Giant copper miner Codelco needs at least $1bn, hopes for new President to hand it over—report
Chile’s State-owned Codelco said Monday it needs at least $1 billion of extra-funding to finance its projects for 2014, which amount close to $5bn.
In an interview with local newspaper El Mercurio (in Spanish), CEO Thomas Keller said the only two options for the company are either to cut back on the planned investments or to change the miner’s financing policies.
Currently the world’s largest copper producer hands all its profits back to the state. The government then decides how much to re-allocate to Codelco, often creating uncertainty in the run-up to the announcement and at times spurring disagreement over how much is ultimately assigned.
In December last year, current President Sebastian Piñera handed Codelco $1 billion, which didn’t help the miner much, as the funds essentially amounted to an accounting increase, not fresh capital.
Heller said he hopes Chile’s President-elect Michelle Bachelet, who takes office on March 11, will give Codelco the fresh cash injection it urgently needs to counter declining ore grades at its aging mines, as well as to deal with increasing costs and low copper prices.
Chile expects mining investment to reach $112 billion by 2021, figure that includes the $27bn planned by Codelco. By the same year, the country’s total copper production is projected to reach an annual 8.1 million metric tons.
The red metal accounts for 60% of Chile's exports and 15% of gross domestic product.
Image courtesy of Codelco, via Flickr