Codelco scraps plans for new mine at El Salvador division
Chile’s Codelco, the world’s No.1 copper producer, has scrapped its plan to build a new mine at its El Salvador division and, instead, will extract the riches from the nearby Inca deposit by gradually expanding the current pit.
“While plans to expand Salvador, known as the Rajo Inca project, have not even reached pre-feasibility stage, the company has already decided that it’s not building a new mine,” Codelco’s chairman Oscar Landerretche said in an interview with local newspaper Diario Financiero (in Spanish).
According to Landerretche, who has a Ph.D. in economics from Massachusetts Institute of Technology, the decision would reduce the total investment needed to $600 million from the whooping $3 billion it was originally estimated.
Codelco has benefited from the slide in oil prices and has managed to cut costs at most projects. But its smallest mine, Salvador, has not been viable for some time.
Former Codelco executives have said Salvador should be a low priority and that optimistic views on the division’s future have been shared just “to keep people’s hopes up”.
But closing the mine would entail job losses and could be politically damaging to President Michelle Bachelet, who is already struggling with low approval ratings.
Mining companies in Chile axed some 23,000 jobs last year alone, or about 10% of positions in the sector. Codelco carried the weight, becoming the mining company that has let go the highest number of employees in the South American nation since metal prices began their decline over a year ago.