BHP bets billions on Chile mines to face global copper crunch
BHP detailed to investors this week plans to spend $10.7 billion to $14.7 billion within about 10 years.
Chilean state-owned Codelco, the world’s No.1 copper producer, has decided to remove Chief Executive Officer Thomas Keller and seek new leadership at a critical time for the company.
The decision, made by the board late Thursday’s night (in Spanish), was something that many saw it coming as Keller has recently clashed with some directors over cost-cutting and expansion plans.
Keller, a former retail executive, had been commended for his efforts to overhaul old mines and cut costs at Codelco, but his tough style triggered tensions with the company’s powerful unions, according to opposition-run newspaper El Mercurio (in Spanish).
The board stressed Keller’s removal, seen as close to the right, was not politically motivated. Critics such as former deputy minister of mining under president Sebastian Piñera, Francisco Orrego, differ:
His departure comes as President Michelle Bachelet’s government considered his plan to raise output and increase investments by more than $20 billion this decade. Without the spending, Keller said in January, output would drop by more than half.
“I have a very clear vision and I’m not convinced that that vision is shared by the board,” Keller said in an interview with El Mercurio (in Spanish) published Thursday. “What we have now in terms of workforce, health benefits and pay isn’t consistent with the profitability promises we made,” he told the newspaper, referring to the company’s century-old Chuquicamata mine.
Keller will remain in its position until Friday, June 13. According to newly appointed board head Oscar Landerretche there is no obvious candidate to become Codelco’s next CEO, but MINING.com learned last month Bachelet’s government is considering the nominations of Nelson Pizarro and Sergio Jarpa, both former Codelco executives.
Copper accounts for 60% of Chile’s exports and 15% of gross domestic product.
Image courtesy of Codelco, via Flickr
7 Comments
Jack de la Vergne
“Century-old” Chuqui? I don’t think so. “During the period from 1560 to 1879 the high grade veins of the Chuquicamata deposit were worked superficially by the Spaniards and Bolivians. The treaty signed after the war of 1879 recognized the sovereignty of Chile over this territory and Chile, realizing the importance of the district, started to develop it in an orderly manner, although only high grade veins were worked.”
Martin Feddersen
Jack, I think the comment “century – old” refers to modern mining, in which Chuquicamata began operations in the early 1900, although it is true that mining in chile has been performed for more than 500 years now
Sergo Cusiani
“…as Keller has recently clashed with some directors over cost-cutting and expansion plans”.
“We know, after your appointment as CEO the company increased production.” Board said. “But we still have no profit since the costs are increased, too!
“Of course”, Keller replied, ” the costs increased after you change iPhones and laptops every month, buy luxury cars, fly first class – all at the company expense!”
Sergio Pastor, Geologist
-Sergio
Pastor-Geologist
The
beginning of the destruction of one of the best copper producer in the world,
no to the lack of reserves but due to the introduction of POLITICS and UNIONS”
that do not belong in the business …introduction of “compadres” and bureaucratic
costs increases and “freebies” will sky rocket there by fat unpatriotic
unproductive sucker…, fly first class, hotels, meals conferences etc all at the
company expenses. Sorry Chile, I see this coming
Raul Ramirez
While in Chile a few years ago someone asked me what were my thoughts about Codelco, my reply was that 30% of the workforce should be dismissed an study a few months later indicated that 35% should be fired. The problem are the unions and the Ley de Inamovilidad del Cobre – under this law no miner of Codelco can be dismissed regardless if they are productive or not. The only country in the world where, when the value of copper increases the miner goes on strike to get more money, nothing get done when the price decreases.
The way I see this, is by privatization of Codelco, in order to get the hands out of it from polititians and Unions. It doesn’t help the mentality of the present government with their left wing ideas.
Sergo Cusiani
The approach is correct in general, but care should be taken of who is in charge of privatization and how open the process is going. I am not acquainted with Chilean legislation so that I am not certain how attractive it is for foreign mining investors. The task is not simple. Strong legislation and Union is not so bad. Firing 35% workforce will not save you much if your management is poor. Any government, unless it is corrupt, should make sure the potential investor keeps jobs, cuts costs, maximizes production – all as much as possible.
Martin Feddersen
I fully agree with Sergio Pastor as it is the beginning of the end for the chilean state copper company.