The objective of the geological exploration business of Codelco is to generate new copper resources from the identification of new deposits.

The exploratory activity of Codelco is carried out in areas that have been identified by the Corporation or suggested by third parties both in Chile and abroad. The exploration projects may involve associations with other companies, allowing to share the risk capital that characterizes the activity.

The staff responsible for explorations in Codelco work intensively in the field to discover new mineral deposits. The Chilean Andes region stores the greatest copper reserves in the world, some 32% of the total.

Codelco has made 7 of the 13 discoveries made in Chile since 1991. The world mining industry invested US$ 2,346 million between 1970 and 2001 in exploration. Of these, US$ 1,359 million were invested in Chile by several companies since 1993.

Ninety seven percent of the deposits that have been identified in Chile are of the "porphyric" type, in which copper is diluted in the mineralized body as sulfide and oxide ores mixed with other elements. The metal is recovered from the mineralized rock by using extraction and benefitiation technologies that are permanently under development. This process achieves grades as high as 99.99% copper.

Codelco´s strategy defines exploration as the first link in the value chain of the company, and it gives priority to aspects such as the quality of the exploration equipment, the field work of the geologists, persistency in the use of new concepts and management of specialized knowledge, among others.

Associations

The exploration projects to look for copper containing ores often involve Codelco´s association with other companies of the sector, for operations both in Chile and abroad.

In Chile Codelco has four exploration projects under this model: the Yabricoya with Cominco of Canadá, the San Bartolo with Minorco of England, the Sierra Mariposa with Placer Dome of Canada and the Río Hurtado with Barrick of the United States.

The association strategy´s goal is to share the risk capital, thus enhancing Codelco´s capacity to do business, since this allows it to take on a larger number of projects.

Facing the internationalization of explorations, associations with third parties become more essential. Starting in 2001, Codelco decided to give more strategic relevance to the search of business opportunities in other countries. Steps in this direction have been taken in Brazil and Mexico.

Codelco established associations with Barrick Brazil and with Minera Santa Elina to start exploration activities in Brazilian territory, in areas of high prospective interest. These societies give Codelco access to more than two million hectares, as well as to the possibility of obtaining 51% of share participation.

In the case of Mexico, Codelco and Industrias Peñoles S.A. de C.V. established the Pecobre mining society, to carry out explorations in areas of the Sonora region.