Chilean state-owned copper miner Codelco is aiming to tamp down capital expenditures and costs at its century-old Chuquicamata mine as it transforms the globe's largest open-pit copper deposit into an underground mine. World No 1 copper producer Codelco is pushing through an ambitious investment plan to expand old mines and keep output flowing, but a sharp fall in the price of copper has forced it to scale back those plans.
Capital expenditures to convert Chuquicamata to an underground operation could jump as high as $4.7 billion, though Codelco is looking to optimize construction and renegotiate contracts where possible to keep costs down, company executive Alvaro Aliaga told Reuters in an interview late on Thursday.
Aliaga, the head of Codelco's north operations, which includes five mines, said capex on the project was currently forecast to be $3.5 billion. A presentation on Codelco's website put capex projections at $4.2 billion. "We have a projection which is increasing and we are seeing how we can contain that increase in capex ... we are doing engineering to create opportunities and are revising and renegotiating contracts," Aliaga said from his downtown Santiago office.
The project, which is already nearly 40 percent complete, is key for turning around Chuquicamata's declining production. It produced 309,000 tonnes of copper in 2015, down from 340,000 tonnes in 2014. While initial production from the underground mine is scheduled for 2019, it will take eight years before the ramp-up process is complete, at which point Chuquicamata will be producing around 400,000 tonnes annually, said Aliaga.
Underground Chuquicamata will benefit from increased automation and efficiencies, allowing for cash costs at the mine to decline to under $1 per lb of copper by 2025, Aliaga said. That is down from cash costs of $1.287 per lb currently at Chuquicamata, and rivaling cash costs of 98.6 cents per lb at the El Teniente mine, Codelco's cheapest.
Codelco's smallest mine was also seen boosting production to 60,000 tonnes in 2016, then 66,000 tonnes in 2017, from 49,000 tonnes last year. Aliaga said that Codelco has decided to develop a desalination plant to supply water to Codelco's northern operations in the arid Atacama desert. By 2023, the plant would meet half of the water needs of those operations.