Codelco increased production by 3% in their divisions to 433,000 metric tons (mt) of fine copper and reduced costs 14.7% during the first quarter of 2015 compared to the same period of 2014. As a result, profits increased to $312 million for the quarter. Between January and March, the average price of copper reached $2.64/lb, 17% lower than in 2014 when copper traded at $3.19/lb. Low copper prices reduced Codelco’s revenue by $392 million. Along with this, there was a fall of 15% in the value of molybdenum, main product sold by the company, which was quoted at $18.7/kg vs. $ 22/kg in the first quarter of 2014.
“The good news is the (lower) costs to cope with the dramatic simultaneous fall in the price of copper and molybdenum prices,” said Nelson Pizarro, CEO, Codelco. New production from Ministro Hales and increased production at El Teniente and Gabriela Mistral counterbalanced decreased production at Chuquicamata.
Direct costs were $1.36/lb of copper, which is 14.7% lower than that achieved in the first quarter of 2014 ($1.60 /lb), placing Codelco in the second quartile cost of the mining industry globally. Pizarro explained that significant part of the cost reduction is a result of better management, lower costs and increased production.
“It’s pure and simple management,” Pizarro said. “Pure and simple cost control in the use of critical inputs, steel, resources, labor productivity increases gear ratio, they are absolutely in line with the billions of dollars that we invest.”