US$400 million in Peru copper exports stalled

Anti-mining protests in Peru have held up about US$400 million in copper exports from the company’s top mines and blocked supplies from reaching their operations for nearly three weeks, the manager of port operator Tisur told Reuters News Service.

Four copper mines – Freeport-McMoran Inc.‘s [FCX-NYSE] Cerro Verde deposit, MMG Ltd.‘s Las Bambas, Glencore Plc‘s Antapaccay and HudBay Minerals Inc.‘s  [HBM-TSX, NYSE] Constancia Mine have been unable to ship copper concentrates from Matarani to destinations in Asia and Europe since July 18, 2019, said Gabriel Monge, manager of port operator Terminal Internacional del Sur (Tisur).

Last year, the four mines – led by the country’s top producer, Cerro Verde – churned out about 1.2 million tonnes, or about half of the total copper output from Peru, the world’s number two producer.

The Reuters report said so far, Cerro Verde, Las Bambas, Antapaccay and Constancia have continued producing and are stockpiling concentrates on site for shipment later, said Pablo de la Flor, manager of the National Society of Mining, Petroleum and Energy.

The price of copper slipped to US$2.59 a pound Friday after China’s National Bureau of Statistics reported that the country’s producer price index shrank for the first time in three years in July, a move that stokes deflation fears and puts pressure on Beijing to deliver more economic stimulus as the economy sputters amid an intensifying trade war with the U.S.

Protests in Peru are another setback for HudBay, which has pledged to appeal a U.S. Federal Court decision to block construction of the company’s Rosemont copper project in Arizona. The court overturned the Final Record of Decision issued by the U.S. Forest Service in mid-2017, the company said in an August 1, 2019, press release.

Analysts said the appeal of this ruling is expected to take one to two years and is also likely to derail the company’s near-term plans to secure a 30% minority joint venture partner. The ruling could also delay the production start-up.

On Friday, HudBay shares eased 4.26% or 20 cents to $4.50 on volume of just over one million. The shares are trading in a 52-week range of $10.42 and $4.505.

HudBay is an integrated mining company, primarily producing copper concentrate (containing copper, gold and silver), zinc concentrate and zinc metal. The company owns four polymetallic mines, four ore concentrators and a zinc production facility.

The operations are located in northern Manitoba and Saskatchewan, Peru and Arizona.

The Rosemont Project is expected to be one of the largest copper mines in the U.S., accounting for 10% of total U.S. copper production.

However, U.S. Federal District Judge James Soto overturned the Final Record of Decision issued by the U.S. Forest Service on the grounds that there was no factual basis to determine that Rosemont has valid unpatented mining claims on 2,447 acres and that the claims are invalid under the Mining Law of 1872.

Constancia, meanwhile, is primarily a copper mine, situated in southern Peru and consists of the Constancia and Pampacancha deposits. The Secondary metals are molybdenum and silver. Commercial production was achieved in April, 2015.

Constancia delivered record mill throughput, record copper recoveries and record molybdenum in 2018. The Peru operations produced 122,178 tonnes of copper last year, as well as 24,189 ounces of silver, 2.7 million ounces of silver, and 904 tonnes of molybdenum.