Codelco - Large investements needed to keep produc
The Chilean stateowned Cu-miner that dominated the Cu-industry in latter part of lasrt century is under pressure to keep its top position.
Having produced 1.74 mill tonnes in 2011, slightly ahead of Freeport at 1.67 mill tonnes it is at risk of loosing that position in 2012.
Their plan toward 2020 is to increase investements in all their exisiting mines, adding one new mine to be able to grow production to abt. 2 mill tonnes in 2019-20.
Excerpt from Nomura memo:
Codelco, the state copper mining company of Chile, will be investing more than
US$20bn over the next decade in a number of major projects; however, most of this
investment will be primarily to maintain production at close to current levels at its major
operations Codelco Norte, and El Teniente, and increase group production through
Ministro Hales and the Andina expansion. However, achieving growth is not without
difficulty, as Codelco anticipates that, if the major projects detailed below were not to
proceed, the group’s production could fall from ~1.73 mtpa in 2011 to ~800 ktpa by the
end of the decade. A loss of ~900 ktpa would equate to ~4% of current 2012E refined
production.
This gives them by far the highest capacity costs per tonnes expanded production among Cu majors.
This is a sad result of a stateowned company where the owners stripped the company of capital to sustain and grow its production base as all their competitors have done.
Fortunately, they still own some of the best Cu-mine assets in Chile.