KALGOORLIE, Australia, Aug 7 (Reuters) - EMED Mining is making plans to restart Spain’s fabled Rio Tinto copper mine in early 2015, citing a mini-mining boom in the copper-rich Iberian Peninsula that is attracting foreign mining companies.
Production at the Rio Tinto mine would start at around 40,000 tonnes per year, rising to 60,000 tonnes within two years, said EMED Managing Director Harry Anagnostaras-Adams.
Anagnostaras-Adams said the mine will employ 1,000 people in a region where around 50 percent of the workforce is jobless.
“This area is in the forefront of a resurgence in mining in Europe,” Anagnostaras-Adams told Reuters on the side of the Diggers and Dealers mining conference.
Others operating in the region include Iberian Minerals-Trafigura , Inmet Mining, First Quantum and Lundin Mining.
Copper prices have been stuck in a $6,600-$7,100 band since mid-June and are down around 12 percent for the year, hit by concerns over the world’s two biggest economies, China and the United States. The metal is used in power and construction.
But Anagnostaras-Adams said a “structural problem” exists in copper mining where low investment was setting the stage for an under-supplied global marketplace, which could boost prices.
European countries, including Spain and Portugal, are attracting investment with good grades of ore, a large labour pool and revamped mining regulations.
The Rio Tinto copper mine’s modern history dates back 1871 when the Spanish government sold it to a British firm which eventually became the global miner Rio Tinto .
The mine gained its name from the Spanish river Rio Tinto.
Miner Rio Tinto sold the Spanish project in the 1980s. By 2001 under operation by a workers’ collective, it was mothballed. EMED took an option over the project six years later and then acquired 100 percent ownership.
Last year, Anagnostaras-Adams negotiated a deal with investment bank Goldman Sachs to provide EMED with more than $175 million up front, with no equity dilution. In exchange, Goldman Sachs gets the equivalent in copper delivered every month for seven years.
He said EMED will be able to restart the project at a cost equivalent to around $2 per pound of copper, which is below the industry average of $2.50. EMED can do it cheaper because much of the project’s infrastructure is intact, he said.