Codelco, the world’s largest copper producer, is aggressively working to boost its copper output from a 25-year low, aiming for an annual production target of 1.7 million metric tons by the end of the decade. However, union workers and analysts express concerns about the sustainability of these tactics.
Key Highlights:
Current Production Levels:
Codelco’s production reached 1.328 million tons in 2024, only slightly above the quarter-century low of 1.324 million tons in 2023, as indicated by an internal document reviewed by Reuters.
Operational Changes:
Workers reported that Codelco has implemented measures such as shortening downtime, altering shift schedules, and intensifying production targets. Some necessary maintenance tasks have been postponed until 2025.
Analyst Concerns:
Analysts are questioning how much Codelco has relied on its reserves to achieve its production figures. They emphasize the need for new mines or alternative copper sources to offset the degradation of minerals at aging facilities.
Worker Insights:
An equipment operator at Chuquicamata, one of Codelco’s largest mines, noted increased pressure to minimize routine stoppages and prevent incidents that could lead to operational downtime. There are ongoing bottlenecks in mineral transport that have yet to be resolved.
Maintenance Delays:
Codelco announced in February 2024 that it would halt ore transport at Chuquicamata to replace conveyor belts. Maintenance at smelters in both Chuquicamata and El Teniente has also faced delays.
Codelco’s Response:
The company stated that it conducted scheduled maintenance on the Chuquicamata smelter in December and began maintenance at the Caletones smelter in El Teniente last month, assuring that operations would continue during this period.
Production Peaks:
Codelco Chairman Maximo Pacheco reported a production peak of 160,000 tons in December, the highest monthly output since 2019. Analysts suggest that this spike is due to an aggressive reduction in inventories rather than sustainable production practices.
Long-Term Challenges:
Project Delays:
The advancement of major projects like Chuquicamata Underground and El Teniente has faced significant delays and construction issues. Two new phases of El Teniente are now set to start later than originally planned.
Capacity Issues:
The Ministro Hales mine is still operating at reduced capacity, and the ramp-up of Chuquicamata Underground has been slower than anticipated.
Future Outlook:
Analysts believe that while production may increase, it is unlikely to reach Codelco’s ambitious targets. The company’s investments of $4 to $4.5 billion annually have not yielded the desired results in production stabilization.