(Bloomberg) — Codelco plans to spend an additional $720 million to repair its oldest mine as the world’s largest supplier of the metal attempts to turn around late and over-budget projects and stem a decline in production. Does.
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Chile’s state-owned miner has already spent $5.7 billion to convert the Chuquicamata open pit into an underground mine and is in the process of spending $1.3 billion on related infrastructure, according to a May 2 shareholders meeting. It is now seeking environmental approval for design adjustments and supplementary works, according to a document posted on the regulator’s website.
The additional outlay, which will not increase Chuquicamata’s capacity or useful life, is the latest example of how costly and challenging it is to build mines amid increasing social and environmental scrutiny and deteriorating ore quality. Teck Resources Ltd. suffered a $4 billion cost blow to the expansion of its Quebrada Blanca mine in northern Chile. High interest rates and low metal prices create further headwinds for investment.
Read more: Chile faces copper problem in green energy transition
Under new Chief Executive Officer Ruben Alvarado, Codelco is struggling to bring production back to pre-pandemic levels of about 1.7 million tons a year by the end of the decade, up from about 1.3 million tons this year, a quarter-century high. Is the lowest level in.
The producer has begun a $40 billion overhaul of its aging mines, with Alvarado shaking up management to turn around the projects. After decades of underinvestment, Codelco is managing several large projects.
With production and earnings declining and costs and debt rising, Codelco is also exploring the possibility of forming more joint ventures with private sector companies. Chairman Maximo Pacheco said he spoke with several major mining companies on a recent trip to London, including talks with BHP Group about potential cooperation.
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