Codelco and Glencore to advance major smelter in Chile

Chile’s state-owned copper miner Codelco has signed a memorandum of understanding with Swiss miner and commodities trader Glencore (LSE: GLEN) to advance a new smelter in the country.

Codelco is to supply Glencore with up to 800,000 metric tonnes of copper concentrate a year while Glencore leads the project’s development, which covers the design, financing, construction, operation and maintenance of a plant. This facility is expected to process 1.5 million dry metric tonnes annually under strict environmental standards. Codelco has previously said it will not directly build or finance the plant.

“We believe this is a good initiative for Chile’s current and future mining ecosystem. The proximity of the new smelter to other copper-producing companies will provide logistical advantages, operational flexibility, and the possibility of capturing added value by refining concentrates close to the production source,” Codelco Chair Máximo Pacheco said.

The deal marks a key step for Chile’s mining sector and aligns with long-term goals for sustainability and global competitiveness, Pacheco  added. He said the project supports the country’s strategic position as demand for critical minerals grows and nations push ahead with the energy transition.

Glencore shares gained 6% to £384 ($512) on Wednesday in London, valuing the company at £45.2 billion. The stock has traded in a 12-month range of £205 to £455.

Final deal pending

Glencore will now begin a pre-feasibility study, with both companies aiming to complete a final agreement in the first half of next year. If approved, construction would start in 2030 and operations would begin between 2032 and 2033. Codelco said Glencore was chosen after a competitive tender.

Glencore CEO Gary Nagle said being selected as Codelco’s strategic partner for the landmark project reflected the company’s confidence in Chile. The company, which has invested heavily in the country’s mining sector for years, looks forward to building a long-term partnership with Codelco, Nagle said.