Production Delays Hit Gold, Copper Miners - Gainesville Coins News
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Production Delays Hit Gold, Copper Miners

blog | Published On 4/19/2016 11:31:47 AM by Everett Millman

goldmineOne of the interesting truths of precious metals mining is that most mines are diverse projects. Very few mines produce silver as a primary output, for example. Instead, silver usually comes as a byproduct of other mining activities.

Similarly, many copper mines also produce gold, and vice versa. In fact, the two metals are very frequently found together in deposits. Consequently, the shuttering of a major gold mine in Peru will also have an impact on copper output. Meanwhile, the world's largest underground copper mining project in Chile is also experiencing a huge delay in operations.

Conga Mine Controversy

open-pit-mining-261092_960_720One of Newmont Mining's (NEM) most promising projects has come under heavy pressure from local resistance in Peru. Newmont, who is based in Colorado, is the world's second-largest gold mining company.

For years, local residents and their representatives in government have been resisting the opening of the Conga mine. This groundswell of political and social pressure to impede the project has been based primarily on environmental concerns. Moreover, due to the vast mineral riches found in Latin America, many of these countries are seeing political movements that oppose foreign multinational corporations from operating in their homelands.

mine-cartDue to the local opposition, Newmont has finally given into the pressure and is abandoning the project for now. The company has reclassified the underground reserves at Conga as "resources," meaning they are merely tabbed for future development. The mine was originally supposed to open for business as far back as 2011.

According to Mining.com, the Conga mine "was going to be built by Newmont’s existing Yanacocha mine, Latin America’s largest gold operation." However, Yanacocha is coming to the end of its lifespan. Conga was expected to pick up the slack, with the potential to produce 350,000 oz of gold and 120 million pounds (over 54,400 metric tonnes) of copper annually over the next two decades.

Weather Hampers El Teniente Mine

Elsewhere in South America, the biggest copper miner in the world, Codelco, is experiencing its own production delays. In this case, it's not local resistance that's slowing things down. Rather, it's Mother Nature.

Copper being smelted Copper being smelted

An onslaught of heavy rains in the area of the El Teniente mine in Chile has led to mudslides that have forced Codelco to halt output at the mine. (Codelco is owned and run by the Chilean government. It accounts for 11% of the global copper supply annually.) El Teniente is the sixth-largest copper mine in the world in terms of reserves, and also has the distinction of being the biggest underground copper mine on the planet.

Officials from Codelco estimate that each day the mine is closed, the company loses out on about 1,500 tonnes of copper production. This staggering total could continue to pile up: local authorities issued an early alert that a state of emergency could be declared if the inclement weather persists. In addition to being soaked by torrential rains, the Atacama region of Chile (home to many copper producers) has also seen consistent winds reaching 100 km/hr (~62 mph).

This delay is not welcome news for the company nor the government of Chile in general. It has been reported that for each penny the price of copper drops, Codelco loses $36 million.

 

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.

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