"We're still studying alternatives. They are still in a formative stage," Bruce Turner, vice president of operations at Escondida, told reporters at a gathering of mining executives. In May, Escondida closed the plant, which produced 25,574 tonnes of copper cathodes last year and 64,021 tonnes in 1997, Escondida's public relations department said.

The plant has an annual capacity of 80,000 tonnes and was producing at a rate of only 70,000 tonnes annually in 1998 when it was closed, it said. Escondida is "actively pursuing very creative alternatives" for the use of the Coloso plant, Turner said. Selling it isn't much of an option because there is not much to sell, he said.

"Who would buy Coloso?" he asked. "You need a dedicated concentrate source." As for the company's new oxide operation, it is expected to produce its full capacity of 125,000tonnes of cathodes in the next fiscal year, which runs from June 1 to May 31, Turner said, adding that it is at full production right now.

It produced its first cathode on November 19 as part of its trial run. In the 1999 calendar year, the oxide plant will not produce its full capacity but will come close to it, he said.

In March, shareholder Broken Hill Pty Co Ltd (BHP) said that aggressive action would be taken to improve the mining and energy company's performance after a disappointing third quarter and nine month profit result. Turner said he does not see Escondida being affected by BHP's efforts to change the way it does business. "We will continue to focus on costs (and) productivity, and basically we will see no change in that kind of focus," he said.

"We will see perhaps a more stringent review of capital projects and ensure that we are going to get the appropriate returns given the current (price) scenario we are in, but apart from that I don't see really any impact on what Escondida isdoing," he said. Escondida took on a cost-reduction programme almost two years ago, he explained.

He said Escondida will not cut its production, and when asked if it would increase production, Turner just chuckled and replied, "We will do what the place is designed to do." An approximately $1 billion expansion called Phase 4, which would seek to maintain current production levels amid a diminishing copper grade, is in its engineering stage. Escondida produced 867,566 tonnes of contained copper last year.

In the first two months of this year it produced 162,479 tonnes of contained copper. BHP and Anglo-Australian Rio Tinto Plc control 57.5 percent and 30 per cent of Minera Escondida, respectively. Japanese Escondida Corp has 10 per cent and the International Finance Corp. has the remaining 2.5 per cent.