MercoPress. South Atlantic News Agency

Chile plans massive investments in copper industry

Chile plans to invest 16 billion US dollars in the copper industry through 2010 retaining its position as the world's leading producer and exporter, announced Friday the Chilean Copper Commission, Cochilco.

Cochilco forecasts that the massive (private and government) investment will have Chile producing 6.4 million tons of copper annually, compared with 5.3 million tons in 2005.

That volume by the end of the decade, however, would represent 32% of the world's total output, down from 35.5% in 2005.

Guillermo Olivares, research director for Cochilco said Chile will remain the global copper industry leader over the next few years in terms of investment although admitting Brazil was involved in developing a strong presence by planning to invest 15 billion US dollars through 2010.

Chile's government managed company Codelco, the world's largest copper producer, also sees strong prospects for the industry and is planning to invest 2.4 billion US dollars in 2007, reported the company's Projects vice president, Fernando Vivanco.

That sum compares favourably with 1.2 billion US dollars in approved investment for 2006, even when some current expansion projects could push it to 1.6 billion US dollars, admitted Codelco's CEO Jose Pablo Arellano said recently. During a seminar on mining investment Mr. Vivanco revealed that Codelco's main investment project for 2007 would be the new "Gaby" mine in northern Chile. An estimated 700 out of a total 840 million US dollars are programmed to be invested in the project which should become operation in 2008.

"Gaby" is forecasted to produce some 100,000 tons of copper in 2008, with output projected to rise to 150,000 tons annually over the following 15 years with prospects of further expansion from deposits in the area which "are proving encouraging" according to recent exploratory surveys.

Another important investment project for Codelco in 2007 will be the 200 million US dollars expansion of its "Andina" division, 130 kilometers northeast of Santiago, which will increase processing capacity from 72,000 to 92,000 tons per day.

However Codelco could be pushed aside from its ranking as the world's most important producer of copper if a 40 billion US dollars plan by U.S. mining giant Phelps Dodge to merge with Canadian companies Falconbridge and Inco becomes effective.

Codelco produces close to 1.7 million tons of the red-metal in Chile, while Phelps Dodge is currently the world's third ranked copper producer with 1.1 million tons of copper produced each year.

The new company, under the projected name of Phelps Dodge Inco, will definitively become the world's leading copper producer in the world post-merger, said officials close to the merger. Phelps Dodge Inco would operate in over 40 countries and employ 40,000 people across the globe.

World copper prices in the last three years, as with most metals and commodities, have soared increasing its basic price fivefold, after having reached an all time record of 4 US dollars the pound, pushed by Asian and US demand.