CDB pledges to finance Galeno Copper Mine Project

Project narrative

On January 25, 2008, Minmetals Corporation and Jiangxi Copper signed an agreement to acquire the Galeno Copper Mine — located in the Yanacocha mining district of northern Peru in the Celendin — and invest $1.5 billion. However, due to delays, the cost of the project increased to $2.5 billion. Minmetals Corporation has a 60% ownership stake while Jiangxi Copper has the remaining 40% ownership stake in the mine. In November 2008, CDB, Minmetals Corporation, Jiangxi Copper and Peru's Banco de Credito signed a framework financing agreement for the project. However, it does not appear that a loan agreement was ever finalized. Due to an increase in prices for equipment, machinery and services, the projected cost of the project is now $3.8-3.9 billion, up from $2.5 billion. The local business in charge of the mining operation is Lumina Copper S.A.C., represented by CEO Richard William Graeme. In 2010, Lumina Copper S.A.C. signed a “Social Accord” and a series of agreements with the adjacent community of La Encañada, Cajamarca, in which the company agreed to designate 90 percent of all non-skilled jobs to local residents. However, the project has been stalled since 2013. It has faced several development delays related mainly to environmental and political issues. The proven resources of Galeno copper deposits cover 7.411 million tons of copper, 165.7 tons of gold, 4981.7 tons of silver, and 201,000 tons of molybdenum. Production was expected to start in 2012 producing 200,000 metric tons of copper metal.