Codelco’s contribution to the Treasury falls 27% with US $ 1,310 million in first half
The state company recorded surplus of $ 1,310 million, in the first half, the lowest amount for the period since 2009.
The increased in production, lower costs and the entry into operation of the Ministro Hales division, were not enough to counter the effects of the decline in the price of copper -main sending from Chile- in Codelco’s financial results for the first half of the year.
The state company reported yesterday that its surplus reached $ 1,310 million, in January-June, 27% less than in the same period in 2013. The amount is also the lowest achieved by the state company for the period since 2009, when it scored US $ 714 million.
Its comparable profit which equates to what obtained by applying the same tax than the private company- fell from $ 348 million compared to 2013, scoring $ 1,050 million. While revenues from copper sales totaled $ 5.002 million, US $ 852 million less than in the first half of last year.
“The effect of lower prices explains the low results (…) They are lower than in previous years results, but still good if we have a long-term view,” said Vice President of Administration and Finance of the State Company, Ivan Arriagada .
The executive explained that between January and June this year, the price of copper fell 8%, (starting at $ 3.42 per pound in January-June 2013 to $ 3.13 in the same period this year). The fall meant lower revenues from about $ 478 million for the corporation, so the effects of the lower value of other metals like gold and silver, whose prices recorded declines of 15% and 25%, respectively adds.
Arriagada said that total copper production from Codelco increased 4% to 877,000 tons in the period. While their own (without regard to its participation in El Abra and Anglo Sur) reached 788 000 tons in the first half, a figure 3.9% higher than what reported in the first six months of 2013. He added that there were production increases in all by-products- explained largely by the launch of Minister Hales- which highlighted molybdenum and silver, with increases of 41% and 35%, respectively.-
Evolution of costs
Arriagada explained that one of the issues that helped them cope with the drop in the price of copper had to do with cost.
So, he said, that the C1 or direct cost, which is used to compare the costs of copper production between companies of industry decreased 7.7%, from US $ 1.71 in the first half of 2013 to US $ 1.58 this year, which meant savings of $ 121 million for the state company. However, he added that the costs and expenses of Codelco, were up 2%. While the net cathode cost (C3) as a credit, which includes the sales of by-products- increased in the same proportion. “We proposed ourselves cutting $ 600 million in 2013-2014 and we are in a good path to reach that number,” he said.
Capitalization
On the occasion, Codelco’s Chief Executive (i), Octavio Araneda said the project funded by up to $ 4 billion for the period 2014-2018, released by the government earlier this month.
In that sense, Arriagada said it is “very good news” considering the investment portfolio for about $ 23,500 million to year 2018. He also noted that the company can manage to have only $ 200 million capitalized during the year because “there is flexibility.
“The important thing is we have a commitment of $ 4 billion, which is the figure in our calculations is necessary to develop a plan for maintaining the credit quality investments,” he said. He added that he could turn back the debt market in the next 12 months if market conditions are good.
Sources close to the government commented that contrary to what was expected, the initiative funded for Codelco-signed by President Michelle Bachelet on August 25th-not include the goals to which the state contribution shall be subject to the copper company.
Such a decision would have caused surprise even within the state company, where they hoped that conditions were established in the initiative.
The situation would respond to the scheme proposed by the State to make sure the goals to be met by the copper company is defined and regularly reviewed at the meeting of shareholders of the company. The proposed targets would not be annual, so during each session of the Executive Board, through the ministers of finance and mining, will evaluate Codelco assess behavior in relation to cost containment and advancing in the structural projects.-
The definition of this scheme would have delayed the finalization of the project, which would have led to President Bachelet signed a draft of only two pages, because the final document was not ready for the ceremony.
Source: La Tercera
