Chile's Codelco preparing investment in Mongolian copper

SANTIAGO (Reuters) - Chilean state miner Codelco [COBRE.UL], the world’s second largest producer of copper, is preparing to invest in far afield Mongolia as the copper market improves, the company’s chief executive told Reuters on Friday.

FILE PHOTO: A worker monitors a process inside the plant at the copper refinery of Codelco Ventanas in Ventanas city, northwest of Santiago January 7, 2015. REUTERS/Rodrigo Garrido/File Photo

In an interview as part of the Reuters Latin American Investment Summit in Codelco’s copper-coated offices in downtown Santiago, Nelson Pizarro said the company was aiming for medium-term investments in the isolated Asian nation, which appears to have significant untapped copper potential.

“We have a lot of interest. We’re learning to milk camels,” he said. “We’re working to get the first documents that will allow us to advance in that area, and we hope to bring it about in the medium-term if the technicians confirm our initial perspective.”

In Chile itself, Pizarro said Codelco was preparing to launch a broad sustainability program called “green copper,” which will include broad use of wind and solar power in its operations and the use of water from the ocean rather than Chile’s parched Atacama Desert.

As part of that, the company has recently settled on a short-list of bidders interested in constructing a $1.2 billion desalination plant, and hopes to award the contract toward the end of 2017, he said. In northern Chile, miners have increasingly looked to the ocean in recent years to supply the water-intensive process of copper mining without coming into conflict with local communities.

Codelco is also considering new port infrastructure, as its copper exports are being increasingly interrupted by waves hitting Chile’s desert coasts, forcing the ports to close, said Pizarro.

“There are months with 10 days in which we can’t send out ships ... That’s something we’ve never seen before,” he said. “It would seem to be a consequence of climate change. It concretely impacted us last year, and it’s strongly impacting us this year.”

Still, Pizarro said, Codelco was in line to meet its 2017 copper production target of around 1.7 million tonnes. That number would likely decrease about 3 percent or 4 percent in 2018, he added.

In terms of the global copper market, Pizarro said a number of factors, such as the needs of the burgeoning electric car industry, could mean average 2017 copper prices of above $2.60 per pound, significantly higher than recent years. That trend should consolidate in 2018, he added.

“The copper price, unless there’s a great global crisis should be - I don’t know if $2.90 - but yes in the $2.60 to $2.70 range next year.”

Reporting by Gram Slattery; Editing by Tom Brown