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UPDATE 2-Codelco aims to cut 2015 costs by $1 bln as copper price plummets
January 30, 2015 / 3:33 PM / in 3 years

UPDATE 2-Codelco aims to cut 2015 costs by $1 bln as copper price plummets

(Adds CEO’s comments, background details)

By Fabian Cambero

SANTIAGO, Jan 30 (Reuters) - World No.1 copper miner Codelco will look to slash costs by $1 billion in 2015, Chief Executive Nelson Pizarro said Friday, as the price of the base metal slumped to multi-year lows.

It is seeking to cut direct cash costs by some $0.193 per pound of copper at its operations, Pizarro told journalists. In the January through September, Codelco’s cash costs averaged $1.537 per pound.

Still, none of the Chilean state-run copper miner’s large investment projects will be at risk and no personnel will be laid off, Pizarro said.

Instead, the company will look to implement efficiencies by such measures as the renegotiation of energy contracts, its task eased by slumping oil prices and a Chilean peso that has weakened around 25 percent versus the U.S. dollar over the last two years.

Crude prices are poised for a seventh month of declines, the longest rout on record. As a country that imports almost all its hydrocarbons, Chile is reaping the benefit, with open pit mines that run diesel trucks among those positively impacted.

The lower oil price and the weaker peso will “help reduce costs by $500 million, via the renegotiation of contracts,” Pizarro said.

Codelco will also look to boost copper production some 35,000 tonnes this year by optimizing metals recovery at two of its smelters. The additional copper output should translate into an extra $200 million in revenue, Codelco hopes.

“This drop in prices is an opportunity to make Codelco a more efficient and productive company,” said Pizarro.

Copper prices reached 5-1/2 year lows on Friday, continuing a recent slide that has been driven by concerns about global economic growth and demand from China, which accounts for 40 percent of global refined copper demand.

Codelco, battling falling ore grades at its decades-old flagship mines, is implementing an ambitious multi-billion investment plan over the next few years to open new projects and revamp older ones. (Writing by Anthony Esposito; Editing by Rosalba O‘Brien and Bernadette Baum)

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