Construction of an internal gas distribution system at the mine's smelter, Caletones, is 68 percent complete and the main machinery at the plant is being adapted for the new fuel, El Teniente said in a statement.

The construction required for the conversion is due for completion in July 2003 but it will take two years for all the equipment to be fully running on natural gas, it said.

Last September, El Teniente said the gas distribution network would be finished in May 2003 and that the entire smelter would function with that fuel by the end of 2004.

Work on a 74-km (45-mile) pipeline bringing gas to the site is 50 percent complete, the company said. The fuel will be supplied by GasValpo, owned by the Australian Gas Light Co (AGL.AX), which has a 15-year contract with El Teniente.

Natural gas will reduce toxic emissions at the smelter.

"Combustion of natural gas reduces by half the production of monoxides and dioxides compared to other fuels. Because it is lighter than air, this fuel dissipates into the atmosphere, which guarantees the safety of our employees," El Teniente said in a statement.

El Teniente is one of five mines wholly-owned by Codelco.