April 10, 2018 / 5:17 PM / a year ago

UPDATE 1-CRU/CESCO-Collahuasi says to slash costs to under $1/lb in 2018

(New throughout, adds further details on cost-reduction efforts, comments from interview with CEO Gomez)

By Dave Sherwood and Fabian Cambero

SANTIAGO, April 10 (Reuters) - Chilean miner Collahuasi said on Tuesday it expected to slash production costs to under $1 per pound of copper this year as it boosts output and uses efficiency measures to optimize operations.

Collahuasi, owned by Anglo American Plc and Glencore Plc, is a copper mine located in northern Chile and is among the world´s largest.

"We´ve decreased our costs to $1.14 (per pound), and we think that this year they will go below one dollar," said Collahuasi Chief Executive Officer Jorge Gomez during a talk at the CRU/CESCO World Copper Conference in Santiago.

Global miners and investors have been particularly atuned to production costs as inflation begins to increase alongside rising commodity prices, including that of copper.

In an interview with Reuters following his talk at the conference, Gomez said increased production at the mine, following several years of technical, weather and labor-related setbacks, has helped reduce costs, together with efficiency measures.

"A couple of cents less than a dollar. That will put us in the top quarter (of costs reduction industry-wide) after previously being in the bottom quarter," he said.

Hennie Faul, CEO for copper at Anglo-American, one of the mine´s top shareholders, said in an interview with Reuters this week that productivity improvements and brightening long-term fundamentals for copper could open the door to a potential expansion at Collahuasi.

Gomez added that the mine was well-positioned "to take on new challenges" and said Collahuasi was asessing different possiblities to reduce the mine´s use of water - a critical though often scarce resource in Chile´s parched northern desert.

"Not necessarily a desalination plant, which may be the most common (solution)..." Gomez said. "In economic terms, it´s a decision that needs to be taken very seriously."

Collahuasi produced 524,000 tonnes of copper in 2017. (RegoriReporting by Dave Sherwood and Fabian Cambero; editing by Jonathan Oatis and David Gregorio)

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