As far as the largest mining companies are concerned, they have the capability of taking big hits over the short term. However, it takes a whole new dimension when a company’s largest mine is out of business due to a restructuring process. That is exactly what has happened with Codelco, the Chilean mining giant and the biggest copper miner in the world. Chuquicamata, which is the biggest copper mine owned by Codelco, is going to produce drastically lower volumes of copper over the next two years and a report states that according to a company memo, the total production might go down by as much 40% from the mine. Such a drop in production and that too for a period of two years is anathema for any mining company, which is why Codelco is now looking for other ways to ensure that its production levels can somehow offset that shortfall to some degree.
The mine in question is one the largest one in Codelco’s stable, and currently, it is going through a transformation that is going to turn it into an underground shaft. The whole process is going to cost the government-run mining company $5 billion, but it is in order to ensure that the mine remains operational for many more years. Codelco is trying to do away with open pit mines completely, and this is its first step in that direction. However, the company is going to suffer in terms of its production levels for the foreseeable future, and according to Codelco, the output could drop by as much as 181,000 tonnes by 2021.
The entire process of overhauling the mines is going to cost the company in both money and production, but the company believes that it will be to Codelco’s benefit in the long run. The company believes that production of copper could drop to an alarming 277,000 tonnes a year in 2021, but Codelco projects that it will gradually rise and reach 416,000 tonnes a year by 2014. The head of a consultancy firm stated,
We’re going to see a lengthy process to bring production to a level similar to that of the pit.