UPDATE 1-Codelco seeks funds from Bachelet, 2014 spending at risk
SANTIAGO, Jan 20 (Reuters) - State miner Codelco hopes Chile's incoming center-left government will give it a fresh cash injection as it struggles to finance ambitious investments, the chief executive officer said in an interview published on Monday. If president-elect Michelle Bachelet does not grant Codelco extra funding, "the company has two options: reduce its investment plans or change its financing policies, " CEO Thomas Keller told local newspaper El Mercurio. Bachelet, who takes office on March 11, has promised to finance Codelco but hasn't specified what type of mechanism she will favor. World No.1 copper producer Codelco hands all its profits back to the state. The government then decides how much to re-allocate to the miner, often creating uncertainty in the run-up to the announcement and at times spurring disagreement over how much is ultimately allocated. The issue is especially salient this year as Codelco urgently needs to invest to counter declining ore grades, and is also battling to rein in steep costs and deal with lower copper prices. The company is currently missing about $1 billion of the $5 billion it plans to pour into sprucing up its massive but ageing mines this year. PRODUCTION SEEN INCREASING Copper production in 2014 is set to hit a record 1.9 million tonnes, Keller added in the interview. A Codelco spokesperson told Reuters later on Monday that figure includes the miner's stakes in El Abra and Anglo American's Los Bronces. Including those stakes, Codelco's production in the January to September period of last year reached about 1.3 million tonnes. The government of outgoing conservative President Sebastian Pinera last month announced it was handing Codelco an extra $1 billion to protect its coveted investment rating and allow it to forge ahead with its crucial mining overhaul. But the news disappointed many in the market, as the additional funds essentially amounted to an accounting increase, not fresh capital. Keller said he presumed Codelco's board would reach out to the Bachelet administration. The fight for resources is poised to be fierce, where the economy is gradually slowing just as citizens are clamoring for improved education, health and pensions.
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