LMEWEEK-Codelco lifts El Teniente loss estimate, copper output target intact

Codelco is likely to suffer copper losses of 45% more than originally estimated. However, Chairman Maximo Pacheco expects a slight increase in production from the world's biggest copper miner this year.

The loss of production at the El Teniente mine in Chile, along with other disruptions such as those at Freeport-McMoRan’s Grasberg Mine in Indonesia have tightened supply and pushed prices up to $11,000 a metric tonne this week. This is close to last year's record.

The accident in July at El Teniente will cause Codelco to reduce its production by 48,000 tons and lose around $500 million on EBITDA.

Pacheco stated that Codelco’s production between January and September of this year was 2% higher than the same period last year.

He said: "We still believe that by 2025 we will have a level of production that is a little higher than last year."

Codelco has set a target of 1.34-1.3 million tons for copper production in 2025.

ROCK BURST

According to Pacheco, an internal investigation of the El Teniente incident, which is due to be completed by the end this year, revealed that the most likely cause was the rock explosion caused by a change in geological structure.

This was due to a vertical unloading process caused by geometric changes and cavity interactions in the northwest part of the deposit... weakening the structure and facilitating the downward movement of materials. At depth, the rock layers are moving over each other," Pacheco explained.

He added that Codelco must monitor the terrain structure, seismic activities and geomechanical factors in all 4,500 km of tunnels of the mine.

The Andesita Unit within the El Teniente Complex will be suspended until the investigations are complete.

ENVIRONMENTAL Permits

Pacheco stated that Codelco will apply for environmental permits for the joint operation between its Andina Mine and Anglo American Los Bronces' neighboring Los Bronces operations by 2027. Last month, the companies signed an agreement that they claim will save $5 billion.

Pacheco said Codelco would also contribute to discussions about the future of Teck Resources Quebrada Blanca in Chile. The mine is where Codelco holds a 10% share and two seats on its board.

Teck wants to merge Quebrada Blanca and the nearby Collahuasi mining operation as part of an proposed merger with Anglo American. Reporting by Pratima Dasai in London and Daina Beth Solon in Santiago, with editing by Kirsten Doovan.

(source: Reuters)