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Chile's Codelco Plans $3.8B Investment For 2017
Chile's state-owned Codelco, the world's largest copper producer, plans investments of about $3.8 billion in 2017 and more cost cutting, Chief Executive Nelson Pizarro said in an interview published on Sunday.
Codelco would prioritize an expansion at its massive Chuquicamata mine, he said, while plans to expand its Andina and Radomiro Tomic mines would be delayed. Projects deemed most profitable would take priority, he said. Pizarro also said that he hoped for savings from cost cuts of around $400 million in 2016.
It can be remembered that as part of the recent 5-year investment plan of Codelco, as the world's top copper miner, had made drastic changes to its ambitious five-year investment plan as falling copper prices continue to dry up the company's earnings.
The state-owned miner, which faces what its chief executive Nelson Pizarro recently called its "worst crisis ever" since created in 1976, has decided to reduce its investment budget by $2.25 billion, local news site El Pulso reports (in Spanish).
The figure, though significant, is minor when taken in the context of Codelco's ambitious investment plan, originally pegged at $25 billion (now sitting at $18bn), aimed at upgrading its aging mines and dealing with dwindling ore grades.
Among the affected plans, Codelco noted that phase two of its Radomiro Tomic sulphide project will be postponed to 2024, while construction of a new level at El Teniente, originally set to be done by 2020, now it is expected to complete in 2023.
The company, however, won't touch a much needed expansion project at its century-old Chuquicamata mine underground, currently underway, which is due to be completed by 2019.
The investment cuts come despite Chile's government injected $600 million of capital into the copper giant earlier this year.
But Codelco, which hands over all its profits to the state, has received only 10% of its surplus over the past decade. In comparison, private copper miners reinvest an average of about 40% of their profits.
The miner's output amounts to around a tenth of global supply and it has been one of the main forces behind Chile's transition from one of Latin America's poorest countries to one of the richest over the past 40 years.
Base metals suffered a broad-based sell-off Tuesday after the dollar hit a multi-month high, but the slide has since slowed down. Copper for December settlement on the Comex division of the New York Mercantile Exchange gained 0.85 cents or 0.4% Wednesday to $2.1755 per pound. Trade has ranged from $2.1585 to $2.1815 so far today.