Codelco sees copper output bottoming out with recovery in sight

Codelco’s surprisingly steep drop in copper production this year will be as bad as it gets for the world’s biggest producer of the red metal, according to chairman Maximo Pacheco.

“We will be better,” Pacheco said in an interview. “The projection from here is that we start to go up.”

He spoke on the sidelines of an industry breakfast in Santiago on Wednesday just days after the state-owned behemoth reduced its annual production guidance to the lowest in 25 years and raised cost estimates in the wake of another disappointing quarter. The output decline has accelerated due to project delays and mishaps at mines.

Those project delays are due to execution rather than a lack of funding, Pacheco said. As ore grades decline, the copper industry is finding it harder and costlier to develop new deposits amid supply chain disruptions, inflation and construction bottlenecks.

Still, Pacheco said the $3.5 billion to $4 billion a year Codelco is spending will ensure production over the next five decades. In the meantime, it’s trying to streamline projects and decentralize decision-making in some areas, he said.

Codelco is also set to become a major player in lithium after Chile’s President Gabriel Boric assigned the company to represent the state in a new public-private-participation model.

Pacheco said talks with Chile’s biggest lithium producer, SQM, are advancing ahead of a targeted deal by the end of the year.

(By James Attwood)