February 27, 2019 / 4:17 PM / 3 months ago

UPDATE 1-Chile's Chuquicamata underground copper mine to start this year -Codelco

(Adds Finance Ministry announcement of second capitalization payment; further info on overhaul)

By Aislinn Laing and Marion Giraldo

SANTIAGO, Feb 27 (Reuters) - Chile’s Chuquicamata underground copper mine is due to start operations in middle of this year, the state copper miner Codelco’s chairman said on Wednesday.

Chairman Juan Benavides said the start-up will be “a fundamental step and milestone in this structural overhaul” of Codelco.

Codelco, which produces nearly 10 percent of the world’s copper, announced a $5.550 billion investment to convert Chuquicamata, its second-largest resource, from an open cast mine into an underground facility last year.

The plans for Chuquicamata are part of a 10-year, $39 billion overhaul of the state miner’s key operations as it seeks to maintain production despite rapidly falling ore grades at its deposits.

Finance Minister Felipe Larrain confirmed in the same news conference on Wednesday that the government would pay out the remaining $400 million of $1 billion capitalization for Codelco’s overhaul that was announced last June.

“This is a show of the confidence we have in the company and in the importance of these resources for Codelco to be able to complete its structural reform program,” Larrain said.

Codelco’s Chuquicamata and nearby Radomiro Tomic mines produced 653,000 tonnes of the company’s total 1.8 million tonnes of output last year, a third of Chile’s total production. (Reporting by Aislinn Laing and Marion Giraldo Editing by Chizu Nomiyama and Bill Trott)

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