LMEWEEK-Chile reviews how it funds cash-strapped miner Codelco
* Review of Codelco funding method started two months ago
* Move follows request from some members of parliament
* Ministry of mining and treasury are working on review
By Maytaal Angel and Silvia Antonioli
LONDON, Oct 8 (Reuters) - Chile's government is reviewing the way it funds state-owned copper miner Codelco following requests from some members of parliament, the country's mining minister told Reuters on Tuesday.
The world's top copper miner, which gives all of its profits back to the state, is struggling to finance an ambitious, multi-year investment plan, previously estimated at about $27 billion.
The government has awarded Codelco $1 billion for 2013, an amount which the miner deemed insufficient.
Codelco, which produces about 11 percent of the world's copper, has since reduced its planned investment for this year to around $4 billion from $4.5 billion.
"We are analysing how we give Codelco money but have not made a decision yet. Problem is, more money to Codelco is less money towards education, infrastructure, etc," said Chile's mining minister Hernan de Solminihac, who was in London to attend a major mining industry event, LME Week.
He explained that the review started two months ago and was being conducted jointly by the treasury and the mining ministry. Solminihac would not be drawn on when the group might present its findings.
Codelco said recently it plans to ask banks to help finance its investments this year, after being promised less capital from the government than it expected. The company has about $2.7 billion of the $4.5 billion it originally forecast, its CFO said in August.
Codelco's battle for capital comes as it struggles to rein in costs while global copper prices tumble. Capital constraints have also led the miner to say it will review projects that have not yet begun.
"We support Codelco's investments but first Codelco must find money in the private markets, then we'll provide the money necessary for them to keep their investment grade status," said Solminihac.
Codelco's copper output in the first half of the year fell 1 percent to about 758,000 tonnes because of diminishing ore grades and harder mineral in its deposits. Its earnings before tax and extraordinary items fell 28 percent during the period.
Copper prices, which are priced globally on the London Metal Exchange, fell about 15 percent in the first half of the year and are down around 9 percent year to date.
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