Why Minera Las Cenizas plans to move into Chile's copper big leagues

Chile's Minera Las Cenizas (MLC) wants to leave the medium-sized mining category and enter the big leagues of copper production with a strategy to increase output to 100,000t/y from 44,000t/y.

"The possibility of mining growth in Chile lies in medium-sized mining, but unfortunately, the regulatory system does not allow it since we have a large number of restrictions that ultimately stifle entrepreneurial drive," says CEO Cristián Argandoña, who is also the VP of local mining association Sonami, which has urged the government to facilitate the growth of small- and medium-sized miners

"For example, the processing of a closure plan takes five years. The authorities must address over-regulation and facilitate reasonable processes in time."

BNamericas: How has MLC come up in the medium-sized mining segment?

Argandoña: We started operating in 1978 in Cabildo, Valparaíso region, with a 15,000t/m processing plant, and in the 1990s we experienced significant growth when we opened a gold processing plant in the Alhué area, 110km from Santiago.

It was successful and allowed us to form the Florida complex, which in 2006 was transferred to Meridian Gold and then to Yamana Gold, now part of Pan American Silver. That stage consolidated the operation in Cabildo and we managed to increase processing to 85,000t/m.

In 1995, we developed the Las Luces project in the municipality of Tal Tal, Antofagasta region, which today consists of the Las Luces sulfide plant, processing 100,000t/m and producing around 10,000t/y of copper; the 160,000t/m oxide plant, producing 12,000t/y of copper; and the Cabildo plant, producing 8,000t/y of copper.

Overall, Las Luces produces 30,000t/y. And in 2022, we acquired [open-pit operation] Franke, which currently produces around 13,000t/y – so our overall production is 44,000t/y of copper.

BNamericas: What are the next steps?

Argandoña: We've carried out several exploration campaigns around our deposits and mining areas, allowing us to have a significant inventory of resources and plan a strategy to take us above 100,000t/y of copper in the coming years.

BNamericas: And why do you want to leave the medium-sized mining segment?

Argandoña: Current regulations threaten medium-sized mining. They apply the same framework to us as to a 150,000t/m processing plant or Collahuasi, whose production is around 600,000t/y. We have not managed to convince the authorities that this is discriminatory.

Medium-sized mining projects, in general, have a short useful life, averaging five years. During this period, we constantly try to replenish resources to continue operating, and when the deadline expires, all permits must be renewed again.

In this process, several companies in the highest fourth quartile of production costs shrink or experience increases in costs that prevent them from growing. In cycles of low prices, they are seriously threatened, and several must close or halt their operations. All of this motivates us to leave the niche.

BNamericas: Which projects will help MLC reach production of 100,000t/y?

Argandoña: First, the expansion of the Las Luces plant, which will increase processing from 100,000t/y to 150,000t/y and production to 15,000t/y of copper. With that, we would reach almost 50,000t/y [the limit to be classified as medium-sized mining].

Then there is the Franke plant, which aims to reach maximum capacity of 30,000t/y of fine copper in the short term, from the Altamira and Aguilucho mines. With this, we will produce between 60,000t/y and 65,000t/y of fine copper in the next three years.

A concentrator plant in the Altamira-Franke sector will also add 30,000-40,000t/y, bringing us up to 100,000t/y.

BNamericas: How will the projects be financed?

Argandoña: The latest project's capex is large, with a concentrator exceeding US$550 million, but the expansions at Las Luces and Franke, while still requiring further engineering analysis, will need an investment of close to US$200mn. Payment will be made with a combination of our own resources and longer-term financing through banking and traditional mechanisms.

BNamericas: What are the plan's main points for achieving operational continuity at Barreal Seco, which involves US$73mn?

Argandoña: Barreal Seco is an important deposit. Although its grades are low, we have access to greater resources and we estimate that we could extend operations for 29 years and sustain production from the oxide plant. We are assured of at least 10 more years.

BNamericas: Will the project incorporating seawater at Franke be completed in 2025?

Argandoña: We have used seawater in its natural state, without desalination, since 1995, when we built the Las Luces plant. In 2011, we extended the pipelines to the oxide plant, and today, we have a capacity of 100l/s.

Franke is currently supplied with water from [state miner] Codelco's Salvador division, whose contract expires in June 2025, so we are racing with the permits to be on time. After this first stage, we will develop phase 2, which will expand water extraction to achieve a flow of 150l/s or 200l/s. Our idea is to cover each of our expansion projects.

BNamericas: How do you approach electricity supply and what role do renewable sources play?

Argandoña: We buy energy from the grid but also use specific renewable energy applications. We have a solar panel plant that heats water for washing copper cathodes.

In addition, we are participating in a project with our partner Imelsa, where we will build an electricity generation plant in Copiapó city that will include solar panels.

BNamericas: Given the water shortage that also affects communities and other economic sectors where MLC has operations, have you considered collaborating on projects that supply seawater to residential or agricultural areas?

Argandoña: Medium-sized mining companies are characterized by being embedded in the territories where they operate and by using extensive local infrastructure, such as commerce, hotels, banks, health services, etc. In Cabildo, we have been committed to local development for 46 years and in Tal Tal for almost 28 years.

Both areas have suffered from the drought. We have raised the importance of building seawater projects from the coast to the interior valleys with the authorities. In the case of Cabildo, there are currently at least two projects for which permit processing is underway, which we have supported and we are willing to facilitate their water infrastructure crossing our land.

Furthermore, as a company we make efficient use of water. At Cabildo, we have paste tailings deposits where we recover 75% of the water and recirculate practically 80% of the water used.

BNamericas: What is MLC’s technological focus?

Argandoña: In the 1990s, we began the mechanization of our mines with the incorporation of jumbos [drilling equipment], and then we replaced manual drills with electrohydraulic equipment that drilled more meters in less time. 

We have favored online management, where operations reporting is visible, and the densities and measurements are done automatically in the tailings deposits.

MLC was the first company in Chile to incorporate a paste tailings dam in 2009 to ensure stability, prevent infiltration and solve the issue of pollution, since conventional tailings that are not in use raise dust due to the wind.

In contrast, our conventional tailings dams were reforested, and today, we see forests in Cabildo. We believe in that kind of thing in the field of technology.

BNamericas: In June, An accident occurred at the MLC paste tailings deposit.

Argandoña: On June 14, 160mm of rain fell in Cabildo in 24 hours, something that had not happened in 200 years, causing a wall to move and the water eventually dragged sediment. However, we were able to immediately confirm that the tailings were intact and the paste consolidated.

After that, we changed the wall's design, added pools to manage excess water, and installed a system that slows down the water during similar events to prevent sediment from being carried away. We also added channels and settling pools.

The emergency allowed us to prove that paste tailings are an excellent solution, something confirmed by Sernageomin. This was despite the fact that the deposit was designed 15 years ago when the average rainfall was 50mm, so our maximum resistance was 95mm. Many companies have wanted to visit the site to learn about this option.