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Markets // Market Analysis

Minsur’s Peruvian production down in 2016

Wednesday, 15 February 2017

Individual Q4 results for Minsur's Peruvian operations, released today, reveal refined tin production totalled 19,573 tonnes in 2016, down 3.2% from 2015. Despite a 20% year-on-year fall in refined production to 5,023 tonnes in Q4, 2016 production guidance of 19kt to 19.5kt was exceeded.

In addition to the contraction in refined tin output from the Pisco smelter during Q4, tin-in-concentrate production from the San Rafael Mine fell 6% year-on-year to 4,828 tonnes in Q4, while head grades fell to 1.80% Sn compared to 1.96% Sn in Q4 2015. Tin output from San Rafael fell 4% to 18,789 tonnes contained in concentrate in 2016, as average head grades fell to 1.97% Sn, compared to 2.05% Sn in the previous year.

The volume of ore treated rose 71% year-on-year in the final quarter to 0.49 Mt and by 37% year-on-year to 1.43 Mt on an annual basis. This is largely due to the start-up of an ore sorting plant at San Rafael and the treatment of low-grade ore stockpiles at the site, which also resulted in a temporary 4% reduction in cash costs for 2016 to US$8,139 per tonne of tin. These ore stockpiles which have been supplementing production will be exhausted by 2017 and this may result in higher costs moving forwards.

ITRI View: Despite the impact of falling tin grades and tin output, the cost of production at the San Rafael mine remains globally competitive. By processing lower grade, run-of-mine material through the ore sorting plant at San Rafael, some production and cost benefits will continue to be realised. We expect to gain a clearer view of the outlook for Minsur's tin production at the beginning of March, when the company will release its Q4 consolidated results, which will include the performance of Minsur's tin producing Brazilian subsidiary, Taboca.

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