22 Dec Cesco organizes a seminar and opens a conversation about the convenience of increasing the smelting and refinery capacity in Chile using the latest technology
More than 300 people participated in the meeting “New smelting capacity for Chile”, where experts and authorities discussed this issue. The activity was sponsored by the Ministry of Mining and the collaboration of Voces Mineras.
In order to analyze the technical, environmental, and economic feasibility of new smelting capacity in the country, the Center for Copper and Mining Studies (Cesco) held the seminar “New smelting capacity for Chile”, a meeting that included the participation of the Undersecretary of Mining Iván Cheuquelaf, the director of Cesco Iván Valenzuela, the general manager of Altonorte Beatrice Pierre, the CRU consultants Erik Heimlich and Ben Jones, and the senators Juan Pablo Letelier and Alejandro García Huidobro.
The seminar was sponsored by the Ministry of Mining and the collaboration of Voces Mineras and brought together more than 300 people on this topic. “We believe that this is a pertinent discussion, which allows us to open a conversation about the future of mining in our country”, said Cesco’s executive director, Alejandra Wood. “After more than 30 years in which the mining strategy has aimed at the objective of increasing copper production and exporting concentrate, it is worth asking, is the existence of modern, clean and competitive smelters are convenient for the country? Is that industry viable in economic terms? ”.
After Wood’s introduction, the meeting was welcomed by the Undersecretary of Mining, Iván Cheuquelaf, who highlighted the work that Cesco has done on this matter through the working document “Refined copper: a good business for Chile”. Especially in the context of the development of the National Mining Policy 2050, and the theme related to green copper.
“There has been a decline in refining in Chile in the last 30 years, representing less than 40% of the country’s copper production”, said the authority. “And the question posed by the study is what is more convenient for Chile from a strategic perspective: Export more concentrate or more refined copper in the future? These are precisely the kinds of questions to ask when designing public policy. They are not easy questions to solve but rather characterized by having a high complexity. But that does not mean they have to stop being carried out, especially if the long-term objectives consist of moving towards sustainable development”.
Cesco’s proposal and the expert look
Cesco’s director Iván Valenzuela was in charge of presenting the work that the center has carried out on this matter. In the instance, Valenzuela highlighted the relevance and need of having a new smelter in Chile and pointed out that Cesco’s proposal aims to advance in the addition of value to the mineral, the challenge being how to generate greater value per unit of copper produced.
“We put forward the great hypothesis that a new semelter and refinery is possible and necessary”, explained the director of Cesco. “When we started studying the issue, the first reaction was of surprise from many, who thought ‘this sector is dead, it is not attractive, and it is the past’. It is assumed that the sector is not attractive due to the results of some of the companies that have clearly been poorly managed. Our interest is to separate both factors because we believe that the smelting business is challenging without a doubt, but it can be profitable and it is a key lever for sustainable and future mining”.
Valenzuela subsequently presented the technical and economic proposal prepared by Cesco’s Foundry Commission for the development of an installation of this type in Chile, which would imply an investment of US$ 1,500 million, for a production of 1.5 Mt, at a cost of US $ 0.17 lb / Cu, and an IRR of 13%, with advantages of location and availability of concentrates.
The installation of a state-of-the-art smelter would allow a 99% capture of S02, a 71% saving of greenhouse gases by transport to China, and would be a great technological contribution when treating complex minerals and valuable elements; in addition to contributing to improving the image of mining, a critical factor for obtaining a social license, and preventing Chile from being pushed by the market to a “point of no return” in the copper value chain.
According to estimates by the commission led by Valenzuela, the investment in a new smelter should be materialized and operational in 2027, considering that by that date the current regulations could cause a metallurgical facility to stop operating.
After the Cesco director’s presentation, Glencore’s Altonorte General Manager, Beatrice Pierre, presented the reality of the smelters in Chile, detailing the characteristics of this metallurgical facility in the Antofagasta Region.
The executive explained to the audience the emission reduction plan that has been implemented in Altonorte, in addition to its tailings management strategy and the improvement of water use, and the use of natural gas in its processes, and the mechanisms that they have incorporated to reduce water consumption.
Subsequently, CRU analysts, Ben Jones and Erik Heimlich analyzed the strategic elements to consider in the smelting industry, as well as the facilitating elements and barriers to developing this industry locally.
In this sense, Heimlich explained that there is currently a significant deficit of copper concentrate concerning the installed smelting capacity that China has so that several of these metallurgical facilities have been seen in a complex economic situation. However, there is some optimism in the long term.
“What makes a project successful? Well, the scale is fundamental”, pointed out Heimlich during his speech. “We see that the smaller foundries are struggling and have technological problems. Iván also spoke of another aspect that can improve the success of a foundry, and that is having access to the correct mix of concentrate, and it would be convenient to be close to the mining sites”.
The expert stressed that foundries must be operated very efficiently given that their profit margins are lower, and thus improve the possibility of success. To this are added the operating costs, where the main ones are labor and energy.
For his part, Ben Jones referred to the economic and environmental impact that the construction of a smelter implies, factors that should be considered when developing a project of this type, as well as the legal framework and its effect on the national supply chain, emphasizing the importance of analyzing what percentage of value or “cash flow” would remain for the country, as a result of the investment and operation of a new foundry, all of which would help to make the case for a decision of the magnitude and complexity like this.
To end the meeting, there was a discussion panel moderated by Cesco’s executive director, Alejandra Wood, with the participation of Iván Valenzuela, and Senators Alejandro García Huidobro and Juan Pablo Letelier.
In this instance, the space for discussion that the seminar implied was valued. Both senators agreed on the importance of communicating in a better way what the industry is doing at the country level and the development possibilities for national mining.