Restoring the original Rio Tinto mine may have been a “pain in the ass”, according to Atalaya Mining’s chief executive Alberto Lavandeira, but it hasn’t put the plucky, Aim-listed firm off plans to expand elsewhere.
Nestled in the Andalucian hills in southern Spain, the vast pits of the open-cast copper mine are expected to reach full production this month, processing its proven and probable reserves of 153m tonnes at 0.45 per cent of copper.
Established as a modern mine by Rio Tinto in 1873, though active since the Roman era, the blue chip mining giant sold off two-thirds of its interest in 1954 and later divested the rest of its stake. The mine has changed hands several times since then and was bought by Emed Mining, now Atalaya, in 2005.
When Atalaya seriously began renovating the mine in the last couple of years, it picked its battles, first ordering a major cleanup operation of the existing equipment and then assessing which parts of the site needed replacing and which could be repaired.
It has opted to restore anything that could be salvaged and, to save money, has not prioritised clearing leftover equipment, which Lavandeira says looks “very crappy and oxidised” as he conducts a tour of the mine.
The collage of having old and new equipment side-by-side has had the effect of some areas looking like a post-apocalyptic film set at times, as shiny new outhouses stand next to rusting conveyor belts and processing buildings from former operations.
In an area that has experienced more than 30 per cent unemployment, locals and regional politicians have welcomed the mine’s reestablishment for its boost to industrial jobs. For a time, locals would line up outside the site’s main gates, angling to get day work.
It was rehabilitating a brownfield site that Lavandeira specifically says has been a “pain in the ass”, though he adds that the result has been a high-quality mine. “Everyone thinks brownfield is easy but it’s not – in the same way that it’s much easier to build a new house than to rehabilitate an old one.”
Lavandeira joined the company, which only gained the key permits for the site three years ago, in April 2014. He oversaw the company’s rebranding from Emed, which he says was a “junior junior” firm, to Atalaya, or vantage point, named after one of the pits at the site. The company is Atalaya by name, but not yet by operations – it won’t start mining for copper in the tall, slim pit until around 2020.
Lavandeira is aiming for the company to acquire another mine, or company with a mine, next year, and another the year after that. In terms of location, Europe is a priority for the group. If the company got to three mines in as many years, Lavandeira says it would then consider a main market listing in London.
Last month, Atalaya’s third quarter results showed the group reported positive Ebitda, reaching €1.9m (£1.6m), though it produced a loss of €1.5m, or 1.3 cents per share. The group will be able to sustain full production for 16 years, though it will try and eke it out for 20 if possible.
The group will likely be lifted by the recent increase in copper prices. Since Donald Trump’s surprise victory in the US election and his early indications that he will spend big on infrastructure investments, the copper price has risen from around $225 per pound to more than $268 towards late-November.
In the longer-term though, copper will not just be driven by the “Trump effect”, Lavandeira says.
“The largest consumer is China, and after some period of slowdown in growth it is picking up again. More people in the world means more copper is needed – everybody wants a house, better living conditions. Higher living standards in general require more copper.”
And more copper means more mines.