Southern Copper Corp. is preparing to invest more than US$10 billion in Peru and Mexico to capitalize on rising copper prices and demand, Bloomberg News reported May 31.
"During the last five years we've not seen significant investment worldwide," Southern Copper CFO Raul Jacob Ruisanchez said during an interview. "There were projects but not enough to cover the demand we will see in the next few years."
The company expects to start work on its Tia Maria copper project in 2019, one of the three projects that it is planning to build in Peru with a combined investment of about US$7 billion, he said.
Southern Copper plans to invest US$1.4 billion to build Tia Maria, which will add 120,000 tonnes per annum to its output.
However, public acceptance of Tia Maria in the surrounding areas is a prerequisite for securing a construction permit from the government. The company had to suspend the project in 2015 due to deadly protests.
Southern Copper won a tender to develop the Michiquillay mine in February and expects to secure licenses next month. The company earlier estimated a capital investment of about US$2.5 billion for Michiquillay development.
Cia. de Minas Buenaventura SAA President and CEO Víctor Gobitz Colchado said in a same-day Reuters report that Southern Copper was evaluating a proposal from the Peruvian miner for the joint development of Michiquillay.
Together with its investments in Mexico, Southern Copper plans to boost capacity to 1.7 million tonnes by 2025 from the current 900,000 tonnes, surpassing Glencore PLC and BHP Billiton Group to become the third biggest producer of copper, Ruisanchez said.
The company's production capacity is set to exceed 1 million tonnes in 2019 as a new concentrator at its Toquepala mine in Peru reaches full operations.
Grupo México SAB de CV is also considering expanding its refining capacity and may make a decision on the matter this year.
One of the options is to grow its Ilo operation in Peru, with about US$1 billion of investment being a "fair" estimate of the project's size, while building a new plant in Mexico, the U.S. or Europe could be other options, said Ruisanchez.
Southern Copper may tap the bond market to help finance its project pipeline, the executive noted.
