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By Anthony Esposito and Fabian Cambero
SANTIAGO, April 15 (Reuters) - Chilean state-run copper miner Codelco expects its annual copper production to reach about 2 million tonnes by 2026 as it invests $25 billion in new mines and expansion projects to boost output.
Codelco produced 1.67 million tonnes of copper in 2014 from its 100 percent owned mines, but its position as the world’s No. 1 producer is being threatened by declining ore grades, high energy costs, and permitting delays for new projects.
Cash costs are seen as relatively stable, averaging around $1.51 a pound between 2015 and 2019, marginally higher than last year’s $1.50, Chief Executive Officer Nelson Pizarro told journalists at a meeting during the CESCO/CRU copper conference in Chile on Wednesday.
On Tuesday, Pizarro shrugged off suggestions that Codelco could soon lose its top spot to a miner such as Freeport-McMoRan Inc, saying he preferred to focus on profits. Codelco’s pretax profits are seen at over $10 billion from 2015 to 2019.
Codelco is betting on a $25 billion investment plan over the next five years, led by giant projects such as converting open-pit Chuquicamata into an underground mine, and adding a new level to century-old El Teniente, the world’s biggest underground copper mine.
With all that on its plate, Codelco was not considering buying new assets, Pizarro said on Wednesday.
“Codelco has all its resources placed in the development of its structural projects,” he said.
“ASSURED PERMANENT DEMAND”
Fundamentals for the base metal remained strong, Pizarro said, adding that economic growth in China and India “assured permanent demand for copper” in coming years.
Mirroring the comments other miners have made during the CESCO/CRU conference, Codelco sees a previously forecast copper market surplus for 2015 essentially disappearing.
The market will likely have a slight surplus of 50,000 tonnes in 2015 before balancing out in 2016, said Victor Perez, head of Codelco’s commercial planning and markets. (Writing by Anthony Esposito; Editing by Chizu Nomiyama, Rosalba O‘Brien and Jeffrey Benkoe)