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Chile's Codelco plans up to US$1B debt issue in 2019 to fund overhaul of mines

Chilean state-miner Codelco is planning an up to US$1 billion debt issue in 2019 to help finance the planned overhaul of its existing mines, Reuters reported, citing Chairman Juan Benavides.

The company's 10-year, US$40 billion investment program is aimed at revamping its aging operations, including the El Teniente and Chuquicamata mines.

"We will issue a maximum of [US]$1 billion of debt in 2019, we don't know where yet. It will be where the best benefits are in terms of cost, flexibility and interest," the executive said, noting that most of the US$40 billion would come from its cash flow.

The company issued US$600 million in a 30-year bond earlier in the year. The Chilean government also plans to inject US$1 billion into Codelco to support the revamp.

Around 60% of the US$40 billion planned investment, or about US$24 billion, will go toward structural projects to extend the life of mines, while the remaining 40% would be spent to improve smelter operations and renewing equipment and machinery.

In August, Codelco announced plans to invest around US$4.88 billion over 74 months to convert the open-cast Chuquicamata mine into an underground operation and to extend mine life by 50 years.

"Chuquicamata is on target, we will see it processing by the middle of next year, July probably. Initially it will produce 275,000 tonnes of copper a year and by 2025 we expect it to produce about 350,000 tonnes," said Benavides.

Out of Codelco's total of 1.73 million tonnes copper output in 2017, Chuquicamata contributed 330,900 tonnes.

Benavides added that the copper miner holds experience and capability to develop open-pit and underground mines around the world.

"We are exploring in Ecuador, Brazil and have an agreement to collaborate with Kazakhstan. Mongolia is something we looked at, but we're not advancing that," he commented on the company's plans.