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By Dave Sherwood
SANTIAGO, June 29 (Reuters) - Chile’s government will inject $1 billion in “extraordinary” capitalization into state-owned copper miner Codelco as an additional boost to the company’s ambitious plans to overhaul its aging mines, Finance Minister Felipe Larrain said on Friday.
Codelco produces nearly 10 percent of the world’s copper and is planning a 10-year, $39 billion total overhaul of several of its operations as it seeks to maintain production despite rapidly falling ore grades at Chile’s major deposits.
“It is important that Codelco carries out this investment programme because if it does not invest, its mines will run dry,” Larrain said.
He said half the funds would be dispersed immediately and all would be paid out by February next year.
The injection of capital coincides with several of Codelco’s planned projects, including at the sprawling, century-old El Teniente y Chuquicamata mine, facing delays for technical reasons, raising costs.
Codelco returns all of its profits to the state and is funded by a mix of capitalization and debt.
The state-run miner last year delivered $3 billion in profits to Chile’s coffers, accounting for 16 percent of the South American nation’s exports and more than one-third of its copper production.
Chile President Sebastian Pinera, a conservative billionaire who took office in March, has promised stable financing, improved management and efficiency at Codelco. He has called for “maximizing performance of existing assets.” (Reporting by Dave Sherwood; Editing by Chizu Nomiyama and Grant McCool)