September 5, 2017 / 2:34 PM / 10 months ago

UPDATE 1-Codelco posts solid first half-profit despite slumping production

(Adds details on cash cost, comments by CEO Pizarro, context)

By Fabian Cambero

SANTIAGO, Sept 5 (Reuters) - Chilean state copper company Codelco produced less copper in the first half of 2017 than it did in the same period a year ago but made a healthy profit as prices for the metal have improved significantly in recent months.

The company said on Tuesday it produced 798,000 tonnes of copper in the January-to-June period, down from 843,000 tonnes last year. During that period, the company posted a $1.023 billion pre-tax profit, versus a $97 million loss in the first half of 2016.

Direct cash costs rose to $1.317 per pound of copper from $1.275 in 2016 as falling ore grades at the company's mines - a problem for years in Chile - continue to take a toll.

Codelco, which transfers all its profits to the state and relies on capitalization and some debt issuance to fund its operations, is emerging from a prolonged rough patch after low copper prices ate into earnings and scuttled near-term investment plans.

The price of copper has risen dramatically in recent months on strong Chinese demand and supply disruptions, among other issues. Codelco, like other copper miners, is reinstating projects that were earlier put on ice.

At a news conference announcing the results, Codelco CEO Nelson Pizarro said Chinese demand for the metal should remain solid in the near future.

He said the company hopes to settle on a short-list for a lithium joint venture by the end of the September, and reiterated its commitment to move ahead with a $1.2 billion desalination plant to help supply copper mines in the bone-dry Atacama Desert with the water they need to function.

Reporting by Fabian Cambero; Writing by Gram Slattery; Editing by Jeffrey Benkoe and Dan Grebler

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