Codelco's lithium assets lure big sector companies: CEO

HOLLYWOOD, Fla. (Reuters) - International and domestic companies have expressed interest in partnering with Codelco, the world’s biggest copper producer, to develop its lithium assets, the Chilean state-owned company’s chief executive said on Tuesday.

Nelson Pizarro, chief executive officer of Chile's state copper giant Codelco, answers a question during an interview with Reuters at Santiago, Chile, January 15, 2016. REUTERS/Ivan Alvarado/Files

In a wide-ranging interview, CEO Nelson Pizarro said Codelco was sticking to a shrunken capital expenditure program to revive and expand its copper assets unveiled last year amid weak copper prices, despite a rebound in prices by nearly a third since November.

Pizarro also said he expected “more difficult” labor negotiations at Codelco’s flagship El Teniente mine early next year as workers’ demands for higher wages and benefits clashed with the company’s need to invest in its aging mines.

Codelco is due to make its decision by the end of March on a partner to help it develop its lithium assets, Pizarro said on the sidelines of the BMO mining and metals conference. Companies had until Feb. 3 to state their interest.

Lithium, a small but irreplaceable component of rechargeable batteries used in electric cars and mobile phones, is one of the hottest commodities with prices more than doubling in the past 18 months. Most of the world’s lithium is produced in Australia and Chile.

“The big players in the industry are interested,” Pizarro said.

He declined to say whether Chile’s SQM, one of the world’s biggest lithium producers, was in the running.


Despite an unexpected rebound in copper prices late last year, Codelco was sticking to its reduced $18 billion capital spending program through 2020 to rejuvenate and expand its aging copper mines, cut from an initial $25 billion when prices slid.

“It doesn’t change,” Pizarro said of the $18 billion plan, adding that the previous, costlier capital program had been “almost impossible” to carry out due to the management time it required. The new plan has staggered investments rather than carrying them out simultaneously, delaying some projects.

Pizarro said Codelco’s aim was to maintain production at around 1.7 million tonnes a year despite declining grades and to keep reducing cash costs, which have fallen by 23 percent to an estimated $1.26 a pound over the past three years.

Pizarro said he expected copper prices to average around $2.40-$2.50 a pound this year. Copper was last trading at $2.71 a pound.

Chile’s government last year asked Codelco to study the lithium production potential of its Maricunga and Pedernales salt flats.

Codelco was nationalized in the 1970s and returns all its profits to the state, providing a key source of income to the Chilean government. It is funded by a combination of government financing and debt issuance.

Reporting by Nicole Mordant in Hollywood, Florida; editing by G Crosse