July 7 (Bloomberg) -- Xstrata Plc, the world's fourth- largest copper producer, approved investment of $1.47 billion to develop the Antapaccay copper mine in Peru as the company seeks to increase its production of the metal by 50 percent.
The expansion of the Tintaya project in southern Peru will raise output of copper in concentrate at the site by 60 percent to 160,000 metric tons a year, Xstrata said in a statement today. The new mine will open in 2012, as the older development at the site reaches the end of its life, the company said.
"We continue to like Xstrata for its commodity exposure, growth potential and valuation," David Butler, a London-based analyst at JPMorgan Cazenove, wrote in a note today. Xstrata's cash flow can support its expansion program, Butler said.
Projects such as Antapaccay that are in construction or approaching approval will raise total annual copper production by 50 percent to almost 1.5 million tons by the end of 2014, Charlie Sartain, Xstrata's copper chief, said in the statement.
The project will also reduce operating costs, Chief Executive Officer Mick Davis said in the release. Cost per pound of production will be about 90 cents, Sartain said on an analyst conference call. Annual output will fall to 120,000 tons to 140,000 tons after the first six years of operation, he added.
The company already has plans to develop the Las Bambas project in the region, requiring $4.2 billion of investment. Las Bambas is expected to get approval in the first quarter of next year and begin production in the fourth quarter of 2014, Sartain said. It will add 400,000 tons of copper output a year, he said.