Copper mining projects are increasingly being pushed back due to cost overruns and other reasons, according to a senior executive at Capstone Mining Corp.

Jay Grewal, Capstone’s senior vp strategy and stakeholder affairs, said that only 11 of the 22 projects in the “highly probable” category in 2007 have made it into production.

“The remaining 11 were pushed out by between six and eleven years,” she told CRU’s World Copper conference in Santiago, Chile this week.

The postponements are often down to estimates of the projects’ capital expenditures running about 40-50% over the original figures, she said.

The market is also facing a talent vacuum, with engineering, procurement and construction companies stretched and long lead items contributing to construction delays, she added. 

Capstone is a Canadian base metals mining company focused mainly on copper with operations in Canada and Mexico, and development projects in Chile and Canada.

Grewal said that, like other mid-tier firms, the company is looking for strategic partners to strengthen its balance sheet and the markets for its products.

“Our focus is on the Americas, but [target markets] could be eastern Europe for other companies, for instance,” she said.

“We don’t have the ability to absorb a USD2 billion hit,” she added.

Mid-size firms such as Capstone are adopting a more multi-faceted approach to their social licences to operate, by being more integrated into project development planning and engaging with communities at earlier stages.

The divestment by major mining firms of scale-producing assets opens up an “opportunity to acquire derisked, cash flow-producing assets and an improved capacity to absorb project development,” Grewal added. 

Andrea Hotter
Twitter: @andreahotter