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SANTIAGO, May 13, 2010 (Dow Jones Commodities News via Comtex) --&nbsp; The Chilean government needs to continue reinvesting part of Corporacion Nacional de Cobre's profits into the copper mining company to finance its ambitious investment plans, the miner's chief executive said Thursday.
In recent years, the government has reinvested $1.9 billion into the copper miner known as Codelco, but for 2010, due to post-earthquake reconstruction efforts, officials have said the country has other financing priorities.
In late February, the fifth strongest earthquake on record hit the South American nation, leaving behind damages estimated at $30 billion. The government will foot the bill for $8.4 billion, with insurance policies and the private sector covering the rest.
Mining Minister Laurence Golborne recently said Codelco might not see reinvestments from its 2009 profits and will have to seek other financing sources for its planned $2.4 billion 2010 capital expenditure budget.
The company's Chief Executive Jose Pablo Arellano, whose term ends Tuesday, said he hopes the government will continue to reinvest in the mining company over the next five years.
Codelco has investment plans totalling $15 billion over the next five years for the company to maintain its spot as the world's largest copper producer.
&quot;You have to look at the five-year plan. This year reinvestment might be lower but in coming years it should be bigger,&quot; Arellano told reporters.
If the government doesn't allow Codelco to retain part of its 2009 profits, the company can still finance its record capital expenditure for the year through amortization, depreciation and debt, the executive said in a review of his four years at Codelco's helm.
He declined to say how much Codelco would seek in debt this year, saying that would be up to the incoming administration to decide.
Conservative Chilean President Sebastian Pinera earlier this week named a new president of the miner's board of directors while the new CEO, BHP Billiton Ltd. (BHP) executive Diego Hernandez, joins the miner May 19.
Among Hernandez's challenges, Arellano said, will be to carry out the $15 billion, multiyear investment plan, which is centered on expansions at the company's aging mines.
Codelco's Chuquicamata and El Teniente have both been producing copper for over a century and the company's average ore grade, or the amount of copper contained in the rock it mines, has steadily fallen.
At Codelco, the average ore grade is around 0.8% copper per metric ton of mineral, while the Chilean industry average tops 1%.
As more and more copper mines come on line around the world, Codelco fights to remain the biggest producer. Last year, it produced about 1.7 million metric tons of copper, or about 10% of global output.
Although he won't be around to release first-quarter output data, due out at the end of the month, Arellano said the company posted a strong first quarter, topping the results it obtained in the same quarter a year ago. 
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