Codelco Gets $600 Million From Chile for Project Spendingby
`Some projects will have to be done at a slower pace:' Valdes
Investment plan is designed to avoid a slump in production
Codelco will receive $600 million from Chile’s government to help fund a five-year spending plan as the world’s biggest copper miner battles to maintain production at aging deposits at a time of slumping prices.
The capital injection, which will come from government bond sales, is the first payment in the $3 billion authorized under a funding mechanism set up for state-owned Codelco last year, the Finance Ministry said in an e-mailed statement Wednesday.
The money was released after Chief Executive Officer Nelson Pizarro presented an investment plan this week that reduced to $21 billion or $22 billion an original proposal of $25 billion. He said on Wednesday that the government funds ensure project development is financed through next year after Codelco sold $2 billion of bonds last month.
The investment plan is designed to avoid a slump in output as existing deposits run out of profitable ore. The six projects listed in the plan include an underground operation at Chuquicamata that would come into operation in 2019, one year before the century-old open-pit closes. It also includes plans to expand the El Teniente and Andina mines.
“Some projects will have to be done at a slower pace,” Finance Minister Rodrigo Valdes told reporters in Santiago Wednesday. “This contribution by the state is because we believe in this company, which has made significant efforts” to cut costs.
The price of copper is down 17 percent this year to $2.35 a pound in New York as China’s slowing economy undermines demand.
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