Codelco 1st-Qtr Copper Output Falls 3.8% on Cutbacks (Update1)
(Adds prices in third paragraph, company comment in fourth
paragraph, output and investment in seventh paragraph.)
Santiago, May 7 (Bloomberg) -- Chile's Codelco, the biggest
copper producer, said first-quarter production of the metal fell
3.8 percent after it cut output because of low prices.
Output fell to 352,000 metric tons from 366,000 tons a year
earlier, Codelco Vice President Juan Eduardo Herrera told
reporters. The state-controlled company also will reduce
production in the quarters ahead, he said.
Codelco and BHP Billiton Plc announced production cuts after
copper prices dropped to 60.8 cents per pound in November, a 14-
year low. Since then, the cuts, combined with expectations that a
rebound in the U.S. economy will increase demand for copper, have
boosted prices 18 percent to 71.9 cents per pound on the Comex
division of the New York Mercantile Exchange for delivery in three
months.
The cuts ``led to an improvement in prices,'' Herrera said.
He added that he expected copper prices to rise in the second half
this year.
Codelco's first-quarter earnings before taxes fell 37 percent
to $104 million from $166 million as a result of the earlier
decline in prices. Prices remained 12 percent lower on average
than a year earlier even after rising in the quarter.
The company plans to expand output to 2 million tons annually
by 2005 from 1.6 million tons last year and increase spending to
$900 million this year from about $600 million in 2001, in part to
boost output at El Teniente, its-second biggest mine, Herrera
said.
``Our development program is at full throttle,'' he said.
The mining company may sell bonds in the second half of this
year or seek bank loans to finance part of the spending, he said.
He declined to elaborate.
Acquisitions
Codelco is also considering acquisitions as part of longer
term plans to maintain its share of world copper output, Herrera
said.
Earlier this month, Codelco failed to acquire Exxon Mobil
Corp.'s Chilean copper unit, Cia. Minera Disputada de las Condes,
after it was outbid by Anglo American Plc.
Anglo American last week agreed to pay $1.3 billion for
Disputada, which produced 252,000 tons of copper last year.
Codelco will make acquisitions ``if we find something worth
buying and worth the price,'' Herrera said.
Codelco, which owns five mines in Chile and a 49 percent
stake in Chile's El Abra mine, said in December that it would cut
output by 4 percent in 2002 to 1.53 million tons from 1.6 million
tons in 2001.
--Heather Walsh in Santiago (562) 638-6820 or
hlwalsh@bloomberg.net through the New York newsroom (212) 318-
2730. Editor: Kraus |
