Chile’s Codelco, the world’s No. 1 copper producer, plans to kick off underground operations at its century-old Chquicamata mine by mid-year, chairman Juan Benavides said Wednesday.

The $4.9 billion-switch, part of Codelco’s 10-year, $39 billion-overhaul of its core mines, is expected to extend the mine’s life by at least 40 years. This will allow the copper giant keep production rates, despite falling ore grades and increasing costs at its assets.

The $4.9 billion-switch to underground from open pit is expected to extend Chuquicamata’s life by at least 40 years.

The announcement comes as the Chilean government handed the state miner the remaining $400 million of the $1 billion “extraordinary” capitalization it promised Codelco last year.

“This is a show of the confidence we have in the company and in the importance of these resources for Codelco to be able to complete its structural reform program,” said Finance Minister Felipe Larraín, according to EFE news agency.

Codelco, which hands over all of its profits to the state, holds vast copper deposits, accounting for 10% of the world’s known proven and probable reserves and about 11% of the global annual copper output with 1.8 million metric tonnes of production.

“Chuqui” — as locals call it — and the nearby by Radomiro Tomic mines produced 653,000 tonnes of the company’s total 1.8 million tonnes of output last year.

Annual production from the mine after the full transition from surface to underground extraction is projected to be 320,000 tonnes of fine copper and 15,000 tonnes of molybdenum.

Posted by