SANTIAGO – Chile’s State copper processor Enami is pushing a more ambitious project at almost double the cost to ensure its Paipote smelter meets new environmental standards.

An initial investment of as much as $65-million will allow Enami to comply with new rules that require smelters to capture 95% of emissions by 2018, Executive Vice-President  Jaime Perez said in an interview Tuesday. A second phase requiring as much as $700-million would use Chinese technology and funding to expand the plant and capture 99% of emissions by 2020, he said. That compares with a $418-million plan announced at the end of last year.

“Upgrading Paipote is a trial by fire,” Perez said. “The smelter is our main business and it holds Enami’s structure together, so it needs to be profitable.”

The new regulation is part of Chile’s multibillion-dollar bid to overhaul decades-old technology at its seven smelters and catch up with cleaner plants in Japan, China or Europe, all at a time when the industry is cutting costs to cope with lower prices. Adding to the challenge in Chile, the biggest copper-producing country, are high levels of arsenic in the concentrates it produces.

Dirty Ore

“The investment is inevitable because it is impossible to move concentrates with such high levels of arsenic around the world," Perez said. "It’s wrong to think only about a raw material export model. We need to become more industrialized and think about new business models."

For the second, more ambitious phase of its project at Paipote, the state company will seek a Chinese partner to provide technology and funding in exchange for a stake in the expanded smelter. Enami, which processes material for small and mid-sized mines, is studying the possibility of doubling capacity to 700 000 metric tons of concentrate a year.

Empresa Nacional de Mineria, as the company is formally known, plans to present the first phase of the project to Chile’s state copper commission this month and the second phase at a later date, Perez said.

While copper prices have recovered 3.6% this year, they are still down more than 50% from a 2011 peak as supply expanded just as Chinese demand began to slow.

“With a Chinese partner, we lower the risks and we ensure its viability,” he said. “This is a long, expensive and ambitious dream in a sector that is only viable if we can ensure very low costs.”