The Huáscar arrived in Iquique at 0:45 am on July 10 and since there was no Chilean ship, 2nd Lieutenant Fermín Diez Canseco was sent to go ashore to get reports. He obtained the report that at 3 pm on the 9th, the corvette Abtao and the transport Matías Cousiño had left and at 6 pm, the ironclad Almirante Cochrane and the corvette Magallanes did the same.[3] The mission was over however, as there was no Chilean ship in the port, but Grau decided to set off again to look for them, despite the fact that the chances of running into the ironclad Almirante Cochrane, which he was forbidden to confront, were great.
About 10 miles from Iquique, at 2:20 a.m., the Huáscar's lookout spotted the Matías Cousiño, which was commanded by Captain Augusto Castelton.[4] The Chilean transports spotted the Peruvian ship and was told to surrender, but the captain of the Matías Cousiño, bearing in mind the instructions of its owner, replied that he was not authorized to lower the Chilean flag and fled. Surprised, the Huáscar moved away and began to bombard the transport. The Matías Cousiño began to move so as to offer the smallest possible target, which didn't prevent at least three hits from affecting it, one of these projectiles penetrated her hull and lodged in one of her bunkers. Grau orders to board the Chilean ship to capture it for Arica, but realizing the proximity of the Chilean squad, he orders the crew to abandon it and to sink it. The Matias Cousiño insisted on escaping, so the Huáscar continued to shell her, causing heavy damage to the hull.
At the sound of the shots, the corvette Magallanes came, the Huáscar undertook to withdraw by mistaking the gunboat for the Almirante Cochrane, but realizing that it was a smaller ship that was approaching, Grau decided to attack the approaching Chilean ship . A fight between the Huáscar and the Magallanes began after the Magallanes was confused for the Abtao.
The Magallanes was under the command of the frigate captain Juan José Latorre and when he was 300 m away, he fired a can of shrapnel at him with his 64- pound cannon, starting the fight between the two, which was between 3:00 am and 3:35 am. A.M. Near the Huáscar and the Magallanes, they fought blindly shooting each other. At all times, the Magellan tried to contain the Huáscar to give time for the Chilean armored Cochrane to come to its aid. Due to the poor aim of the shots, Grau decided to use the Huáscar 's spur to sink the Magallanes ., but the Chilean gunboat was very maneuverable and was well led by Captain Latorre, avoiding Huáscar 's spur on several occasions; the closest was the last one, which passed 10 meters from the stern . A projectile from the 115-pound cannon of the Magallanes hit the Huáscar's hull squarely without piercing it.
The Magallanes fired 1 shot at 115 pounds, 1 canister of 64-pounder shrapnel, 6 at 20-pounders, 1 canister of 20-pounder shrapnel, 2,400 shots from the Comblain rifle and 360 from the Adams revolver; while the Huáscar, 6 300-pounders and several rifles and machine guns.
After the sounds of the cannons and the flares fired by the Magallanes were heard, the ironclad Almirante Cochrane began to arrive. When it was 2,000 meters from the scene of the combat, the Huáscar headed north to avoid it. The pursuit of the Huáscar by the Almirante Cochrane and the Magallanes lasted until 11 a.m. on July 10, when the Chilean ships reached Pisagua, desisting because the Huáscar was faster than the Almirante Cochrane.
The Abtao wasn't present in this combat since it was undergoing repairs far from the port[5]