March 29, 2019 / 3:40 PM / a month ago

UPDATE 3-Chile's Codelco copper output drops in 2018, profits plunge

(Adds Pizarro’s prediction on copper price, details on lithium projects)

SANTIAGO, March 29 (Reuters) - Chilean state miner Codelco produced slightly less copper in 2018 than the year before, the company reported on Friday, as it continued to contend with declining ore grades and rising costs at its aging mines.

Chief Executive Nelson Pizarro said the company produced 1.678 million tonnes of copper at its own mines in 2018, down 3.3 percent from the previous year, and a total of 1.806 million tonnes, including production from its joint ventures at El Abra and Anglo American South.

Codelco, the world’s top copper producer, reported a 2018 pre-tax profit of $2.002 billion, down from $2.885 billion the previous year as production costs rose 2 percent and the price of copper fell from 2017. Codelco said it also took a one-time deduction for deteriorating assets of nearly $400 million, for a total drop in pre-tax profits of 44.3 percent.

Pizarro said at a presentation at Codelco’s Santiago headquarters that 18 labor negotiations at its mines had also affected the bottom line but that productivity increases kept costs in line with industry averages.

Pizarro predicted a copper price of $2.95 per pound for 2019.

Codelco, which produces nearly 10 percent of the world’s copper, is investing billions of dollars to convert its Chuquicamata mine, its second-largest deposit, from an open pit mine into an underground facility.

Pizarro said the Chuquicamata project was approaching 76 percent complete. It is a central part of a 10-year, $39 billion overhaul of the state miner’s key operations as it seeks to maintain production despite rapidly falling ore grades at its deposits.

Codelco Vice President Alejandro Rivera said the company would begin applying in May for the environmental permits it needs to begin exploring for lithium on its Maricunga salt flat holding. Rivera said Codelco hoped to have results from those explorations by the end of 2020.

The company’s lithium projects are off to a slow start. Codelco has yet to find a partner for either its Maricunga or Perdernales project.

Reporting by Fabian Cambero, writing by Dave Sherwood; editing by Steve Orlofsky and Leslie Adler

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