World's biggest copper mine to grow even more

ANTOFAGASTA, Chile Mon Apr 7, 2008 8:23am EDT

Dynamite explosions blast rock mass at the La Escondida copper mine near Antofagasta, some 1,545 km (980 miles) north of Santiago city and 3,100 meters (10,170 feet) above sea level, March 31, 2008. REUTERS/Ivan Alvarado

Dynamite explosions blast rock mass at the La Escondida copper mine near Antofagasta, some 1,545 km (980 miles) north of Santiago city and 3,100 meters (10,170 feet) above sea level, March 31, 2008.

Credit: Reuters/Ivan Alvarado

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ANTOFAGASTA, Chile (Reuters) - Smoke and debris rocket into the air, then the ground shakes as far as 600 meters away. Seconds later, a boom rings out as explosives pulverize 190,000 tonnes of rock near the base of Chile's Andes mountains.

It will take three days for miners driving monster trucks to remove the mineral ore, as the copper-rich rock is called, and more than a few more to crush and process some of the purest caliber copper known to man.

Everything about Escondida is a superlative. It's the world's largest copper mine in the world's largest copper producing country and it is easily visible from outer space.

"I think Escondida is a world-class ore body and probably one of the biggest ever discovered," said Diego Hernandez, the president for base metals for majority-owner BHP Billiton, the world's largest diversified miner.

Not satisfied to simply be producing nearly a quarter of Chile's copper, nearly 1.5 million tonnes last year, Escondida is looking for more, and expects a three-year-old exploration program to extend the existing 40-year mine life with new discoveries soon.

Managers are looking at several alternatives to maintain record output at the mine, whose name in Spanish means "hidden" because geologists in the 1980s failed repeatedly to find copper at the site before striking it rich on one last try.

Local mythology holds that David Lowell, a legendary geologist, found the deposit by ignoring conventional wisdom and sinking a drill bit on the top of a hill, instead of at the bottom.

"Why'd they drill there? Hah ... any answer I could give would be an old wives's tale," Sergio Valenzuela, a mine spokesman, said after a recent visit to the mine.

With copper prices near record highs -- close to $4 a pound now compared with cents a pound five years ago -- Escondida and other miners want to pump out as much of the red metal as possible.

And China, the biggest consumer, can't get enough of the red metal, which is crucial to its rapid industrialization and urbanization.

"The main driver in copper demand has switched from the developed countries to the countries in development, China, India, and so on," Hernandez said in a televised interview ahead of the CRU/CESCO copper conferences to be held this week in Santiago.

The company is also looking for new ways to squeeze more copper out of the rich deposit, through technology, design and simple hard work.

"Escondida is the biggest copper mine in the world by far. We have reached very high production and the challenge now, more than trying to increase it is to sustain that for a longer period. We are working on that," said Hernandez.

That means looking at alternatives that go beyond exploration, like one proposal to build a third concentrator plant and increase the amount of mineral processed by about 50 percent.

That proposal is in the pre-feasibility stage and a decision is expected by the end of the year. If approved, the plan will bring with it a project to expand Escondida's vanguard program to desalinate sea water for use in processing.

Escondida is also looking at boosting output capacity at its cathode operation by increasing pool density for cathode sheets by as much as 15 percent.

Finally, the mine is looking at processing molybdenum, a by-product of copper mining used to strengthen steel whose prices have multiplied along with other commodities in recent years.

Hernandez said the company could make an investment decision soon on a new molybdenum plant, after a feasibility study is completed mid-year. If it goes ahead it will mean a $120 million to $150 million investment and production of about 4,000 tonnes of molybdenum per year.

Billiton and other mine managers at Escondida will continue to look for ways to maximize output there, but the company will also continue to look for more copper.

Chile will remain the No. 1 copper destination for many years, but explorers may need to look elsewhere for their next Escondida.

"I think that its necessary to start working in new geographies to meet the additional demand, but Chile will continue to be No. 1 for a long time," Hernandez said from plush offices in the Chilean capital.

(Editing by Steve Orlofsky)

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