SANTIAGO – Chile’s government said on Friday it will capitalize state-owned miner Codelco, the world’s largest copper producer, with $4 billion during the 2014-2018 period.
Of the total, $3 billion will come from Treasury-issued debt and the remaining $1 billion from reinvestment of the company’s profit, Finance Minister Alberto Arenas said at a press conference.
The amount includes $200 million of Codelco’s 2013 net income that the government returned to the miner at the beginning of July, Arenas said.
The state-owned copper giant, which produces nearly 1.6 million tons of the red metal a year, had requested $1.2 billion in financing for 2014, a period in which it is planning to invest a total of $4 billion.
The company is planning to carry out a $23 billion investment program to overhaul its aging mines with the goal of lifting annual copper production to more than 2 million tons by 2025.
Codelco is subject to a special tax regime that requires it to deliver all of its net income, which in 2013 totaled $3.9 billion, to the Treasury and turn over 10 percent of its annual revenue to the armed forces.
Arenas said Codelco’s ability to continue generating net income for the national government “crucially depends on the timely execution of its structural projects.”
The finance minister said the capitalization proposal will be sent to Congress this month.
On Thursday, the company said it named Nelson Pizarro, who has a lengthy track record in the mining industry, as its new chief executive officer.
Pizarro, who will take over as CEO in September, will be tasked with leading the biggest investment plan in the company’s history, Codelco said in a statement.