INTERVIEW-Drill rigs scarce as Chile copper hunt intensifies

By Pav Jordan

SANTIAGO, July 14 (Reuters) - Exploration for copper is growing again in Chile, reversing the trend of previous years as the world's largest producer of the red metal works to find new reserves, a top mining executive said on Monday.

Francisco Costabal, president of the Mining Council that represents Chile's biggest copper mining enterprises, said one of the strongest indicators of a new exploration boom is the shortage of available drill rigs in Chile.

"A good indicator of how much exploration activity we are experiencing is the scant availability of drills, which are about as scant as water in Chile," Costabal said during an interview to mark the 10th anniversary of the Mining Council in Chile.

"Fortunately, we have in the past year broken a descending tendency (in exploration investment) and have rebounded, although not to the levels of a decade ago," he said.

Chile is home to at least 40 percent of the world's reserves of copper, which is used in everything from electrical wiring and plumbing to air conditioning and is a chief raw material for China's booming infrastructure growth.

The Andean country is home to the world's largest copper mine Escondida, majority-owned by global miner BHP Billiton (BHP.AX: Quote, Profile, Research) (BLT.L: Quote, Profile, Research). The mine, visible from outer space, pumps out nearly 25 percent of Chile's annual copper output of near 5.6 million tonnes.

Costabal, who runs Billiton's Spence copper mine in northern Chile, said the country could very well produce another Escondida-scale mine in the Andes mountains that separate Chile and Argentina.

He predicted Chilean copper output would reach 6.0 million tonnes by 2010 and would continue growing after that amid expansions at existing operations and new, so-called greenfield projects.