WARSAW May 8 A planned second phase of
expansion of Polish miner KGHM's Sierra Gorda copper project in
Chile, which was put on hold in March, will definitely not
happen now, the chief executive officer said on Monday.
State-run KGHM bought the Sierra Gorda project in
Chile's Atacama Desert mining belt in 2011, its largest ever
foreign acquisition, and began shipments in 2014 after cost
overruns in the ramp-up.
Originally the project, co-owned with Japan's Sumitomo Metal
Mining Co Ltd and Sumitomo Corp, targeted
220,000 tonnes of copper per year at completion of a second
phase in 2018 or 2019.
But it has struggled to master complex ores and high
production costs at a time of falling copper prices. Other new
projects in Chile, the world's top copper exporter, have
suffered similar issues in recent years, with much of the easier
ore now gone and companies needing to solve difficult technical
issues in remote locations.
Both Sumitomo Metal and KGHM reported losses and booked
writedowns on the project earlier this year, and in March KGHM
said the second phase was on hold.
"In the current macro conditions, the second phase has lost
sense," KGHM CEO Radoslaw Domagalski-Labedzki said at a news
conference in Poland on Monday.
When asked if the phase two expansion could one day be
revisited and under what conditions, Domagalski-Labedzki said:
"There is no such possibility."
The CEO told Reuters last month that KGHM was still
committed to Chile and was focused on optimizing the first phase
of Sierra Gorda.
In 2016, the mine produced around 98,000 tonnes of copper,
according to government figures.
(Reporting by Agnieszka Barteczko; Writing by Rosalba O'Brien;
Editing by Lisa Shumaker)