KGHM and South32 (ASX, LSE, JSE: S32) have officially begun a $725 million expansion of their Sierra Gorda mine in Chile, expected to lift annual copper output to nearly 200,000 tonnes.
The fourth grinding line will increase the Antofagasta operation’s ore-processing capacity by 26%. Construction is scheduled to begin in January 2027, with the expanded plant expected to reach full capacity in the second half of 2030.
The project targets average annual payable copper production of about 195,000 tonnes and a roughly 10% reduction in average operating unit costs, according to South32’s investment approval announcement.
The investment comes as Chile’s mining industry faces declining production, putting pressure on the world’s largest copper-producing country to bring additional capacity online.
Economy and mining minister Daniel Mas said projects such as Sierra Gorda would help bridge the current transition and an expansion cycle expected to begin in 2027.
Poland’s KGHM owns 55% of Sierra Gorda, while Australia’s South32 holds the remaining 45%. The local joint venture, Sierra Gorda SCM, will manage the project, which is expected to create about 900 direct construction jobs and support regional mining services, transport and accommodation businesses.
Chilean President José Antonio Kast joined local and Polish officials at the symbolic cornerstone ceremony, held on the 12th anniversary of the mine’s first production on October 1, 2014.
Sierra Gorda CEO Marcelo Bustos said the operation ranks as Chile’s eighth-largest copper producer, accounting for 3.1% of national output.
Longer mine life
The expansion forms part of a broader investment plan that includes a $100 million exploration program between 2028 and 2032, aimed at extending operations to 2049. The Catabela deposit is a key exploration focus.
In August, the partners announced a 61% increase in Sierra Gorda’s ore reserve estimate, extending its estimated reserve life by about five years to 2045.
Ore reserves rose to 1.1 billion tonnes grading 0.39% copper, 0.016% molybdenum and 0.06 grams of gold per tonne, with a copper-equivalent grade of 0.46%.
Mineral resources increased to 1.87 billion tonnes grading 0.37% copper, 0.016% molybdenum and 0.06 grams of gold per tonne, with a copper-equivalent grade of 0.44%.
The fourth grinding line has secured the necessary permits. Mas said the approvals demonstrated that competitive mining projects could meet high technical and environmental standards.
Sierra Gorda processes low-grade ore, making plant efficiency central to its performance. The operation also has an ongoing commercial and technical collaboration agreement with BHP’s (ASX: BHP) nearby Spence mine to pursue economies of scale and improve the efficiency and sustainability of both operations.
