Right now, we are the eighth largest copper producer worldwide, with around 600,000 mt/y in Chile, and once Quellaveco and some other smaller projects we have are commissioned, we should become the fifth largest.”

Anglo American Quellaveco

CEO, ANGLO AMERICAN QUELLAVECO

July 24, 2019

How does Quellaveco fit into Anglo American’s copper portfolio?

Quellaveco puts us in a very good position. Right now, we are the eighth largest copper producer worldwide, with around 600,000 tonnes per year (mt/y) in Chile, and once Quellaveco and some other smaller projects we have are commissioned, we should become the fifth largest. Quellaveco will contribute 300,000 mt/y for the first 10 years, including 330,000 mt/y for the first five years. We expect Quellaveco to be in the first quartile of costs worldwide. It enjoys several advantages, such as low-cost power and a very low strip ratio of 0.8. On top of that, a lot of the infrastructure, like the water systems, is put into capital. We are diverting the Asana river upfront, for instance, so we will not have major investments once the mine is commissioned. Additionally, we believe there is potential to extend Quellaveco’s 30-year mine-life. If you look at the mines around us, Toquepala and Cuajone, they have been producing for several decades. I think Quellaveco has the potential to become a generational asset.

Could we have some basic details about the operation?

It is a straightforward copper concentrator with the standard SAG/ball mill configuration, although we have just started the feasibility study for one of our technologies, Coarse Particle Flotation (CPF), an additional flotation circuit to gain more recovery and use less water. Then, the concentrate will be trucked to the Engie port in Ilo, through the route agreed upon during the dialogue table, for over 160 km. At the port, we are investing US$100 million to build a new shed to store the concentrate, as well as a conveyor and offloading system.

How is Anglo American implementing its ‘FutureSmart’ approach at Quellaveco?

Quellaveco is going to be the first mine to run the FutureSmart operating model from day one. The idea is to build a stable base on which we can layer new technologies, CPF being one of them. We will also apply Anglo Americans P101 approach, a model that pushes for higher performance in our equipment than the industry standard; additionally, we will be a fully digital mine, which brings us future benefits in terms of understanding and applying changes in real time. Finally, our trucks and our drills will be automation-ready. We have taken the approach that, when we decide to move into an autonomous operation, no jobs will be lost, but the nature of some people’s jobs will have to change.

How is Quellaveco dealing with water supplies and the overall water balance in the area?

One of the good things about Quellaveco is the use of water. It shows a net benefit, which is quite unique. We are using around 18 million cubic meters (m3) from the Titire River, which is not fit for human consumption or agricultural use due to its natural arsenic and boron contamination. On top of that, we are building a dam in Vizcachas that will hold 60 million m3, of which 28 million m3 will be released every year. Of that, we will only use 4 million m3, and the remaining amount will be for the communities.

What is your approach towards tailings management for the project? When do you think filtered tailings will be an option for large-scale operations?

Anglo American is leading the industry in terms of tailings with our own standard in use since 2014, which is well above the current industry practices. For Quellaveco, we have looked into all other dams of the same size and scale to try to learn the best way to operate this facility. We also have an independent technical review panel that has gone through the design and will be there through the whole life of the project. We focus on putting the right technology and all the QA/QC on site, so we are very comfortable with our dam. The technology is not yet ready to deploy dry stack tailings successfully at large scale operation, but it will be a question of time – even if this solution will not apply to every single dam. At Quellaveco, depending on how the CPF project goes, we might be able to apply dry stacking to at least a portion of the stream at some point in the future.

What do you think are Quellaveco’s most positive impacts on the area?

One of the challenges for us is that we have been there for a long time; on the official day one of the project we already had approximately 5,000 people on site, whereas most projects start from a small number and then ramp up. So, one of the key challenges we have is managing the expectations. Overall, the things I am proudest of include water and employment. Out of the 11,000 people we have hired, 44% are locals. That is a great achievement in a project of this scale. Also, with the Moquegua Development Fund we have impacted up to 25,000 people directly, which is a huge benefit for a region with around 120,000 people. Once the mine is up and running, our canon and royalty will amount to between US$150 million and US$200 million annually, which should help to improve roads, schools, water treatment and health infrastructure. We are supporting the authorities to make sure they are ready to spend that money; indeed, we are providing Anglo’s project management training course in Moquegua to a total of 150 people.

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