Codelco posts US$537mn pre-tax profit

Chilean state copper giant Codelco pulled in US$537mn in pre-tax profits in the first quarter, 7% more than in the same period last year thanks to higher copper prices, better management and higher sales volume, CEO Nelson Pizarro said Friday.

The improved results came despite a 1% increase in C1 cash costs to US$1.351/lb and an 8% rise in C3 costs to US$2.295/lb explained by a stronger peso, increased input prices and collective contract negotiations.

C1 costs were 12% lower than the US$1.535/lb average of the Chilean copper industry excluding Codelco, Pizarro (pictured, center) told reporters in Santiago.

The CEO said Codelco achieved a productivity level of 50.8t per worker in Q1, up 11% from the same period last year, due to the optimization of contracts with third parties and better administration of staffing levels.

Production of 416,000t of fine copper was up 7% compared to 1Q17.

"Each of the members of this company is responsible for this achievement. Their work and commitment allowed us to face, once more, the constant mineral grade decline," which fell 2.7%. Including Codelco's shares in the El Abra mine and Anglo American Sur, the figure was 446,000t.

Pizarro also highlighted that during the period the company negotiated collective contracts with six unions at its Andina, Chuquicamata, Ministro Hales and Radomiro Tomic mines, representing a total of 3,000 workers. All the negotiations were successful, with no strikes and a 1% wage hike, he said.

A total of 11 negotiations processes are expected for the rest of the year. "The biggest will be at El Teniente. We hope that this process allows us to maintain our austerity efforts," Pizarro said.

The company's Ebitda reached US$1.27bn in Q1, up 11% compared to a year earlier, Pizarro said, citing the company's productivity, improved copper and molybdenum prices and higher sales volumes. The Ebitda margin was 36%. No revenue figures were provided.

FINANCING

In April, finance minister Felipe Larraín said that the new government that took office in March will ensure Codelco gets the funding it needs to develop projects without jeopardizing its credit rating.

Pizarro said in the press conference that capex for 2018 is US$633mn.

"When we fulfill our promises, we will be in a position to receive this capitalization," he said.