Marimaca to acquire acid plant

CHILE

Marimaca to acquire acid plant

Marimaca Copper Corp. says that it has recently executed a binding asset purchase option agreement to acquire a used sulphuric acid plant in Chile from CEMIN Holding Minero. Sulphuric acid is one of the key input costs for the Marimaca Oxide Deposit, and the ability to produce a significant amount of its own supply will reduce exposure to a volatile acid market. The agreement has an exclusivity period of three months to allow further detailed technical and engineering reviews including capital and operating cost estimates for the installation and operation of the 150,000 t/a sulphuric acid plant, whose output would represent approximately 30-40% of total acid consumption at the Marimaca Oxide Deposit, depending on the phase of development. Marimaca says that, based on market research and quotations received, the estimated equipment cost of a new sulphuric acid plant of similar capacity is approximately $35-40 million, with a total installation cost of $50-60 million. The cost of breaking down and relocating the plant to the site at Mejillones and the start-up costs of the used plant are expected to be materially lower than cost of new equipment. Indicative operating costs show the potential for an approximately 30% reduction in acid cost relative to current long-term forecast and normal historical spot and contract acid prices delivered to Mejillones.

Marimaca says that it will also simplify the company’s acid storage strategy due to the relative ease of storing elemental sulphur as compared to concentrated sulphuric acid. The company has completed initial engagement with industrial operators in Mejillones with respect to the installation of the acid plant.

Hayden Locke, President and CEO of Marimaca Copper, commented: “The Marimaca Oxide Deposit is forecast to be a mid-level acid consumer in the context of Chilean heap leach operations, and we continue to recognise acid cost as one of our most important drivers of profitability. We have numerous operational levers we can utilize to reduce acid consumption, if necessary, however, lowering the volatility associated with one of our key consumables was a logical step for the company.

“Based on current projections from Comision Chilena del Cobre (Cochilco), which provides industry forecasts for long term acid supply and demand in the Chilean market, the expectation is for acid prices to normalize at around $95/tonne in Mejillones from 2028 onwards. Our analysis indicates, based on today’s elemental sulphur price, a company owned acid plant could produce sulphuric acid for approximately $70/ tonne, excluding by-product credits from heat generation. This represents an approximate 30% reduction from the current long-term acid price forecasts from Cochilco. This discount is even more significant if you consider current spot prices, which are artificially elevated by H2SO4 seaborne freight rates and strong demand from the global fertilizer industry.”

“In addition, while the elemental sulphur and global sulphuric acid markets exhibit reasonably strong price correlation, the underlying volatility of the final acid cost via a sulphur burner is reduced. This is due to the stoichiometric relationship of reacting one tonne of elemental sulphur to produce approximately three tonnes of concentrated (98%) sulphuric acid.”