Codelco racing to meet smelter rules

Chilean state copper producer Codelco is moving forward with its billion dollar program to upgrade its four smelters in order to meet stricter environmental rules by end-2018.

The world's largest copper producer is investing US$1.9bn in its network of smelters and refineries, in what CEO Nelson Pizarro said was an "expensive, difficult and risky process." The company has said previously it was investing US$1.8bn.

As of the end of the first half, Codelco's Ventanas refinery and smelter in central Valparaíso region (V) is the only facility already capturing at least 95% of emissions, as mandated by the law set to be enforced in December next year. The company invested US$107mn in Ventanas, Pizarro said during a conference to discuss first half results.

The other three smelters - Chuquicamata, of the namesake mine; Salvador's Potrerillos, and El Teniente's Caletones (pictured) - still do not meet the future standard.

"At Chuquicamata we're advancing strongly, we're already in the construction phase, there's a lot of work to do, same as in El Teniente. At El Salvador, we're over halfway done," Pizarro said.

According to the company's latest results presentation, it is investing US$908mn at Chuquicamata, which is currently 26% complete; US$557mn at El Teniente (23% complete); and US$328mn at El Salvador, which is 55% complete.

The executive said the new rules are a very difficult commitment from the investment point of view, and complex from the construction point of view, "because all of the smelters are operating, so it is not easy to make structural changes with a running smelter."

Pizarro said he's confident that Codelco will meet the deadline, though noting that in case it fails, contingency plans will be in place.

The new smelter rules have been criticized by industry experts and politicians as already obsolete, considering existing technologies, which already capture over 99% of emissions.

CHINA OFFICE

Pizarro said Codelco continues to strengthen its offices in Shanghai, with the inclusion of a purchasing division led by a senior official, as the company maintains its focus on savings and cutting costs.

The CEO said Codelco is going "where opportunities will allow us to diversify our sources, without sacrificing the quality of the products, but with lower costs; and that mainly means China," considering the company makes close to US$5bn in acquisitions each year.

Codelco is "challenging the way in which we have made purchases historically" in order to carry out sustained savings, Pizarro added, noting that the goal is to save US$350mn over the next five years.