May 17 (Bloomberg) -- Chile's Mining Minister Karen Poniachik urged metals producers to take advantage of a rally in copper prices and increase exploration in the country.

Chile, the world's biggest producer of copper, still has new deposits yet to be discovered, she said. The country accounts for 35 percent of copper mined worldwide.

``Now that we have the money to explore, let's do it,'' Poniachik, who is also chairman of government-owned copper producer Codelco, said in an interview today in Santiago. ``We need new deposits if we want to keep growing.''

Codelco, the biggest copper miner with about 20 percent of the world's reserves of the metal, is increasing investment to boost production and scout for new deposits in Chile's north, as well as in Brazil and Mexico. Poniachik, 42, said globally there are few projects coming on line as demand for copper increases.

Copper prices have climbed 76 percent this year, on increased demand by nations including the U.S. and China, the two biggest consumers of the metal.

Copper for delivery in July on the Comex division of the New York Mercantile Exchange fell 17.05 cents, or 4.4 percent, to $3.6715 a pound. Prices have declined from a record of $4.040 a pound on May 11.

``This rally has taken everyone by surprise,'' Poniachik said.

Companies also need to invest in research and development to find ways to compensate for a decline in the copper content in ore at mines, Poniachik said.

Codelco said in January that its production will slide this year and next as the copper content in rock at its mines in Chile declines.

To contact the reporter on this story: Heather Walsh in Santiago at hlwalsh@bloomberg.net

Last Updated: May 17, 2006 18:03 EDT