Codelco lifts output to ease tight market

The Radomiro Tomic copper mine. Image from Codelco.

Codelco’s sales surged last quarter as the world’s biggest copper supplier ramped up production just as rebounding economies sent prices of the metal to record highs.

The state-owned producer is navigating Covid-19 restrictions in Chile better than some of its private-sector rivals this year, registering an almost tenfold jump in contributions to state coffers. That’s good news for a nation seeking funding for pandemic relief and policies to counter inequalities after mass protests in late 2019.

Codelco is also reaping the benefits of a multibillion-dollar overhaul of its aging deposits, bringing some relief to tight global supplies. Copper futures have headed back toward all-time highs in the past week or so as traders focus on the alleviation of virus-related constraints in key industries.

Codelco’s second-quarter sales jumped 79% to $5.36 billion, according to financial results released via the securities regulator. Pricier inputs and exchange rate fluctuations pushed up costs in the first half of the year.

The company reported a steeper-than-expected 7% production increase in the first half. While it didn’t give a quarterly breakdown, calculations using previously reported results show April-June output at 410,000 tons, also up 7%.

Its Hales, Teniente, Salvador and Radomiro Tomic mines all posted first-half gains thanks to improved ore quality, offsetting declines at Chuquicamata and Gabriela Mistral. In project development, Codelco has reached 97% completion at an investment in Andina as it moves forward with other works at Teniente and Salvador.

Codelco also managed to navigate a slew of wage talks in Chile, although the company is facing the possibility of its first strike in the current cycle after workers at its Andina mine rejected the company’s final wage offer on Thursday.

Click here for an interactive chart of copper prices

(By James Attwood, with assistance from Alejandra Salgado)

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