BNamericas reported that US based Freeport McMoRan Copper & Gold has increased its capital cost estimates for the expansion program at the Cerro Verde copper operation in Peru's Arequipa region from USD 4 billion to USD 4.4 billion primarily due to incremental costs of investments related to power facilities and water projects.

Mr Red Conger president of Freeport McMoRan Americas said that “In terms of future variation in the cost requirements for the project, the increased figure is a solid estimate. We now have an estimate based on 30% of the engineering being completed, so that gives us a good solid basis for that new forecast."

Mr Richard Adkerson president and CEO of Freeport McMoRan said that "A lot of this is very similar in nature to what we've done before referring to previous expansion work carried out at the mine. The big issues as is the case in northern Chile and southern Peru are water and power and those are the things where we have seen some escalation but some of our investment has given us a surety on these things.”

Mr Adkerson emphasized that the Cerro Verde expansion is part of the company's portfolio-based strategy aimed at giving Freeport the ability to continue to provide large volumes of copper down the line while maintaining adaptability. We wish every mine could be a Grasberg but it can't. The world increasingly has to look to Cerro Verde type deposits for supplies of copper and with greenfield projects with a Cerro Verde type grade you have a big challenge."

He said that "So we're seeing this investment as giving us the opportunity to move forward with this significant resource, have it available to the marketplace and if we have times as we faced in 2008 and 2009, where the world turns against us, we have our business organized so that we can adjust to that."

Source - Business News Americas

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