BHP Billiton plc (LON:BLT) has said it will spend US$2.46bn to extend the life of the Spence copper mine in northern Chile by more than 50 years, bringing new output online from 2021.
In a statement, the FTSE 100-listed miner’s chief executive officer Andrew Mackenzie said: "Execution of the Spence Growth Option (SGO) will create long-term value for shareholders in one of our preferred commodities. The project significantly extends the life of our Spence operation and unlocks the potential of the large, quality resource."
READ: Elliott Management raises stake in BHP Billiton to 5%
He added: "SGO has been extensively studied and we have made significant improvements to project cost and design so that it is able to compete in our portfolio of attractive development options."
BHP Billiton said that in the first 10 years of operation, incremental production from SGO will be approximately 185 kilotonnes per annum (ktpa) of payable copper in concentrate and 4 ktpa of payable molybdenum, with first production expected in the 2021 financial year.
It added that the current copper cathode stream will continue until the 2025 financial year.
Copper prices have recently hit their highest levels since late 2014 as expectations mount of strong demand and tighter supply following a fall in spending linked to the commodity price crash of 2015-2016.
BHP Billiton has been under pressure from US hedge fund group Elliott Management to consider some radical moves to unlock shareholder value.
READ: BHP Billiton outlines plans to grow value after Elliott Management calls for strategic review
In a letter sent to BHP Billiton directors in April, Elliott said the firm should scrap its dual-corporate, Anglo-Australian structure, demerge its oil business and rejig its capital return policy.
Elliott revealed yesterday that has raised its stake in BHP Billiton’s UK-listed shares to 5%, from a previous 4.5 % "economic interest".
BHP Billiton will report its full-year results next Tuesday.