Chile’s mining industry mulls increase in copper smelting capacity

Chile’s copper industry is debating an increase in refined copper production capacity rather than keeping the focus on copper concentrate exports.

While the country is leading global copper concentrate production, it is processing only around 25% of it.

“It is assumed that the [smelting] sector is not attractive due to the results of some of the companies that have clearly been poorly managed. Our interest is to separate both factors because we undoubtedly believe that the smelting business is challenging, but it can be profitable and is a key factor for sustainable mining,” Iván Valenzuela, director of copper studies center Cesco, said during a webinar. 

Chile has seven smelters – Chuquicamata, Caletones, Altonorte, Potrerillos, Chagres, Hernán Videla Lira and Ventanas – of which Chuquicamata, Potrerillos and Ventanas have a refinery. 

Five smelters are controlled by state copper miner Codelco and national mining company Enami, while Altonorte and Chagres are property of Swiss Glencore and London-based Anglo American, respectively. 

With annual smelting capacity of 1.4Mt and refining capacity of 540,000t, Chuquicamata is the biggest unit.

A 2013 law established that existing smelters must capture over 95% of sulfur and arsenic emissions, while new operations must capture at least 98%. 

Cesco has been working on a proposal to develop a smelting and refinery facility in the country, suggesting it should be managed by a sector leader. 

According to Valenzuela, the facility would require a US$1.5bn investment to reach annual copper production of 1.5Mt, considering costs of US$0.17/lb, and a net present value of 13%. 

The facility would allow capture of 99% of sulfur emissions and a 71% reduction in greenhouse gases emitted during cathode transport to China. 

Valenzuela highlighted that the smelter is also pushing industry technology due to ore treatment and recovery of other elements under the circular economy concept. The executive also said that it would improve the image of mining and ease approval of the social license.

Yet, he said the smelter must be in operation by 2027, considering potential new environmental regulation and the closure of current smelters. 

During the webinar, senator Alejandro García-Huidobro highlighted that the 2013 law has spurred around US$2.6bn in smelter investments so far. 

“Mining and environmental actors must work together to create consensus and move forward. Five years ago, we didn't even know how much a new smelter would cost,” he said. 

Participants of the webinar agreed that the government must provide conditions to attract investors and professionals.

Chile is the world’s biggest copper producer, expected to produce 5.82Mt this year.  

Photo credit: Codelco