OREANDA-NEWS. November 9, 2011. MPX announced today that the Environment and Sustainable Development Ministry of Colombia granted the environmental license for the Canaverales open-pit mine, authorizing MPX to begin construction works. Full-scale production at Canaverales is expected to reach 2.5 million tons per year (Mtpa). In March 2010, US-based independent consultant John T. Boyd certified 27.4 million tons (Mt) of reserves and 93.8 Mt of resources in MPX’s concessions in the area.

“The environmental license for the Canaverales mine, which is the first construction authorization that MPX has received in Colombia, is a cornerstone for our development in the country. We intend to replicate the success we have obtained in Brazil, designing projects that are robust in all respects, including the engineering, social and environmental aspects. Along these lines, we are advancing the licensing process for other mines and for the logistical infrastructure in the area. We have concluded 3D-Sesmic and currently have nine rigs drilling on a 24/7 schedule in a 10x10 km area in San Juan, and also have the support of internationally-renowned firms in the design of the engineering projects, with the aim of certifying mineral resources in the first quarter of 2012”, stated Eduardo Karrer, CEO of MPX.

“The thermal coal produced by MPX in Colombia will supply our power plants in Brazil and Chile, and will also be sold in the global seaborne market, providing us with a unique growth opportunity. The future outlook for the global market is very positive with the entry of China and India as large importers of seaborne thermal coal, driving prices upwards in both the short and long-term”, concluded Karrer.

The timeline for the development of the open-pit mines will be set so as to maximize synergies in the construction and operation of the mines and the logistical infrastructure and, consequently, the return on investment. Sensitivity analyses carried out thus far indicate that it is more attractive to begin mining after the start-up of the MPX port, given the significant increase in margins arising from operating with fully-owned integrated logistics, in comparison to utilizing a third-party port initially.

Canaverales, together with Papayal and San Juan, is part of the integrated compliance coal mining system that MPX is developing in Colombia. The mines, which are expected to reach an annual production of 35 Mt when they reach full-scale, are located 150 km from the coast, resulting in extremely efficient rail transportation, that can deliver coal to a deep-water dedicated port that is capable of handling capsize vessels.

In the first quarter of 2011, the Environmental Diagnosis of Alternatives (DAA) for the logistical infrastructure, the first and essential requirement for the environmental license, was confirmed by the Environment, Housing and Development Ministry and by the Corporacion Autonoma Regional de La Guajira (Corpoguajira), which is the highest environmental authority in the region.