Codelco plans copper cuts (December 06, 2001)

Vancouver — The world’s largest copper producer has finally entered the fold of other major producers by saying it would cut output by at least 100,000 tonnes in 2002.

Chile’s state-owned copper company, Codelco made the anticipated move in a bid to prop up prices for the metal amid weak global demand. The details of which of its five mines would face the slice will be announced later this month. However, mining analysts expect that lower output will be achieved through the mining of lower grade material at the Chuquicamata and El Salvador mines in northern Chile. The reduction would leave Codelco with a production forecast of 1.54 million tonnes of copper in 2002.

This action marks the latest in a series of production cut backs that started with Phelps Dodge (PD-N) in March. BHP Billiton (BHP-N) followed suit by cutting 80,000 tonnes per year at its Escondida mine in Chile and 90,000 tonnes per year from the Tintaya operation in Peru. Asarco and Noranda (NRD-T) also tabled copper production cuts from their North American operations

Codelco’s average copper production cost across its fully owned mines was US42.2 per lb in the first nine months of this year. The company, one of the few large corporations never to be privatized by Chile, owns the Chuquicamata, Radomiro Tomic, Andina, El Teniente and El Salvador mines. It also has a 49% stake in El Abra, which is controlled by Phelps Dodge.