Copper traders, manufacturers discuss funding for Chile smelter

Chile’s Enami is in talks with manufacturers and traders interested in financing a $1.4 billion-plus smelting project as the top copper-mining nation looks to arrest a drop in processing capacity.

The state-owned mining company has been approached by copper users as well as global trading firms to potentially put up funds to rebuild the Paipote smelter that was mothballed early last year, chief executive officer Ivan Mlynarz said Monday in an interview.

Sinking money into smelting would appear to make little business sense right now given there’s a global glut, which may be exacerbated by the US’s push to be self sufficient in copper. But Mlynarz says the project is viable, considering it would use more efficient technology and produce byproducts such as gold and sulfuric acid. Chile is among countries looking to boost local smelting for sustainability reasons and to ease their dependence on China.

Enami has started sounding out advisers for a process to finance the project, in which the state company will retain 100% ownership, Mlynarz said. One option is that metal buyers would essentially pay up front for copper. Multilateral lenders offer another option, he said.

Mlynarz is striving to get the project moving before the government’s term ends in March, with environmental permitting and the results of an independent audit expected to be in place by mid year.

“Today, there are a range of interested parties — that’s very different from 20 months ago,” Mlynarz said. Asked what’s changed, he said: “The certainty of the project — the probably that it will be a reality.”

Separately, Chile’s other state mining company Codelco is working on a proposal to develop a new smelter with private capital. Codelco closed one of its smelters in 2023 for environmental reasons, while a proposed toughening of emission rules poses a threat to another.

Enami’s other big project is in lithium. Latest drilling puts resources at the Altoandinos project at about 3 million tons of the white metal. That indicates it could sustain annual output of as much as 100,000 tons compared with an original estimate of 60,000 tons, Mlynarz said.

The state firm is seeking a partner to develop Altoandinos, with four shortlisted candidates — Rio Tinto Group, China’s BYD Co., France’s Eramet SA and Posco Holdings Inc. of South Korea — due to make binding offers April 21 and a winner to be chosen in May. Bidders are betting lithium will recover from the lowest levels on almost four years as a glut works its way through battery supply chains.

(By James Attwood)