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Chile’s Codelco reports 10% drop in copper output in Q1

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Chile’s state owned copper producer Codelco reported a 10% drop in copper output in the first quarter of 2012 compared with last year, mainly due to lower prices for the red metal.

Copper output went from 373,000 tonnes in the first quarter of 2012, compared with 414,000 tonnes in the same period in 2011

Sales of the red metal reached $3.16 billion in the January-March 2012 period, down slightly from $3.58 billion in the first quarter of 2011.

Codelco cited lower-than-expected ore grades, especially from the Chuquicamata project, and higher costs of energy and other inputs, as reasons for the weaker results.

“This fall was expected by the company due to declining ore grades at its mines, which were also down 10% from the first months of the previous year”, Codelco said.

“Although copper ore grades are declining at all of Codelco’s mines, it is more marked at Chuquicamata: ore grades have dropped 25% compared with the second half of 2011. In fact, this division’s production fell 40,000 tonnes during the first quarter”, the company added.

The only exceptions were Andina and Minera Gaby, which increased production by 10.9% and 65.6% year-on-year, respectively. Together, they produced 96,600 tonnes of copper in the first quarter.

Profits down
Codelco’s total net profit dropped to $456 million in the period, compared with $743 million in the first quarter of 2011.

The company intends to invest a record $4.3 billion in 2012, of which $2.27 billion will go to Codelco’s specialised development unit.

Codelco’s target is to close the year with a copper output totalling about 1.70 million tonnes.

“The programme of production is going as planned, so we are confident that we will reach the goal by the end of the year”, ceo Diego Hernández said, a few days before resigning his position

His resignation came in the same week that Codelco announced a suspension in legal proceedings with Anglo American in order to try to negotiate a deal in relation to Anglo American Sur. 

Markets
Codelco’s sales to China also dropped to 33% in the first quarter of the year, compared with 36% in the first quarter of 2011.

The rest of Asia is the company’s second main market (25%), followed by Europe (19%), South America (12%), North America (9%) and Oceania (1%).

Other metals
Molybdenum production dropped to 4,000 tonnes in the first quarter, from 6.000 tonnes in the corresponding period in 2011.

Silver output reached 79,000 tonnes, against 94,000 tonnes in the year-on-year first quarter comparison.

Carolina Guerra
cguerra@metalbulletin.com
Twitter: #!/cguerra_mb

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