Chile copper mines pursue tie-up to cut costs

Chile’s Sierra Gorda mine and BHP’s (ASX: BHP) Spence operation have agreed to explore collaboration opportunities aimed at lowering costs, improving efficiency and strengthening the long-term competitiveness of two of the country’s largest copper mines.

The companies signed a memorandum of understanding to evaluate commercial and technical cooperation in Chile’s Sierra Gorda district, where both mines face declining ore grades, operational challenges and lower output. Areas under review include supply chains and operating processes that could generate economies of scale and improve sustainability.

“This approach allows us to identify opportunities that will contribute to long-term sustainable results for our company, but also to consolidate our relationship with the region by working collaboratively in the area,” Dee Lingenfelder, President of BHP’s Pampa Norte, which includes the Spence and Cerro Colorado operations, said.

“This agreement allows us to move forward in evaluating initiatives that can generate efficiencies in specific areas,” Marcelo Bustos, CEO of Sierra Gorda SCM said. “We are convinced that low-grade mining is viable and profitable, and to further develop it, more dialogue and collaboration are required, just as we are doing.”

The agreement reflects a broader trend across the mining industry as producers seek new ways to maintain margins and support investment while confronting lower-grade deposits and rising operational complexity. Shared infrastructure and coordinated development can reduce capital requirements while improving project economics.

Production gains

Both operations reported lower copper production in the first quarter of 2026 compared with a year earlier and are advancing projects designed to improve performance.

BHP is progressing a $600 million concentrator expansion at Spence, which remains in the design, prefeasibility and engineering stages. The project would add a new flotation circuit to address ore variability that has reduced recovery rates. BHP said it could make a final investment decision in the first half of fiscal 2027. Spence produced 254,795 tonnes of fine copper in 2025.

Sierra Gorda is advancing plans to process oxide ore currently stockpiled for future heap-leach operations. The proposed SX-EW project would produce about 30,000 tonnes of copper cathodes annually over a 10-year mine life.

The operation is also upgrading its tailings storage facility through a $400 million brownfield project and evaluating a roughly $700 million expansion of its fourth grinding line.

Sierra Gorda is owned by KGHM International (55%) and South32 (45%), while BHP owns Spence outright.