London 26/08/2016 - Codelco lifted copper production to a record 843,000 tonnes and cut costs by nine percent in the first half of this year but warned of an uncertain outlook due to low prices and massive investment needed to upgrade its old mines.
"The situation is still extremely fragile. Nobody can think that tough times are behind us yet. 2017 is not going to be much better than 2016 and 2018 may not be either," CEO Nelson Pizarro said during a press conference on Friday.
The Chilean company produced 843,000 tonnes of copper in the January-to-June period, up 1.4 percent from 831,000 tonnes in the first half of 2015 and up two percent from the second half of 2015 despite lower ore grades. It also reduced C1 cash costs by 9 percent year-on-year to $1.275 a pound ($2,810 per tonne).
This allowed the world's biggest copper producer to return to a small profit in the second quarter of this year of $54 million but the company still recorded a loss of $97 million in the first half of the year, swinging from a profit of $876 million in the same period in 2015.
The price of copper fell 21 percent in the first half and is down 55 percent since 2011. It was last at $4,618 per tonne on the LME on Friday.
Earlier this year, Codelco announced aggressive cost reductions and delayed around $6 billion in expenditures over the next five years, most of which would have been used for structural projects. This will result in the reduction of some 4 million tonnes of copper production over the next 25 years, it warned in April.
Codelco has also adopted a tough stance ahead of wage negotiations with workers at its Chuquicamata and Salvador mines in Chile. Pizarro said the company was prepared to shut down the Salvador mine if strikes occur, for instance.
(Editing by Mark Shaw)