May 30, 2019 / 4:48 PM / a year ago

UPDATE 2-Codelco reports drop in copper output as labor talks loom

(Recasts with announcement of new labor talks at Chuquicamata mine)

SANTIAGO, May 30 (Reuters) - Chile’s Codelco, the world’s top copper miner, reported an 18% year-on-year drop in its first-quarter copper output on Thursday, as unions at its Chuquicamata mine announced they would hold talks with the company in hopes of averting a strike.

Codelco produced just 342,000 tonnes of copper in the first quarter, and its pretax profit fell 31% to $372 million from the same period in 2018, the company said in its earnings statement.

Labor unions 1, 2 and 3 at Chuquicamata said later on Thursday that they would hold government-mediated talks with Codelco on Friday. The talks will stave off plans for a strike that the unions had approved after rejecting the company’s last offer for a new contract on Wednesday.

Codelco is seeking to transform the 100-year-old open-pit deposit at Chuquicamata into an underground mine. That is part of a 10-year, $39 billion overhaul of Codelco’s key operations as it seeks to maintain output despite rapidly falling ore grades at its deposits.

Codelco’s chief executive, Nelson Pizarro, said before the unions’ announcement that he was confident an agreement could still be reached with workers. Pizarro also predicted the price of copper would continue to fluctuate and said he did not expect it to hit the average of $3 per pound in 2019 that the company previously estimated.

Codelco said its cost of production per pound of copper slipped 0.3% to $1,347 in the first quarter.

Copper production at Chile’s top mines dropped sharply in the first quarter of 2019, Chilean copper commission Cochilco said earlier this month, amid a perfect storm of operational issues, heavy rains and falling ore grades at the largest deposits. (Reporting by Fabian Cambero; writing by Cassandra Garrison, Adam Jourdan and Mitra Taj; editing by Chizu Nomiyama, Bill Trott and Leslie Adler)

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