Chile's 10-year mining investment pipeline shrinks to US$49bn
Mine construction projects in Chile will demand close to US$50bn in the 2016-25 period, according to the latest estimates from state copper commission Cochilco.
The US$49.2bn project pipeline estimate unveiled Wednesday in Santiago is US$28.1bn smaller than Cochilco's August 2015 10-year estimate of US$77.3bn, but interim calculations had already shown the pipeline was shrinking. A May 2016 update showed a pipeline worth US$50.1bn.
If the entire pipeline comes to fruition on time, miners will have spent 45% more than the US$34bn spent in the last 10 years. However, a majority of the investment (US$29.0bn) is attributable to projects Cochilco categorizes as possible or potential, their advance vulnerable to market conditions and subject to further studies and permitting.
Indeed, the bulk of the pipeline reduction as compared to last year owes to the elimination of eight projects requiring a total US$22.7bn that are halted for restructuring, including state miner Codelco's US$6.5bn Andina 244.
Other projects eliminated include El Abra Mill (US$5.0bn), Relincho (US$4.5bn), Pascua Lama (US$4.3bn), Sierra Gorda expansion (US$1.5bn) and Pampa Blanca expansion (US$665mn).
In that sense, the reduced pipeline is a clear reflection of the intense scrutiny of large-scale projects and capital spending cuts among major copper miners that have characterized the years since copper prices fell from their 2011 peak of almost US$5/lb. The red metal is now worth some US$2.15/lb.
FURTHER BREAKDOWN
The total number of projects included in the pipeline has shrunk to 37 from 42, Cochilco said.
Three projects worth US$6.3bn exited the pipeline because they entered production (Antucoya, Escondida OGP I, and Valle Central expansion), while six new projects are included worth US$4.6bn.
Codelco accounts for US$7.0bn of the new pipeline, including a new, reduced version of its Andina expansion. Copper projects overall make up 88% of the pipeline at US$44.0bn, while primary gold and silver projects account for just US$1.3bn and iron ore US$3.9bn.
The pipeline includes projects that are at least at prefeasibility stage and estimated to come online during the 10-year period.
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