A Cost-Benefit Analysis Of A Custom Mill For Small Copper Mines In Northern Chile

One form of encouragement for the small copper mining sector in Chile has been the construction and management of custom mill facilities to process the ore. The paper describes an economic analysis framework for the evaluation of government custom milling opportunities. Feasible mill locations and capacities within a region are selected and the infrastructure and milling costs associated with each combination of location and capacity are assessed. For each combination, the economics of developing and operating known copper deposits in the region is evaluated, and an optimum cut-off grade and mine capacity is selected for the deposits which justify development. Since the total ore supply from mines in the region may exceed a particular custom mill capacity, mine development is scheduled to optimize the economics of the mill facility. Finally, the best custom mill location and capacity is selected on the basis of overall costs and benefits. A copper mining region in northern Chile is used to illustrate the application of the model. A mobile mill approach is examined and compared with the fixed location mill alternatives. Results are analyzed as a function of copper price.