For copper bulls betting on more mining companies cutting production like Glencore Plc, the news out of Chile isn’t good.
Codelco, the world’s biggest copper producer, is maintaining output targets and warning investors not to expect any dramatic changes to its record investment plans.
Codelco’s mines probably will remain profitable even as concern over Chinese demand is set to keep prices low in the coming years, Chairman Oscar Landerretche said in an interview Monday in London. While there will be minor revisions, the majority of a $25 billion, five-year investment plan to help replace aging deposits will be rolled out as planned, he said.
“We will have to rationalize, but the projects, we will do,” he said, adding that a review of the state-owned Chilean miner’s investment budget will be completed later this month. “One shouldn’t expect big dramatic changes in the strategic position.”
Unlike the third-biggest copper miner Glencore — whose decisions to reduce output of copper and zinc have helped ignite a rebound from prices near six-year lows — Codelco will push ahead with its annual target of producing 1.6 million to 1.7 million metric tons this year and next year.
Publicly traded commodity companies are under greater pressure than state-owned producers like Codelco to placate investors by cutting output as prices collapse. With its bonds supported by Latin America’s highest-rated sovereign, Codelco has also kept borrowing costs in check relative to competitors.
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