SANTIAGO – Codelco’s prospect of remaining as the world’s biggest copper miner received a boost on Thursday as Chile signaled it will increase funding for the state company to overhaul aging mines and head off a slump in output.

Chile is already investing a lot in Codelco and will have to provide “slightly more” as a law that gives 10% of its sales to the military drains reserves, Finance Minister Rodrigo Valdes said in an interview in New York. A funding decision is scheduled for next month.

"President Bachelet decided we need to mitigate as much as possible this year and next year the effect of this law on Codelco’s debt, and that will mean we need to capitalize Codelco slightly more,” Valdes said. “How much? We are doing the calculations."

Codelco is racking up debt as it attempts to complete a $19-billion investment program in its aging mines after copper prices tumbled more than 50% since 2011. Complicating the situation still further, Valdes is trying to find money for Codelco as the budget deficit reaches its second-highest since the return to democracy 26 years ago amid mounting social demands. The copper slump has deprived the government of revenue equivalent to 4% of gross domestic product, he said.

In that context, Chile must discuss the four-decades-old law that gives the Chilean armed forces revenue from a tenth of its sales, Valdes said.

The ratio of Codelco’s net debt to earnings before interest, depreciation and amortization, or Ebitda, surged to 8.8 at the end of last year, from 3.4 times a year earlier as it sold bonds to finance the investment plans.

"This year and next year we have to take debt out of Codelco, of this excess debt they had to issue because of the copper law,” Valdes said.

A bill to scrap the copper law, which was created in its current form by late dictator Augusto Pinochet, has been languishing in Congress since 2011, when copper traded above $4 a pound amid surging Chinese demand. Now the metal is about $2.09 a pound.

Codelco gave the military as much as $14.3-billion between 2000 and 2015 -- money the company could have used to invest in its aging mines, Codelco chairperson Oscar Landerretche told a committee. Codelco reinvested 9.6% of its profits over the last ten years, compared with an industry average of 38.5%, he said.