BHP will spend $US2.46 billion ($3.12 billion) to extend the life of the Spence open cut copper mine in Chile by more than 50 years.
The diversified miner’s investment includes the development of the Spence Growth Option (SGO) project at the northern Chilean operation. It is targeting first production at SGO in the 2021 financial year.
In the first 10 years of operation at SGO, BHP has forecast incremental production to be around 185,000 tonnes per annum of payable copper in concentrate and 4000 tonnes per annum of molybdenum.
BHP will develop SGO using the experience it gained during construction of the Organic Growth Project 1 concentrator and desalination plant at the Escondida operation in Chile. The SGO project will create 5000 jobs during the construction phase, according to BHP.
Chief executive officer Andrew McKenzie said the SGO project supports the company’s strategy to deliver near-term, valuable copper production.
“Execution of the Spence Growth Option will create long-term value for shareholders in one of our preferred commodities. The project significantly extends the life of our Spence operation and unlocks the potential of the large, quality resource,” McKenzie said.
“SGO has been extensively studied and we have made significant improvements to project cost and design so that it is able to compete in our portfolio of attractive development options.”
SGO will require a new 1000 litre per second desalination plant at Mejillones Bay and a 154km water pipeline from the plant to the Spence mine site.
Both will be built and operated by a third party under a build, own, operate and transfer contract, which has been awarded through a 20-year agreement worth $US1.43 billion.