Teck Resources Ltd. (TCK_A.TO, TCK_B.TO, TCK) and Xstrata Plc (XTA.L) said the shareholders of Peruvian miner Compañia Minera Antamina SA approved US$1.288 billion ore processing capacity expansion of its copper-zinc mine.
With the investment, Ancash Region, North Peru-based Antamina copper-zinc mine is expected to ramp up the ore processing capacity to 130,000 tonnes per day. By late 2011, on completion of expansion project, annual production of copper and zinc is expected to rise by approximately 30%. The project is scheduled to be commissioned in the fourth quarter of 2012.
Xstrata owns a 33.75% interest, while Teck has a 22.5% interest in Antamina. BHP Billiton Ltd. (BHP) holds 33.75% stake and Mitsubishi Corp. owns 10%.
Teck expects that its share of distributions from Antamina will be reduced by less than US$100 million for 2010 and 2011 as the expansion project progresses. For the last 12 months to September 30th, 2009 Teck's share of operating profit after depreciation from Antamina was C$231 million.
Commenting on expansion project, Xstrata Copper Chief Executive Charlie Sartain said, "This is the third brownfield expansion of an operation involving Xstrata Copper that has been approved in recent months, following the announcements to construct Lomas Bayas II in October and Ernest Henry underground earlier in December. These three projects provide a firm foundation for Xstrata Copper to implement its business strategy to grow production by 60% to 1.5 million tonnes in 2015."
The proposed expansion would commence in the first quarter of 2010 and is expected to create 2,726 jobs in the construction phase and 500 additional permanent positions. The company is expected to buy new mining equipment and construct a new 55 kilometer electric power transmission line as part of expansion.
Commenting on expansion project, Xstrata Zinc Chief Executive Santiago Zaldumbide said "The zinc production coming from Antamina reinforces the position of Xstrata Zinc as the largest integrated zinc producer in the world."
Antamina in November 2008 had announced a 77% increase in its Mineral Reserves to 745 million tonnes after it completed an intensive in pit exploration program.
Tuesday, XTA.L closed at 1,188 pence, up 25.5 or 2.19% on the LSE. TCK is currently trading at $38.47, up $1.03 or 2.75% on the NYSE.
In TSE, TCK.A is currently trading at $40.44, up $0.49 or 1.23% and TCK.B is currently trading at $39.98, up $0.97 or 2.49%.
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