Nexa's Magistral project in Peru faces uncertain times

Nexa Resources warned of possible complications in developing its Magistral open pit copper project in Peru following environmental certifier Senace's rejection of a request to modify the environmental impact assessment.

The mining company, part of Brazil’s Votorantim group, said in its latest results report that the rejection on May 24 may affect the economic viability and technical development of the project.

According to the company, it is working to respond to “unfavorable observations” made by water authority ANA and protected natural areas service Sernanp.

“Nexa is currently addressing this situation with the competent authorities and expects to receive a response in the coming months,” it said. 

“The project remains in Nexa's portfolio of exploration and evaluation assets, and the company has decided to reassess the engineering studies and continue evaluating options for the project. This reassessment may affect the project’s current maturity stage and was considered an impairment indicator.”

Magistral is in Áncash region, where the large Antamina copper-zinc mine is located. According to the energy and mines ministry (Minem), the greenfield initiative will have a useful life of 15 years and has 157Mt of reserves grading 0.48% copper. The mine will process up to 35,400t/d and annual production will be 55,000t of copper, 5,000t of molybdenum and 1,000oz of silver, according to Minem, which puts capex at US$493mn.

According to Senace, Magistral's proposed modifications to the EIA were presented in December 2021.

“In June 2024, the Magistral project was tested for impairment. As a result, the company recognized a pre-tax impairment loss of US$58mn (after-tax US$42mn) in 2Q24, classified under property, plant and equipment,” the results report states.

According to Nexa's latest results call, the company's focus will be on optimizing Aripuanã in Brazil and the Cerro de Pasco integration project combining the El Porvenir and Atacocha polymetallic mines in Peru. Magistral was not mentioned during the call.