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BHP has approved a $2.46bn capital expenditure programme at the Spence open-cut copper mine in northern Chile, which will extend the mine life by more than 50 years.

The spending will be directed towards the Spence Growth Option (SGO) project, which is part of the company’s strategy to achieve near-term, valuable copper production.

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With first production scheduled in 2021, the project is expected to yield incremental production of 185ktpa of payable copper in concentrate and 4ktpa of payable molybdenum, in the first ten years of operation.

BHP CEO Andrew Mackenzie said: “The project significantly extends the life of our Spence operation and unlocks the potential of the large, quality resource.”

“SGO has been extensively studied and we have made significant improvements to project cost and design so that it is able to compete in our portfolio of attractive development options.”

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“The project significantly extends the life of our Spence operation and unlocks the potential of the large, quality resource.”

With an expected internal rate of return of 16%, the project is expected to convert 1.3Bt of measured and indicated mineral resources to hypogene sulphide ore reserves.

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Project works include the design, engineering and construction of a sulphide concentrator for both copper and molybdenum with a nominal ore throughput capacity of 95ktpd.

BHP projected that around 5,000 jobs will be created during the construction phase.

A new 1,000l/s desalination plant will also be built at Mejillones Bay, along with a 154km water pipeline from the plant to the Spence mine site under a $1.43bn build, own, operate and transfer contract.

Image: Operations at BHP’s Spence copper mine located in the Atacama Desert in Chile. Photo: courtesy of BHP.