Codelco hits a record US$9bn pre-tax profit in 2006 despite output drop
Source: BNamericas
metalsplace.com
The world's largest copper miner, Chile's state-owned Codelco, shattered all records in 2006 with US$3.34bn in profits versus US$1.78bn the year before despite rising costs and slipping output.
Pre-tax profit, the figure emphasized by the state company due to its unusual tax structure, came to US$9.22bn in 2006 compared to US$4.90bn the year before.
"These results are thanks to the good prices that copper enjoyed last year," Codelco executive president José Pablo Arellano told reporters at a press conference Thursday, adding that costs rose 17.8% from 2005 to US$1.16/lb due mainly to rising energy expenses.
Codelco raked in US$13.0bn in revenues last year versus US$8.39bn the previous annum, while total costs came to US$3.19bn in 2006 compared to US$2.74bn in 2005.
Arellano said reducing costs is one of Codelco's main concerns for the coming years, as he anticipates copper prices will fall in the medium term. The average copper price in 2006 was US$3.05/lb.
Production
Output fell slightly in 2006 to 1.68Mt from 1.73Mt in 2005, not including production from Codelco's 49% share in the El Abra mine, which produced 107,000t last year compared to 103,000t the year before. US miner Phelps Dodge (NYSE: PD) owns the other 51%.
But excluding 2004 and 2005, Codelco's production last year was the highest since at least 1980, according to the company's 2006 production report.
Arellano said last year's drop in output was not due to the July rockslide at Codelco's largest mine Chuquicamata that weakened production for several months, because the company managed to mitigate the problem successfully.
However, the executive noted that worker productivity fell in 2006 to 98t/worker from 102t/worker in 2005 and 105t/worker in 2004.
Codelco sold slightly more than 2Mt copper in 2006, or 21,000t less than in 2005. In molybdenum production, the company churned out 27,200t last year compared to 36,600t in 2005, Arellano said.
Investments & projects
Codelco is set to invest a record US$2.2bn in 2007 in new mines and expansion projects, the creation of a US$400mn reserve fund and another US$314mn to be reinvested during the year, an unprecedented move in the company's history.
Arellano said Codelco has no concrete plans to repeat the reinvestment program next year as copper prices are expected to be lower.
The main projects to consume the 2007 budget include the US$989mn Gaby mine set to come on stream in June 2008 at a rate of 150,000t/y in cathodes for 14 years.
Some funds will also go towards a US$578mn expansion to ramp up output at the Andina division by 50,000t/y-60,000t/y by September 2009. The mine produced 236,000t in 2006 compared to 248,000t the year before.
Finally, Codelco plans to spend US$88mn on the Pilar Norte expansion to add resources of 37.6Mt grading 1.32g/t copper to the mine plan at underground El Teniente. The mine produced 418,000t in 2006 compared to 437,000t the year before.
Codelco's largest division Codelco Norte churned out 941,000t last year versus 965,000t in 2005, while the Salvador division produced 81,000t in 2006 compared to 78,000t in 2005. |
