Anglo American wins permits to explore for copper in north Brazil

Altamira Gold

18/06/2018 20:18

(Adds source of mapping data, paragraph 26)
    By Alexandra Alper
    RIO DE JANEIRO, June 18 (Reuters) - Miner Anglo American Plc
 AAL.L  clinched hundreds of permits this month to explore for
copper in a remote part of northern Brazil, Brazilian
authorities said, as the growing electric vehicle market and a
scarcity of shovel-ready mining projects fuels demand for the
metal. 
    A major copper find, if confirmed, would cheer the mining
industry which is eyeing a looming shortfall for the red metal,
prized as an electricity conductor, after years of shrunken
exploration budgets meant little in the way of promising new
discoveries.  
    In a statement to Reuters on Thursday, Anglo said it was too
soon to make claims about the viability of the project. But the
company confirmed it had received permission to explore for
copper in Brazil's Mato Grosso and Para states where it had not
yet begun studies.    
    The project on the edge of the Brazilian Amazon, an open
secret among Brazilian geologists but not previously reported by
Anglo, could also be a major boon for copper mining in the
country, which lags far behind the world's top producer Chile
and has been hit by a series of headline-grabbing mining
accidents.
    But the remote location of the 284 blocks, which cover
nearly 1.9 million hectares (4.7 million acres), poses myriad
challenges, such as the specter of a showdown with activists,
just months after they forced the government to walk back plans
to open a reserve to mining. 
    "There could be (resistance), but it would be perfectly
manageable," Marcos Andre Goncalves, the chief of Chilean miner
Codelco in Brazil and a director of mining companies association
ADIMB, said on Friday. He added that a big copper find "would
clear some of the fog away" from the industry. 
    What Anglo appears to have found in the Alta Floresta Gold
Province, experts say, is a porphyry style copper-gold deposit,
geology typical of Andean mines and responsible for upward of 60
percent of the world's copper resources. In Brazil, there is
just one example of a mine in operation with such geology, the
Chapada deposit in Goias state. 
    "The (mineral) content is similar to that of Chile," said
Victor Bicca, director general of mining regulator DNPM, adding
that it could be a "mega deposit."
    "Obviously it will be in the interest of the government to
make it happen in as little time as possible, because the world
is demanding copper," he added. 
    In a May report, Bank of America said the copper mine
project pipeline has shrunk dramatically since 2011 as copper
prices cratered and exploration has been increasingly less
successful. 
    Even if the Alta Floresta Gold Province yields as much
copper as hoped, that does not mean Brazil is on the path to
becoming another Chile, with annual copper production of 5.33
million tonnes, thanks in part to BHP Billiton Plc's  BLT.L 
 BHP.AX  Escondida, the world's biggest copper mine. 
    "The chances of this being another Escondida are really
small," said Vancouver-based mining consultant Mike Doggett.
Still, the find "is generating excitement and that is good." 
    Only one-fifth of all copper discoveries turn into mines in
20 years, according to Richard Schodde, managing director of
exploration adviser MinEx Consulting. 
    Schodde said that porphyry deposits tend to be much larger
in size, but lower-grade and economically feasible only if they
are close to the surface or have good infrastructure nearby. 
    London-based Anglo said it began exploring 9,000 hectares
nearby two years ago, through a partnership with privately owned
local miner Mineradora Ouro Paz SA, adding that two drill rigs
are in use there.
    It took the miner almost a year to receive the exploration
permits and it will likely soon need to seek environmental
permits to extract minerals for analysis. 
    Anglo Chief Executive Mark Cutifani reiterated the company's
commitment to the base metal.
    "We like the commodity, we like our assets, and we like the
potential within the business," he said at a Miami conference
last month. "We've got significant growth options inside the
portfolio and also outside the existing operations," he added.
    
    HEADWINDS
    Other miners have disclosed more about the project. In
February, Altamira Gold Corp  ALTA.V  said in a news release it
had begun exploring for copper in the belt, adding that 3.5
million hectares of new claims had also been staked by Anglo,
Nexa Resources SA  NEXA.N  and Vale SA  VALE3.SA  in the area. 
    Nexa confirmed it was exploring in the area but Vale denied
having rights to the area.
    The mining industry as a whole is still struggling to
improve its image after a series of recent accidents in Brazil,
following the 2015 dam burst at Samarco, a joint venture between
Brazil's Vale and BHP, which killed 19 people. Earlier this
year, Norsk Hydro ASA's Alunorte  NHY.OL  and Anglo's Minas Rio
project reported spills.  urn:newsml:reuters.com:*:nL8N1RN2YN  urn:newsml:reuters.com:*:nL1N1S81NG
    And environmental and indigenous rights movements have been
successfully winning bids against mining in Brazil's Amazon.
    President Michel Temer was forced to walk back plans to open
up Renca, a massive Amazonian mineral reserve, to mining, late
last year following a huge backlash. 
     A bid by Canada's Belo Sun Mining Corp  BSX.TO  to build
Brazil's largest mine has been frozen due to complaints from
Indian affairs agency Funai about indigenous studies it
conducted.
     Anglo's area, nearly as big as Slovenia, may not escape
these headwinds. It is flanked by two indigenous reserves, close
to national and state parks, and abuts several so-called
conservation units, which enjoy environmental protection levels
among the highest in Brazil, according to Jazida.com, a website
that maps government mining data.           
    "Beyond polluting the environment, it means the migration of
lots of people to remote areas and in this case very close to
indigenous reserves," Greenpeace energy specialist Tiago Almeida
said, adding he hoped to study Anglo's plans. "It is an enormous
threat."
    In a statement, Anglo said it took such concerns seriously.
"Wherever we operate, whether at the earliest stages of
geological work through to our mining operations, we are
sensitive to host communities and the natural environment," the
company said on Friday.

 (Reporting by Alexandra Alper in Rio de Janeiro
Additional reporting by Jake Spring and Anthony Boadle in
Brasilia, Barbara Lewis in London, and Marta Noguiera in Rio de
Janeiro
Editing by Christian Plumb, Amran Abocar, Marguerita Choy and
Matthew Lewis)
 ((Alexandra.Alper@thomsonreuters.com +5521-98221-9827
Reuters Messaging:
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