Chile's state copper producer Codelco's output in the first three quarters of this year fell 7.83% year-on-year to 1.12Mt mainly due to lower grades and other operational challenges, the company reported in its quarterly results on Thursday.
"The main issues accounting for lower production were conflicts with contractors, environmental issues at El Teniente and Andina and lower than average grades due to older mineral deposits especially in Chuquicamata and El Salvador," Codelco executive president José Pablo Arellano told reporters during a Santiago press conference.
As a result of the lower output, coupled with higher costs, the company's pre-tax profits fell to US$4.86bn in the recent period from US$6.74bn year-on-year. Pre-tax profits are the figure the state miner emphasizes since all its earnings go to Chile's treasury.
Sales totaled US$7.24bn in the recent period from US$8.39bn year-on-year.
Net profit - calculated by Codelco using the same standards as traded companies for comparison purposes - amounted to US$3.88bn in the first three quarters of this year compared to US$5.37bn year-over-year.
Total costs amounted to US$1.81/lb in the recent period, up from US$1.35/lb year-on-year. Cash costs after molybdenum byproduct credits averaged US$0.63/lb in the first nine months of this year, compared to US$0.34/lb year-on-year.
"We are looking at all our operations and taking contingency measures to decrease higher costs and we are also working towards investment projects and structural projects which may not come into production this year or next year but they will eventually move forward," Arellano said.
Molybdenum output in January-September totaled 15,000t, versus 21,000t year-on-year.
The company's copper sales including third-party purchases amounted to 1.39Mt in the first nine months of 2008, compared to 1.48Mt in January-September of last year. Molybdenum sales totaled 19,000t in the recent period, compared to 21,000t year-on-year.
PRODUCTION MINE BY MINE
The company's largest branch, Codelco Norte in region II, contributed 552,000t of copper in this year's first nine months, compared to 641,000t in the year-ago period.
The El Teniente underground mine in central region VI produced 271,000t of red metal in the recent period, down from 292,000t year-on-year.
The Andina division in central region V churned out 159,000t of copper in the recent period, down from 163,000t year-over-year.
The Gaby mine, commissioned this year and also in region II, produced 29,000t since its startup until the end of September.
The company's smallest division, Salvador in northern region III, was responsible for 36,000t in the recent period, versus 45,000t year-on-year.
Finally Codelco's 49% stake in the El Abra mine in region II amounted to 61,000t of copper in January-September of this year, versus 60,000t in the same period 2007.
US-based Freeport-McMoRan Copper & Gold (NYSE: FCX) controls El Abra with 51%. Codelco is the world's largest copper producer.
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