HomeBase MetalsBHP may develop new copper mines

BHP may develop new copper mines

BHP’s Escondida
copper project in
Santiago, Chile — MININGREVIEW.COM — 06 April 2009 – BHP Billiton Limited – the world’s biggest mining company – may decide in favour of developing new copper mines, rather than concentrating on acquiring them because of falling costs.

“The cost of developing a copper mine is decreasing as energy and materials become cheaper,” BHP base metals division president Diego Hernandez told Bloomberg News in an interview here. “Construction costs may become as attractive as buying companies within six-months,” he said.

“Looking at the market the obvious conclusion is that we will see some distressed companies that will have to dispose of good assets,” Hernandez added, “but in fact we have not seen any such opportunities yet.”

BHP, which owns the Escondida copper mine in Chile – the world’s biggest – is working on developing new mines in Africa, central Asia, Peru and Chile, according to Hernandez. “The cost of developing a project in Chile may return to pre-2004 levels of 4 to 6 cents per pound of copper production a year, compared with about 12.5 cents a pound now, he predicted.

“Decisions on expansions to Escondida will probably be taken after 2009 because of a lack of credit and a need to preserve cash flow,” he continued.

“For big projects, the mining companies will need to go back to project financing, and there is not too much available yet,” he said. “We are starting to look forward and things are looking better.”