Codelco is bracing for a 40% drop in output over two years from its Chuquicamata copper mine amid a US$4.88 billion project to convert the open-cast mine into an underground operation, Reuters reported May 23, citing an internal company forecast.

Driven by the addition of the underground ore, the mine is expected to produce 459,000 tonnes of copper in 2019, its highest level since 2010. However, output is expected to drop to 182,000 tonnes by 2021 as Codelco decreases and eventually stops open pit operations next year, according to the report.

As a result, Codelco's global copper output in 2021 is projected to fall 4% to 1.66 million tonnes compared to the 1.73 Mt estimated for 2019, and the miner is expected to take until 2027 before it recovers and tops 2019 levels.

Codelco also reportedly decreased its short-term production estimate for 2019-2025 as compared to the guidance it provided in 2018, while raising its longer-term estimate.

The output drop looms amid Codelco's ongoing discussions with unions, which recently rejected a management proposal to end contract negotiations, according to Reuters.

The state-run company started underground mining at Chuquicamata in April. It expects the transition, part of its 10-year, US$40 billion overhaul, to extend the mine's life by 50 years.