Codelco First-Half Copper Output Rises 2 Percent After Record Investments

Sep 11 (Bloomberg)--

Codelco, the world’s biggest copper producer, said first-half output rose 2 percent after the company made record investments at aging mines.

Production rose to 799,000 metric tons in the first six months, from 783,000 tons a year ago, the Chilean state-owned company said today in a statement on its website. The figure excludes production from Codelco’s share of the El Abra mine. Profit rose to $832million, versus $145 million a year ago.

Codelco, which supplies about 10 percent of the world’s mined copper, made record investments in its mines after four years of declining output. Chilean President Sebastian Pinera said May 11 the company will spend $15 billion over the next five years to revamp mines, some of which are a century old.

The company mined higher-grade ore at its Norte division, boosting overall output, Chief Executive Officer Diego Hernandez told reporters today in Santiago.

Hernandez said Codelco will focus on expansions, rather than new projects, that will increase output to 2 million metric tons of copper a year by 2020. The company may tap bond markets this year to finance the expansion, said Thomas Keller, vice president of administration and finance.

Copper demand may rise at a faster pace than the historic average because of growth in emerging nations led by China, while supply from mines will be limited, Codelco said in a regulatory filing today.
'Volatile’ Prices

Copper prices may continue to be “volatile” in the short- term, Hernandez said. The price of the metal declined 17 percent in New York in the second quarter. It has since rebounded 15 percent.

Hernandez was appointed by billionaire President Pinera, who took office in March, to reverse output declines. At BHP Billiton Ltd., where Hernandez ran the base-metals division, he helped boost copper output to 1.2 million tons in the year ended June 2009, up 27 percent from the same period in 2004, according to company data.

Codelco’s production in 2010 will be similar to last year’s total of 1.7 million metric tons, Hernandez said. Codelco’s production in 2009 including its share of El Abra mine was 1.78 million tons.