Biggest Copper Miner Joins Cutback Frenzy Sweeping Industry

  • Chile miner sees prices at about $2.50 a pound next year
  • CEO: $25 billion business plan will be lowered after rout

Codelco, the world’s biggest copper-producing company, is going back to the drawing board on one of its biggest projects as it joins an industrywide effort to reduce spending.

Chile’s state-owned producer will redesign its proposed Andina expansion in an effort to lower investments and the impact on the environment, Chief Executive Officer Nelson Pizarro told reporters in Santiago on Friday. A new pre-feasibility process will look to streamline water use, Pizarro said.

“Whether or not Andina is undertaken in stages is to be decided,” he said.

Codelco is looking to add 50 years of life to Andina, its largest reserves nestled above Santiago in the Andes Mountains, as part of a $25 billion plan to replace depleting deposits. That budget is under review and should be cut after prices tumbled on slowing Chinese growth and dollar strength, he said, adding that executive and director salaries will be frozen.

At Andina, Codelco had proposed removing six rock glaciers as part of a $6.8 billion project, drawing criticism from Andres Allamand, a senator representing the metropolitan region, who cited its threat to water supply. President Michelle Bachelet is looking to strengthen glacier protection.

On Track

Other Codelco projects -- such as converting the Chuquicamata open pit into an underground mine, an expansion at Radomiro Tomic and a smaller project at Andina -- are on schedule, Pizarro said. A project at its biggest mine, El Teniente, “will advance if there is a technically and economically viable solution,” he said.

More than half of mining projects in Chile are being reviewed or have been delayed already, Alberto Salas, president of the country’s mining society, known as Sonami, said in a presentation in Santiago late Thursday.

Freeport-McMoRan Inc., the biggest publicly traded copper miner, announced on Thursday a series of investment and production cutbacks, including a 50 percent downsizing of its El Abra mine in Chile.

Copper futures for December delivery lost 0.2 percent to $2.323 a pound by 8:28 a.m. on the Comex in New York, cutting this week’s gain to 1.1 percent.

Codelco expects prices to recover to about $2.40 to $2.45 this year and about $2.50 next year, Pizarro said. The oversupplied market will start to tighten again from 2017 as new supply projects dry up, he said.

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