Antofagasta gears up for phased growth at both Los Pelambres and Centinela

In its half yearly financial report for the six months ended June 30, 2023, copper mining major Antofagasta PLC gave some detailed insight into expansion plans for two of its flagship Chilean copper mines – Los Pelambres and Centinela.

The Los Pelambres Expansion project is divided into two phases with Phase 1 expected to be in production in H2 2023 and Phase 2 in 2026. Phase 1 is designed to optimise throughput within the limits of the existing operating, environmental and water extraction permits. As mining progresses at Los Pelambres, ore hardness will increase. The expansion is designed to compensate for this, increasing plant throughput from its current capacity of 175,000 t of ore per day to an average of 190,000 t of ore per day.

The expansion is divided into two sub-projects, the construction of a desalination plant and water pipeline from the coast to the El Mauro tailings storage facility, and the expansion of the concentrator plant, which includes the installation of an additional SAG mill and ball mill, and six additional flotation cells. The capital cost estimate for Phase 1 is $2.3 billion. Annual copper production will be increased by an average of 60,000 t per year over 15 years, starting at approximately 40,000 t per year for the first four to five years and rising to 70,000 t per year for the rest of the period as the hardness of the ore increases and the benefit of the higher milling capacity is fully realised.

In 2020, the decision was made to change the scope of the project and double the planned capacity of the desalination plant from 400 litres per second to 800 litres per second. However, the additional work on this expansion that can be carried out during Phase 1 is limited by what is allowed under the permits that have already been issued so the remaining work will be treated as a separate project subject to the receipt of the necessary permits. The cost of the additional work is included in the Phase 1 capital cost. Work at the desalination plant progressed during H1 2023, and water production averaged 160 litres per second in June 2023. The plant is expected to ramp-up production during H2 2023, helping to stabilise water availability.

Pre-operational testing of the fourth concentrator line at Los Pelambres has now commenced following the connection of this equipment to the national grid. Commissioning of individual circuits such as the flotation circuit has commenced, with the commissioning phase expected to be completed in H2 2023.

Following the decision in 2020 to increase the size of the desalination plant, Phase 2 of the expansion requires two separate Environmental Impact Assessment applications; one for the expansion of the desalination plant and one for the extension of the mine life of Los Pelambres through an increase in the size of the El Mauro tailings storage facility. The latter EIA will also provide the option to further increase the throughput capacity of the concentrator plant.

The desalination plant expansion will protect Los Pelambres from the future impact of climate change and the deteriorating availability of water in the region. The project includes the expansion of the desalination plant and the construction of a new water pipeline from the El Mauro tailings storage facility to the concentrator plant. In 2021 Los Pelambres submitted the EIA required for this project, which includes the desalination plant expansion and two other sustaining capital infrastructure projects, the replacement of the concentrate pipeline and the construction of certain planned enclosures at the El Mauro tailings storage facility. EIA approval is expected in time for the project to be completed in 2026, by which time over 90% of Los Pelambres’ water needs will be fulfilled by desalinated and recirculated water.

Moving on to the mine – the current mine life of Los Pelambres is 12 years and is limited by the capacity of the El Mauro tailings storage facility. The scope of the second EIA will include increasing the capacity of the tailings storage facility and the mine waste storage. This will extend the mine’s life by a minimum of 15 years, accessing a larger portion of Los Pelambres’ 6 billion tonnes of mineral resources. The EIA will also provide for the option to increase throughput to 205,000 t of ore per day, increasing copper production by an estimated 35,000 t per year, according to the pre-feasibility studies (2014). The capital expenditure to extend the mine life was estimated at approximately $500 million in a 2014 pre-feasibility study, with most of the expenditure on mining equipment, increasing the capacity of the concentrator and the El Mauro tailings facility.

Key studies on tailings and waste storage capacity have advanced and community consultations are underway. The relevant environmental and social studies are being prepared and should be submitted to the authorities during 2023/2024 as part of the EIA application.

Centinela Second Concentrator Project

Antofagasta is also currently evaluating the construction of a second concentrator and tailings deposit at Centinela some 7 km from the existing concentrator, to take place in two phases. The EIA for both phases was approved in 2016. Detailed engineering plans and costings have recently been updated for Phase 1 of the project and key contracts finalised, subject to Board approval of the project.

The Phase 1 capacity of the new concentrator will be 95,000 t of ore per day, producing on average approximately 170,000 t of copper equivalent (copper, gold and molybdenum) a year over the first 10 years of operation. This will move Centinela into the first cost quartile of global producers. The Phase 1 capital cost is estimated at $3.7 billion, including a concentrator plant, Esperanza Sur capitalised stripping, mining equipment for Esperanza Sur, a new tailings storage facility, a water supply system and other infrastructure, pre-commercial production operating costs, and owner’s and other costs.

An updated study into the development of the Centinela Second Concentrator project is expected to be submitted to the Board for consideration by the end of the year. Work on Phase 2 would only start once construction of Phase 1 is completed and it is operating successfully.

The second concentrator, and its potential further expansion to 150,000 t of ore per day, will source ore initially from the recently opened Esperanza Sur pit and later from the Encuentro pit. The sulphide ore in the Encuentro pit lies under the Encuentro Oxides reserves, which are expected to be depleted by 2026. Fully exposing the sulphide ore in the optimal sequence required to initiate feed to the second concentrator from the Encuentro Pit is expected to require separate investments in infrastructure, mining equipment and mine development activities, which would commence half-way through the construction phase of the second concentrator and will span a period of 3-4 years.

If the company elects to proceed with the Centinela Second Concentrator project, the combined investment in mine development and sustaining capital across the Centinela district is expected to increase from an actual average of $650 million per annum in 2021-2023 to an average of approximately $900 million per annum during 2025-2027, enabling a doubling of ore supply from Centinela’s mining operations.

During H1 2023, the company continued the tender process inviting third parties to provide water for Centinela’s current and future operations by acquiring the existing water supply system and building the new water pipeline. This process is expected to be completed during the year. The outsourcing of the water supply will only proceed if it improves the net present value of the project.