Saturday, March 2, 2013
Japan Firms' Development Costs Soar At Chilean Copper Mine
TOKYO (Nikkei)--Sumitomo Metal Mining Co. (5713) and Sumitomo Corp. (8053) said Friday that development costs at a Chilean copper mine project are likely to rise to 3.9 billion dollars from initial estimates of 2.9 billion dollars.
The spike in costs at the Sierra Gorda project is the result of a stronger local currency and climbing personnel expenses caused by a labor shortage. Commercial production is still slated to kick off in 2014.
Development of the Sierra Gorda project began in 2011. Because numerous copper mine development and expansion projects are concentrated in Chile, prices of mining-related materials are rising along with personnel expenses for engineers and laborers. Yet Sumitomo Metal Mining expects the large-scale mine to be profitable over the long term.
Sumitomo Metal Mining has a 31.5% stake in the project and Sumitomo Corp. a 13.5% interest. They are partnered with Canada's KGHM International Ltd., which has a 55% stake. Additional development costs will be covered by the three in proportion to their ownership stakes.
(The Nikkei, March 2 morning edition)