Diversified miner BHP is hosting analyst site visits to its Escondida and Spence copper operations in northern Chile next week and is expected to shed light on its investment plans to address declining grades.Falling grades at Escondida and oxide ore depletion at Spence are expected to cause their output to fall from about 1.5Mtpa to 1.2Mtpa in the coming years without further investment.The company is planning billions of dollars of investments to boost production to 1.
It also wants to double the concentrator capacity at its Bagdad operation in Arizona.The increasing capital intensity of projects, including brownfield expansions, is causing companies to think long and hard before embarking on multi-year investments. This is particularly true in light of cost blowouts at expansion projects such as Teck Resources' QB2 in Chile, where costs doubled from less than $4 billion to almost $9 billion.