Polish state-owned copper and silver company KGHM has begun production at its Sierra Gorda mine in Chile, with an aim to produce 120,000t of copper a year from 2015.

Located in the Antofagasta region within the Atacama Desert, the mine is a 55:45 joint venture between KGHM and Japan’s Sumitomo and one of the largest copper projects in the world.

Before the commencement of production, the company pre-stripped the mine pit, launched crushing, grinding and flotation plants and built a 143km pipeline to supply seawater to a 750,000m³ pond nearby.

The company plans to ramp-up the mine work by early 2015, after which it will be able to produce 120,000t of copper, 50 million pounds of molybdenum and 60,000oz of gold a year.

After completion of phase two, the mine is estimated to produce 220,000t of copper, 25 million pounds of molybdenum and 64,000oz of gold a year through its 20-year life.

"The company is planning to ship the first copper concentrate from the mine in September."

KGHM executive vice-president and CFO Jaroslaw Romanowski said: "With production from Sierra Gorda, the weighted average cost of copper production in the KGHM Group will decrease, thereby enhancing the company’s operational security.

"This cost performance will be influenced by sales of Sierra Gorda’s additional products, including gold and molybdenum, whose prices are at the moment almost one fourth higher than originally planned."

The company is planning to ship the first copper concentrate from the mine in September.

Sierra Gorda general manager Maciej Sciazko said: "Pending resolution of the outstanding appeal to the Supreme Court on the Port of Antofagasta environmental permit, the project has put in place contingency arrangements.

"Half of the mine’s copper production will be processed by Sumitomo Metal Mining, our partner in Sierra Gorda, at its smelters in Japan. The remaining copper production will be sold worldwide."

KGHM acquired the Sierra Gorda mine in 2012 through the purchase of Canadian mining firm Quadra FNX, which has been renamed to KGHM International.

In addition to copper, molybdenum and gold, the Sierra Gorda mine also has the potential to process oxide ore.

Image: The Sierra Gorda mine is located in the Antofagasta region within the Atacama Desert in Chile. Photo: courtesy of KGHM Polska Miedz S.A.