Strategic plan: Pacheco at an interview at Cesco Week in Santiago. The Codelco chairman says the company is exploring partnerships with the private sector as Chile’s state copper behemoth looks to recover from a production slump and surging debt. — Bloomberg
SANTIAGO: Codelco is exploring more partnerships with the private sector as Chile’s state copper behemoth looks to recover from a production slump and surging debt.
Chairman Maximo Pacheco said on Monday that he expected “some conclusions’’ this year from teams negotiating an operational tie-up between its Andina mine and Anglo American Plc-owned Los Bronces.
Codelco already has an indirect stake in Los Bronces, shares ownership of the El Abra mine with Freeport-McMoRan Inc and is negotiating with would-be lithium partners.
“New projects and new partnerships are part of the essence of what we do in Codelco,” Pacheco told Bloomberg from Santiago, which is hosting one of the world’s largest copper industry events – Cesco Week and CRU’s World Copper Conference.
While there’s no talk of private sector ownership of Codelco or its main mines, which would require congressional approval, the company has been pursuing joint ventures to develop new projects and improve operational efficiency.
Mining companies around the world are forging partnerships to bring down costs and boost output as mines and projects get trickier and pricier at a time of lingering supply-chain disruptions, inflation and heavy permitting.
For Codelco, arrangements to squeeze more out of existing operations or share risk and investments would be of particular appeal given its production at the lowest levels in a quarter century, jeopardising its status as the world’s No. 1 supplier.
A possible operational collaboration at Andina-Los Bronces would be focused on tapping rich ore sitting between the two mines as well as sharing processing plants.
“We have tremendous opportunities that we can develop jointly,” Pacheco said.
London-based Anglo declined to comment on the talks.
The plight of Codelco is a focal point at Cesco Week, given concerns that there may not be enough supply of the wiring metal to meet the needs of the energy transition.
Copper futures on the London Metal Exchange have rallied this year to 22-month highs amid signs of supply stress and improving factory activity from the United States to China.
Much of the company’s woes are due to delays and budget blowouts at four giant projects, which the firm said are essential to reverse its declining production.
Pacheco attributed the company’s struggles with its projects to investment procrastination that led to previous management opting to develop the four projects simultaneously, a juggling act he said “was not a good idea”.
New chief executive officer Ruben Alvarado has shaken up management in a bid to bring late and over-budget projects onstream, with the company aiming to get back to pre-pandemic levels of about 1.7 million tonnes by the end of the decade.
Still, management is revising budgets and schedules at a project at El Teniente mine, citing geomechanical conditions, the effect of glaciers and cost underestimates.
Pacheco insisted Codelco was turning the corner despite signalling a drop in first quarter production.
Earlier this month, he told lawmakers that output was “almost 300,000 tonnes” in the first three months of this year, or 99% of an internal target. — Bloomberg
