SMM to Participate in Developing Cu Mines for Earlier Commercialization

Sumitomo Metal Mining (SMM) tries to acquire equities in developing copper mines. SMM presently holds 120,000 tonnes per year of copper production interests. The interest will reach 250,000 tonnes in 2018 thanks to the expansion of existent investing mines and operation commencement of Chilean copper mine in which SMM acquired the shares in 2011. However, SMM needs to take additional 50,000 tonnes interests in order to achieve 300,000 tonnes of total production interests. SMM considers self exploration takes long time to start commercial operation. SMM tries to increase copper production interests by participating in already developing mines.

Three of SMM’s investing copper mines, Morenci in the U.S.A. (SMM holds 12% shares), Cerro Verde in Peru (16.8%) and Northparkes in Australia (13.3%) plan output expansion. SMM’s copper production interests in these 3 mines will increase by 60,000 tonnes per year. Sierra Gorda mine in Chile schedules operation commencement in 2014 and output expansion in 2017. SMM’s interest is equivalent to 70,000 tonnes of copper (SMM has a right to take 110,000 tonnes of copper actually).

However, 250,000 tonnes of production interest is equivalent to 55% of SMM’s annual copper concentrate consumption. This is lower than the medium-term target 67% or 300,000 tonnes of annual copper production interest. SMM has considered exploration of new deposits but given up the plan because it takes 15 years or more to commence mass production since deposit discovery. In the case to participate in already developing projects, it takes average 5 years to enter commercial operation.

For fiscal 2012 started in April, SMM plans approximately 7 billion yen of annual exploring investment, 60% for exploration of new deposits and 40% for exploration at existing mines. About 20 projects are ongoing mainly in Pacific rim, 50% of those which are for copper and each 25% for nickel and gold.