Codelco Grapples with Financial and Production Hurdles Amid Senate Committee Visit
During an unprecedented session of the Senate Mining and Energy Committee at Codelco's historic Sewell facilities of the El Teniente Division, Codelco’s leadership and union representatives discussed the state-owned copper company’s challenging financial and operational conditions. The meeting followed the recent announcement of a 38% decrease in contributions to the Treasury for 2023, alongside a significant decline in surpluses and the company's EBITDA.
Máximo Pacheco, the chairman of the board, and Andrés Music, general manager, led discussions on the factors contributing to lower production, which dropped 8.4% to 1.32 million tons in 2023, and a net loss of $591 million. Pacheco emphasized that production levels directly influence Codelco's financial outcomes, highlighting a nearly $1,600 million fall in EBITDA from 2022 to 2023. This decrease was attributed to reduced revenues due to lower copper prices and increased costs, along with an extraordinary deterioration of Codelco's affiliate Anglo American Sur, leading to significant losses.
Addressing operational challenges, Pacheco outlined the decline in copper ore grade from 0.71% to 0.63% over two years, accounting for over half of the reduction in total production. Operational incidents, including a seismic event at El Teniente and a pit wall collapse at Ministro Hales, further impacted production.
Looking ahead, Pacheco presented an optimistic production budget of 1.35 million tons for 2024, approved by the Ministry of Finance and the board of directors, with an ambitious target of reaching 1.7 million tons by 2030. He candidly addressed Codelco’s need for faster decision-making and acknowledged the impact of delays in structural projects and the underestimation of the COVID-19 pandemic's effects on mining development and equipment maintenance.
In light of these challenges, Pacheco declared 2024 as the year of productive recovery for Codelco, noting that the company nearly met its copper production goal for the first quarter, producing 298.4 thousand tons against a projected 295 thousand tons. With a projected annual production of 1.352 million tons of copper, Codelco remains committed to overcoming its current obstacles and enhancing its operational efficiency and financial health.
