March 28, 2014 / 2:35 PM / 6 years ago

UPDATE 2-Copper output at Chile's Codelco drops to 5-year low in 2013

* Slipping ore grades drag down copper output

* Base of comparison, lower metal prices hit profit

* Codelco shows progress in cost control (Adds CEO quotes, details on financing, links)

SANTIAGO, March 28 (Reuters) - World No. 1 copper producer Codelco’s output fell to a five-year low and its profit dropped by half in 2013 as dwindling ore grades and lower metal prices hit the state-owned Chilean miner.

The company produced roughly 1.62 million tonnes of the red metal last year, a 1.5 percent drop from 2012 due to lower ore grades, harder rock and trickier production in deeper deposits.

That number, which excludes Codelco’s stakes in the El Abra and Anglo Sur deposits, was its lowest production figure since 2008, when it mined roughly 1.47 million tonnes of copper.

“This is due to production falls at the Chuquicamata, Radomiro Tomic, Salvador, Andina and Gabriela Mistral (mines), which was partially compensated by an 8 percent increase at the El Teniente (mine,)” Codelco said in a statement on Friday.

Factoring in the miner’s shares in the El Abra and Anglo Sur deposits, total production rose 2 percent from 2012 to 1.79 million tonnes last year.

For a factbox on output, please see:

The production fall highlights the challenge Codelco faces at its aging deposits, where sinking ore grades threaten to slash copper exports in the next few years unless the mines are revamped.

“In general terms and without going into details... (in 2014) we of course aim to top last year’s production, at least in aggregate terms,” Chief Executive Officer Thomas Keller said as he presented the results in Santiago.


Before tax and extraordinary items, Codelco’s profit halved to $3.89 billion due to an unusually high comparison base with 2012, lower copper prices and higher sales costs.

Red metal prices shed around 7 percent in 2013.

Because Codelco hands its funds over to the state, falling profits essentially mean less money for Chile’s government, just at a time when citizens are clamoring for improved education, health care and pensions.

At the same time, Codelco is struggling as it tries to finance an ambitious multi-year investment plan, estimated to cost about $30 billion, after the government awarded the company less money than the company had hoped for last year.

“Pushing forward with our key projects continues to be a priority... as does finding financing for them,” Keller said.

Codelco, however, showed progress in 2013 in containing costs, a major headache for miners in Chile, the world’s biggest copper producer. Direct cash costs last year fell 0.3 percent to roughly $1.631 a pound of copper, helped by lower power prices.

“The best way we can contribute to facing potentially lower copper prices is reducing our costs by being more efficient,” Keller said. (Reporting by Anthony Esposito and Santiago newsroom; Writing by Alexandra Ulmer; Editing by Alden Bentley and Peter Galloway)

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