Codelco Secures $1.5 Billion in Bonds to Boost Copper Investments
Codelco, the Chilean state-owned mining giant, is turning to the bond market to raise approximately $1.5 billion. This funding will help finance its record-breaking investment plan aimed at maintaining its position as the world’s leading copper producer.
The company is issuing two benchmark-sized bond tranches of around $750 million each, with maturities of 10 and 30 years, according to sources familiar with the deal. This marks a continuation of its financing strategy, as Codelco raised a similar amount through bonds last year.
Massive Overhaul of Aging Operations
Codelco is undertaking an ambitious modernization program to revitalize its aging mining operations in Chile. Decades of underinvestment have left the company grappling with declining output, leading to its lowest production levels in 25 years.
To address these challenges, Codelco allocated between $4 billion and $5 billion for capital expenditure in 2023 and has raised that figure to nearly $6 billion in 2024. The funds are earmarked for critical upgrades to its facilities, ensuring the company can sustain its global dominance in copper production.
Strong Market Demand
The bond issuance, managed by Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., and Banco Santander SA, has seen favorable market response. Pricing on the 10-year tranche has tightened to about 170 basis points above US Treasuries, down from initial guidance of 195 basis points. Similarly, the 30-year tranche pricing narrowed to about 190 basis points, compared to the earlier 215 basis points.
With this successful bond offering, Codelco is well-positioned to move forward with its transformative investments, securing the future of its copper operations and reinforcing Chile’s pivotal role in the global copper supply chain.
