* Slow ramp up of waste system has hit Caserones mine -consultant
* Says inexperienced workforce also a problem
* But Pan Pacific CEO plays down issues at site
* Head says on track to reach full output next month
* Chile copper industry battling to get ore from remote deposits
By Rosalba O‘Brien and Yuka Obayashi
SANTIAGO/TOKYO, Aug 26 (Reuters) - The slow ramp up of an ambitious waste disposal system and an inexperienced workforce have been key factors curbing output at a remote Chilean mine built by Japan’s top copper smelter Pan Pacific Copper to bolster its supply of concentrate.
Those are among the main conclusions of a consultant’s report commissioned by the company and seen by Reuters, which details troubles at the Caserones plant, one of only a handful in the world’s top copper producer churning out high-quality concentrate.
Output on the project has been behind schedule since it started producing in May last year in the arid mountains of northern Chile, and its problems highlight the challenges facing miners in the country as they scrabble through far-flung locations after more accessible deposits have largely been tapped out.
Faltering Chilean output of the metal, used in everything from wiring to air conditioners, could help support international prices languishing near six-year lows.
But the head of Pan Pacific, owned by JX Holdings and Mitsui Mining & Smelting, played down the problems contained in the report and said the mine remained on track to reach full capacity next month, even as some industry analysts said that could be tricky.
“The Caserones concentrator is going through a severe crisis in the operation of its facilities,” Canadian mining consultant Hatch said in the report, dated April but updated in May, referring to critical equipment used to process crushed ore that has not been running as expected due to the waste problems.
The consultancy did not respond to requests for comment on the report, a summary of a so-called technical assessment conducted around March. Reuters was shown the report by somebody with direct knowledge of Caserones’ operations.
“The conclusion of the Hatch report was that there were no major problems (at Caserones),” Pan Pacific President Yoshihiro Nishiyama told Reuters.
“The report suggested there were various reasons why the (plant‘s) utilisation rate has not risen, but those issues were solvable.”
Forecast to produce 150,000 tonnes of concentrate a year at full operation, Pan Pacific developed Caserones to cut its dependency on major miners for supply.
It is also partly owned by Mitsui & Co, a trading house in the world’s No.2 concentrate importing nation, making it the first major Japan-owned copper mine.
But costs on the project have already doubled to over $4 billion since construction began in 2010.
Hatch blamed the under-utilisation of the concentrator on issues such as problems with the mine’s “bold and aggressive” tailings dam system, where waste is stored after concentrate is extracted.
The plant’s topography means it has two tailings dams - one for sand and one for mud - as the typical single, larger dam would be difficult to accommodate.
Hatch said some sand had been deposited in the dam that would usually only be used for mud, risking spillage and potential “environmental type sanctions” from the government.
The company said that was a temporary measure while adjustments to the operations of the sand tailings dam were finalised. Nishiyama said work would be finished this month and that there was “no environmental problem”.
The Hatch report also said only about 30 percent of mine staff had sufficient experience, suggesting many should be replaced. Nishiyama said the quality of workers was similar to other Chilean mines, with experienced staff recruited by Nelson Pizarro, who led the project until its inauguration and now heads Chile’s state-run miner Codelco.
He added that the concentrator would reach full utilisation in September, from 70 percent in late-July. An industry source with knowledge of Caserones said that would be very difficult.
CRU Group copper consultant Erik Heimlich also said there was scepticism in the market about the target.
Problems like those at Caserones, as well as delays from labour disputes and weather, led Chile’s state copper commission to downgrade its 2014 output estimates twice, and it has already twice lowered its 2015 forecast, now at 5.88 million tonnes.
Reporting by Rosalba O'Brien and Yuka Obayashi; Additional reporting by Aaron Sheldrick and Euan Rocha; Editing by Joseph Radford