KGHM Cuts Chile Copper Target as It Reviews Port Options

KGHM Polska Miedz SA, Europe’s biggest copper miner, reduced a production estimate for its new Chilean mine after a court ruling forced the company to look for an alternative Pacific port.

The Sierra Gorda project probably will produce 50,000 metric tons this year, compared with a February estimate of 70,000 tons, after labor disputes and as the mine assesses options for shipping its copper concentrate, Chief Executive Officer Herbert Wirth said in an interview in Santiago today.

The Lubin, Poland-based company is considering selling unrefined copper to third parties in Chile as it scours for another port, Wirth said. One option is to build a loading facility at Mejillones port, which would take two years, he said. The company and partner, Tokyo-based Sumitomo Metal Mining Co., are also looking at ports as far away as Arica, which is 412 miles from the mine. Antofagasta is 117 miles away.

“It’s in the hands of the Chileans what’s going to happen to this project,” he said. “Solving the concentrate shipment problem is a long-term option. In the short-term, we are even trying for options such as selling concentrate ex-works.”

Ex-works is an arrangement requiring the seller to deliver goods at his or her place of business with all other transportation costs and risks assumed by the buyer.

An Antofagasta court probably will consider KGHM’s appeal of a ruling to annul permits in about five weeks, Wirth said.

Sierra Gorda is 93 percent complete and development “is going according to plan,” KGHM Chief Financial Officer Jaroslaw Romanowski said in an April 7 interview.

The $3.9 billion project is 55 percent owned by KGHM. Sumitomo owns the rest. An opening ceremony for the mine is planned for late September, Wirth said.

To contact the reporters on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net; Matt Craze in Santiago at mcraze@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net Robin Saponar

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