Codelco defines copper cuts (January 07, 2002)

Vancouver — The world’s largest copper producer, Corporacion Nacional del Cobre de Chile (Codelco), plans to cut production by 4% in 2002.

The Chilean state-owned entity aims to trim 11,300 tons of production from its highest-cost operation, the El Salvador mine, in the northern part of the country, as well as slash 47,000 tons at its largest mine, Chuquicamata. Smaller cutbacks of 25,000 and 23,000 tons are slated for the El Teniente and Andina mines, respectively. The only operation not affected by the cutbacks is the Radomiro Tomic mine.

The move reduces the company’s production forecast to 1.5 million tons in 2002 from the 1.6 million tons of copper produced in 2001.

The announcement marks the latest in a series of production cuts designed to prop up prices for the metal amid weak global demand. In March, Phelps Dodge (PD-N) started the parade of cutbacks, followed by BHP Billiton (BHP-N), which cut output at its Escondida mine in Chile and 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 2001. On Nov. 7, 2001, copper hit a 14-year low of US60.6 per lb. but has since recovered by 12% to trade in the US68-to-69-per-lb. range.