In the desolate, sun-baked mountains of southern Peru, a new black-topped road winds sinuously across the ancient folds and creases, carrying a stream of traffic to and from Anglo American’s new Quellaveco copper project.
Underneath the thin veneer of scorched vegetation, Anglo has what promises to be a magnificent copper deposit — one so rich that it will repay the $5.3bn investment made in it within four years.
Quellaveco is an apposite name for the mine 3.5km above sea level. It means “ash mountain” and Christoff Kuhn, the project director, tells of a recent eruption at Ubinas — Peru’s most active volcano, about 35km away — that showered ash on the upper reaches of the project, leading to a brief withdrawal of staff from that area.
“We didn’t factor that into our planning,” Kuhn says.
While the bill for the project is hefty, coming in at the equivalent of R79bn, Anglo has brought in Japan’s Mitsubishi as a 40% partner, diluting the risk to its shareholders.
The high quality of the new road is in stark contrast to the older road that meanders up the mountains in tight turns and passes through Anglo’s nearest neighbour, Southern Copper’s mine, Toquepala.
It is obvious the thinking is that the mine has a life of at least 30 years and to spend money wisely on quality infrastructure that will make maintaining and possibly expanding the operation after it starts production in 2022 easy.
There is also the question of how to get 330,000 tons of concentrate each year to the port. It is likely to be trucked, but Southern Copper has a railway punched through the mountains to the coast and this could be an option for Anglo. However, Southern Copper was less than pleased when it narrowly lost out on a government auction in 1992 of the Quellaveco project, which is nestled between its Toquepala and Cuajone mines.
The two companies will have to put aside their past differences to present a united front in the face of community demands, or face being divided and played off against each other in the impoverished area where small communities eke out existences on the steep slopes of heavily eroded mountains, herding llamas and alpacas, as well as growing herbs such as origanum.
Anglo has employed 5,600 people from the area for construction work on the project, which will have a workforce of up to 14,000. Once the mine is built, it will employ 2,500 people. The Moquegua region, which hosts Quellaveco, is home to about 180,000 people.
Anglo has painstakingly ensured that water from the Asana river, used by the communities dotted about the mountains, has no contact with the mine. It built a $70m concrete barrier across the narrow valley and has built a 7km tunnel into the mountain to divert the river about the mine and return it to its natural course. No sooner had the barrier been completed in December than in January there was a one-in-19 years flooding of the river that put the system to an immediate test.
“The system worked exactly as planned. We designed it for a one-in-1,000 year event, so it handled this one well,” says Kuhn.
It is the Asana river that made this project unique in the world of copper deposits, he says. Over centuries, the river has stripped off the worthless soil lying over the deposit and enriched the top layer with additional copper, lifting its grade to above 1%.
The first five years of mining will focus on this enriched layer and it is this that gives Anglo confidence about the quick payback on the price tag.
The mine will be able to add new technologies Anglo is testing and trying to prove will work both operationally and financially. These include bulk sorting of ore, removing as much waste rock as possible to deliver good quality ore to the processing plant. Another is coarse particle flotation, which means not grinding the ore to a fine dust to extract copper, something Anglo hopes will use less water and energy.
A third is the introduction of automated trucks to haul ore from the pit to the crusher that grinds the ore, delivers it to a conveyor belt that will travel 3.5km through a tunnel dug into a mountain, to deliver it to the processing plant on the other side.
The fleet of 30 trucks will boost productivity and efficiencies, but Anglo wants to ensure they meet stringent tests and prove their value first.
Seccombe is a guest of Anglo American in Peru
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