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PrintChilean copper miner Antofagasta Minerals aims to expand into a global player, doubling output after 2015 through takeovers and developing its own projects, from Pakistan to the United States.
Mr Marcelo Awad CEO of Antofagasta told the Reuters Global Mining and Steel Summit in London that the London listed firm has already had informal discussions with banks about debt financing for its USD 3.3 billion Reko Diq project in Pakistan. The group is holding productive talks with the authorities in Pakistan about Reko Diq, which at its peak could produce by itself as much as the whole group churns out currently. While the firm is keen to spread its wings geographically as it seeks takeovers, it wants to remain a pure copper play, with only modest contributions from other metals.
He said that "We want good quality assets that can fly in any cycle. Our main targets are copper or gold or copper or molybdenum mines anywhere in world, we don't have any restrictions."
Antofagasta's strong balance sheet, with a cash balance of USD 1.6 billion, gives it firepower for acquisitions as rivals struggle to cut debt, but takeovers were more likely to be projects that have not yet launched production.
Mr Awad said that the group came close to a couple of takeovers during the downturn, but failed to go ahead at the last minute, judging that valuations were excessive. I don't foresee any acquisitions of an existing operation. I don't rule out projects at an advanced stage.
Mr Awad dismissed worries that regional officials might block the Reko Diq project in Pakistan, echoing optimism expressed on Tuesday by JV partner Barrick Gold Corp of Canada.
A provincial government official told Reuters in January that the project may be cancelled, but Mr Awad said that view was held by a small minority pressing for independence of the southwestern province of Baluchistan. The national Pakistani government was very keen on the new mine, one of the biggest private investment projects since independence. There have already been informal discussions with both Western and Islamic banks on debt financing, which is expected to include syndicated loans and denominations in both dollars and euros.
He said that the Islamic Development Bank, which is very similar to the World Bank in the Western world, is also very interested to participate. We have been very well supported by the Islamic banking sector.
Antofagasta and Barrick each have a 37.5% stake in the project, with the provincial government holding the remaining 25%. That project, currently seeking an investment agreement and later a mining licence, is hoped to launch production in 2015 and help Antofagasta meet its 1 million tonne target. The Phase I, which would produce 200,000 tonnes of copper and 300,000 ounces of gold per year would cost USD 3.3 billion.
Mr Awad said that the copper resource is massive, at the highest point that resource can support up to half a million tonnes per year. That's why we plan to grow by modules. We think that if everything goes well, we should be at close to 1 million tonnes after 2015. That compares with output of 442,500 tonnes last year and expected production of 540,000 tonnes in 2010 due to the expansion of its flagship Los Pelambres mine in Chile.（Reuters）
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