Third Escondida expansion approved

The owners of the Escondida copper mine in northern Chile’s Atacama Desert have expanded production capacity twice since operations started in November, 1990. The partners now plan to spend US$520 million on a third-phase expansion program aimed at increasing daily ore throughput to 115,000 tonnes by mid-1996.

Escondida is owned 57.5% by BHP of Australia. RTZ (NYSE) has a 30% interest, and 20% is held by a Mitsubishi-led Japanese consortium. International Finance Corp. holds the remaining 2.5%.

The decision to proceed with a third phase of expansion was based on additional drilling which increased proven and probable reserves to an estimated 2.2 billion tonnes grading 1.31% copper.

With reserves of this magnitude, it is easy to understand why Escondida ranks as one of the world’s foremost copper deposits. But when the partners began building the US$824-million open-pit mine in 1988, investment in Chile was still viewed as a somewhat risky proposition.

By the early 1990s, such concerns were laid to rest. In October, 1993, the partners went on to complete a US$76-million, phase-one expansion project, which increased capacity by 80,000 tonnes to about 400,000 tonnes of copper per year (in concentrate).

The second-phase expansion program increased mine capacity to its current level of 480,000 tonnes per year of copper-in-concentrates. As part of this US$200-million program, about 80,000 tonnes of concentrate will be converted to refined (cathode) copper at a new plant, nearing completion and situated at the port site. Cathode production is expected to begin in September of this year, using a hydrometallurgical process developed by Escondida. Although still subject to financial approval, the third-stage program will result in copper production being expanded to an average of 800,000 tonnes per year until the end of the decade.

The increase will be in the form of copper concentrate. Following the expansion, about 30% of Escondida’s copper production will be refined in Chile. The program will include additional mining and milling equipment, an increase in the treatment capacity of the concentrator, and other improvements in infrastructure.

Construction will begin immediately, with production expected to start in the second half of 1995. Full nominal capacity of 115,000 tonnes per day of ore throughput is expected to be achieved by mid-1996.