Southern Copper Suspends Peru Operations for Repairs

Southern Copper (NYSE:SCCO) has said this week that it would be temporarily suspending operations at a Peruvian concentrator at the same time an incident possibly involving tailings at its Cuajone mine is being investigated by government authorities.

The company said that while there was no tailings spill at the operations in southern Peru, it would not fully restart operations at the nearby concentrator for three to five days while it performed maintenance.

The two incidents are connected by rainfall events; over the weekend, the Peruvian Agency for Environmental Assessment and Inspection (OEFA) reported it was investigating “green solution” that had flowed into the Torata River from operations associated with Cuajone mine in an area which has suffered intense rainfall.

Southern Copper said that its assets there were affected by the downpour, and it was suspending operations at the copper concentrator at Cuajone as a precaution while it worked to fix damage done to the railway system linking its mine to tailings facilities.

It was also undertaking a search effort to find a worker that was swept away by floodwaters. Flooding in Peru has so far killed five people, while there have also been fatalities in neighboring Chile.

Both Cuajone and the Toquepala mine have been affected by the rain, with the mines themselves operating at 70-percent capacity, according to the company.

The company also said that the tailings dam at Cuajone that OEFA was investigating was stable.

OEFA said that while the runoff had since stopped, it would “determine the cause of the environmental emergency, the responsibility for the events and the impact generated.”

Tailings remain at the forefront of South American mining concerns, with communities in Brazil still reeling from the impact and fallout from last month’s collapse of Dam 1 at Vale’s (NYSE:VALE) Córrego do Feijão mine near Brumadinho in Minas Gerais.

Southern Copper also released its results for 2018 on Monday (February 11), saying that production at Cuajone and Toquepala was up so much that they had offset a fall in production from its mines in Mexico, for a company-wide increase of 0.8 percent in copper production in 2018.

In Q4 of 2018, across the entire companies operations Southern Copper produced 234,991 tonnes of the red metal — an increase of 4 percent compared to Q4 2017.

On the NYSE, Southern Copper was trading down 3 percent at of Tuesday (February 12), at US$ 30.22.

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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.

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