KGHM, South32 Advance Sierra Gorda Copper Mine Expansion as Chile Sees Lower Output

Written by Amir Richani for IIR News Intelligence (Sugar Land, Texas)

Summary

Sierra Gorda is advancing an expansion to increase copper production capacity, alongside plans to extend the mine's operating life. Chile's copper output fell 7% year on year between January and July, as major mines faced operational setbacks.

Groundbreaking for Mine Expansion

Chilean Minister of Economy and Mines Daniel Mas recently attended the groundbreaking ceremony for KGHM and South32's US$725 million fourth grinding line project at Sierra Gorda. Construction is scheduled to begin by early 2027.

The Sierra Gorda mine is owned by KGHM (55%) and South32 (45%), and it is located in Chile's Antofagasta region.

According to Industrial Info Resources data, there are 261 copper-related projects in Chile, with a total investment value of more than US$69 billion. The Global Market Intelligence (GMI) Metals & Minerals Project Database offers a list of detailed project reports.

The expansion project will increase the mine's processing capacity from 48 million to 60 million tonnes per year, lifting average payable copper production to 195,000 tonnes. In 2025, Sierra Gorda produced 165,000 tonnes of copper and 4,200 tonnes of molybdenum, representing 3.1% of Chile's copper output and 9.7% of its molybdenum.

Separately, KGHM and South32 contemplate expanding the mine's life by 21 years, until 2049, as part of their broader investment plans.

"What we have sought to drive from the government is investment to unleash investment and for Chile to once again become the mining powerhouse we deserve to be. Here we have concrete proof that it is possible," said Mas during the ceremony.

Copper Production

The announcement to expand copper production comes as Chile faces declining copper output. Operational setbacks at major mines have weighed on production, while labor disputes pose a risk of further disruptions.

According to the Chilean Copper Commission, Cochilco, Chile produced 2.88 million tonnes of copper between January and July, a 7% drop compared with the same period last year. Among the mines leading the decline are Spence and El Teniente, with volumes 26.3% and 26.5% below last year's levels.

The decline in production at the El Teniente mining operation follows last year's earthquake, which led to the death of six miners and restricted operations at sections of the mine. Meanwhile, Spence is facing challenges with managing ore complexity, variation and declining grades in the concentrator and the cathode plant, according to information shared by BHP in April 2026.

At the same time, the Escondida mine, the world's largest copper mine, recorded a 9.3% decline in production between January and July 2026, equivalent to 73,500 tonnes. In late September, a mining labor union rejected BHP's contract offer, increasing the risk of a strike at Escondida in October, prompting the company to request government mediation.

While negotiations could avert disruptions triggered by strikes, declining ore grades and complex ore at major mines pose a challenge to increasing the nation's output. Despite this, several companies have announced projects, such as Sierra Gorda's, aimed at unlocking new opportunities and raising production.

Considering the current project pipeline, the new government of José Antonio Kast has targeted production of 6 million tonnes by 2030-2031.

Key Takeaways

• KGHM and South32 advance their US$725 million Sierra Gorda expansion.
• The project aims to increase copper output from 165,000 tonnes to 195,000 tonnes.
• Chile's copper production fell 7% year on year, driven by setbacks at large mines.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).