UPDATE 2-BHP OKs $554 mln plan to boost Chile Escondida output

 * One of biggest projects at Escondida in 7 years
 * BHP eyeing other ways to reach higher grade ore
 * Output dwindled on low ore grades since 2007 peak
 (Updates with analyst comment, graphic link)
 SANTIAGO, March 30 (Reuters) - BHP Billiton said Wednesday
it approved a $554 million investment at the world's No. 1
copper mine, Chile's Escondida -- one of the biggest projects
there in seven years -- as it seeks to boost dwindling output
at a deposit many fear is past its heyday.
 The project will relocate crushing and conveying facilities
in Escondida's main pit to improve access to higher grade ore
and help boost production from 2013, BHP (BHP.AX: Quote, Profile, Research) (BLT.L: Quote, Profile, Research) said
in a statement, adding its share of the project's costs totaled
$319 million.
 The last major project approved at Escondida was an $870
million sulfide leach operation in 2004.
 "Escondida has been one of the world's premier copper mines
for over two decades and our ongoing exploration program
suggests the basin retains a number of options for further
development," said BHP Billiton Base Metals President Peter
Beaven.
 "We are studying a number of additional opportunities to
improve access to higher grade ore and increase processing
capacity over the years to come," he added.
 (Graphic on mine's output: http://r.reuters.com/rus78r )
 Escondida's output fell slightly in 2010 on lower
production of copper cathodes, but the pace of output declines
at the deposit slowed following two years of sharp falls.
 The mine's annual output dwindled sharply in 2008 and 2009,
after reaching an all-time peak of 1.48 million tonnes in 2007,
on disruptions and deteriorating ore quality. [ID:nN1484377]
 Some were skeptical the investment would make much
difference.
 "That seems kind of small dollars ... to do almost anything
these days, it starts with a 'B' usually. These are big
companies. In order for it to have any impact on their basic
business, it has to be pretty sizable," said Charles Bradford,
a metals analyst with Bradford Research Group LLC.
 "This is a mine where reserve grades have been falling, so
in order to keep the output up they have to expand the amount
of material processed," he added.
 BHP has a 57.5 percent stake in Escondida, while Rio Tinto
(RIO.L: Quote, Profile, Research) owns 30 percent. JECO Corp, a consortium formed by
Mitsubishi Corp (8058.T: Quote, Profile, Research), owns 10 percent and JECO 2 Ltd owns
2.5 percent.
 (Reporting by Brad Haynes in Santiago and Chris Kelly in New
York; Writing by Simon Gardner; editing by Jim Marshall)


UPDATE 2-BHP OKs $554 mln plan to boost Chile Escondida output