(Adds comments on copper price, market)
SANTIAGO, May 29 (Reuters) - Codelco, the world's No. 1 copper producer, increased output in the first quarter of 2015, compared with a year ago, although a slide in the copper price eroded profits.
Codelco produced 394,000 tonnes of copper from its fully owned projects in the first quarter, up 3 percent from 2014, boosted by new projects like Ministro Hales, it said on Friday.
But earnings at the state-run firm, which hands all its profit to the government, fell more than 40 percent to $312 million, with a recent sharp fall in the copper price offsetting lower costs.
Copper was trading at around $2.78 a pound on the LME on Friday morning. It has risen about 11 percent since the start of February after a steep drop in the second half of 2014.
At a presentation on Friday following the results, Codelco Chief Executive Officer Nelson Pizarro forecast the copper price to be at around $2.80 a pound by the end of year. Direct cash costs in the first quarter were $1.35 per pound for the company.
Pizarro said the copper market was likely to show a light surplus over the next year and a half, but would return to a deficit within three years. (Reporting by Anthony Esposito; Writing by Rosalba O'Brien; Editing by Chizu Nomiyama and Jeffrey Benkoe)