UPDATE 4-Codelco first-half copper output falls, 2012 aim intact

* First-half output slightly missed target
* First-half pretax profit plummeted 39 pct
* Chuqui, Salvador, Radomiro Tomic output down
* Slumping ore grades, high energy costs hit miner

SANTIAGO, Aug 31 (Reuters) - Copper production at Chile's
Codelco fell 6.4 percent in the first half from a year earlier
to 767,000 tonnes, the miner said on Friday, but the world's No.
1 copper producer said it still intends to produce around 1.7
million tonnes this year.
"The output produced in the first six months of 2012 is
slightly below what was defined by the company in its budget,"
state-run Codelco said in a statement.
Production fell due to "a drop in ore grades, harder rock
and deeper deposits," the company said, especially at its
Chuquicamata, Salvador and Radomiro Tomic mines. But declines
were limited by higher output at the Gaby, El Teniente and
Andina deposits, Codelco said.
Still, during a press conference to discuss results, CEO
Thomas Keller said "expected production for this year hasn't
been modified with respect to what we had budgeted."
Codelco has said it expects to produce 1.708
million tonnes of copper this year. It is implementing an
ambitious investment plan to boost copper output to more than 2
million tonnes annually.
But the miner has struggled as ore grades deteriorate at its
massive but tired mines. Average grades were 0.806 percent of
metal in the ore in 2011, which have tumbled to 0.720 percent
this year, it said.
"I see it difficult, not impossible, but very difficult (for
Codelco to reach its 2012 production aim)," said Gustavo Lagos,
mining professor at the Universidad Catolica in Santiago.

The miner said profits before tax and extraordinary items
fell 39 percent during the January-June period from a year
earlier to $2.391 billion, partially due to lower prices for
Chile's top export copper, lower output, dwindling ore
grades and higher costs.
Cash costs in the period reached $1.477 per pound, up 27
percent compared with the same period of 2011. Codelco said the
increase was partially due to fuel, energy and other costs.
"Energy (costs) have hit us badly during this period," said
Jorge Robles, the firm's interim CFO.
Average monthly spot energy prices fluctuated between $144
and $268 per megawatt hour in the first half of this year,
according to Chilean energy consulting firm Systep.
World No.1 copper producer Chile is struggling with power
problems, triggered by a devastating 8.8 magnitude earthquake in
early 2010, years of under-investment and significant setbacks
in key energy projects. Major shortages are not seen in the
short-term, but miners are bracing for a hike in already steep
power prices.
Codelco's emblematic Chuquicamata mine produced 25.2 percent
less copper than in 2011, while Codelco's small Gaby mine
produced 27 percent more.
"Production would have to top 150,000 tonnes per month on
average to reach 1.7 million tonnes (this year)," said Jose
Pedro Fuenzalida, a senior analyst with LarrainVial in Santiago,
who also said Codelco's aim seemed difficult to reach. "It
hasn't been over 140,000 tonnes per month this entire year."
Codelco produced 30 percent of copper concentrate in the
first semester of this year, up from 10 percent in the first
half of 2011.
Chuquicamata's smelter underwent an unscheduled maintenance
in the beginning of 2012, leading Codelco to produce a bigger
share of concentrates.
Since July 25 the smelter has been under scheduled
maintenance, which is programmed to last 53 days, Codelco said.

'BALANCED' MARKET
Codelco sold 32 percent of its products to top metals
consumer China in the first half of 2012, unchanged from last
year. Around 24 percent went to Asia, excluding China, 20
percent to Europe and 12 percent to South America.
Keller said delays and complications in global copper
operations coupled with still-healthy economic growth in China
point to a "fairly balanced" red metal market.
"The business' fundamentals don't allow us think prices will
be dramatically different to what we're observing now," Keller
said. "Within a cautious context, we're optimistic."
Benchmark copper on the London Metal Exchange closed
at $7,610a tonne on Friday.
Codelco and its finance partner Mitsui recently
bought a 29.5 percent stake in global miner Anglo American's
coveted central-south Chilean properties, ending an
acrimonious 10-month brawl over the assets.