Metals News
UPDATE 2-Codelco Q1 Copper Output up, to Meet Annual Goal
industry news
May 28,2010

SANTIAGO, May 27 (Reuters) - Chile's Codelco said on Thursday its copper output rose by 3.2 percent to 383,280 tonnes in the first quarter from last year as the world's top producer seeks to maintain output at aging mines.

New CEO Diego Hernandez said he expected the company to produce slightly above 1.7 million tonnes in 2010, similar to output last year when Codelco marked its first annual increase since 2004.

He added that it was difficult to predict copper prices due to current market volatility amid Europe's debt woes, but said prices should stay at current levels in the short- to medium-term.

"We are confident that in the short- to medium-term, demand will continue strong and prices should hold at current levels," he told reporters.

Hernandez added that the state giant sees no problems in financing its $2.3 billion investment plan for this year, but had no intention to issue debt in the short term.

Hernandez, former head of BHP Billiton's (BHP.AX) (BLT.L) base metals division who took office in May, has said current production levels are guaranteed over the next three years.

However, Codelco faces declining ore grades and growing tensions with the powerful workers' unions who have vowed to strike if new President Sebastian Pinera moves ahead with past pledges to sell part of the company.

The company lost 11,300 tonnes of copper due to a massive Feb. 27 quake that briefly cut energy supplies to some of its mines in central Chile. 

The company said it produced 371,355 tonnes of copper during the first quarter of 2009.

The total output did not include output from El Abra, which is a joint venture between Codelco and a private company. Adding El Abra, output rose to 402,000 tonnes in the Jan-to-March period.

Codelco's output increase in the first quarter was due to higher-than-expected ore grades at mines, more processed mineral and higher recovery in treatment plants.

Its profits pretax and extraordinary items rose to $1.48 billion in the period, more than five times the $275 million registered in the same period last year.

Codelco produced 4,000 tonnes of molybdenum, a metal used to strengthen steel, in the first quarter compared with 5,000 tonnes in the same period a year ago. 

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