MELBOURNE, Jan 28 (Reuters) - China’s MMG Ltd flagged on Thursday that its $10 billion new copper mine in Peru was set to ramp up production faster than some analysts had expected, which could weigh on copper markets already mired at more than six-year lows.
MMG, the Melbourne-based arm of China’s state-owned Minmetals Corp, said it expected to produce 250,000 to 300,000 tonnes of copper in concentrate at the Las Bambas mine in 2016.
That’s well above two analyst forecasts for up to 200,000 tonnes this year from the project, which shipped its first cargo earlier in January and is set to be the world’s third largest copper mine when it reaches full capacity.
Worries over a global supply glut have hit copper markets hard, with benchmark London prices falling 27 percent since the start of last year to their lowest since mid-2009.
“At this stage, it is expected that commercial production will be achieved during the second half 2016,” MMG said in its quarterly report.
The company expects production costs at the mine to be between 80 and 90 cents a pound once it reaches a steady state.
MMG produced a total of 207,528 tonnes of copper in 2015, up 8 percent on the previous year from its mines in Australia, Laos and the Democratic Republic of Congo, and expects output to more than double to between 415,000 and 477,000 tonnes in 2016, thanks to Las Bambas.
Annual output of zinc in concentrate fell 16 percent to 392,667 tonnes in 2015, as the Century mine in Australia came to the end of its life, but that beat the top end of MMG’s forecast of 370,000 tonnes.
Production costs for zinc were 47 cents a pound in 2015, well below the company’s forecast of 60-65 cents a pound. (Reporting by Sonali Paul; Editing by Joseph Radford)