus to organic growth, has about 15 major growth projects that will cost $14bn in total.

Xstrata has also been working on its Antapaccay project, which would cost around $1.47bn, and sits next to its Tintaya copper mine in the Andean country. Antapaccay will expand output at Tintaya by 60% to 160 000 tonnes a year and extend mine life for at least 20 years.

Sartain has said the company expects to produce well over 500 000 tonnes of copper a year in Peru by the end of 2014.