Anglo’s copper target unaffected by Chile row

[] — CHANGES in the ownership structure of Anglo American’s southern Chilean copper operations wouldn’t detract from the group’s longer term production ambitions for the metal, an executive said on Tuesday.

Anglo American’s CEO of copper, John MacKenzie, told journalists the group would stick to its output target of 1.4 million tonnes by 2020 (from 623,000 t in 2010), saying Anglo’s copper asset base would allow the company enough flexibility to pursue this objective in a number of ways.

“The target can be achieved solely through organic growth, and excludes the potential of (exploration) project or possible acquisitions,’ MacKenzie said.

Earlier in November, Anglo American sold a 24.5% stake in Anglo American Sur (AAS) to Japan’s Mitsubishi Corporation. AAS houses the Los Bronces mine and expansion project in Chile – one of Anglo American’s four major strategic growth projects to commence production during 2011. Anglo American may have no choice but to sell another 24.5% to Codelco, should the Chilean state-owned copper producer decide to exercise an option to do so in January.

The expansion of Los Bronces was expected to more than double the existing mine’s production of 221,000 tonnes per year. The project has already made its first delivery of copper production after commissioning in October.

Mackenzie said Anglo’s existing growth profile for copper already took cognisance of the transaction with Mitsubishi, while a further decrease in attributable output stemming from a possible deal with Codelco could be made up elsewhere in the longer run.

Growth in the short to medium term would come from the Quellaveco project in Peru, in which Anglo holds a 81.9% stake, and from Collahuasi (44% stake), following a recent announcement of a more than 40% increase in reserves and resources.

Pre-feasibility studies are undertaken at the Michiquillay project in Peru (100% stake) as well as Pebble in Alaska (50%). Also, Mackenzie said two other deposits at Los Bronces, Los Sulfatos and San Enrique Monolito, each have the potential to mirror the existing operations at the mine.

Despite recent volatility in the price of copper, MacKenzie said Anglo believed the metal would show a compounded growth rate of between 4% to 6% per year until 2015.

“What differentiate copper from almost all the other commodities is the constrained supply side,’ he said, pointing to falling ore grades, production disruptions as well as the long lead time for new projects.

– The writer’s expenses for visiting Chile has been paid for by Anglo American.