Spotlight: The reasons for the delays to Codelco's megaprojects

Bnamericas Published: Wednesday, February 01, 2023
Spotlight: The reasons for the delays to Codelco's megaprojects

Chile's state-owned mining giant Codelco is up and running with its megaprojects in the ChuquicamataEl TenienteAndina and Salvador divisions as part of its quest to boost output.

The company’s production last year was 172,000t below that of 2021 due mainly to operational continuity problems, but also because of project delays. 

Like many mining projects globally, the progress of Codelco’s four brownfield projects has been affected by the COVID-19 pandemic, high inflation, low productivity in the construction sector, engineering problems and slow procurement processes, chairman Máximo Pacheco recently told a forum organized by the College of Engineers and the Voces Mineras trade association.

Pacheco said the situation is worrisome due to the stagnation that copper output has seen in Chile for 20 years, with an average annual production of 5.5Mt in a world where 22Mt are consumed - and an additional 7Mt will be needed between now and 2030 to supply the global push for zero-carbon economies.

The fight against climate change will force the company to accelerate the search for innovative ways to make its production more efficient, cleaner and sustainable, said María José Ruiz, Codelco's director of climate change and responsible production, in a column.

"We’re replacing deposits because in a few years approximately 75% of our production will depend on these works that are under construction," Pacheco said.

Here BNamericas looks at the key details of the megaprojects.

Chuquicamata (underground)

Investment: US$6.2bn

Objective: Transform the open pit mine into an underground operation and extend its useful life by 40 years. It is expected to go from its current production of 50,000t/d (35% of capacity) to 140,000t/d.

Located in Antofagasta region, it involves access infrastructure, ventilation, belt transportation system, crushers and a new area for production.

Challenges: The scarcity of qualified personnel and achieving a gradual and sustained increase in output.

Status: Design improvements are being implemented, while the company is finetuning safety measures and making geomechanic adaptions.

El Teniente

Investment: US$5.6bn (75% cost overrun, under review).

Challenges: Construction of a new level in the underground deposit in O'Higgins region began in 2011, but geomechanical problems paralyzed progress until 2017. The risk has been diversified into three levelsAndes Norte (deepest level), Diamante and Andesita.

Status: It has reached 70% completion, representing a one-year delay in terms of first production.

Traspaso Andina

Investment: US$1.7bn (21% higher than the original budget).

Objective: Change the focus of the open pit to access higher-grade minerals and extend exploitation by 40 years. It involves the construction of a primary crushing station and a new ore transport system to the Cordillera plant, to maintain current levels of processing.

Challenges: Infrastructure development in underground areas at high mountains that require long execution periods (nine years).

Status: In the final phase and could start operating this year.

Rajo Inca

Investment: US$1.4bn (under review).

Objective: Build an open pit mine and optimize the performance of the concentrator, extending the life of Salvador by 47 years. It will replace the underground mine, whose closure was completed this month after 63 years of operation.

Challenges: The difficult situation of contractors and equipment suppliers due to problems in global supply chains, which have been impacted by Russia's war in the Ukraine, higher fuel costs and tighter financial conditions.

Status: It is 16 months behind the initial schedule and has achieved 43% progress. Production is expected start in 1H24.

Photo: Chuquicamata Division, Codelco

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