Copper Rookie Looks to Glencore and Chinese for Downstream Dream

(Bloomberg) -- Ecuadorian officials have held talks with several foreign companies about the possibility of building a copper refinery as the smallest OPEC member looks to reduce its dependence on oil, the mining minister said.

Chinese and Japanese companies and Glencore Plc “could be among those interested in the project,” Rebeca Illescas said Thursday. The government intends to choose companies in the coming months and sign contracts by year-end. A Glencore spokesman declined to comment.

“Developing mines is a priority, but we need to accompany this process with industrialization,” she said in an interview in Santiago. “There are conversations with companies that are interested in the whole copper mining value chain, and with others who would build strategic alliances separately.”

Ecuador has become a destination for copper, gold and silver exploration, and some of the world’s largest miners including BHP Billiton Ltd., Fortescue Metals Group Ltd. and Newcrest Mining Ltd. have set up offices in the country or acquired concessions. EcuaCorriente SA is developing Ecuador’s first large-scale copper mine, which is set to start producing in 2019.

The copper refinery is a mid- to long-term project that could go into production in five to 10 years, the minister said. The government has conducted market research and a pre-feasibility study with Hatch Group. The project would be privately funded and could process concentrate both from Ecuador and the rest of the region.

The plant’s annual capacity would be about 280,000 metric tons of copper cathode, according to a document on the website of state miner Enami. Cathodes would be exported to China, while other sub-products such as sulfuric acid could be sold to Chile, the document says.

The government is also in conversations with companies such as Antofagasta Plc and Rio Tinto Group about exploration opportunities, Illescas said. However, the mining registry was closed for new exploration applications late last year as the government organizes the concessions and establishes policies for awarding permits.

Authorities have eliminated about 2,500 concessions that were inactive or not in compliance. These would become available when the registry opens again within the next few months. The government intends to open an additional 1.25 percent of Ecuador’s territory for exploration this year, adding to the 5 percent already open to prospectors.

“Opening the registry doesn’t keep me awake at night,” Illescas says. “Right now we have 275 new areas that can be explored and we need strong institutions so we can give investors certainty.”

A bill designed to boost investment -- which includes a provision to eliminate a windfall mining tax -- will be sent to congress in the next few weeks, Illescas said.

©2018 Bloomberg L.P.

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