Thomas Keller says Codelco’s capitalization need to finance investments for 2014
The executive says it is not sustainable to keep the company in debt and calls for greater government commitment. He reveals that this exercise the state company could reach 1.9 million tons of production and savings plan is set at U.S. $ 400 million
For Codelco 2013 was a year of Chuquicamata union movement, the environmental authority problems with Ventanas, and the pressing pressure by high costs and low copper value. But Thomas Keller, chief executive of the state company, said that the year end balance sheet is positive: will achieve a production virtually similar to that of 2012 and, despite the price of copper fell between 8% and 9%, end surplus not fall.
In 2012 the surplus totaled U.S. $ 4,000 million, excluding the contributions of the transaction with Anglo.
Next for 2014 is to continue with structural projects and an investment of US$ 5,000 million, mainly in Nuevo Nivel Mina El Teniente, Chuquicamata Underground and Radomiro Tomic as well as definitions in initiatives such as the expansion of Salvador, which could become a structural design and ensure the continuity of the division, which boasts the highest levels of costs with Codelco together with Ventanas.
The challenge says Keller, is how to finance this ambitious program. And it warns that “is not sustainable in the medium and long term,” the state company further into debt. Therefore urges for an annual cap of US$ 1,000 million in fresh funds, since the transaction with Anglo, closed in 2012, improving the equity of Codelco, but does not deliver more funding and also allows them to access better financial market conditions. “It has a neutral effect,” says the senior executive.
Thomas Keller argues that just as Codelco was able to reduce its costs by US$ 400 million even under adverse circumstances, a commitment of the Government projects Codelco expressed in delivering fresh resources would be appreciated. “No it received last year from the authorities requested that the board regarding capitalization (U.S. $ 1,000 million in fresh funds). We all know that the capitalization of the profits of the transaction of Anglo does not represent effective remedies. Although increasing the quality of our assets, clearly do not provide fresh resources to realize our investment programs and therefore we expect the new authorities themselves do, “he says.-
Although Codelco assumed that the Government would give the capital, “the expectation was not fulfilled and it was outstanding.” If this year the company has no capitalization necessary, Keller notes that “the company has two options: either reduce its investment program or change its funding policy and that has to define the directory in due course.”
Therefore, “it is very important to be close to the new authorities and I guess what the board will do when it sees fit.”
Keller notes that the company cannot make the largest investment in its history with an uncertain funding. Especially since the 2014 production plan is ambitious and includes the extraction of 1.9 million tons of copper, which Codelco would score a record production that strengthen loosely as the largest copper producer in the world.
Copper Price
The CEO does not believe that copper prices will suffer a very substantial change in the year. He note that volatility will remain, in recent weeks encouraged by positive news from the U.S. and Europe, but the conditions of supply and demand for copper are consistent with the current price. “In the absence of a shock to the world economy, I see no fundamental change in the copper price quote,” he says. Last week, the metal closed at U.S. $ 3.35 per pound and in 2013 traded on average at U.S. $ 3.32 a pound.
Source: El Mercurio
