August 1, 2014 / 4:15 PM / 3 years ago

UPDATE 2-Chile to give Codelco $4 billion in financing

(Adds Codelco board chairman’s comments)

SANTIAGO, Aug 1 (Reuters) - Codelco, the world’s biggest copper producer, will receive $4 billion in state financing through 2018 to help pay for an ambitious investment plan, Chile’s finance minister said on Friday.

The state-run firm will receive around $3 billion via treasury-issued debt and around $1 billion from returned profits, Alberto Arenas told a news conference.

A bill to approve the financing will be sent to Congress later this month.

“We are going to take steps to give solidity and financial sustainability to Codelco in this five-year period... We are going to capitalize Codelco with up to $4 billion linked to the company’s business and development plan,” said Arenas.

Capitalization would be transferred annually based on completion of the company’s goals, he added.

Codelco, which was nationalized in the 1970s, gives all its profits to the state, which then decides on an annual basis how much to return to the miner.

That exposes it to the whims and spending priorities of the government. The longer-term financing plan is intended to give it better visibility, the government has said.

“Now we have to build a strategic alliance with the unions, professional workers, with the communities surrounding our operations and all the relevant actors in order to have a long-term vision (for the company),” said Codelco Board Chairman Oscar Landerretche.

Codelco, which also issues its own debt, plans to spend around $23 billion through 2018 to upgrade its aging deposits to counteract falling ore grades.

Planned projects include a $6.8 billion expansion of its Andina mine near Santiago, and a $4.2 billion conversion of open-pit Chuquicamata to an underground mine.

On Thursday, the Codelco board named industry veteran Nelson Pizarro as chief executive to lead it through the transformative period. (Reporting by Felipe Iturrieta; Additional reporting by Fabian Cambero; Writing by Rosalba O‘Brien; Editing by Dan Grebler)

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