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Chile Copper Project Pipeline

Spot copper fell to a low of less than US$2/lb. in the early days of 2016. Copper has steadily risen since and it averaged US$3.16/lb. in this first quarter of 2018. The price has recently decreased but the fundamentals are still in place. That is a strong copper demand outlook with little production coming online to replace declining ore grades in existing mines.

Chile’s mining industry has undergone years of severe cost containment efforts. One of the early signs of the recovery in the local mining sector comes from the annual update of state copper commission Cochilco’s 10-year investment pipeline, unveiled in August last year which expects overall capital expenditure forecast to grow to US$64.9 billion for the 2017-2026 period compared to the US$49.2 billion projected in Cochilco’s previous 10-year forecast. Although, it should be mentioned that the 2016 forecast was a US$77.290 billion.

Copper Project Pipeline Overview:

One of the main reasons for the increase is the inclusion of 11 new mining projects requiring a combined investment of US$12.5 billion, reflecting a reactivation of investment plans. New investments in smelter and tailings dam upgrades by state miner Codelco worth another US$3.43 billion also entered the pipeline in 2017.

Another early sign of revival was the August 2017 board approval of global mining giant BHP’s much-awaited Spence Growth Option, a US$2.5 billion initiative to tap the Spence mine’s primary sulfides and extend the mine life another 20 years.

Spence Mine, BHP, Chile

Three large copper projects account for more than US$10bn of the pipeline increase. The largest is the US$5 billion project to mine sulfide ore at El Abra, a 51:49 JV between Freeport McMoRan and Codelco. The project is necessary to keep El Abra running as it approaches the depletion of its oxide resources. Prefeasibility studies and permitting work is underway for a 240,000t/d concentrator.

The pit at El Abra operations, Calama, Chile

NuevaUnión is another new project on Cochilco’s list. The US$3.5 billion initiative is a JV between Teck and Goldcorp, which merged their stalled Relincho and El Morro projects, respectively. The project saw prefeasibility studies completed in 1Q18. Production is forecast at 206,000t/y copper and 395,000oz/y gold over 36 years. Goldcorp said in April that the first ore could be mined in the first half of 2023.


The US$2 billion expansion of KGHM International’s Sierra Gorda mine is also on the list. The project seeks to optimize the operations of the mine, opened in 2013, as well as boost processing capacity. The environmental impact study was submitted in 2017.

Sierra Gorda

Meanwhile, three additional large copper investments are up for board consideration during 2018. Two are expansions at Antofagasta Minerals’ largest operations – Los Pelambres and Centinela. At Los Pelambres, the company plans to expand production by 55,000t/y by investing US$1.3 billion in new equipment. Production would start in 2021. At Centinela, the board is expected to decide by year-end on one of two investment alternatives: build a second concentrator or expand the existing one.

Los Pelambres


The outlook for mining in Chile is much more positive than a year ago, with projects accelerating and clear indications that investment is picking up. Chile made its way back into the top 10 most attractive mining investment destinations in Canadian Fraser Institute’s most recent survey of mining executives in the most recent report.

However, it is also true that mining companies are approaching projects more cautiously than in the past, prioritizing optimization and rationalization over speed and volume. In this context, productivity will remain a strong focus going forward.

Harris Gomez Group is an international law firm with offices in Santiago, Bogotá, and Sydney. Our firm has been working with mining equipment, service, technology providers both in Australia and internationally for 16 years. We find that our clients appreciate that we understand the industry, provide fixed pricing, and take the time to learn our clients business.

To better understand how we can support you, please contact Cody Mcfarlane at cmm@hgomezgroup.wwwaz1-lr5.supercp.com