Codelco Investment Will Develop Structural Projects

SANTIAGO, CHILE - Codelco reported that it will invest US$ 4,328,000 this year, of which US$ 2,273,000 will go to the investment plan managed by Project Vice-Presidency - the specialized unit created in 2005 - responsible for managing and implementing the Company's key development projects.

The estimated investment is a new record in Codelco's history; last year it invested US$ 2.545 billion, of which US$ 1.022 billion went to VP's project portfolio.

This significant investment is primarily focused on developing Codelco's structural projects in Chile; Ministro Hales and El Teniente New Mine level are already under construction and this year will invest US$ 1.145 billion and US$ 399 million, respectively. Chuquicamata Underground Mine, north of Santiago, is currently conducting a feasibility study and implementing early works, which during this period will amount to US$ 234 million. Finally, Andina Expansion, Region V Chile, 244, RT Sulphide Mine Phase II and San Antonio Oxides will continue implementing their feasibility study stages.

The implementation of these projects will create a significant number of jobs, which on average will benefit more than 16,000 employees.

These five key projects will enable Codelco to maintain and even increase its current production rate and improve it competitiveness, consolidating its leadership in the global mining industry.

Codelco's has a very positive assessment about the progress of its projects during 2011. Key achievements were: the early works construction was completed for the Ministro Hales project, this involved a US$150 million investment and an implementation period of 23 months, including, but not limited to, a drainage system for the mine area, transfer of power lines and electrical installations, major road works, housing construction (hospital, offices, bureau de exchange) and the mine truck workshop with a mechanical lubrication shop and wash shop.

In 2011, two projects were completed which are necessary for the operation of Andina Division and its future expansion: RÆo Blanco Diversion Tunnel and Water Flow Regularisation Stage I, which jointly totalled US$ 255 million.

Another important achievement for VP management in 2011 was safety during early works and project construction, i.e., high risk jobs such as working with explosives, industrial assemblies at high altitudes, electrical and mechanical jobs. The results of this "commitment to life" were reflected in good safety performance indicators: for a total 11,787,000 worked hours and an average workforce of 6,029 employees, the Total Frequency Rate was 1.53 and the Total Severity Rate was 40, the best results in the project industry.

In 2012, Codelco will focus on the efficient management of its structural projects, i.e., prevent serious accidents occurring and implement projects within deadlines, budget and quality standards. It is a significant challenge, given the complexity of the global market of mining projects, with different simultaneous developments and a high demand for professionals, engineering, services and supplies.

Ministro Hales-MH is currently removing overburden and waste materials from the mine world's large pre-stripping operation with 238 million tonnes and it is also building the crushing, grinding and flotation plants, the roasting complex and the sulphuric acid and arsenic abatement plants. They are all scheduled to start operations by mid 2013.

The New Mine Level - El Teniente Project, that in 2011 had its Environmental Impact Assessment (EIA) approved and investment authorised, is currently completing its early works, i.e., its Confluence platforms, where the access roads to its main tunnels will be located. Additionally, at the beginning of this year, project implementation commenced both from inside and outside the mine.

At Chuquicamata Underground Mine the structural project was approved last year by the Board in order to implement its early works, which were positively recommended by Cochilco Mideplan. Together with implementing the feasibility study, it has started works that are the project's "critical route." A US$ 850 million investment, the early works for Chuqui Underground include a series of earthworks and major excavations, such as tunnels that are access roads for both workers and to transport minerals, shafts and drifts for clean air intake and air removal, mine ramps and other support works, such as water networks, power supply, telecommunications and part of the industrial facilities.

The Andina Expansion 244 project has made progress in two sub-projects that form part of its early works Acid Water Treatment and Node 3,500- and by the end of 2012 its feasibility study should be completed.

At RT Sulphide Mine - Phase II which is Codelco's fifth structural project and involves a new concentrator plant that will use desalinated seawater to process the sulphide reserves from the Radomiro Tomic Mine in the Atacama Desert of northern Chile. In 2011, the project completed its prefeasibility stage and this year it has to complete the feasibility study.

More than US$ 2.2 billion of this investment will go to key projects developed by the company at its different divisions. The implementation of these projects will also create a significant number of jobs, which on average will require more than 16,000 employees.

The company headquarters are: Huerfanos 1270, Santiago, Chile.