SANTIAGO, Oct 5 (Reuters) - The world’s biggest copper miner, Codelco, said it would delay some $2.25 billion worth of planned investment, as its profits have dried up due to weak prices globally for copper.
The state-run company is part-way through an ambitious investment plan, with five major projects underway to expand its old mines and keep its output flowing.
But a sharp fall in the price of copper - down around 40 percent since the start of 2013 - has complicated its plans. After making a financial loss in the first half of 2016, its chief executive described Codelco’s situation as “extremely fragile”.
Now Codelco is planning to reduce investment by $2.25 billion in relation to its original spending plan, it said in an internal newsletter sent to staff and seen on Wednesday by Reuters.
“For the five years to 2020 spending will be $18 billion, allowing better sustainability of the project portfolio,” it said.
“We have modified our strategy for the projects. Instead of carrying them out simultaneously, development will now take place sequentially,” it said.
That could be good news for the copper price, which has stayed low both on concerns about cooling growth in key buyer China and oversupply, as new mines in Peru in particular ramp up production.
Among other changes, phase two of Codelco’s Radomiro Tomic sulphur project will be postponed to 2024, while a project to build a new level at El Teniente, originally slated to be complete by 2020, is now seen operational in 2023.
A key project to expand the century-old Chuquicamata mine underground, which is already underway and is due to be completed by 2019, will continue as planned.
Production in September had been in line with expectations, despite falling ore grades and work stoppages, the company said in the communication.
Codelco declined to comment on the contents of the newsletter. (Reporting by Fabian Cambero, Writing by Rosalba O‘Brien; Editing by Alistair Bell)