SANTIAGO, Jun 09, 2010 (Dow Jones Commodities News via Comtex) -- Chilean state miner Corporacion Nacional del Cobre de Chile will invest $15 billion in the next five years to maintain its spot as the world's leading copper producer, President Sebastian Pinera said Wednesday.
Codelco's largest mines are a century old and its ore grades continue to fall, so the company needs to expand existing mines and develop new deposits to increase its annual output of around 1.7 million metric tons of copper.
"During the next five years, we are going to invest more than $15 billion to allow the rebirth and bring new youth to Codelco," Pinera said at the company's Radomiro Tomic mine in northern Chile.
Codelco's chief executive and the country's Mining Minister have both said already that the company would invest about that amount in projects over the next five years.
Pinera, the first democratically elected conservative president in over half a century, also reiterated that the miner will remain in state hands.
While on the campaign trail last year, Pinera said he was open to incorporating private capital into Codelco, but he later backtracked on that idea.
The company's powerful workers' unions threatened protests and stoppages if the Pinera administration went ahead with incorporating private capital.
"Codelco will continue to be a public company, owned by all Chileans...but today it needs to become a much more powerful and promising cornerstone than what's it been in the past," Pinera said.
The copper miner is one of the biggest generators of government revenue, contributing $4 billion in pre-tax profits in 2009 and $5 billion in 2008.
"Codelco is a key company in our country and the mining industry is fundamental," Pinera said.
Chile not only produces a third of the world's copper, it's also one of the leading producers of molybdenum, iodine, lithium, nitrates and other metals.
The president said that the mining industry generated $30 billion of the country's GDP last year, "which means that almost one of every five pesos the Chilean economy produces comes from the mining sector."