Anglo American is set to go ahead with the $5bn-$5.3bn development of the Quellaveco copper project in Peru after receiving approval from its board.

The move comes after Mitsubishi signed an agreement last month to increase its stake to 40% in Anglo American Quellaveco (AAQSA), which owns the Quellaveco project.

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The project development is expected to begin once the transaction is complete.

Anglo American chief executive Mark Cutifani said: “Quellaveco is one of the world’s largest and most attractive undeveloped copper orebodies. We see significant potential to expand Quellaveco beyond its current 30-year reserve life, as well as to increase throughput above the initial capacity of 127,500t per day.”

The company expects a post-tax internal rate of return (IRR) of more than 15% and an EBITDA margin of over 50%.

“Quellaveco is one of the world’s largest and most attractive undeveloped copper orebodies.”

The development cost will be shared between the companies, with Anglo American contributing 60% and Mitsubishi covering the remainder.

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Anglo American noted that the pre-funding for the first $500m of its share of the development expenditure will be arranged by the Japanese company.

Cutifani added: “The approval of Quellaveco is an important step in delivering the full potential of our world-class asset portfolio, with an expected project ROCE in excess of 20%, and we look forward to working responsibly with all our stakeholders to make it a reality.”

The company expects the project to deliver the first copper in 2022 before it is ramped-up to full production in 2023.

Quellaveco copper mine is anticipated to produce around 300,000t a year for the first ten years.