15th World Copper Conference 2016

Sustainability of Chilean Copper Smelters

Iván CerdaTechnical Manager

Chilean Mining Association

Santiago, April 6, 2016

Agenda

1

2

3

4

5

Characterization of Chilean Copper Smelters

The Environmental Issue. The New Emissions Standard

Facing the Environmental Challenge

Competitiviness and Strategic Issues for Sustainability

in the Long Term

Final Comments

Copper Production in Chile

Concentration

Plants

Chilean

Smelters

Foreign

SmeltersTotal

Copper Production (ktpy) 1.800 1.400 2.600 5.800

Distribution 31 % 24 % 45 % 100 %

Sulfide

Ores

Concentrates

LX-SX-EW

Plants

Oxides

Ores

Chile is the leader of the

copper production in the

world, and also has the

largest reserves. Of the total

production, 24% is obtained

as cathodes processing

concentrated in domestic

smelters.

Production and Processing Concentrate

Chilean Smelters (ktpy)

0

2.000

4.000

6.000

8.000

10.000

12.000

14.000

16.000

18.000

Concentrate Production Concentrate Processing

60 %

40 %

The total production of

concentrates is about 16,000

ktpy. Of this amount,

approximately 60% is exported,

mainly to Asian smelters.

Copper Smelters in Chile

Zone Smelter Owner Products

North

1.- Chuquicamata Codelco Blister, Anodes, Cathodes

2.- Altonorte Glencore Anodes

Atacama

3.- Potrerillos Codelco Blister, Anodes, Cathodes

4.- Hernán Videla Lira Enami Anodes

Center South

5.- Chagres Anglo American Anodes

6.- Ventanas Codelco Blister, Anodes, Cathodes

7.- Caletones Codelco Blister, Anodes

State Smelters Private Smelters

0

200

400

600

800

1.000

1.200

1.400

1.600

1.800

Chuquicamata Caletones Altonorte Potrerillos Chagres Ventanas Hernán Videla

Lira

ktpy concentrate ktpy copper

Smelters Capacity and Copper Production

(kpty)

Nominal capacity in chilean smelters are in the range 1,600 - 350

ktpy of concentrate, to produce between 500 and 150 ktpy of

copper.

Smelter Smelting Converting Fire Refining Slag Cleaning

Chuquicamata CT & HF CPS HA HLE & FLOT

Altonorte CN CPS HA FLOT

Potrerillos CT CPS HA FLOT

Hernán Videla Lira CT CPS HA HELE

Chagres HF CPS HA HLE & FLOT

Ventanas CT CPS HA HELE

Caletones CT CPS HA HLE

� Smelting: Most of smelters use Teniente Converter (CT). Noranda Converter (CN)

and Outokumpu Flash Furnace (HF) are used too.

� Converting: Generalized use of Peirce Smith Converter (CPS).

� Fire Refining: Anode Furnace (HA)

� Slag Cleaning: Slag Cleaning Furnace (HLE), Electric Slag Cleaning Furnace (HELE)

and Flotation (FLOT)

Technologies in Chilean Smelters

Technologies in Chilean Smelters

In recent decades investment in technological

modernization of Chilean smelters has been poor.

Mining investments have been focused on mining

operations and mineral processing to enhance or

maintain overall production.

The lack of modernization in smelters and

refineries, has led these operations face the

following problems:

� Low environmental performance

� Loss of competitiveness

The Environmental Issue

The environmental issue is a major concern of mining companies

operating in Chile. In 1991, before the enactment of the

Environmental Law, the Ministry of Mining created an

Environmental Unit, and the mining sector pioneered enter their

projects to the System of Environmental Impact Assessment,

before it was mandatory.

To prevent air pollution, in 1991 quality standards regarding

SO2, particulate matter and arsenic were established, resulting

in most areas around smelters exceeded the standards. For this

reason "saturated areas" were declared, prompting the

development of Decontamination Plans to reduce emissions

for each pollutant and each source.

The Environmental Issue

However, a report by the Organization for Economic

Cooperation and Development (OECD, 2005) noted that

"smelting activities are still causing the bulk of emissions,"

recommending "advance the development of rules of national

emission , including the regulation air pollutants to reduce the

impact of SO2 and As."

In this context, after several years of study, in 2013 the Decree

N° 28 of the Ministry of Environment, established the

"Emission Standard for Copper Smelters and Arsenic Emitting

Sources".

What Emission Standard Says?

In the main, for existing smelters sets:

Overall annual emission limits (SO2 and As), and

emission limits in stack (SO2, As, PM) for different

unit processes.

Simultaneously, compliance minimum percentage

capture of sulfur and arsenic of 95%.

Compliance deadlines:

� 5 years if the smelter does not have an acid

double contact acid plant

� 3 years if the smelter has at least one double

contact acid plant.

0 50.000 100.000 150.000

7.- Caletones

6.- Ventanas

5.- Chagres

4.- Hernán Videla Lira

3.- Potrerillos

2.- Altonorte

1.- Chuquicamata

Average Emissions 2007-2011 Standard Decree 28

SO2 Emissions Decree 28 (tpy)

As Emissions Decree28 (tpy)

0 200 400 600 800 1000

7.- Caletones

6.- Ventanas

5.- Chagres

4.- Hernán Videla Lira

3.- Potrerillos

2.- Altonorte

1.- Chuquicamata

Average Emissions 2007-2011 Standard Decree 28

Facing the Environmental Challenge

Emission standard generated the need to change

technologies and / or improve existing facilities to

increase the capture of pollutants.

Considering the sizes and technologies in use in

smelters, as well as the current environmental

performance compared with the new standard,

investment requirement, etc., smelters identified

the following solutions:

� Technological changes, and/or

� Facilities Improvement

Technological Changes

Facing the Environmental Challenge

The most relevant technological change corresponds to Hernan

Videla Lira Smelter project in smelting and converting

operations, from the current CT-CPS configuration to BBR-

Hoboken configuration.

Other examples are:

� Replacement rotary dryer by indirect steam drying

(Chuquicamata)

� Replacement cleaning furnaces slag by concentration of slag

by flotation (Chuquicamata, Potrerillos, Caletones, HVL)

Facilities Improvement

Facing the Environmental Challenge

� Modification in acid plants to double contact system

(Chuquicamata, Potrerillos, HVL) and/or adding tail gas

treatment (Caletones, Ventanas).

� Modification / repair hoods gas in smelting and converting

furnaces.

� Improving uptake fugitive gas sectors bleeding matte and

and slag.

� Construction / repair gas cleaning systems (electrostatic

precipitators or wet treatment)

Competitiviness and Strategic Issues for

Sustainability in the Long Term

The total investment involved to reach the

Decree 28 standard is around US$ 2.500

million, most for state smelters.

Improve the environmental performance off

Chilean smelters, has opened the debate on

the scope and focus should be the investment

in smelters and refineries.

It is convenient and enough invest to capture

up to 95% of emissions?

Competitiviness and Strategic Issues for

Sustainability in the Long Term

Regarding the current situation, reaching a 95% capture is an

important step. However, this goal is modest compared to the

best industry standards. Furthermore, is likely that with the

revision of the emission standard, the demand of capture will

increase at least to 98%.

Is better to postpone the entry into force of Decree 28 to

enable larger technological changes with a minimum capture

target of 98%.?

Is the environmental issue the only or main focus for

investment in smelters?

Other Reasons for Investing in Smelters

The general opinion is that the environmental

issue is only one aspect that motivates improve

smelters. It is very important, but it is not the

only one.

Investment in smelters also justified by:

� Changing in the production matrix and

market share of concentrates.

� Low cost competitiveness and operational

efficiency.

� Having smelting capacity to process complex

concentrates (high content of impurities).

AñoProd. Cu Total Prod. Cu en Conc. Exportación

(kpta) (kpta) (% del Total)

2014 5.800 2.600 45%

2026 6.800 4.400 65%

The matrix of copper production in Chile is headed

for a decline in mineral oxides (LX-SX-EW), and an

increase in concentrates for smelters feed.

If the smelting capacity remains constant, at 2026

copper concentrate exported will increase

significantly.

Changing in the production matrix

and market share of concentrates.

Improve Cost Competitiveness

The high costs are the result of the

technologies used and the small scale of

most operations. Also they are influenced

by some local conditions such as the cost of

energy and the cost of labor.

On average, smelters and refineries in

Chile operate with high costs and low

income, i.e. with negative margin.

State smelters are in the fourth quartile of

the industry in terms of operating costs.

Processing Complex Concentrates

Domestic copper concentrates in the north have

high levels of arsenic, which hinders

commercialization:

� Increasing restriction to shipping of

concentrates, with a consequent increase in

transport costs and reducing marketing

alternatives.

�Restrictions buyers’ smelters through higher

charges TC / RC. For example, China imposed

restrictions on the import and processing of

concentrates with arsenic content greater than

0.5%.

Final Comments

The lack of modernization of domestic smelters

and refineries, has led these operations to a

difficult situation, both environmental and

competitiveness. Mining investments have

focused on the extraction and ores processing,

that provide greater value to the business.

To comply with the new regulations, the

smelters are investing some technology

changes, but mainly facilities improvement.

With this, the environmental issue will partialy

improve, but will not mean relevant impact in

terms of competitiveness.

Final Comments

There are strategic reasons to improve

operational standard in smelters and refineries

operating in Chile, mainly the state owner,

investing to make a significant leap in smelting

and converting technology, maximizing recovery

of products and by-products, and developing

projects with possible synergies.

Otherwise, Chile could lose prominence on the

world market copper concentrates, despite

being the largest producer of mined copper and

have the largest reserves.

Thank you for your attention...

15th World Copper Conference 2016

Sustainability of Chilean Copper Smelters