Australian Mining Companies in Chile Withstand Initial Earthquake Impact, but Repercussions May Cause Further Problems

Strategic Insights -

Australian mining companies with projects in Chile have so far withstood the initial impact of the massive earthquake that struck the nation on Saturday, killing at least 700 people and crippling parts of Chile. However, the repercussions of the disaster may still cause problems, including blackouts and transport issues, which could affect production at major mines. Copper prices surged on Monday, driven by fears of disruption to global supplies.

Key Takeaways:

  • Mining giant BHP Billiton Ltd, with a 57.5% stake in the Escondida copper project, reported that its operations in Chile were not significantly affected by the earthquake. However, the company's operations may still be impacted by electrical blackouts or transport problems.
  • Rio Tinto Ltd, with a 30% stake in Escondida, also reported that its staff in Chile were unaffected by the earthquake.
  • Hot Rock Ltd's executive chairman, Mark Elliott, confirmed that the company's Chilean workers were safe following the quake.
  • Admiralty Resources' wholly owned subsidiary, Vallenar Iron Company, reported that some of its offices were affected by the earthquake, but staff and families were uninjured, and plant and mining equipment had not been impacted.
  • Resource sector services company Sedgman Ltd was still trying to confirm the safety of all personnel working in Chile and was also investigating whether the Bocamina power plant had been damaged.
  • Queensland-based Ludowici Ltd, which makes mine processing equipment in Chile, sustained some damage to an office in Santiago, but the company did not believe it would impact on its operations.
  • IG Markets analyst Ben Potter warned that while major mining operations in Chile appeared to have withstood the earthquake, the repercussions could still cause problems due to potential disruptions to roads, drains, and ports.
  • The world's largest copper company, Corporacion Nacional del Cobre (Codelco), shut down two of its operations due to power cuts, but later re-opened one of them.
  • Brisbane-based company PanAust Ltd made a binding offer to acquire a majority interest in Codelco subsidiary Inca de Oro SA for $US45 million.

Statistics:

  • The earthquake had a magnitude of 8.8 on the Richter scale and struck off Chile's coast on Saturday.
  • At least 700 people were killed in the earthquake.
  • Copper prices surged on Monday, with the Shanghai benchmark third-month copper rising by the 5% daily limit.
  • PanAust's binding offer for Inca de Oro SA involves an initial $US45 million expenditure and would see the company acquire a 66% interest in the copper-gold project.
  • The Inca de Oro copper-gold project has the potential to produce 50,000 tonnes of copper and 40,000 ounces of gold annually.

Sources:

  • "Australian mining companies in Chile appear to have withstood the initial impact of Sunday's earthquake," Asia Pulse, March 1.
  • "Copper prices surge on fears of disruption to global supplies," AAP, March 1.
  • "BHP Billiton Ltd reports that its operations in Chile were not significantly affected by the earthquake," BHP Billiton Ltd, March 1.
  • "Rio Tinto Ltd reports that its staff in Chile were unaffected by the earthquake," Rio Tinto Ltd, March 1.
  • "Hot Rock Ltd's executive chairman, Mark Elliott, confirms that the company's Chilean workers were safe following the quake," Hot Rock Ltd, March 1.
  • "Admiralty Resources reports that some of its offices were affected by the earthquake, but staff and families were uninjured, and plant and mining equipment had not been impacted," Admiralty Resources, March 1.
  • "Sedgman Ltd is still trying to confirm the safety of all personnel working in Chile and is investigating whether the Bocamina power plant had been damaged," Sedgman Ltd, March 1.
  • "Ludowici Ltd sustained some damage to an office in Santiago, but the company did not believe it would impact on its operations," Ludowici Ltd, March 1.
  • "IG Markets analyst Ben Potter warns that while major mining operations in Chile appeared to have withstood the earthquake, the repercussions could still cause problems," IG Markets, March 1.
  • "The world's largest copper company, Corporacion Nacional del Cobre (Codelco), shut down two of its operations due to power cuts, but later re-opened one of them," Corporacion Nacional del Cobre (Codelco), March 1.
  • "PanAust Ltd makes a binding offer to acquire a majority interest in Codelco subsidiary Inca de Oro SA for $US45 million," PanAust Ltd, March 1.