Chile's Codelco eyes annual $1.7 bln debt issue as part of financing

SANTIAGO, July 23 Wed Jul 23, 2014 6:55pm EDT

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SANTIAGO, July 23 (Reuters) - Chile's Codelco, the No.1 copper producer in the world, said on Wednesday it would seek to issue annual debt of around $1.7 billion to help it finance an ambitious multi-year investment plan.

Codelco estimates it needs to invest an average $4.5 billion annually over the next 5 years to upgrade its aging deposits and counteract falling ore grades.

The board has agreed that a further $2 billion would come from its own resources, amortization and depreciation, said board head Oscar Landerretche in a speech to Congress on Wednesday.

The miner would request the remaining $800 million from the government as part of its capitalization, he said, adding that the figures were average and could fluctuate.

The nationalized miner gives all its profits to the state, which then decides how much to return to it, exposing it to government spending priorities. The government has promised a capitalization law this year to give Codelco more long-term visibility on funding.

Earlier this month, the company issued a 600 million euro ($810 million) 10-year bond. It has around $12 billion in bonds.

Landerretche is also leading the charge to nominate a new chief executive, after former boss Thomas Keller was removed last month.

He said on Wednesday that the board had evaluated more than 20 candidates from the mining industry and elsewhere and that it was in the "final stages" of naming someone.

Codelco unions said on Wednesday that they may take "action" if decisions on capitalization and the naming of the new CEO were not made soon. ($1 = 0.7431 Euros) (Reporting by Rosalba O'Brien and Fabian Cambero; Editing by Mohammad Zargham)

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