Lundin suspending copper mine in Chile

Lundin Mining Corp. [LUN-TSX; LUMI-Sweden] is suspending production at its Candelaria copper mine in Chile after failing to strike a wage deal with unionized employees. “The company sincerely regrets having to take this action and its impact on our workforce, local community, suppliers, customers and many stakeholders,” Lundin said in a press release.

But the company indicated that it was left with no alternative after mediation with the Candelaria AOS Union, which represents approximately 550 workers at the Candelaria operation, failed to produce an agreement. The union can legally be on strike as of today, Lundin said.

Lundin is a diversified Canadian base metals mining company with operations in Chile, the United States, Portugal, Sweden and Finland, primarily producing copper, nickel and zinc. Lundin also holds an indirect 24% equity stake in the Freeport Cobalt Oy business, which includes a cobalt refinery in Kokkala Finland.

With full year contributions from the Chapada copper-gold mine in Brazil and Candelaria mining complex in Chile, the company previously said copper production was expected to rise by over 20% in 2020 from 235,498 tonnes in 2019.

However, the company now says previously provided 2020 production, cash cost and capital guidance for Candelaria should no longer be relied upon.

“Lundin holds health and safety as a top priority in everything we do,” the company said. “Illegal and violent actions promoted under the guise of the legal strike of the Mine Workers Union and the pending labour action of the Candelaria AOS Union puts the safety of our Candelaria workforce at risk,” it said.

Candelaria operations are currently in the process of planning for a temporary suspension. Critical works will continue to be executed to protect required onsite personnel, the operation and the environment.

Candelaria (owned 80% by Lundin and 20% by Sumitomo of Japan) is an open pit and underground mine, providing copper ore to an on-site processing plant with a capacity of 75,000 tonnes per day. The mine is located in Chiles’s Atacama Region, about 20 km south of the city of Copiapo (population 160,000).

The operation produced 35,060 tonnes of copper and approximately 21,000 ounces of gold in concentrate on a 100% basis in the second quarter of 2020. Copper production for the quarter was higher than equivalent 2019 quarter due primarily to higher copper head grades and recoveries as more higher grade open pit and underground ore was mined.

However, throughput was lower than planned due to ore hardness, operational issues and an unplanned maintenance stop. In addition, COVID-19 has further delayed the Candelaria Mill Optimization Project and installation of the final ball mill motor is now planned for January, 2021.

The company’s shares advanced 4.3% or $0.33 to $7.94 on volume of just over 1.0 million. The shares are currently trading in a 52-week range of $8.02 and $7.73.