Chile’s Codelco, the world’s biggest copper producer, is “perfectly well financed” for the next two years as it pushes forward with its largest-ever drive to revitalize its aging mines, Chairman Juan Benavides said on Wednesday.
State-owned Codelco, which produces nearly one-tenth of the world’s copper, is set to shell out $40 billion in 10 years to overhaul its century-old Chuquicamata and El Teniente mines, among others.
“Codelco has its finances in perfect order with respect to our requirements today,” Benavides said in an interview with Reuters. “What is fundamental is that we sustain production.”
Benavides said he did not expect the company would issue any additional bonds this year.
Codelco returns all of its profits to the state and is funded by a mix of capitalization and debt.
Chile’s government last year injected $1 billion into Codelco in “extraordinary” capitalization and earlier this year topped it off with an additional $400 million.
That funding, in addition to a bond issued by the miner in January, are meant to boost the companies ambitious mine overhaul plans. Ore grades have plummeted at Codelco’s aging mines, prompting the urgent need for upgrades.
Benavides said Codelco expected to wrap up final studies and present an environmental impact study for the delayed expansion of its Andina mine near the end of 2019. The mine accounted for approximately 11% of the companies output in 2018.
Codelco’s total production would be “slightly above” that of last year’s total of 1.678 million tonnes, boosted by new output from its Chuquicamata mine, which is due to begin producing from its underground expansion in May.
Benavides said heavy rains in northern Chile, as well as strife with communities at Peru’s Las Bambas mine would dampen global production and likely result in a supply deficit.
“That leads us to believe that price (of copper) will continue to rise,” he said.
Benchmark copper on the London Metal Exchange touched its highest since April 1 at $6,540 a tonne on Tuesday.
(Reporting by Dave Sherwood and Fabian Cambero Editing by Susan Thomas)