Codelco CEO Forecasts Slight Copper Surplus

Chilean Miner Still Expects Own Production To Rise

The chief executive of Codelco, the Chilean company that is the world’s biggest producer of copper is forecasting a slight surplus of global copper supply this year. Despite this, Jose Pablo Arellano maintains that his company’s output will increase slightly this year on the 1.7 million tonnes it produced in 2009, despite February’s earthquake disrupting production.

Mr Arellano told reporters at the CRU/CESCO copper conference in Santiago that his company plans to invest $2.3 billion this year to offset output from older mines; however he suggested that any supply surplus will be due to an increase in European and US demand for the metal, while Chinese demand is expected to fall.

"We hope there will be some synchronization between a possible slowdown in China with strengthening in the rest of the world, particularly the United States and Europe." Mr Arellano added.

Codelco Transporting Copper By Road From El Teniente

Codelco, the world’s largest copper producer, has resumed sending copper from its El Teniente mine to the port of San Antonio by truck after last Saturday’s earthquake damaged railways.

Repairs have been completed at the mine, which sustained slight damage during the 8.8-magnitude earthquake, although shipments only re-commenced on Thursday 4 March.
Shipments from El Teniente primarily go by rail to the San Antonio port, which is working at 80 percent capacity. Ships bringing in grains are being given priority over incoming and outgoing vessels.

Copper Soars As Production Halted At Chilean Mines

Copper prices soared in New York after the 8.8-magnitude earthquake in Chile forced Codelco and Anglo American to suspend some of their mine operations.

Futures contracts for May delivery in New York rose by 6.2 per cent – the biggest gain for almost a year while levels in London climbed to their highest in more than five weeks as the ‘quake affected almost 5% of the world’s copper production. Around a third of the world’s copper production is mined in Chile.

Codelco’s plants at El Teniente and Andina both suffered a power outage after Saturday’s earthquake, however Codelco announced yesterday that its El Teniente mine had “gradually” resumed production from about 4pm local time yesterday afternoon (1900 hours GMT/2pm EDT). Andina, however, remains closed. Power has also been partially restored to Anglo American’s mines at Los Bronces and El Soldado, though there is no word as to when production will re-commence.

Meanwhile reports from Chilean media quote Raul Maturana, secretary general of the National Federation of Port Workers of Chile as saying that the central Chilean ports of San Antonio and Valparaiso remain closed however the larger ports of Antofagasta and Mejillones are apparently unaffected, meaning copper shipments should be able to leave the country.

Codelco is the world’s largest copper producer and has said that it will be able meet supply contracts, compensating for any shortfalls with shipments from undamaged plants in the north of the country. The company ruled out declaring force majeure, which allows companies to miss obligations because of circumstances beyond their control.

Codelco Mines To Reopen After Earthquake

Safety inspectors have found no major damage at Codelco’s copper mines at El Teniente and Andina. The mines were closed after a power outage following an 8.8 magnitude earthquake that hit the country in the early hours of Saturday morning.

Chilean mining minister Santiago Gonzalez said the mines would open shortly without specifying a time-scale.

Codelco’s mines in the north of the country are operating normally. The company suffered no deaths or injuries as a result of the earthquake. The Escondida copper mine, jointly-owned by Rio Tinto and BHP, is also working normally as a result.
Anglo-American’s copper mines at Los Bronces and El Soldado are also out of action following a power outage caused by the earthquake.

Copper accounts for half of Chile’s $53 billion worth of exports. Codelco is the world’s largest copper producer with annual production of around 600,000 tonnes. Anglo-American produces around 280,000 tonnes a year from its two mines.

Codelco Increases Copper Production By 16 Per Cent

Codelco, the Chilean state-controlled copper miner, increased copper output in 2009 by 16 per cent to 1.78 million tonnes compared to 1.46 million tonnes in 2008. This figure includes Codelco’s 49 per cent share of the El Abra mine controlled by Freeport McMoran, which equated to 80,000 tonnes.

Codelco also produced 22,000 tonnes of molybdenum during the year, against 21,000 tonnes in 2008.

However, profits before tax and extraordinary items fell by 18 per cent to $4 billion due to lower copper prices and the global financial crisis. Revenues rose to US$8.88bn from US$8.74bn the previous year, despite a steep fall at the company’s molybdenum division, registering a fall of $1 billion down to $500 million.

Output was higher for the first time in four years, largely due to investment in ageing plant, and helped by stimulus money from the Chilean government. The company invested $2.13 billion during the course of the year against $1.99 billion in 2008. Production was also helped by the fact that were no strikes at the company during the year.

CEO José Pablo Arellano told a press conference on Thursday that Codelco was the only Chilean miner to register growth during 2009. Figures for Chile’s copper production showed a fall on 5 per cent during 2009. Mr Arellano said that Codelco’s share of Chile’s copper production rose from 27 per cent in 2008 to 33 per cent last year.

Total costs fell to US$1.58/lb last year from US$1.78/lb in 2008. Cash costs following by-product credits and other deductions rose to US$0.93/lb in 2009 from US$0.70/lb in 2008.

Codelco Won't Take Up Sur Option

Chilean state copper giant Corporacion Nacional del Cobre, or Codelco, has said in a statement that it won't be exercising its option over a 49% stake in Anglo American's Sur complex at this time. The option is valid until 2027 and Codelco plans to reevalute it when it comes up again in January 2012.

Codelco purchased the option for $175million from a smaller state mining company Empresa Nacional de La Minera, (Enami). Anglo acquired the Sur complex, formerly known as La Disputada de Las Condes, in 2002 from Exxon Mobil Corp, who had bought La Disputada from Enami in 1978. That transaction included the option that Enami has the right to exercise every three years over a 49% stake. The Sur complex includes the Los Bronces and El Soldado copper mines and the Chagres smelter.

Codelco was one of the leading contenders to buy the property when it was put up for sale in the early 2000s, however the Finance Ministry didn't authorize the expenditure.

Both Los Bronces and Codelco's Andina copper mines are located on the same copper vein.

"Codelco expressed its interest to Anglo American as well as its disposition to continue deeping cooperation and operations between Los Bronces and Andina, which can bring added value to both companies," the company said in a statement.