Southern Copper to invest over US$60mn in Ilo smelter in Peru

Southern Copper, a subsidiary of Grupo México with copper operations in Peru, plans to spend US$62.4mn on improvements to its Ilo smelter and refinery complex in the Moquegua region.

Seven upgrades are proposed, including switching its energy supply to natural gas from oil and diesel for the smelting and refining equipment, the company said in a fifth technical report (ITS) presented to environmental certification service Senace for approval. The document is now being assessed.

In Peru, mining companies send ITS documents to the environmental regulator when they propose modifications that will not have a significant environmental and social impact – unlike modifications to environmental impact studies (EIS) which require more exhaustive evaluations.

In total, the seven proposed changes will take 15 months and work is expected to begin in April 2024 and finish in August 2025.

The report, drafted by Anddes Asociados, can be downloaded in the Documents section in the top right corner of the screen.

The Ilo refinery has a smelting area and a copper refining area, but it also has ancillary facilities such as the Pueblo Nuevo camp, an industrial railroad, and access and port facilities at Patio Puerto. It has capacity to process 1.2Mt per year, according to the report.

DETAILS

The company hopes to begin the modifications as soon as possible. The initiatives are outlined in the table below.

Proposed modification	Budget (US$ Million)
Improvements to fuel dispensing station	1.45
Increase in storage capacity of the foundry slag deposit	8.05
Enabling of system of pipes and access points to connect the internal effluent network to public wastewater network	1.62
Technological and environmental improvements to foundry and refinery combustion equipment	9.2
Replacement of foundry water cooling system	12.3
Implementation of electrical cogeneration system using superheated steam	29.8
Fine-tuning of data for georeferencing environmental noise monitoring stations	No investment required

Source: Anddes Asociados/Prepared by BNamericas

In the case of the improvements proposed for the combustion equipment, the ITS states that "the change of the energy matrix to natural gas... will be carried out through the installation of a satellite liquefied natural gas regasification plant, installation of internal distribution networks and replacement of burners in 16 units."

The improvements to the fuel dispensing station and the enabling of a piping system will take four months, while the increase in the slag storage capacity and the improvements to the energy matrix will take six months and eight months, respectively.

The longest works will be the replacement of the water system and the implementation of the electrical cogeneration system, which will take 11 and 15 months, respectively. The improvements to the georeferencing system will not require any construction works.

INVESTMENTS

Southern Copper is optimistic about its investments in projects currently underway. In mid-March, the company presented a sixth ITS to Senace for its Cuajone mine in Moquegua region, in which it plans to invest US$692mn. 

The main objectives are to expand the concentrator plant's processing capacity from 90,000t/d to 108,000t/d, create a new freshwater reservoir and improve the molybdenum flotation process.

Although the mining company did not state in its last results presentation what its capex for 2024 would be, total capex was US$1.01bn for 2023 and a projection made at the end of 3Q23 indicated that the total capex for the Peruvian and Mexican units would be US$1.32bn this year.