Chinalco bets $1.7B on Peru mine turnaround

Aluminum Corp. of China (Chinalco) is investing about $1.7 billion to overhaul its Toromocho mine in Peru, adding molybdenum output to drive a long-awaited turnaround.

The upgrade at the site east of Lima in the Junín region aims to incorporate new deposits, revise the mining plan and add a molybdenum recovery circuit, according to a government release this week. It mentioned more than $700 million in spending over three years in a program first declared in 2018. 

The investment is being carried out in stages, with the core $1.35-billion expansion focused on lifting plant capacity and extending Toromocho’s development. That is being followed by additional technical modifications valued at about $350 million to optimize processing, recovery and supporting infrastructure.

The expansion is set to lift daily mill throughput towards 170,000 tonnes from 117,000 tonnes. The open-pit mine, one of Peru’s key assets as the largest copper producer behind Chile, ships around 250,000 tonnes a year of concentrate. The company expects higher recoveries and improved processing performance at the operation, where past technical challenges have weighed on output and costs.

Molybdenum

“The approval of our planned overhaul will make it possible to implement 28 projects, comprising 33 components, over the next three years,” Chinalco executive Álvaro Barrenechea said in the statement.

A key component of the overhaul is the introduction of molybdenum recovery, a metal previously not processed at Toromocho, supported by a new classification system that separates copper-only ore from copper-molybdenum material. The latter will be stockpiled for near-term processing, allowing more efficient resource use and diversified production.

Chinalco said this approach will help secure early reserves and ensure continuous supply to the concentrator. The company also plans to stockpile ore in 2027 for processing in 2028, using existing pit roads and a new northern stockpile to maintain steady feed to the concentrator.

Peru’s Vice Minister of Mines Mayra Figueroa said copper and molybdenum are critical to the global economy, underscoring the project’s strategic importance as Peru remains the world’s second-largest copper producer and a key molybdenum supplier.

Toromocho, which sits 4,500 metres above sea level, accounts for about 10% of Peru’s copper output and is expected to operate until 2042, highlighting the long-term significance of the upgrades. It holds 1.53 million tonnes in reserves grading 0.48%, with a mine life of roughly 36 years since starting operations in 2013.

The company has also advanced its digital transformation at the site, launching an Integrated Operations Management Centre earlier this year and deploying an autonomous drilling and fleet management system developed with Huawei Peru to improve efficiency across the value chain.

Political landscape

Peru’s mining outlook now hinges on a June 7 presidential run-off between Keiko Fujimori and Rafael López Aliaga, with both candidates signalling policies that could reshape the sector.

Keiko, daughter of jailed former president Alberto Fujimori, has positioned herself as pro-US and investor-friendly, promising clearer rules to attract foreign capital while casting opponents as closer to Beijing. Her campaign has leaned on law-and-order messaging reminiscent of her father’s presidency. 

López Aliaga has struck a similar tone but warned unused mining permits could revert to the state, signalling a potential shake-up in one of Peru’s most important sectors.

The prospect of revoking unused mining concessions underscores rising political pressure on the country’s sector, raising the risk of disruption for major operators including Southern Copper (NYSE, LSE: SCCO), MMG (HKG: 1208) and First Quantum Minerals (TSX: FM). 

The election outcome will shape billions in mining investment as Peru’s sector— which attracted about $6 billion last year and has driven roughly 3% annual economic growth since the pandemic—faces mounting political pressure and a surge in illegal mining.