Lenders line up for Chile copper smelter in bet glut won’t last

Chile’s Enami said it has received various financing offers for a $1.7 billion copper smelter and will name the banks to structure the deal as early as next week, even as the market remains depressed.

 

 

The state mining company has received “very encouraging” preliminary financing proposals, chief executive officer Ivan Mlynarz said in an interview. Enami is also analyzing six indicative offtake bids out of 17 companies that expressed interest in buying the finished copper and financing the project.

 

Would-be participants in a project to build a new smelter and refinery on the site of a shuttered plant in northern Chile are taking a long-term view given the current excess of smelting capacity led by China. Mlynarz spoke from Shanghai during the Asia Copper Week conference, where miners and smelters are negotiating rock-bottom fees for turning imported ore into metal.

 

“The imbalance is in China, but the copper concentrate is in Chile and Peru,” he said by telephone. “Our proximity to deposits and the geopolitical factors at play are key. Current market conditions are temporary.”

 

The six indicative offtake proposals vary widely in size and in the share of future production they are willing to take, he said. Financial institutions, which are being evaluated separately, have offered structures that could include full-package financing mandates.

 

“We’re likely to appoint not just one structuring bank, but two, because the offers are strong and we don’t want to leave anyone out,” he said.

 

Enami will retain full ownership of the project, which is designed to process 850,000 metric tons of concentrate a year and recently secured environmental permits. The project still needsthe copper commission Cochilco to sign off on it before the board can make a final investment decision. Mlynarz said he still hopes to begin early works before the current government leaves office on March 11.

 

“That’s what we’re working toward, but everything depends on the resolution of Cochilco,” he said.

 

Enami is negotiating supply deals with small, medium and large miners in the Atacama region of northern Chile, where private sector mines are estimated to generate 1.5 million tons of concentrate a year by the time the smelter starts up.

 

On lithium, the CEO said Enami’s Altoandinos venture with Rio Tinto Group is progressing despite the Anglo-Australian miner’s recent decision to shelve a hard-rock project in Serbia. Updated resource estimates for Altoandinos are expected to be published in late December or early January.

 

“The Altoandinos project continues to advance,” he said. “There is no condition that would require stopping it.” 

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