The distance between the Sierra Gorda and Spence mines is less than ten kilometres in a straight line. KGHM is already in talks with the Australian mining giant BHP, the owner of Spence, about potential cooperation in ore processing. The plan involves developing deposits adjacent to Sierra Gorda, which in practice could mean the creation of a new open-pit copper mine.
KGHM has been present in Chile for more than a decade. Commercial production at the Sierra Gorda mine, also known as Ignacio Domeyko, began in July 2015. The Polish company holds a 55 percent stake in the project, with the remaining 45 percent owned by Australian group South32 Ltd. Since its launch, Sierra Gorda has produced well over one million tonnes of copper and has become a key foreign asset for KGHM, generating significant profits for the entire group. The Chilean mine is currently considered a model operation in many respects, and KGHM earns substantial revenue from it.
KGHM is currently running two exploration programmes designed to maximise the potential of Sierra Gorda. The first is the Catabela Deep programme, which aims to confirm the continuity of the mineralisation system in zones located directly below the currently designed open pit. The goal is to determine whether valuable deposits with metal content that would make extraction economically viable still lie beneath the planned pit.
– Deep drilling carried out so far has shown stable copper and molybdenum grades, which opens up the possibility of incorporating new resources in the medium term – KGHM emphasised in its statement.
The second programme is Catabela Northeast, which covers an area adjacent to the current mining operations. Since 2014, 42 core holes have been drilled there. Further exploration drilling is planned in the coming years to verify the extent of the mineralisation and its continuation. Prospecting work, geochemical and geophysical surveys, and core drilling have confirmed that the zone shows strong evidence of continuous copper-molybdenum porphyry mineralisation.
– Prospecting work, geochemical and geophysical surveys, and core drilling have confirmed that the zone shows strong evidence of continuous copper-molybdenum mineralisation – the company reported.
Preliminary estimates indicate a deposit potential of several billion tonnes of ore with typical copper and molybdenum grades for this type of mineralisation. The location of Catabela Northeast relative to the current pit and the positive results to date make this area a priority in the plan to extend the life of the Sierra Gorda mine. To enable a precise estimate of the resource base, further drilling is planned in the coming years to explore the anomaly area.
The results of the work so far have not surprised geologists. The fact that the deposit may extend further is suggested by the presence of another large copper mine belonging to Australian BHP – Spence – located northeast of Sierra Gorda. Last year, that mine produced 254,795 tonnes of copper, and the straight-line distance between the two open pits is less than ten kilometres. This proximity suggests that both mines may be part of the same deposit system, opening up the prospect of cooperation.
BHP and KGHM in talks
In an interview with the WNP portal, KGHM CEO Remigiusz Paszkiewicz acknowledged that the company is exploring the possibility of cooperating with BHP. The talks concern the Spence mine and potential collaboration on ore processing. These are not accidental discussions, as there is a growing trend in the metals mining industry towards cooperation between companies at the operational level. Companies are starting to work closely together to improve efficiency, and this is being encouraged by the situation on the copper market, where metal supply is likely to be insufficient.
– Companies are starting to work closely together to improve efficiency – the article’s author notes.
KGHM is not disclosing the details of its talks with BHP, but they are expected to proceed relatively smoothly. It is worth noting that KGHM’s partner at Sierra Gorda – Australian South32 – is a company that was spun off from BHP 11 years ago. It is now completely independent of the giant, but its shared history and legacy may facilitate negotiations. South32 was created in 2015 as a result of the demerger of some of BHP’s assets and has since operated as a separate entity listed on the Australian stock exchange.
BHP’s new CEO, Brandon Craig, who took office on 1 July 2026, sent a widely commented signal to the industry. He stated that the company would focus more on building copper production capacity rather than buying it. The issue is that the current valuation of good copper projects is, in the giant’s view, inflated. A mine with a production capacity of around 50,000 tonnes of copper – less than half of Sierra Gorda’s half-year production – would cost an astronomical 5 billion dollars.
That is why BHP prefers to develop its existing assets and cooperate with partners who already have infrastructure in the region. Joint use of processing plants, access roads or pipelines could significantly reduce operating costs for both parties. For KGHM, cooperation with BHP is an opportunity to gain access to new resources and technologies, as well as to strengthen its position in Chile. BHP, despite being the world’s largest mining company, does not shy away from cooperation with partners if it brings economic benefits.
Sierra Gorda bis – what the new mine could look like
What could KGHM’s second mine in Chile – unofficially dubbed Sierra Gorda bis – look like? It is difficult to talk about specific parameters, but a new open pit is the most likely scenario. The Polish company would want to leverage the existing processing potential of Sierra Gorda, which, after the planned expansion with a fourth grinding line, is set to achieve a processing capacity of around 60 million tonnes of ore per year. Such a scale would allow it to handle both the current deposit and any new resources.
An important argument in the discussion is that Sierra Gorda is in such a strong financial position that it could finance development work on its own. In the first half of 2026, the mine produced 40.2 thousand tonnes of payable copper (for KGHM’s 55 percent share) and recorded high production levels of by-products, including silver and molybdenum. Strong financial results allow for investments without the need to seek external financing, giving KGHM greater negotiating flexibility.
Sierra Gorda currently has a projected mine life extending to 2045. There is therefore plenty of time, but preparatory and exploration work has been underway for years. The Catabela Deep and Catabela Northeast programmes are designed to provide the necessary data for investment decisions. If the results confirm the viability of exploiting the new resources, KGHM could proceed with developing the additional areas. A decision to build a new open pit or expand the existing mine would require economic analyses and the obtaining of the necessary environmental permits.
KGHM is also considering involvement in other projects outside Chile, for example in Morocco. As KGHM’s Vice President for Foreign Assets Anna Sobieraj-Kozakiewicz admits, various options are being analysed. When will we see the first results of the talks with BHP and the exploration programmes? Perhaps as early as 2026. Sierra Gorda is a key asset for KGHM, and its development is of strategic importance to the entire group. Cooperation with BHP and the development of new deposits around Sierra Gorda is a natural step towards strengthening KGHM’s position in the global copper market. Copper is a critical raw material for the energy transition, and demand for it will grow in the coming years.
Photo: KGHM
