UPDATE 1-Codelco seeks funds from Bachelet, 2014 spending at risk

Mon Jan 20, 2014 9:21am EST

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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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