Chile's Codelco Issues $2 Billion in Bonds to Fund Long-Term Mining Projects

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Written by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--Codelco (Santiago, Chile), the national Chilean miner, has issued US$2 billion in bonds maturing in 12 and 30 years with yields of 6.447% and 6.746%, respectively. The operation was led by Bank of America, Citi, JP Morgan and Santander, attracting US$7.5 billion in the order books.

This is positive news for the world's largest copper producer, as it requires investments of around US$40 billion in the next 10 years to finish its structural projects. The company launched these projects to expand the lives of operating mines and open new ones.

Codelco Vice President of Finance Olivar Hernandez said the bond sale will "generate value for the company, extend the useful life of the deposits, and recover historical production levels by 2030."

The Chilean miner is registering the lowest copper production volumes in over two decades, with a copper output guidance between 1.31 million and 1.35 million tons for 2023. The situation resulted from lower grades in operating mines and delays in the company's structural projects.

Last year, the company's former president, André Sougarret, said in a presentation that Codelco is expected to reach its previous copper production levels of 1.7 million tons by 2030 with the construction of its structural projects. On that occasion, Sougarret said that the longer the delay in completing those developments, the greater the negative impact it would have on Codelco's current production.

The Diamante, Andesita, and Radomiro Tomic Fase II mines are among the copper projects expected to be finished in the following years. Industrial Info is tracking 56 Codelco capital projects, worth US$17.64 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Project Database can click here for a list of detailed project reports.

Additionally, Codelco has been tasked with leading Chile's lithium production and industry. The nationalization of the sector last year has forced private companies operating in the area to renegotiate their contracts to grant Codelco's access to their operations.

In December, the Chilean miner closed an agreement with Sociedad Química y Minera de Chile (SQM) (NYSE:SQM) (Santiago), one of Chile's lithium producers, to create a public-private partnership in its lithium operations. Also, in January, Codelco moved a step closer to acquiring Lithium Power International's Maricunga project by purchasing the company's shares. For more on that, see January 25, 2024, article - Lithium Power International Shareholders Approves Sale to Chile's Codelco.

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