BHP To Expand Copper Mine In Chile
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BHP Billiton has made its third big investment decision to expand and extend the life of a major hard rock mining asset in a month. The company revealed last night that it will spend $US2.46 billion on extending the life of a copper mine in Chile by 50 years.
The expansion of the Spence open cut mine will deliver 185,000 tonnes of copper per annum in the first 10 years of operation, with first production expected in the 2020-21 financial year, CEO Andrew Mackenzie said.
"Execution of the Spence growth option will create long-term value for shareholders in one of our preferred commodities," he said. The project significantly extends the life of our Spence operation and unlocks the potential of the large, quality resource.”
The news adds to the $600 million the company has started spending renovating and updating the mining operation at the huge Olympic Dam mine in South Australia and the $43 million to be spent building a nickel sulfate plant near Perth to enable the company to expand its presence in the rapidly growing electric battery sector.
Mr Mackenzie, said the Spencer expansion “has been extensively studied and we have made significant improvements to project cost and design so that it is able to compete in our portfolio of attractive development options.”
The project "will draw on experience developed in the construction of the Organic Growth Project 1 concentrator and desalination plant at Escondida, and create up to 5,000 jobs during the construction phase. The project includes the design, engineering and construction of a conventional large-scale sulphide concentrator for both copper and molybdenum with a 95 ktpd nominal ore throughput capacity,” BHP said in the statement.
“In addition, it will require a new 1,000 litre per second desalination plant located at Mejillones Bay and a 154 km water pipeline from the plant to the Spence mine site.
“These will be built and operated by a third party under a Build, Own, Operate and Transfer contract, which has been separately awarded, with nominal, undiscounted value of lease payment obligations over the 20 year contract term totalling US$1.43 billion." BHP also controls another huge mine in Chile at Escondida where a massive expansion plan to be finished later expected because of a 44 day strike earlier this year.
BHP and its Escondida partners (including Rio Tinto) have spent an estimated $US3.7 billion over the past four years on a new third concentrator and desalination plant which are designed to allow copper production at the mine to grow by about 20% to 1.2 million tonnes a year.
BHP is expected to give the go-head soon on an expansion of its WA nickel business. The new mine and associated facilities could cost billions, depending on the pace of investment.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.