"SCC has the financial capacity to develop all of these projects at the same time with a total investment of US$8 billion, which will increase our copper production by 575,000 mt/y."
To what extent has COVID-19 impacted Southern Copper’s operations?
We have continued operating our mines in Peru and Mexico, despite lockdowns in both countries, which has been achieved partly by imposing local quarantine measures at our projects which are far from large settlements. Copper production was down just 1.3% in Q2 at 253,097 metric tons (mt), as lower output at Buenavista in Mexico was partly offset by an increase at Cuajone in Peru. Guidance for 2020 is 997,100 mt/y, a reduction of only 1,300 mt from original forecasts. On the positive side, the company’s molybdenum production increased by 16.3% in Q2, with silver up by 13.5%.
Southern Copper Corporation (SCC) is making every effort to keep production at satisfactory levels while achieving a competitive cash cost. This is reflected in our 2Q20 cash cost per pound of US$0.67 net of by-product credits. We are operating in total compliance with local, regional and national emergency measures, and we have implemented rigorous hygiene, sanitation, and safety protocols at all of our facilities.
What are Southern Copper’s plans for investment in Peru in the next five years?
We expect to develop Tía María project with an investment of US$1.4 billion to produce 120,000 mt of copper cathodes annually. When Tía María starts its operation, Southern is also evaluating a new smelter with a capacity of 1 million mt/y to process copper concentrates and an expansion in our refinery to produce 280,000 mt/y of cathodes – this project represents an investment of approximately US$1.3 billion.
Los Chancas, another deposit located in Apurimac region, will add 130,000 mt/y of copper contained in concentrates with an investment of US$2.8 billion. We are about to finish the environmental impact assessment (EIA) to obtain the construction license at this project, which also contains molybdenum and gold reserves.
Michiquillay, in Cajamarca, will increase our copper production by 255,000 mt/y, with an investment of US$2.5 billion. We have also increased reserves, achieved higher production and mined higher grades at Cuajone in 2020. SCC has the financial capacity to develop all of these projects at the same time with a total investment of US$8 billion, which will increase our copper production by 575,000 mt/y.
What issues have caused the delay to the development of Tía María, and what actions is SCC taking to resolve the situation?
There has been placed doubt by some members of the Peruvian government, and some anti-mining activists have been using violence against the local population. However, SSC has maintained a strong relationship with the majority of stakeholders and has explained our project step by step, while, at the same time, developing social programs to increase wealth in the area. The Tía María project is one of the best mining projects in the world from an environmental standpoint; it has no tailings and there are no smelting fumes, so we hope authorities understand there is no possibility of contamination.
How have operational improvements and the introduction of new technology increased production capacity and efficiency for the company?
The new concentrator at Toquepala added 100,000 mt/y of copper contained in concentrates, which represents approximately an increase of 30% in our production capacity compared to previous production. We also have a desalination plant which processes seawater for our personnel residents of Ilo, and for the metallurgical process.
Regarding new technology, we foresee an increased in artificial intelligence (AI) in all of SCC’s processes. All production areas are using or incorporating AI and digitalization in order to increase efficiency, safety and productivity.
Can you provide examples of SCC’s social initiatives in Peru, and how the company has helped communities during this time of economic hardship?
We continue to fight the COVID-19 pandemic, prioritizing efforts to safeguard the health and well-being of our workforce, their families and nearby communities in Moquegua, Tacna, Arequipa, Apurimac, and Cajamarca. In addition, in order to collaborate with the Ministry of Health, SCC we have been providing 30,000 liters of oxygen every week to regional hospitals in the Arequipa and Moquegua regions. Furthermore, we have been delivering sanitation kits to the National Guard, police workers, health centers and local communities to prevent dissemination of the virus. Besides this, we continue our efforts to support vulnerable people, providing nutrition and sanitary kits. Due to social distancing measures, we have reinforced educational, health and economic initiatives through online programs.