Codelco shifts project priorities in face of constraints

Chilean state copper giant Codelco is realigning its portfolio of large-scale projects as it continues to face financial constraints, project complexities and pressing environmental needs.

The company's capex projects involve planned investment of US$18bn through 2020, CEO Nelson Pizarro said during a press conference to discuss third quarter results.

The company has shifted its strategy from developing simultaneously several of its so-called structural projects – which were designed to increase production to 2Mt by 2025 – to a sequential model, prioritizing those already well advanced and pushing the rest further down the pipeline.

"We've reprogrammed the structural projects and reorganized them because of restrictions in our capex, prioritizing those that we have to do either way because of environmental issues, and then those with better returns," the chief executive said.

Pizarro said the company did this to make better use of the financial resources it currently has at hand, as it waits for a price turnaround, and to make sure it maintains current production levels of approximately 1.7Mt/y.

PRIORITIES

As such, Codelco is investing some US$1.800bn in upgrading its four smelters in order to comply with new emissions standards in 2018.

The company is working on 20 projects at the smelters, said Pizarro, with US$100mn being invested in the Ventanas refinery and smelter, another US$800mn in the Chuquicamata complex, US$300mn in Salvador's Potrerillos smelter and US$600mn at El Teniente's Caletones.

In the case of the structural projects, Codelco is prioritizing the underground transformation of the Chuquicamata mine, which at the end of September was a third complete. Pizarro said he's confident underground operations will start in 2019.

After Chuquicamata, the priority is the Traspaso Andina project, which will connect the underground and open pit operations of the mine, located in central Valparaíso region. The CEO said the project is advancing smoothly, and there's a change in the timeline, moving ahead of schedule.

At the new mine level at El Teniente underground mine, Codelco has been making strong progress in trying to "understand and solve" the issue of rock bursting, which resulted in the company pushing back the original completion target of 2020.

While it has made progress with the construction and strengthening of the tunnels, a new timeline for its development is due in the coming months, Pizarro said in August.

The three other large-scale projects originally planned – the expansion of Andina, RT Sulfuros and Rajo Inca at Salvador – are currently back at the prefeasibility stage.

In the case of RT Sulfuros, the company is still evaluating spinning out the desalination plant associated with the project in order to build it as a standalone facility to provide water to its four mines located in northern Antofagasta region.

It has completed detailed engineering studies, and is currently evaluating several options involving a partner to build and operate the plant, as stated by the company in August.

Pictured: One of the tunnels at the new Chuquicamata underground mine