Fiscal deficit hits first injection of resources to Codelco in 2014
Treasury confirmed home of capitalization of U.S. $ 200 million and multi-year project. It is feared that amount affects relationship with unions, debt level and projects deadlines.
It exists concern within Codelco after the government’s decision to initiate the capitalization of the state copper company with $ 200 million. Because the figure is far from the $ 1,200 million that requires the company.
Treasury explained that the resources will come from profits generated by the company in 2013 to support its investment plan and endorsed the government’s commitment that in the third quarter of this year will send to the Congress a bill to ensure company’s long term financing.
In this regard, the Finance Minister Alberto Arenas said he is already collecting information and talking with Codelco, but he warned that the respective amounts will be announced in due time.
It was transcended that the decision of the portfolio was unofficially informed on Monday to the Board of Directors and the members viewed with concern the signal. In fact, Directors have asked President Oscar Landerretche, request a meeting with Arenas to manage the next injection of resources.
Sources revealed that in the Mining Portfolio-which had proposed to capitalize Codelco with $ 1,000 million-are restless. They fear that with the uncertainty that the amount and the bill produce, the company must incur more debt, delay structural projects and face inconvenient with unions, especially in Chuquicamata, where it must be approved between August and September, a US$4,200 million project for longer life.
This was felt with the rejection expressed by the Federation of Copper Workers (FTC): “It does not solve the urgent need to inject fresh funds this year to Codelco for $ 1,200 million, which were due last year.” To which is added urgently that the Executive set deadlines and content of his permanent financing bill.
Deeper
But, why Treasury chose to start capitalization with only $ 200 million? According to Gustavo Lagos, Academic from Catholic University, “decision due to the fiscal deficit”. He explained that the 2014 copper’s revenues will be low (to date, the average copper price is of U.S. $ 3.13 and the budget was developed with $ 3.25). Moreover, with the downturn in the economy, tax revenues will be lower, as they are already stating the mining companies results and Dipres’s figures.
“What was expected to raise not raise it. There will be a higher fiscal deficit than last year, and if we add to that a capitalization of Codelco, the deficit increases, “he said adding that ideally resources of the Fund for Economic and Social Stabilization (Fees) are considered in the next shot.
From the political arena was also rejected. Deputy Paulina Nunez (RN) said that with the amount “not a blade moves”, whereas the copper company develops projects for about U.S. $ 25 billion by 2015. Sen. Baldo Prokurica (RN), meanwhile, envisioned problems some divisions north by this. From the other lane, Rep. Luis Lemus PS called it “important announcement” considering that resources are fresh and long-term financing was announced.
To the President of the Mining Council, Joaquin Villarino, “it is not possible for Codelco to keep its current leadership position and compete on equal terms if they do not count on long-term financing”. While Cesco’s Executive Director, Juan Carlos Guajardo, said that the low amount “may indicate that the Ministry of Finance preferred a gradual financing approximation of the company while advancing in a more permanent policy.
Source: La Tercera
