Whilst we are killing time for the assay results I have pieced this together. The Chilean story goes like this... The country accounts for 34% of the worlds copper supply. impressive if you consider the next country accounts for 7% of world supply. Everything has been going well for the chileans so much so they are the richest south american country by a good stretch of your ruler.
The labour costs in mining exploded to the point they pay mining people the same as what costs are in the USA. The only country paying more for labour in this sector is Australia and canada. BHPB at escondida is paying $80,000 for a truck driver. It is not uncommon for mine workers there to get a end of year $30,000 bonus.
Next...The Argentinians a despot country next door, stop supplying gas to Chile. Chiles power costs rose sharply as result. The government has delayed approval of $30b in mine site expansions to keep a lid on the power supply the country has trouble coping with and keep a lid on the cost of power to mum and dad users.
Added to this the locals have discovered you can litigate the big companies if they destroy your sacred sites and fowl your rivers. barrack just shelved mine site plan on border with Argentina, in the mountains smack on a river coz the locals said no.
The politics also is the copper game in Chile is a hybrid. The government owns the tolls and owns some big mines. They havent spent the money up grading the mines and maybe trying to slow the competition down by blocking them.
BHPB is now sourcing water from desalination plant rather than suck the water table dry, to placate the locals. This is a big extra cost.
The exisiting mines are getting old. Escondida has fallen from 1.7% Copper to .7% copper as they go deeper and deeper. Trucks are having to travel further chewing more fuel and the plant is further away.
The government owns the 3 toll treating plants in the country. (See where i am heading with this)
So MNE is going to toll treat its ore, down the road, says little about building its own plant, minimizing labour needs and therefore costs, minimizing fowling the local area and as long as the grades are good the toll treating costs will be absorbed.
My assessment is the toll plants have plenty of capacity and as long as you are using them you have little to fear. Lucky, one is close to us. If you do build a plant you better have a 100% water recycle technology in your pocket. Some are moving to that now.
Flux
MNE Price at posting:
2.7¢ Sentiment: ST Buy Disclosure: Held
