Codelco plans copper cuts (December 17, 2001)

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

The move by Chile’s state-owned Corporacion Nacional del Cobre de Chile (Codelco) is designed to prop up prices for the metal amid weak global demand. The company has yet to specify which of its five mines will be affected and to what degree, though several analysts say the lower output will be achieved by mining lower-grade material at the Chuquicamata and El Salvador mines in northern Chile. The reduction would leave Codelco with a production forecast of 1.5 million tonnes copper in 2002.

This action marks the latest in a series of production cuts 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 at the Tintaya operation in Peru. Also, Asarco and Noranda (nrd-t) tabled cutbacks at 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 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.