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Two of the biggest mining firms in the world, Rio Tinto PLC and BHP Billiton Ltd are teaming up to invest over USD 4 billion to boost their copper output, according to their announcement on Tuesday.
Rio and BHP have staked their investment on a high copper demand worldwide as they approve plans for USD 4.5 billion expansion of their Escondida mine in Chile. BHP is even reopening their copper mine that has been out of commission since 2009 due to the global fiscal crisis.
The mining site that will produce molybdenum concentrate and copper is expected to have a yearly production of around 60,000 tonnes. Moreover, BHP expects that this resumption of operations will provide for 650 new jobs.
Majority of the money is set to be invested in the Escondida operation located in the southeastern part of Antofagasta, Chile. In addition to this, BHP is also planning to resume its operations at the Pinto Valley in Arizona before the year ends.
The recovery in ore grades combined with current work at Escondida should aid them in their target production of over 1.3 million metric tonnes by 2015. This is exclusive of the 60,000 tonnes of copper concentrate that the Pinto Valley is capable of producing yearly, according to BHP.
Last year, operations at Escondida was distracted by labor strikes and lower grade ores but Rio and BHP announced that output is anticipated to increase from 2013 due to the higher grade ore in the main pit.
Escondida is a joint venture between Rio and BHP with a total stake of over 87%. Almost 8% of the total world production comes from it.
Production of copper has been steadily decreasing worldwide for the past few years, triggering an aggressive pursuance for a big copper prospect like the Oyu Tolgoi in Mongolia and the Olympic Dam in South Australia.
BHP is planning to release USD 2.6 billion on 2 projects to increase their mining output while Rio (with their USD 1.4 billion stake) and Japanese consortium JECO’s respective stakes are going to take care of the rest.
Companies in the mining industry are aggressively investing in minerals and key metals as they maintain an optimistic view that demand from China and other developing countries will continue to grow. In order to improve their overall output by 80%, the biggest copper mine is showing optimism regarding the long-term demand for metals.
Last year, the mine’s produce amounted to more than 700,000 tonnes of copper.