(Adds Codelco's comments, background)
SANTIAGO, Dec 19 (Reuters) - The expansion of Chilean copper company Codelco's El Teniente underground mine has fallen around two to three years behind schedule, Chief Executive Officer Nelson Pizarro said on Friday.
Pizarro, who took the helm at the world's No. 1 copper producer earlier this year, added that the El Teniente expansion will require $2 billion more than initially planned.
State-run Codelco wants to dig deeper to add a new level at El Teniente, the world's biggest underground copper mine. The company had forecast that the project would cost some $3.4 billion and begin operating in 2018.
"The new mine level, however, is considerably more complex simply because it's deeper ... in order to assure control and minimize risks we have slowed down the development of the mine," Pizarro told journalists following a Codelco shareholders meeting.
"Extending the construction time frame will require extra resources of around $2.0 billion."
Codelco is battling falling ore grades at its decades-old flagship mines as well as high energy costs, and seeking to implement an ambitious $27 billion multiyear investment plan to open new projects and revamp older ones.
On Thursday, the miner's board of directors approved $3.3 billion in investments on top of the $900 million already spent, to transform the century-old Chuquicamata open pit mine into an underground operation and expand its life by at least 40 years.
Regarding the copper market, Pizarro forecast improved prices for the industrial metal as of the second half of 2016.
Benchmark three-month copper on the London Metal Exchange rose 1.1 percent to $6,382 a tonne by 1415 GMT, but was heading for losses of nearly 2 percent for the week.
For the year, copper is down some 13 percent on worries the market is heading toward surplus after several years of deficit, and as economic growth slows in China, which consumes nearly half of the world's copper. (Reporting by Felipe Iturrieta; Writing by Anthony Esposito; Editing by Jeffrey Benkoe)