Codelco reports strong Q3 profit as lower costs offset falling grades
VANCOUVER (miningweekly.com) – The world’s largest copper producer, Chilean State-owned miner Codelco, has reported a strong third-quarter net profit of $1.6-billion, an improvement of more than three times on the loss posted for the same period a year earlier.
Executive president Nelson Pizarro attributed the strong performance to significantly lower operating costs, giving it more wiggle room in the face of fluctuating copper prices and as the company battles falling grades at its ageing mines.
Earnings before interest, taxes, depreciation and amortisation came to $3.7-billion, with a margin of 38%.
Direct cash costs fell to $1.32/lb of copper, 9% below the industry average, from a level of 10% above the industry average in 2013. The cost was below budget, as was the cost of $2.11/lb for finished copper cathode.
Pizarro noted that the company’s average grade has fallen 10% since 2013, meaning it has to process 10% more ore to produce the same amount of red metal. Output for the period was, however, 3% lower year-on-year, at 1.24-million tons of finished copper.
Codelco had implemented austerity measures during the lean years of 2015 and 2016, shelving several investments to reinvigorate its mines. Pizarro stressed that Codelco would continue to promote a culture of austerity, despite a dramatic rise in copper prices this year.
The company is, however, ready to restart investment into its portfolio, with the two main projects currently being executed being the Chuquicamata underground mine and an expansion of the El Teniente mine.
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