Codelco, the world’s biggest copper producer, saw sales more than double in the first quarter as production rose and prices of the metal surged.
The state-owned producer churned out 386,000 metric tons from its own mines in Chile, up 7% from a year ago, thanks in part to an improvement in ore quality after a multi-billion-dollar overhaul of aging deposits. Nevertheless, a surge in Covid-19 cases in Chile has slowed project development.
Sales jumped to $4.65 billion, and the company’s contribution to state coffers was the highest since the peak of the commodity super-cycle a decade ago. That’s good news for Chile, as authorities seek funding for pandemic relief and policies to counter economic inequalities after mass protests in late 2019.
Codelco’s ability to navigate both the pandemic and a slew of wage talks to increase output is also good news for tight global supplies of the metal. Copper topped $10,000 a ton on Thursday for the first time in a decade, fueled by stimulus measures, near-zero interest rates and an economic recovery from Covid-19.
While Chilean output fell in the first quarter, the biggest copper-producing nation expects to be able to increase production this year as giant mines run by companies including Codelco, BHP Group and Antofagasta Plc have the protocols in place to continue operating through a surge in Covid-19 cases.
In the first quarter, Codelco’s Hales, El Teniente, Chuquicamata, Salvador and Radomiro Tomic mines all posted gains, offsetting a 40% slump at Gabriela Mistral. The board approved the strategy for the Sulfides Phase II pre-feasibility study at Radomiro Tomic.
In the longer term, the surge in cases in Chile may have an negative impact on the market. Measures taken to safeguard workers mean that expansions at El Teniente face delays of as long as a year. The ramp-up of underground operations at Chuquicamata is also slower than planned.
“In any case, for the second half we expect a significant recovery in the development of all our projects,” Chief Executive Officer Octavio Araneda said in a statement accompanying the results.
(By James Attwood)