BHP commits $2.5bn to extend life of Spence copper mine in Chile

Mining giant BHP (ASX:BHP) greenlighted Thursday a long-awaited $2.46 billion expansion of its Spence copper mine in Chile, which will add another 50 years to the operation’s productive life.

The decision comes at a time when copper prices have reached their highest levels since late 2014 and will boost BHP’s annual copper production by around 185,000 tonnes of copper over the first decade of the expanded operation, with first production expected in 2021.

Project will prolong the mine’s operating life by over 50 years, with new output expected in 2021.

Spence’s expansion contemplates the construction of a concentrator plant and a desalination plant at Mejillones port, located about 60 km north of Antofagasta city, which will be built and operated by a third party. BHP has committed to a 20-year lease nominally worth $1.43 billion.

It’s estimated the Spence project will generate 5,000 jobs during its construction phase, and, in the words of chief executive Andrew Mackenzie, it will create long-term value for shareholders in one of BHP's preferred commodities.

"The project significantly extends the life of our Spence operation and unlocks the potential of the large, quality resource," Mackenzie said in the statement.

BHP, already the world's second-biggest listed copper miner, decided last year to rise its annual exploration spending by 29%, allocating nearly all its $900 million budget to finding new copper and oil deposits. The mining giant is committed to make of those two commodities the pillars of its future growth.

Analysts believe the red metal is well placed to benefit from the increasing development of battery-powered vehicles, as they use more copper than regular cars.

The miner will release its full year results for the 2017 fiscal year ending in June on Tuesday.