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CESCO-INTERVIEW-Chile sees untapped copper in central region
8 hours ago by Thomson Reuters

* Vast resources unexplored in central Chile- mining min

* Prices to stay strong despite slower-growing China

* Chile sees hybrid cars, medicine feeding future demand

By Brad Haynes and Fabian Cambero

SANTIAGO, April 4 (Reuters) - Northern Chile may be the heart of the world's copper mining industry, but there is tremendous potential in the little explored central highlands, Mining Minister Laurence Golborne told Reuters.

Chile needs to look at incentives to foster exploration by nimble junior companies in a business dominated by the likes of huge mining companies Codelco [CODEL.UL] and BHP Billiton <BHP.AX> <BLT.L>, he said.

"Chile has focused exploration in the far north where it is easiest," Golborne said in an interview ahead of the CESCO conference in Santiago. Chile produce's one-third of the world's mined copper.

"But if you look in the central region, we have enormous deposits ... There are little-explored areas that could have enormous potential," he added, though some see greater growth potential in faster-growing regions like the Zambia and Congo copper belt or neighboring Peru.

Exploration in Chile's north is more straightforward given desert terrain that makes geology easier to survey and the population is relatively thin. In central Chile, vegetation masks rock formations and communities are more widespread, complicating exploration efforts.

Chile wants junior mining companies to list on its local stock exchange and have better access to local capital markets, following in the steps of mining powerhouses Canada and Peru.

The government is also planning to review the tax code to lure smaller miners into the country, which holds by far the biggest reserves of copper on the world.

Current high prices are a great incentive for exploration, and Golborne expects them to remain strong even if top consumer China's torrid economic growth slows further.

While copper prices are still near record highs, many in the market fear China's economic slowdown could deepen and hit demand in the world's top copper consumer at a time when warehouse stocks are rising as some hold the metal as collateral against loans.

"If the Chinese economy continues to grow, even at a slower pace, the level of consumption of copper will be significant enough to keep prices at a reasonable level," Golborne said.

Sustained global growth and copper output at the current pace is enough to keep copper around $4 per pound for some time, he said, citing a bullish outlook for India and other fast-growing Asian economies.

Copper's long-term outlook is also boosted by the fact its properties as a conductor make it hard to replace in key electrical applications, and as new uses in hybrid cars and medicine more than offset substitution elsewhere, he added.

To capitalize on the boom, Chile aims to raise output to 7.5 million tonnes by the end of the decade, up from 5.5 million tonnes at present, due to direct investment of around $50 billion over that period, Golborne said. (Reporting by Brad Haynes and Fabian Cambero. Editing by Simon Gardner and Diane Craft)


https://research.tdwaterhouse.ca/research/public/Markets/CommoditiesNews?documentKey=1314-N03210285-1