Codelco’s quest to recover from a 25-year production low hit a financial roadblock in Q1, as currency swings and maintenance costs slashed profits despite marginal copper output gains. The Chilean miner’s struggles highlight the challenges facing national champions in volatile commodity markets.
By the Numbers
- Pre-Tax Profit: ▼53% YoY to $213M
- Copper Production: ▲0.3% to 296K tons (Codelco-owned); ▲1.6% to 324K tons (including joint ventures)
- EBITDA: ▼12% to $1.35B (peso depreciation and higher costs)
- 2024 Target: 1.37M–1.4M tons (up from 2023’s low but still below historic peaks)
Key Headwinds
- Currency Pain: A 2.76% peso appreciation vs. USD eroded dollar-denominated earnings.
- Operational Snags:
- February blackout cut refined output by 10K tons.
- Maintenance costs rose at aging mines like El Teniente.
- Cost Creep: Equipment leasing expenses climbed, though lower energy prices provided partial relief.
Silver Linings
- Expansion Projects:
- Andesita section (El Teniente): Q2 production start.
- Rajo Inca concentrator: Q3 ramp-up to boost Salvador Division output.
- Price Tailwinds: Copper prices near $9,300/ton may offset volume challenges ahead.
Industry Context
- Global Copper Squeeze: Codelco’s sluggish recovery contrasts with surging demand for green energy and AI infrastructure.
- Chile’s Dilemma: The government faces pressure to modernize mines without overburdening debt-laden Codelco.
What’s Next?
- H2 2024: New mine sections could accelerate output, but FX and cost controls remain critical.
- Investor Watch: Can Codelco hit its 1.4M-ton target amid labor and water scarcity risks?
Why This Matters:
- EV/Energy Transition: Codelco’s struggles threaten global copper supply for batteries and grids.
- State-Owned Challenges: Highlights pitfalls of underinvestment in national champions.
- Macro Sensitivity: Emerging-market miners remain vulnerable to currency swings.
Data Point: Codelco’s 2023 output (1.325M tons) was its lowest since 1998—despite controlling 8% of global reserves.
Codelco’s Q1 Profit Plummets 53% Despite Copper Output Gain as FX and Costs Bite