Codelco Copper Output 'Guaranteed' at Current Levels (Update1)

May 19 (Bloomberg) -- Codelco, the world's largest copper producer, is "guaranteed" to produce at current levels for the next three years, incoming Chief Executive Officer Diego Hernandez said.

Codelco will spend $15 billion this decade to develop the company's reserves, the world's largest, Hernandez, the former head of BHP Billiton Ltd.'s base metals division, said in his signing-in ceremony today.

Codelco faces a "tremendous challenge" to revert sagging output at its aging mines, some of which are a century old, Hernandez said. Codelco's copper production has fallen in four of the past five years.

"There are significant challenges but if we know how to handle them we have a bright future," Hernandez said. "Fortunately Codelco has enormous reserves in its current operations."

Codelco needs to explore for deposits in areas outside of its existing operations, Hernandez said.