Mining peers BHP Billiton and RIo Tinto have both approved a major investment to ramp up production at the Escondida project in Chile worth over $4.5bn.
Escondida is 57.5% owned by BHP, 30% owned by Rio, while JECO Corporation has a 10% stake and JECO 2 owns 2.5%.
The Organic Growth Project 1 (OGP1) will put in place a new 152,000 tonnes per day (tad) plant and allow access to higher grade order located underneath the existing facilities. This will cost a total of $3.8bn (BHP will invest $2.2bn, Rio will invest $1.2bn) and is expected to create up to 7,000 jobs during construction between February 2012 and the start of 2015.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Get 6 issues free
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Meanwhile, the Oxide Leach Area Project (OLAP) will create a new leaching pad and mineral handling system which will "maintain oxide leaching capacity at current levels following the exhaustion of the existing heap leach in the 2014 calendar year," BHP said. OLAP will cost $721m ($414m to BHP, $216m to Rio) and will create 2,500 jobs during its construction.
BHP also announced a 17% increase in the mineral resources and a 25% increase in the ore reserves at Escondida following successful brownfield exploration and accelerated in-fill development drilling programs.
"The reserve increase also reflects the approval of OGP1, as most lower grade sulphide ore is now expected to be treated through the flotation circuit with an associated increase in process recoveries," the firm said.
BHP now expect the completion of the current construction projects to take copper production to over 1.3m tonnes per annum in 2015.
"Looking ahead, the success of our brownfield exploration program suggests there are sufficient resources at Escondida to sustain production at current levels for more than a century. OGP1 is the first of a series of potential projects that could substantially expand processing capacity at Escondida and help ensure it remains the world's leading copper operation for decades to come," said BHP's Base Metals President, Peter Beaven.
BC
RICS: homebuyers are returning after stamp duty shock
Reducing cash ISA limit will make lending difficult and expensive, warn providers
