Investments and Projects

In 2010, Codelco invested US$ 2.616 billion in its project portfolio, a record capital expenditure.

Investment management for the period primarily focused on structural projects, which will significantly influence Codelco’s long-term production, and on the implementation of projects to ensure the continuity of existing mine operations at all divisions.

In 2010, significant progress was made in the feasibility studies for four structural projects, currently underway:

• Ministro Hales
• Chuquicamata Underground Mine
• New Andina -Phase II
• El Teniente New Mine Level.

 

 

During the period under review, four projects commenced operations that significantly contributed to Codelco’s copper output:

• Sulphide Ore Extraction at Radomiro Tomic-Phase I
• Gaby Project -Phase II
• Andina Expansion Plan -Phase I
• Extraction at Pilar Norte (El Teniente).

Safety was another important management achievement during project work – assembly, industrial, electrical, at high altitude and mechanical work, and other high risk work – reflected in 22,580,000 hour worked, and the average workforce was 11,500 people, a 1.37 frequency rate and a 21 severity rate; this is the best performance in the project industry.

 

 

Chuquicamata Division

 

 

During the year, the Chuquicamata Underground mine project continued its feasibility study. In September 2010, it obtained the environmental authorisation for its implementation. The early construction work is scheduled for the second half of 2011.

This structural expansion will mine part of the resources located under the last open pit at Chuquicamata, that for almost 100 years has delivered wealth to Chile, but will no longer be profitable towards the end of this decade. Therefore, this strategic project has to transform the world’s largest open-pit mine into an underground operation, with an output rate of 140,000 tonnes per day.

 

Other Projects

As for investments to sustain the continuity of existing sulphide operations at Chuquicamata Division, the Talabre Tailings Dam Wall Raising project was completed in 2010. The tailings dam height reached 2,490 metres. This work was undertaken together with the prefeasibility studies that will ensure the long-term continuity of the Division’s tailings storage systems.

The Mina Sur North Expansion – Phase 9 project was started in the copper oxide production line at Chuquicamata Division, and a project was approved to remove old infrastructure that made it difficult to mine the south side of the mine.

Authorisation was also given to extend the tailings dumps at Chuquicamata mine; this initiative ensures continuity of the oxide processing and production lines. Furthermore, vehicles with new technology replaced part of its truck and shovel mining fleet

 

Radomiro Tomic Division

In June 2010, construction work was completed at the Radomiro Tomic Copper Sulphide Mine – Phase I, which was fast tracked in 24 months. Towards the end of 2010, the facilities and development work began commercial operations.

The project, which required a total investment of US$ 370 million, includes a crushing system to haul mineral from the Radomiro Tomic mine to the concentrator plant at Chuquicamata with a nominal capacity of 100,000 tonnes of sulphide ore per day. As a result, the Chuquicamata concentrator (approximately 8 kilometres from Radomiro Tomic mine) will be able to maintain its full capacity during the Chuquicamata transition period from open-pit to underground mine.

Considerable progress was made in the technical and economic studies on the significant amount of mineral resources available at the Radomiro Tomic deposit; the information will be used to mine the sulphide minerals included in the Radomiro Tomic – Phase II project.

In 2010, key investments were also made to replace mining equipment at the mine, especially trucks and shovels with new technologies. Furthermore, the expansion of the tailings dumps at Radomiro Tomic mine was approved.

 

Ministro Hales Division

 

 

In July 2010, the Ministro Hales Mine structural project obtained its environmental permit. In December, it was at an early stage of construction that will be completed by mid 2011.

The project includes extracting and treating ore from the mine – formerly Mansa Mina mine – that will provide fine copper and silver; this output will position Codelco among the world’s largest silver producers. It is a porphyry copper deposit and contains 1.059 million tonnes of mineral, total copper grade of 0.95% and a high silver and impurity content.

This project also involves pre-stripping scheduled to begin during the second quarter of 2011. The pre-stripping volume will be more than 136 million tonnes per year during the first periods. For this purpose it will use largescale and state-of-the art mining shovels and trucks.

Other work included are the concentrator plant that will process 50,000 tonnes of mineral per day and a concentrate roaster facility (toaster, acid plant and effluent treatment plant), incorporating state-of-the-art technology to abate impurities and to control the environmental impact.

In community management, Ministro Hales Division has developed a plan to effectively integrate into the Calama, given its proximity to the city, so as to positively influence their welfare and quality of life.

 

 

Minera Gaby S.A.

In November 2010, construction work was completed for the Gabriela Mistral Mine -Phase II project; it incorporated a third crusher line and it expanded the plants heap leach process, increasing its mining and treatment capacity to offset the expected lower nominal copper grade.

As a result of this initiative, the annual output of this subsidiary, wholly owned by Codelco, will increase from an average of 150,000 to 170,000 tonnes of fine copper per annum. The expansion required a US$ 230 million investment and its start-up and production ramp up was towards the end of 2010.

During the year, early construction and feasibility studies were authorised for the Secondary Leaching project to recover copper contained in the leached ore from Gabriela Mistral mine.

 

Salvador Division

In consideration of the better longterm prospects for the copper market, in 2010 the Board agreed to go back on its decision to close the Division’s mining operations, initially scheduled for December 2011. The Division was authorised to plan its operations in a medium-term outlook and identify more long-term development opportunities.

In 2010, the pre-investment study for the San Antonio – Oxide project was speeded up; it will give continuity to Salvador Division’s production. The project will process the oxidised ore leftover from the old Potrerillos mine (today Mina Vieja), located 8 kilometres southeast of Potrerillos, at around 3,200 metres above sea level. During the period, the prefeasibility study was undertaken and should be completed during the first half of 2011.

The project is designed for an open-pit mine which will include a crushing plant; haulage via a conveyor belt system, and electro-winning, solvent extraction and leaching plants, located 9 kilometres away at Potrerillos.

It is estimated that the mining operations will have a maximum output of 60,000 tonnes of fine copper per annum, over a period of almost 12 years. The sulphuric acid from the Potrerillos Smelter will be used at the San Antonio Oxide operations, as well as other synergies with the Division, such as services and supplies.

Additionally, a first assessment of primary sulphides at the San Antonio deposit was carried out. The results showed more than 900 million tonnes of copper, average grade at 0.5%; therefore it has high potential to implement a new project.

During this period, the following projects were completed: Increased Capacity of Pampa Austral Tailings Dam and Thickener Upgrade at Concentrator Plant.

Studies were also carried out to update its automated control system and other automation studies for some of the unit operations in the underground mine.

In 2010, at the smelter-refinery complex the Replacement of Rectifiers 1 and 2 at the Electrolytic Refinery project was started; and in September, the Fugitive Gas project was completed. At the end of the year, the approval process began for the Slag Cleaning project feasibility study, which aims to significantly increase smelter recovery.

 

 

New Andina – Phase I

During the period, construction work was completed for Andina Expansion – Phase I project, which involves expanding its mining and processing capacity from 72,000 tonnes per day to an average 94,000 tonnes per day.

The project required a nominal investment of US$ 1.134 billion; and towards the end of 2010, it was close to reaching its design capacity. This expansion gave the Division a new crush/grind/ float line in the underground concentrator, increasing annual output by 70,000 tonnes of fine copper.

 

New Andina – Phase II

During the year, progress was made in the studies for New Andina –Phase II project, which is a production and processing capacity expansion and should deliver an additional 150,000 tonnes per day, up from the current 94,000 to 244,000 tonnes per day. This expansion is sustained on the basis of the mineral wealth of the ore body; its geological resources are estimated at 114 million tonnes of fine copper.

 

 

Other Projects

The Division will need significant investments to prevent future contact of fresh water with the waste dump. The construction of the Río Blanco Bypass Tunnel project is underway and is scheduled to be completed by the end of 2011.

In 2010, the prefeasibility study was completed that provides a solution to drainage water management in the future North Waste Rock Dump (currently in its feasibility stage and recently authorised to start early construction work).

In October, the implementation of the Andina Power System Backup project was completed and progress was made in the Water Standardisation – Stage I project.

 

Ventanas Division

One of the projects authorised during the year was the Construction of Ponds and a Water Recycling System that practically eliminates discharging process water into the sea. This is another initiative included in the environmental improvement programme implemented by the Division in recent years. The prefeasibility study for the Ventanas Refinery Capacity Expansion project, which will increase cathode output from 400,000 to 585,000 tonnes per year, was also completed. It was recommended to move onto the project feasibility stage. If the recommendation to expand the Ventanas Refinery is confirmed, then the project feasibility study will be undertaken.

Equipment refurbishment or replacement was authorised: Replacement of the Rectifier Transformer No. 2 to support the continuity of operations. Furthermore, in the innovation project portfolio, the industrial automation test was approved to remove starter sheets in refinery.

 

 

El Teniente Division

 

 

In 2010, the New Mine Level project made significant progress in its feasibility study, scheduled to be completed during the first half of 2011. Progress was also made in the construction work related to the emergency exit ramp and main entrances.

The new mine ensures another 50 years of operation, maintaining current fine copper output levels and also generating important long-term growth.

With this project, the Division will mine 2.5 billion tonnes in reserves, located at a deeper level in El Teniente mine (1,880 metres above sea level), with an average copper grade of 0.4%.

The structural project will process about 137,000 tonnes of ore per day, equivalent to an output rate of 430,000 metrics tonnes of fine copper per year, and there would still be the option to start the expansion work that will be required to process 180,000 tonnes of ore per day by 2020.

The project includes panel caving mining, applying a level scheme: caving, production, ventilation, hauling and grinding, where the mineral ore is hauled to the surface on a conveyor belt system to the Colón concentrator.

 

Other Projects

In 2010, the Pilar Norte Mine was launched, which will deliver 17,000 tonnes of ore per day. This production will replace depleted zones within the mine and improve its competitiveness, at an average copper grade of 1.32%, one of the highest in Codelco. At full production, Pilar Norte is expected to produce approximately 75,000 tonnes of fine copper per annum. The total investment was US$ 140 million. Pilar Norte production, highly automated, is monitored from a control room located in Rancagua, more than 50 kilometres from the mine.

Diablo Regimiento Mine -Phase III project is in full implementation, this mine replaces 10,000 tonnes per day of the output capacity of El Teniente mine and it is expected to start operations by mid 2012. It estimated output rate per annum is about 30,000 tonnes of fine copper by 2014.

As part of the replacement strategy of the Division’s mining zones, in 2010 early work and continuation of the feasibility study for the Rajo Sur project was authorised; it includes opening an open-pit mine in the mountains. Ore treatment will be carried out at the Sewell concentrator facilities.

In pre-investment studies for replacement projects in depleted mine zones, the following projects were completed: Dacita and Pacífico Superior prefeasibility studies and the Diablo Regimiento-Phase IV zone feasibility study.

The Carén Dam Wall Raising Stage V project is another project to ensure the continuity of operations; it is expected to extend its useful life until 2015.