Copper traders, manufacturers discuss funding for Chile smelter

As global supply chains shift and pressure grows for cleaner, localized production, Chile’s renewed focus on smelting may signal a broader strategic pivot in the copper industry.

Chile’s state-owned mining company Enami is in active discussions with global copper users and trading firms to secure financing for the $1.4 billion reconstruction of its mothballed Paipote smelter. The initiative marks a strategic move by the world’s leading copper-producing nation to curb the decline in domestic smelting capacity and reduce its reliance on foreign processing — particularly from China.

Despite a global surplus in copper smelting capacity, which may intensify as the U.S. seeks to strengthen its own supply chain, Enami CEO Iván Mlynarz told reporters Monday that the project remains economically viable. He emphasized that the revamped facility would employ more efficient technologies and generate valuable byproducts such as gold and sulfuric acid.

“There are a range of interested parties today — that’s very different from 20 months ago,” Mlynarz said, noting increased confidence in the project’s feasibility. “The certainty of the project — the probability that it will be a reality — has changed the landscape.”

According to Mlynarz, Enami has begun exploring financial advisory services to guide the funding process. While the company plans to retain full ownership of the smelter, financing options include prepayment deals from metal buyers or support from multilateral lending institutions. The aim is to finalize environmental permits and an independent audit by mid-year, with construction efforts to begin before the current government’s term concludes in March.

The Paipote smelter, located in northern Chile, was shut down in early 2023 amid tightening environmental regulations. The modernized facility is expected to help Chile meet sustainability goals by increasing in-country processing, reducing emissions, and promoting cleaner production methods.

Meanwhile, Codelco — Chile’s other major state-run mining entity — is also developing a new smelter project with private capital. The company recently shut down one of its own smelters due to environmental concerns and faces challenges from upcoming stricter emissions standards.

As global supply chains shift and pressure grows for cleaner, localized production, Chile’s renewed focus on smelting may signal a broader strategic pivot in the copper industry.