Codelco Cuts Copper Output Forecast Amid Operational Delays and Accidents
Chilean state-owned copper miner Codelco has revised its copper output forecast for the year due to ongoing operational delays and mining accidents. In its recent results briefing, the company announced a downward adjustment to its annual copper production forecast, now ranging between 1.31 million and 1.35 million tonnes. This is a significant reduction from the previous forecast of 1.35 million to 1.45 million tonnes and marks the lowest production level in 25 years.
The decrease in production is primarily attributed to a recent rock explosion at Codelco's largest mine, El Teniente. The incident has affected the development and construction sectors of the Andes Norte Project at the site, causing disruptions that will impact output for the remainder of the year. Codelco is currently exploring extraction alternatives to mitigate the effects on mineral supply.
Operational delays from the previous quarter are also contributing to the production decline, further compounding the challenges faced by the company.
Despite these setbacks, Codelco reported a contribution of $770 million (645.73 billion pesos) to the state Treasury, which is 6% higher than the amount committed to the Ministry of Finance. The company also disclosed a pre-tax profit of $329 million and an EBITDA (earnings before interest, taxes, depreciation, and amortization) of $1.77 billion for the first half of the year.
However, the company is grappling with other financial concerns as average copper sales prices fell by 3%, sales volumes shrank by 11.3%, and direct production costs rose by 41.3% to approximately $2.12 per pound, nearly double the cost seen last year.
Between January and June, Codelco's copper production amounted to 633,000 tonnes, reflecting a 14% drop compared to the same period last year. When considering affiliated projects El Abra and Anglo American Sur, total production reached 684,000 tonnes.
Adding to its challenges, Codelco's chief executive, Andre Sougarret, has announced his decision to step down by the end of August. However, a successor has not been named yet.
Chile is the world's largest copper producer and second-largest lithium producer. In line with the Chilean Government's National Lithium Strategy plan to increase state control of lithium extraction and production, Codelco established two new subsidiaries for its lithium business in May. Furthermore, last month, the company closed its Ventanas copper smelter after almost six decades of operation following a series of environmental incidents.
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