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The board of directors of the Overseas Private Investment Corporation (Opic) has approved US$142mn in political risk insurance for the establishment of a copper concentrator in southern Peru that will produce an average of 180,000 tonnes of copper annually, making it a leading contributor to the Peruvian economy.
Opic will provide the insurance to Phelps Dodge Corporation, headquartered in Phoenix, Arizona for the addition of a copper concentrator at the site of the existing Cerro Verde open-pit copper mine. This is on top of debt financing from ECAs and commercial banks recently agreed (see GTR, Nov/Dec 2005, p79).
OPIC provided insurance in 1996 to a predecessor company of Phelps Dodge for the first phase of the project, following privatisation of Cerro Verde in 1994. Opic currently provides US$108mn in insurance for Phase I.
The second phase will generate additional economic and social benefits through training programmes, equal opportunity and fair gender policies, and by providing employees with health care and a profit-sharing program. It will also establish the Cerro Verde Foundation, which will support various community initiatives.
A 2004 feasibility study completed by Flour Canada evaluated the viability of mining the primary sulphide resource that underlies the oxide and secondary sulphide deposits that are mined at Cerro Verde. The study concluded that best results would be obtained through development of the project’s second phase, which would result in the processing of sulphide ore utilising conventional concentrator processing facilities and high-pressure grinding rolls applied in a tertiary crushing stage.
The current expansion will extend the mine’s life to 2040. Once production begins, annual production from the second phase should average 180,000 tonnes of copper for the life of the mine, and 200,000 tonnes during the first 10 years.