BHP beefs up investment in Escondida
Friday April 1, 2011
SPURRED on by near-record copper prices, BHP Billiton and its partners in the Escondida copper mine at high altitude in the Atacama desert in northern Chile are continuing to invest heavily to offset the natural decline in the operation's ore grades.The latest (100 per cent) commitment is for $US554 million (BHP's 57.5 per cent share is $US319 million) for what BHP as the managing partner has dubbed the Escondida Ore Access (EOA) project.The project involves the relocation of Escondida's two in-pit crushing and conveying facilities so that the mining operations can access higher grade ore, leading to an unspecified increase in production from 2013.BHP base metals president Peter Beaven said that Escondida had been one of the world's "premier copper mines for over two decades and our ongoing exploration program suggests the basin retains a number of options for further development."In addition to the project announced today, we are studying a number of additional opportunities to improve access to higher grade ore and increase processing capacity over the years to come."Declining ore grades have been an issue at Escondida ever since the mine got going in 1991. In the past 10 years alone, the ore grade has fallen by 30 per cent from 1.82 per cent to 1.26 per cent copper.Production this year is expected to be down by 5 to 10 per cent, due mainly to lower grades.By increasing throughput and developing the Escondida Norte project, Escondida has nevertheless grown to be the world's biggest source of the red metal, increasing output from an initial 320,000 tonnes in 1991 to more than 1 million tonnes (in concentrates and cathode).The mine is hugely profitable.On a stand-alone basis, it is BHP's most profitable mine.In the 2010 June financial year, Escondida contributed $US2.17 billion to BHP's net profit, up from a contribution of $US422 million in 2009 when copper prices took a hit in the global financial crisis.The other Escondida owners are Rio Tinto (30 per cent) and a Japanese consortium (12.5 per cent).