Arellano said the decision was based on technical and financial considerations supported by an opportune hedging operation. “This decision will benefit both Codelco and local stakeholders and boost the proceeds we deliver to all Chileans.”

The Salvador Division produces some 80,000 tons of refined copper per year. About 25,000 tons come from copper oxides mined at Damiana, an open-pit facility. This copper oxide processing line exceeds Codelco’s average production cost.

In 2005, noting that expected prices would not adequately cover the high cost of Damiana’s operation in the coming years, the company set to end copper oxide-based production after 2008.

“The good news today is that higher prices are giving copper oxide production at Salvador a two-year reprieve. Prices for 2009 and 2010 have now more than doubled, which guarantees a proper return,” said Arellano. “Extending the life of the Damiana mine will bring in an additional 20,000 mt/y, which means additional revenue for Chile.”

This decision, “will give us more time to implement the reconversion project we’ve designed to ease the impact of closure on the Chañaral Province,” Arellano noted.

Asked about a further deferment should prices stay high, Arellano said, “I’d rather not speculate about prices in 2011 and beyond. Based on today’s technology, I don’t see Salvador staying in production.” As most resources to be mined through 2011 will be even lowergrade, “prices would have to be exceedingly attractive” for the company to entertain an additional deferment.

Arellano also emphasized that the company remains committed to its worker’s retraining plans and today’s decision provides additional time for implementation.

In an unrelated development, Codelco and Freeport-McMoRan Copper & Gold, owners of the El Abra mine in Chile, are apparently moving forward on a project that could add years the life of the mine.

The companies said in a joint statement they had submitted an environmental impact study to Chilean authorities on March 28 to change El Abra’s operation from oxide to sulphide leaching to access a sulphide orebody.

Freeport-McMoRan reported that a feasibility study was completed at the end of 2006 that evaluated development of the large sulphide deposit at El Abra, which would extend the mine life by seven years. Copper production from the sulphide ore is expected to begin in 2010. Existing facilities at El Abra, such as the crusher, transport belts and SX-EW plant, will be used to process the additional reserves, minimizing capital spending requirements. Total initial capital for the project is approximately $350 million, the majority of which will be spent between 2008 and 2011. The project has yet to be approved by the boards of directors at the companies.

While waiting for permits, work will continue on engineering for what will be called the Sulfolix project, Codelco and Freeport-McMoRan said.

El Abra is 49% owned by Codelco, with 51% ownership held by Freeport- McMoRan.