By Marcelo Rochabrun, Marco Aquino and Sameer Manekar
LIMA (Reuters) -MMG Ltd’s Las Bambas copper mine in Peru will shut down copper production by mid-December due to a road blockade, it said on Friday, as executives urged the government to build a freight rail link to avoid similar disruptions in future.
“The freight rail has huge social acceptance,” Carlos Castro, Las Bambas head of corporate affairs, said in an interview with Reuters.
Las Bambas is one of Peru’s largest copper mines, but its operations have been disrupted by close to 400 days since it began operations in 2016, executives said.
At issue is a dirt road that Las Bambas uses to transport the copper from its mine to a sea port. Communities along the road have staunchly opposed this method of transportation, alleging environmental and social concerns. Las Bambas last faced a production shutdown threat in October.
Executives acknowledged in the interview that the dirt road was not sustainable into the future, saying it was the government’s responsibility to pave the route in the medium-term, but that in the long-term building a separate freight train link would be the best solution.
While Peru’s current administration under socialist Pedro Castillo has endorsed the train, the government’s own cost-estimate is significant at $9.2 billion, and would only begin operations in 2028 at the earliest.
Las Bambas was originally going to transport its copper through an underground mineral pipeline, but that plan was cancelled when the mining project was sold to Chinese miner MMG.
Still, executives said the mineral pipeline makes no sense anymore.
“From the point of view of social profitability, it is unacceptable,” Castro said. “What local families tell us is that a mineral pipeline would negatively affect the area, because all the businesses associated with (copper) transport would cease to exist.”
The road is currently blocked by residents of the Chumbivilcas province, who are negotiating contracts for locals to be hired as drivers for the mine.
The Hong Kong-listed company said that no resolution was reached at a meeting on Nov. 30 between the Peruvian government and the community due to what the company views as ‘excessive commercial demands’.
In July, Las Bambas flagged that production in 2021 was expected in the low end of its 310,00-330,000 tonnes forecast.
Las Bambas produces 400,000 tonnes of copper a year, or about 2% of the world’s copper.
Stockpiles on the site have now increased to around 50,000 tonnes of copper in concentrate.
(Reporting by Sameer Manekar and Tejaswi Marthi in Bengaluru; editing by Uttaresh.V and David Evans)