The Chilean government recently announced an extraordinary capitalization plan to invest US$1 billion into Codelco to help the current unstable situation that is facing one of the most important copper producers in the world. The announcement was made by Minister of Finance Felipe Larraín, together with Minister of Mining Baldo Prokurica, and Chairman of Codelco Juan Benavides.
Benavides expressed his satisfaction, stressing that the capital contribution will allow Codelco to maintain its level of indebtedness at around US$14 billion.
“This is a very important signal given by the government to sustain the activity and development of the investments that Codelco has … We are talking about US$20 billion for the next five years and another US$20 billion for the next one. That is, about US$40 billion of exclusive investment to maintain production levels,” Benavides said.
“The contribution will allow the current (debt) levels to be sustained. What lies ahead is that the investment flows are so significant that there is a cash deficit for the next four or five years, so this contribution is very significant,” he added. “The copper company has managed to reduce almost US$1.3 billion in costs.”
Larraín said this capitalization means “a support for the ambitious investment program that Codelco has, but without which it is impossible for Codelco to maintain itself as a leading company.”
In this regard, he said, “We are interested in Codelco continuing to develop (…) it is important that Codelco can carry it out, because otherwise if it does not invest, there is a depletion of the mines, there is an exhaustion in the time that it’s pretty fast.”
The capitalization will be carried out from now until February 2019, according to Larraín.
The minister said the first contribution will be given slightly more than half of the resources now, “according to the availability of cash that the Treasury has,” recalling that “we are in a complex fiscal situation.”
Meanwhile, the minister of mining said, “this contribution is very important to maintain the level of production of Codelco to meet the challenge that presents us (…) is a powerful investment to continue with structural projects.”
From the labor union side, President of the Copper Workers Federation (FTC) Juan Olguin applauded the announcement and said the amount given will help the development of the projects.