GREAT MINES THINK ALIKE
Miners take a ‘common-sense’ approach to falling prices by combining projects in Chile,
Canadian miners Goldcorp and Teck Resources agreed to combine their El Morro and Relincho copper-and-gold projects in Chile to reduce costs amid falling metals prices.
The Vancouver-based mining companies will contribute their projects, which are located about 40 kilometres apart, into a 50/50 joint venture, Goldcorp and Teck said Thursday in a statement. The combination, with the interim name Project Corridor, may reduce development costs by billions of dollars compared with the standalone plans, partly by reducing the duplication of infrastructure, the companies said.
“Combining these two neighbouring assets is a common-sense approach that allows us to consolidate infrastructure to reduce costs, reduce the environmental footprint and provide greater returns over either standalone project,” Teck chief executive officer Don Lindsay said in the statement.
Slower economic growth in China, which consumes about 40 per cent of the world’s copper, is helping erode prices for industrial metals.
Goldcorp and Teck said the codevelopment of their Chilean projects includes construction of a conveyor system to transport ore to Relincho from El Morro and focusing construction of mine infrastructure at Relincho.
“This project will share the expense of several high-cost pieces of equipment,” Jackie Przybylowski, a Toronto-based analyst at Desjardins Capital Markets, said Thursday in a note to clients. “For example, common infrastructure and an optimized mine plan should reduce costs, as the projects can likely share facilities such as a desalination plant, port, transmission line, concentrator and tailings facility.”
Goldcorp, the world’s largest gold miner by market value, said in a separate statement Thursday that it agreed to buy New Gold’s 30-percent stake in El Morro, giving it 100per-cent ownership of the project.
It will pay New Gold $90 million and a 4-per-cent gold stream on future gold output at El Morro.