CHILE – Times are tough for financing expansion and investment plans in the mining industry, and Codelco, Chile’s state run copper producer is no exception. The company had hoped to invest US$25 billion in expand aging mines and explore for new high grade deposits. The government has so far promised only US$4 billion in returned profits between 2015 and 2020.
Codelco produced 1.67 million tonnes of copper in 2014, and had plans to grow output to 2.0 million t/y by 2016. The company turns over its profits to the government, and is funded in part by the return of some profit and in part by issuing debt. In 2014, Codelco contributed US$3 billion in profit, compared to US$7.5 billion in 2012.
Low copper prices have not only delayed expansion plans but are also keeping some projects running in the red. Social programs, too, are in danger of funding shortfalls.
Codelco has pinned all of its future growth hopes on the US$7.5 billion Andina mine expansion. The project was delayed a year ago because the company bowed to environmental pressure and reworked part of the project. Re-engineering is expected to take two years. Likewise, the plan to take the 100-year-old Chuquicamata mine underground is behind schedule.
The company has agreed to continue operating the unprofitable Salvador mine, presumably to protect jobs and avoid embarrassment to Chile’s president.
Learn more about the mine operated by Codelco at Codelco.com.