UPDATE:Chile Codelco 1Q Copper Output 383,000 Tons, Up 3.2% On Year
28 Mai 2010 - 1:01AM
Dow Jones News
Copper output at Corporacion Nacional del Cobre de Chile's
wholly owned mines grew 3.2% in the first quarter to 383,000 metric
tons from 371,000 tons in the year-earlier period, Codelco Chief
Executive Diego Hernandez said Thursday.
Codelco's total January-March production, which includes output
from the El Abra mine in which it holds a 49% stake, rose to
402,000 tons from 390,000 tons in the year-ago period. El Abra is
operated by 51% shareholder Freeport-McMoRan Copper & Gold Inc.
(FCX).
The production increase was due to higher ore grades, or the
amount of copper contained in the mined material, and improved
copper recovery, especially at its Norte division.
With copper averaging $3.29 a pound in the first three months of
the year, Codelco's pretax profit surged to $1.48 billion from $275
million the same quarter a year ago, when copper averaged
$1.56/lb.
If Codelco earnings were reported using the same tax
requirements as private companies, it would have posted a net
profit of $1.18 billion, compared with $219 million in the first
quarter of 2009. The mining company began using International
Financial Reporting Standards, or IFRS, this year.
Hernandez, in his first press conference as chief executive,
said the world's largest copper mining company has a 2010
production target of "slightly over 1.7 million tons of copper,"
similar to last year's output.
In the 2010-2012 period, output will likely hold steady before
several of Codelco's expansion projects come on line.
To finance expansions at most of its divisions, Codelco has an
ambitious capital expenditure program that includes a record $2.3
billion investment program for 2010.
The company has the means to finance this year's capex budget
and isn't planning to tap markets in the immediate future,
Hernandez said.
"The investment plan shouldn't be difficult to finance with the
resources we have on hand; we aren't in a tight spot this year," he
said.
In recent years, in addition to financing its investments
through its own resources and debt issues, the government has
allowed the state mining company to retain part of its profits.
This year, however, due to the government's needs to finance the
$8.4 billion post-earthquake reconstruction, Codelco might not be
allowed to reinvest any part of its profits.
"The Finance and Mining ministers have to decide if there will
be profit reinvestment this year, but we of course understand that
the country has other, more pressing needs," Hernandez told
reporters.
A powerful earthquake hit Chile in late February, causing
destruction and damages totaling $30 billion.
Codelco estimates it lost 11,300 tons of copper on the
quake-related work stoppages, especially at its Andina and El
Teniente divisions, which shut down on a lack of power supply
following the temblor.
Most the output lost following the earthquake will be recovered
during the year, so Codelco doesn't expect an overall loss from the
disaster.
With regards to the recent swings in copper prices, Hernandez
said it was very difficult to predict when the volatility would
subside, but that he was confident that, in the mid and long term,
copper demand would remain stable.
Hernandez, a former executive at BHP Billiton Ltd. (BHP), took
office May 19.
-By Carolina Pica, Dow Jones Newswires; 56-2-715-8919;
carolina.pica@dowjones.com
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