Chilean copper miner Codelco is pushing ahead with its drive to control costs and raise productivity as it seeks to mitigate the effect of fluctuating copper prices and lower ore grades, its ceo said.

According to Thomas Keller, the company is driving cost-cutting measures, particularly on the productivity side, at the same time as bringing new projects to the market that have streamlined cost structures from the outset.

“Costs are an adjusting factor; every miner faces that challenge. Going forward, many of our projects will provide an opportunity to increase ore grades,”Keller, who was speaking in an interview for the annual CESCO industry week in Chile, said.

The miner’s Ministro Hales project, a complex operation with relatively attractive grades but high arsenic levels, is progressing well.

“We have a roaster in the process which is a relatively new experience for Codelco but it is going well. The concentrator is also at design capacity already. Hopefully, if it continues to go well, we’ll be completing ramp up towards the end of the second quarter,” Keller said.

“We are very enthusiastic about Ministro Hales. It demonstrates we can do large projects at Codelco and can do so in a very difficult environment,” he said, adding, “The construction of Ministro Hales was concurrent with a number of other projects being built in Chile and there was heightened competition for engineering and construction services.”

The decline in the number of projects across Chile has allowed the engineering services market to normalise, as well as reduce delivery times on the supplier side, Keller said.

“We expect prices to adjust to market conditions and also expect this to be translated into a more competitive market on the construction service side,” he added.

The project to develop a new mine level at El Teniente is meanwhile in full construction mode, while the transition from Chuquicamata to underground from open pit is also progressing. Both are slated to be completed in 2018.

Chuquicamata has faced delays over the years, a factor that is partly to blame for the company’s decline in profits in 2013.

“One of the reasons profits fell so dramatically is that at this stage we shouldn’t be mining the open pit [at Chuquicamata], we should be mining the underground. For various reasons it got delayed so now we are trying to catch up,” Keller said.

Earnings fell by 50% in 2013, due to lower prices but mainly the result of extraordinary gains on its Anglo American Sur stake.

The company is also advancing engineering work and awaiting environmental authority approval at its phase 2 of Radomiro Tomic, which will start to develop sulphide ores to replace the current oxide ores expansion at the Andina ore body, Keller said. At Andina 4, the company is also awaiting environmental authority approval.

“Following our environmental submission we received a large number of questions and observations, over 2000 in total, so we need to do a lot of work on the permitting side,” Keller said.

“Probably it will take longer than anticipated to obtain approval, but we have to be patient and do a good job in working with communities,” he added.

Keller said the company was looking on a conceptual level at whether it could devise the profitable development of its sulphide ore resources at Salvador, which have struggled with depleting grades.

“Salvador isn’t a project yet as it is still in the conceptual engineering stage, but we will be moving into pre feasibility soon,” he added.

Andrea Hotter
Twitter: @andreahotter