The move follows Antofagasta’s acquisition of an approximately 19% stake in the Buenaventura in December and it comes amid ongoing early-stage exploration by Antofagasta in Peru which is being carried out from a base Antofagasta had already established there when the opportunity to buy the stake arose, Arriagada said.
Among the factors that contributed to the attractiveness of the deal include Buenaventura’s valuation, its location in a conducive jurisdiction in the Americas and the potential of its portfolio to transit to copper, according to Arriagada.
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“Buenaventura has communicated to the market that it has got gold assets which have the potential to transition into copper. We have a view that two or three of those assets have the potential for being copper operations and therefore that mix was attractive…We also thought, at the time that we went in and made this investment, that the valuation was attractive,” Arriagada said at the annual CESCO industry week in Santiago, Chile which took place from April 15-18.
Antofagasta is currently focused on better understanding Buenaventura’s operations and contributing to the Peruvian producer’s development from the base that Antofagasta has in Peru, Arriagada added.
The deal is also what Arriagada calls an opportunistic one, given that while Antofagasta was open to mergers and acquisitions, they were not needed because it possesses organic growth within its portfolio, notably in Centinela and Los Pelambres.
“Copper assets don’t get traded frequently, and therefore there are not a lot of opportunities or deals around. When assets are available, and if they become very visible as opportunities, they become fully valued,” Arriagada said.
Antofagasta also received approval for a $4.4 billion project at the Centinela copper mine in December 2023, which will add a second concentrator to the site and raise production by 144,000 tonnes per year.
Antofagasta, which produced 660,600 tonnes of copper in 2023 and expects production of 670,000-710,000 tonnes in 2024, is now forecasting an annual capacity of 900,000 tonnes going forward.
“We have been traditionally in the space of producing around 700,000 tonnes as a group. We had slightly lower production the last two years because of water shortages at Pelambres. But now that we have finished the first phase of the water plant there, we expect to be back to that level,” Arriagada said.
“By sanctioning the project at Centinela, we expect that we will be able to grow production to around 900,000 tonnes per year when this is finished,” he added.
The first output is expected to take place in 2027, with annual output eventually ramping up to 144,000 tonnes of copper, 3,500 tonnes of molybdenum and 130,000 ounces of gold.
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