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Codelco CEO Confident Government To Reinvest Profit In Expansion
May 7,2010 08:59CST
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SANTIAGO, May 06, 2010 (Dow Jones Commodities News via Comtex) -- The chief executive of Chilean state copper giant Corporacion Nacional del Cobre remains confident the government will reinvest some of the company's profit into the mining company's ambitious capital expenditure budget.

Mining Minister Laurence Golborne recently said that given the government's earthquake reconstruction financing needs, Codelco, as the company is known, might not receive some of its 2009 profit for its 2010 budget.

For 2010, Codelco plans record capital expenditure of $2.4 billion, most of it earmarked for expansion projects at its largest divisions.

For the next five years, it has investment plans totaling $15 billion and aims to increase production by 50% in 2020. Last year, it produced 1.7 million metric tons of copper.

"Codelco's financing strategy is a combination of its own cash flow, debt and profit reinvestment; I'm certain that in coming years we'll continue to use these three sources," CEO Jose Pablo Arellano said in a presentation at an investment conference.

Arellano's term at the helm of the company ends on May 19, when Diego Hernandez, president of BHP Billiton Ltd.'s (BHP) base metals division, takes over the top spot.

Golborne, meanwhile, recently told reporters that Codelco might be forced to seek other sources of financing as paying for postearthquake reconstruction was a higher government priority.

The earthquake and tsunami it spawned hit Chile on Feb. 27, killing hundreds, damaging or destroying hundreds of thousands of homes and causing damage estimated at $30 billion.

The government will finance $8.4 billion in reconstruction as the rest of the bill will be financed by insurance claims or the private sector.

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