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Copper projects said facing longer delays

Keywords: Tags  copper mining, copper, cost overruns, Capstone Mining, Jay Grewell, copper projects, project delays, Andrea Hotter

SANTIAGO, Chile — Copper mining projects are facing increased delays due to cost overruns, among other factors, according to Jay K. Grewal, Capstone Mining Corp.’s senior vice president of strategy and stakeholder affairs.

Only 11 of the 22 projects in the "highly probable" category in 2007 have actually made it into production, she said at London-based CRU Group’s 12th World Copper Conference in Santiago. "The remaining 11 were pushed out by between six and 11 years."

The postponements are often due to estimates of the projects’ capital expenditures running about 40 to 50 percent over the original figures, she said, but the market also is facing a talent vacuum, with engineering, procurement and construction companies stretched, and long lead times for certain items contributing to construction delays.

Vancouver, British Columbia-based Capstone is a base metals mining company focused mainly on copper, with operations in Yukon and Mexico and development projects in British Columbia and Chile.

Like other mid-tier companies, Capstone is looking for strategic partners to strengthen its balance sheet and the markets for its products, Grewal said. "Our focus is on the Americas, but (target markets) could be Eastern Europe for other companies, for instance. We don’t have the ability to absorb a $2-billion hit."

Midsize companies such as Capstone also are adopting a more multifaceted approach to their social licenses to operate, becoming more integrated into project development planning and engaging with communities at earlier stages.

Major mining companies’ divestment of scale-producing assets opens up an "opportunity to acquire de-risked, cash-flow-producing assets and an improved capacity to absorb project development," Grewal said.

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