Bolivian metals plant can't be re-opened, says mining expert

Published by MAC on 2010-10-10
Source: Business News Americas

Expert dashes hopes for Karachipampa reactivation - Bolivia

By Harvey Beltrán

Business News Americas

1 October 2010

In the midst of negotiations between Canada's Atlas Precious Metals (APM) and Bolivian state miner Comibol over the Karachipampa polymetallurgical plant, former mining minister Epifanio Mamani told BNamericas that the plant's activation is not feasible.

"The government says that it's going to take over the reactivation, but I doubt it because the plant has 25-year-old technology and it uses concentrates with lower lead content than the ones produced in Bolivia," Mamani said.

In June 2005, Comibol and APM signed a JV agreement to reactivate the plant in Potosi department. The agreement stipulated an investment of US$100mn over a period of three years, the time it would take to install the new equipment.

The project has experienced several setbacks over the past five years, from complications with the signing of the initial agreement and the lack of a supply of inputs to, more recently, an impasse caused by the government's decision to cash in APM's US$850,000 surety bond due to the lack of investment, which led APM to request the contract's dissolution.

Technical Hitch

Despite this, plans continued to reactivate the plant, which is designed to produce lead with silver content with a minimum amount of zinc that is eliminated through oxidation. To make the plant more efficient, APM proposed integrating a 100,000t/y zinc refinery.

However Mamani, who is also a mining consultant and a professor at the Universidad de Potosi, said that to process zinc, the plant needs concentrates that contain less than 10% lead.

"All of the companies in Bolivia produce concentrates with a lead content above 10%," he said.

Under these conditions, the plant is not going to be able to operate. To do so, it would be necessary to install an additional plant to eliminate the excess from the concentrates, but this would cost about the same as Karachipampa.

Environmental Impact

Another reason why the plant is not viable is that authorities did not require an EIS when it was designed, something that has not been included in the current project either.

"The company would have to start by doing an EIS, since the plant is close to the lakes in Potosi that supply potable water for the city," Mamani said.

Next Steps

Despite the fact that Comibol announced that it has always had a reactivation plan for the plant, even without APM's support, Mamani said that in light of the lack of adequate concentrates for its operation, the government could not undertake the reactivation alone.

"It's better for the government that APM makes the previously agreed upon investments, thus getting rid of a very heavy financial burden to the mining sector," Mamani said.

The plant's reactivation is currently on hold pending an agreement between Comibol and APM which will either end with APM continuing its development or with the government taking over.

Mamani, however, is skeptical, saying that the government "doesn't have the capacity to carry out a project to put Karachipampa into operation."

APM has a 65% share in the JV contract to reactivate Karachipampa. The Bolivian state holds the remainder. The plant has the capacity to process 51,000t/y of silver concentrates.

Karachipampa was completed in 1983 at a cost of US$500mn but has not yet seen production.