Chile's Codelco revises plans to convert Chuquicamata copper mine

(Reuters) - Chile’s state copper firm Codelco on Wednesday announced a $4.881 billion investment to convert its open cast Chuquicamata mine into an underground facility.

The logo of Codelco, the world's largest copper producer, is seen at their headquarters in downtown Santiago, Chile March 29, 2018. REUTERS/Ivan Alvarado/File Photo

Codelco [COBRE.UL], the world’s top copper miner, said its plans represented a scaled-back version of an earlier blueprint to reflect the fluctuating copper price and ongoing high operating costs.

Combined with previous spending, the new figure would take to $5.550 billion the amount it planned to spend in total to convert the Chuquicamata mine, its second-largest, in the world’s largest copper producer.

The plans for Chuquicamata form part of a 10-year, $39 billion overhaul of Codelco’s key operations as it seeks to maintain production despite rapidly falling ore grades at its deposits.

The investment, which was approved by its board in a meeting on Tuesday, would be spread over the coming 74 months and extend the life of the mine by another 50 years, Codelco said.

The announcement comes after Chile’s government said in June that it would provide Codelco with $1 billion in “extraordinary” capitalization to help it prevent its aging mines from running dry.

Codelco said when the plans were first drawn up in 2012 at the height of the copper boom, it had planned for the mine to be spread over four levels, but had revised its plans to three, to save investment and operational costs.

“The reformulation of our plans, coupled with a profound process of contract renegotiation, has allowed us to stop costs escalating,” it said in a statement sent to Reuters.

Codelco signed 27-month contracts in December 2016 with six labor unions at Chuquicamata after relatively quick talks.

But workers last month staged a one-day walkout, blocking access to the mine, to protest over what they described as the unjustified layoffs of two workers. Codelco described the walkout as “illegal.”

Workers have also lamented the company’s plans to convert the mine, saying Codelco’s plans failed to address the concerns of the division’s 5,664-strong workforce.

Chuquicamata produced 330,900 tonnes of copper in 2017, out of Codelco’s total of 1.734 million tonnes.

Reporting by Felipe Iturrieta and Aislinn Laing; editing by G Crosse