Multinational miner Anglo American has been denied an environmental permit to expand the mine that produces half of its global copper, Los Bronces in Chile. The miner is, however, expected to appeal the decision.
Anglo said the multibillion-dollar expansion was an important investment opportunity and it could approach the required minister for a full review of the project.
The $3bn project will extend the life of the 150-year-old mine to 2036 and will allow Anglo to access higher grade copper ore that will cost slightly less to produce.
A week ago, when Anglo warned the market that environmental authorities had advised against issuing a permit, its shares tumbled 7.46% to R669.97. The fall began earlier in the week, before Anglo’s announcement, as the recommendation had already been released by the Chilean authority. The four days of losses in the share totalled just more than 19%.
It has, however, recovered 8% of that since, but closed marginally weaker on Tuesday at R720.
According to Anglo, the Chilean authority said the project adhered to all environmental regulations, but not enough information was provided on whether it posed a risk to public health.
Anglo denies this, saying on Tuesday it had provided all the necessary details and was willing to provide any further information required.
Los Bronces, one of the world’s largest copper mines, lies just 68km from Chile’s capital Santiago, where 6.8-million people live.
The assessment process for the application began in 2019, with Anglo saying 23 of the 25 technical committees and government ministries supported it.
Copper is an extremely popular metal as it is used in electrical wiring and cables, water piping, most consumer electronics, hospitals and roofing.
It is also popular as a so-called green metal and is used in electric-vehicle and battery technologies and renewable energies including solar, wind, hydrogen and geothermal.
Anglo said the planned expansion is an “example of modern mining where the full range of sustainability considerations have been consulted on and designed in from the outset”. The mine will use no additional water or require any further storage for tailings.
The design was planned to ensure there would be no effect on biodiversity or protected areas close by. Opponents of the project have expressed concern about the effect on nearby glaciers.
Globally, Anglo mined 647,000 tonnes of copper in 2021. and Los Bronces produced 327,700 tonnes. Copper was Anglo’s third-largest contributor to earnings before interest, tax and depreciation (ebidta) after platinum group metals and iron ore.
Apart from Los Bronces, Anglo has two other major copper operations in Chile: a 44% share in the Collahuasi mine and majority ownership in the slightly smaller El Soldado mine.
Anglo does not expect Tuesday’s decision to reduce the amount of copper it plans to mine in 2022 and 2023. However, in its annual report, released in February, it predicts long-term shortages of copper globally.
“The copper mining industry is expected to struggle to meet longer-term demand growth ... as declining grades and more challenging physical and environmental conditions, along with tougher licensing and permitting requirements, are expected to limit the industry’s ability to deliver new supply.”
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