SANTIAGO (Reuters) - World no. 1 copper miner Codelco produced more copper in the first half of 2016 than a year ago, but made a financial loss, and the chief executive said on Friday that the company position was "extremely fragile."
The Chilean state-owned firm produced 843,000 tonnes of copper in the first half, up 1.4 percent, and made a pretax loss of $97 million, it reported Friday.
Even though direct cash costs fell 9 percent to $1.275 per pound of copper compared to a year ago, the copper price is down over 20 percent, continuing a slide sparked by cooling demand in top buyer China.
That has complicated the scenario enormously for Codelco, which gives all its profits back to the state and relies on capitalization and some debt issuance to fund its operations.
"We are playing on the edge," Chief Executive Nelson Pizarro said at a press conference following the release of results. Earlier this week he raised eyebrows in Chile after he said at a mining forum that "there is no money, not one damn peso."
In order to maintain output at its tapped-out mines, Codelco has been betting on multi-billion dollar expansion projects, but the economic scenario has forced it to scale back some of those plans.
Two of those projects - to take century-old Chuquicamata underground and build a new crushing plant at Andina - were progressing according to plan, said Pizarro on Friday.
But another plan, to expand Radomiro Tomic, was being redesigned, as it was not as profitable as the other projects, he added.
Although the overall result in the first half was a loss, the company did make a $54 million profit in the second quarter, and Pizarro expressed hope that the price of copper had at least stabilized.
"If (the copper price) can do what we think, we will end this year positively," he said.
"We are in a situation of unstable equilibrium. Our challenge is to produce more with less."
Reporting by Felipe Iturrieta, writing by Rosalba O'Brien, editing by Phil Berlowitz