Chile’s Codelco, the world’s No.1 copper producer, posted Thursday (in Spanish) a net loss of $ 1.4 billion for 2015 related to asset impairments and a sharp fall of prices for the red metal.
The company, which produces nearly 11% of the total global copper supply, booked $2.4 billion in write-downs, and said the results were its worst bottom-line figures since it began issuing earnings reports in the early 1990s.
Delivering the results, president executive Nelson Pizarro, said he believed 2015 was the worst year ever for the state-owned company, citing the sharp drop in metal prices as the main reason for it.
Copper prices fell over 20% last year, while molybdenum dropped 40% and silver about 18%.
“For every penny copper prices drop, Codelco loses $36 million and the country $50 million, he said while delivering the gloomy results, according to Diario Financiero (in Spanish).
Output, however, climbed 3.6% last year to 1.73 million tonnes, while production cost per pound dropped 8% to $1.39 in 2015, from the previous year.
Copper prices climbed to a 20-week high this week, but analysts and producers alike are not very optimistic about the short-term outlook for the metal.
In early March, Freeport-McMoRan (NYSE:FCX) said the copper market is likely to stay in surplus this year following 147,000 tonnes of oversupply in 2015 (the highest since 2009). The Phoenix-based company said that’s despite 700,000 tonnes of supply likely dropping out of the market for the 12 months through June.
Chile’s Antofagasta (LON:ANTO) and Codelco itself, are also sceptical of a prolonged recovery in the copper price. They both have argued the current rally seems to be “driven more by financial investors than any change in the fundamentals,” adding that a price around $2 or lower is likely for the next two years.
Mining companies in Chile axed some 23,000 jobs last year alone, or about 10% of positions in the sector. Codelco carried the weight, becoming the mining company that has chopped the highest amount of positions in the South American nation since metal prices began their decline over a year ago.