Chile’s largest open pit copper mine, Chuquicamata, has officially started its conversion towards underground mining. The project will cost Codelco over $2 billion in the preliminary phase, but that will allow the world’s number one copper producer to substantially increase production and extend the mine’s lifespan.
In a ceremony held at the presidential palace of La Moneda, in Santiago, President Sebastián Piñera tele-triggered Friday the first explosion (image) for one of the access tunnels to the underground operation.
“Chuquicamata and El Teniente will be the two largest underground mines in the world, which will keep an old and a strong mining vocation in the country into the future,” said President Piñera according to Codelco’s press release.
To finance the expansion of its century-old Chuquicamata mine, Codelco raised $2 billion in a sale of debt that includes its first 30-year bond in over five years.
The Chile-owned miner sold $750 million 30-year bonds at an extra yield, or spread, of 180 basis points above U.S. Treasuries. Codelco also placed $1.25 billion of 10-year bonds at a 165-basis point spread.
Early works at the project started earlier in the year with an estimated cost of $234 million, as Codelco stated at the beginning of March.
The underground section of the Chuquicamata mine will allow access to a reserve calculated at 1.7 billion tons of copper ore, with an annual production capacity of 340,000 tonnes of fine copper and more than 18,000 tonnes of fine molybdenum. It is expected to start production in 2018.
Due to the age of Chile’s mines, Codelco needed to go deeper in its open pits, as the cost of waste removal continues to grow. There is also a need to get more ore out of existing mines since, for legal and political reasons, the state-run company cannot buy new ones.
Currently, Chuquicamata, which is located 1,650 km north of the Chilean capital of Santiago, is the largest open pit copper mine in the world. It started operations in 1910 and forms the core of Codelco’s Chuquicamata division, which also includes a second open pit mine, Mina Sur.
(Image courtesy of Codelco)