Chilean miners shed costs in 2016

Thursday, May 25, 2017

Chilean mining companies managed to lower their cash costs in 2016 from the previous year, thanks to a combination of management efforts and market factors, partly offset by declining ore grades, according to state copper commission Cochilco.

The latest report by the agency shows C1 costs of the country's 19 largest mines fell to US$1.274/lb in 2016 from average C1 costs of US$1.535/lb in 2015.

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Cochilco said costs fell 26.5 cents last year due to management efforts, and 7.0 cents because of favorable market conditions, such as lower prices of key inputs like oil, and the exchange rate.

Offsetting those factors was a 7.3-cent increase related to lower ore grades, which was partly compensated by higher throughput, the report said.

Since the end of the commodities boom, miners across the globe introduced strict cost cutting efforts, including the selling of assets, massive layoffs, contract renegotiations, and more efficient use of key supplies like oil, energy and steel.

Chile's mining council, which groups together the country's largest mining companies, have said that since the end of the boom, the industry has lost 50,000 jobs.

Cochilco said that of the 19 operations, 15 managed to lower costs last year. Combined production of the 19 mines in 2016 was 4.89Mt versus Chile's total production of 5.55Mt.

The operations taken into account by Cochilco include BHP's Escondida, Cerro Colorado and Spence; state giant Codelco's El Teniente, Radomiro Tomic, Chuquicamata, Ministro Hales, Andina, Gabriela Mistral and Salvador; Antofagasta Minerals' Los Pelambres and Centinela (pictured); Anglo American's Anglo American Sur and Collahuasi, a JV with Glencore.