Codelco Faces Production Declines Due to Last Year’s Rock Collapse
Chile’s Codelco, one of the world’s leading copper producer, is grappling with significant production declines at its El Teniente mine, primarily due to a rock collapse last year. This incident continues to impact the mine’s output, contributing to one of the lowest annual production levels the state-owned company has seen.
The El Teniente mine, situated about 80 kilometers south of Santiago in the Andes, experienced a 32% drop in production in April compared to the same period last year. This downturn significantly contributed to Codelco’s worst monthly performance in at least three years, as reported by Chile’s state copper commission, Cochilco.
Codelco has stated that the reduced output was anticipated and has been factored into their annual production plans. “This situation was foreseen in annual planning and does not affect the committed production budget,” the company confirmed in a written statement.
Efforts to reverse the decline are underway, with Codelco embarking on an extensive expansion project at El Teniente. The $3.4 billion New Mine Level project that started last decade, designed to extend the mine’s productive life by 50 years, is expected to ramp up production to 500,000 tonnes per year by 2025.
In addition to physical expansions, Codelco is leveraging advanced technologies to enhance productivity and safety. The company has implemented a suite of digital solutions from Epiroc and is testing autonomous rail transport systems to improve operational efficiency. The integration of these technologies is being coordinated through Codelco’s Integrated Operations Centre in Rancagua, which remotely manages various aspects of the mining process.
Despite these efforts, the road to recovery is fraught with challenges. Codelco’s overall production reached its lowest point in 25 years, prompting outgoing CEO Andre Sougarret to emphasize the need for continued investment and innovation to meet future production goals.
This comes after reports point to a copper industry shakeup as BHP Group is projected to surpass Codelco as the world’s largest copper producer in 2024, according to estimates from Bloomberg Intelligence. Analyst Grant Sporre anticipates that BHP’s massive Escondida mine in Chile will drive increased production, allowing the Australian company to edge past the Chilean state-owned giant this year.
Estimates say Codelco’s copper output will dip from 1.42 million metric tons in 2023 to 1.41 million tons in 2024. Conversely, BHP is expected to boost production from 1.37 million tons last year to 1.44 million tons, dethroning Codelco from its long-held position as the global leader.
Despite these challenges, Codelco remains optimistic about reclaiming the top spot in the coming years as it works to recover from project delays and setbacks. The state-owned company experienced an 8.4% drop in production in 2023 but aims to gradually rebound, targeting an output of 1.7 million tons by the end of the decade, according to CEO Rubén Alvarado’s recent comments.
Information for this story was found via Bloomberg and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
