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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (31032)	1/11/2009 8:33:46 PM
From: LoneClone	Read Replies (1) \| Respond to of 193956

Codelco Plans $12 Billion Spending Amid Global Slump (Update2) bloomberg.com By Heather Walsh Jan. 8 (Bloomberg) -- Codelco, the world’s largest copper mining company, will invest $12 billion in the next five years to boost production as metal prices gain, Chilean Mining Minister Santiago Gonzalez said. There will be a “slight” price increase in the next few years on speculation that global economic growth will rebound, he told reporters today in Santiago. Still, worldwide usage of the metal will remain flat in that period, said Gonzalez, who also is chairman of state-owned Codelco. Codelco, which owns about a fifth of the world’s copper deposits, plans to pump $2 billion into expanding this year as it tries to halt a four-year drop in output at century-old mines. Output slid 6.6 percent in 2007 to 1.67 million metric tons, and dropped 11 percent in the first 10 months of 2008 from the year earlier, according to the Chilean Copper Commission. Codelco needs “these investments to increase efficiency and reduce costs,” Juan Jose Ponce, an analyst at brokerage Larrain Vial SA in Santiago, said today in a telephone interview. Metals producers such as Cia. Vale do Rio Doce and Xstrata Plc are scaling back after prices tumbled. Copper has dropped 65 percent from a record in May as global economic growth stalls. “Demand won’t go up in the next few years,” Gonzalez said. Copper futures for March delivery fell 3.25 cents, or 2.2 percent, to $1.479 a pound on the Comex division of the New York Mercantile Exchange. Prices reached a record $4.2605 a pound in March. Average Prices The Chilean Copper Commission, a state-run research group, said yesterday that the price of the metal will average $1.60 a pound this year and $1.50 a pound next year, when global stockpiles will more than double. Production by mines worldwide will grow this year and next, according to the group. Some companies are delaying projects in Chile, the world’s largest supplier of the metal, because of concern that demand may weaken, said Francisco Costabal, president of Chile’s Mining Council, an industry group. Costabal also is chief executive of BHP Billiton Ltd.’s Spence copper mine in Chile. “It’s hard to forecast a price nowadays given all the economic uncertainty,” he said. BHP last month delayed development of an energy plant to supply Escondida, the world’s biggest copper mine, while Anglo American Plc postponed expansion at a copper mine. Handing Over Profit Codelco will be able to tap $1 billion in funds from the Chilean government this year for investment, Gonzalez said. Chilean President Michelle Bachelet announced the financing plan this week as part of a $4 billion package aimed at reviving the economy´s growth after demand for the nation’s exports weakened. The $1 billion requires approval by Congress, which should act “as soon as possible,” Gonzalez said today. “Codelco needs these resources this year,” he said. Codelco hands over almost all of its profit to the government, contributing $22.5 billion to fiscal coffers since 2006, when Bachelet took office. Until this week, the government had allowed Codelco to hold back $1.2 billion since 2007 to pay for its projects, according to the company. Production has declined since peaking at 1.84 million tons in 2004 following a drop in the amount of copper in rock at its mines. Rivals like Freeport-McMoRan Copper & Gold Inc. and Xstrata increased production during the same period through acquisitions. Phoenix-based Freeport’s output surpassed Codelco’s production in the third quarter of last year, according to data on the companies’ Web sites. Codelco is the world’s largest copper miner by full-year 2007 output. The slump in commodities also has reduced the cost of oil and electricity used by mines, Gonzalez said. Codelco, which supplies about 10 percent of the world’s copper, is the largest user of electricity in Chile. To contact the reporter on this story: Heather Walsh in Santiago at hlwalsh@bloomberg.net. Last Updated: January 8, 2009 15:12 EST