Anglo halts $5.3bn Quellaveco project after Peru installs 15-day COVID-19 national quarantine

Anglo American's Quellaveco project

ANGLO American has temporarily halted the development of its $5bn to $5.3bn Peru-based copper project, Quellaveco, in line with the country’s 15-day national quarantine programme aimed at curbing the proliferation of the COVID-19 virus.

Mark Cutifani, CEO of Anglo American, said in a statement the group did not expect the stoppage to be especially disruptive: it was ahead of schedule and on budget “… and we would expect to be able to accommodate this slowdown within our market guidance on both timing and costs at this stage”.

“We are in the process of safely demobilising most of the 10,000 strong construction workforce at our Quellaveco copper project, in support of the Government of Peru’s measures to control the spread of COVID-19,” he said.

Construction work on the project would be “significantly slowed”, with only critical areas of the project continuing as normal, until such time as workers can return safely, said Anglo American in its statement.  “The safety and health of everyone must come first, ever more so at times such as these,” said Cutifani.

The Quellaveco copper project is expected to begin production in 2022. During the first ten years of full production, Quellaveco is expected to produce approximately 300,000 tons per year at a cash cost of $1.05 per pound of copper.

Goldman Sachs said the suspension of the project was “not a surprise” given the global emergency enforced by COVID-19. “Given peers have begun delaying projects … and a growing number of national quarantines around the world, we don’t see this as too much of a surprise and expect delayed projects to be a core theme in the mining space going forward,” the bank said in a morning note.

Anglo said in a separate announcement that its proposed £400m takeover of Sirius Minerals, which is developing the polyhalite fertiliser project in the UK country of Yorkshire, had received court sanction on March 31 and was effective today.

“This is a project with clear potential as a Tier 1 supplier of premium quality, low carbon fertiliser to help meet food demand for a fast growing global population,” said Cutifani who added the takeover of the project – known as Woodside – was “a new chapter for the project and its employees.

Anglo would contribute £1m into the project’s charitable foundation. “We intend to contribute further amounts of £1m on this date for each of the next three years, prior to the foundation receiving a substantial royalty income when the mine begins production,” said Cutifani.