Jan. 13 (Bloomberg) -- Codelco, the world's biggest copper producer, plans to invest a record $2.3 billion this year as prices surge for the metal used in plumbing and wiring.
Chile's state-owned copper company is increasing investments by 12 percent to tap new reserves at existing mines from last year's $2.05 billion, Fernando Vivanco, vice president of projects, told reporters today in Santiago.
Codelco boosted production by 15 percent in 2009, ending four years of declining output, Chief Executive Officer Jose Pablo Arellano said at the same event. Copper futures more than doubled last year as disruptions and demand from China, the world's largest copper user, led to shortages of the metal.
"It's an ambitious plan,"Arellano said. "While other companies slowed down their investments, we forged ahead."
Cochilco, Chile's state-run copper statistics agency, estimates Codelco will increase production by 110,000 metric tons this year, from 1.68 million tons of copper in 2009, research director Ana Isabel Zuniga told reporters in Santiago today. Codelco will release its 2009 earnings report next month.
Cochilco forecasts prices may average $3.10 a pound in 2010, an increase from a previous estimate of $2.70 a pound, as mine supplies fall, Zuniga said. China will lower its purchases by as much as 1 million tons of copper after accumulating stockpiles last year, she said.
Copper futures for March delivery added 6.15 cents, or 1.8 percent to $3.411 a pound at 12:05 p.m. on the Comex division of the New York Mercantile Exchange.
Global copper demand may fall by 0.6 percent to 17.8 million metric tons in 2010, Cochilco said. Global production will fall by 104,000 tons, it said. Chile's copper output may increase to a record 5.7 million tons in 2010, surpassing a record in 2007, Cochilco said. Chile produced 5.34 million tons last year, Zuniga said.
Codelco will reinvest some of last year's profit and tap financial markets to help finance the investments, Arellano said. Expansions to its Andina, El Teniente and Radomiro Tomic mines will increase production capacity by 290,000 metric tons, he said. Falling output from existing mines means Codelco may only achieve a "modest"increase in production, he said.
Arellano maintained a "positive" long-term forecast for the metal even as China's efforts to curb a credit boom and prevent overheating of its economy creates "volatility."
Codelco, which owns about a third of the world's proved copper reserves, restarted its Chuquicamata mine on Jan. 6, ending a two-day strike after agreeing to pay workers record bonuses worth $24,000.