Chilean based company Codelco; the world’s top miner of Copper has altered its ambitious five-year investment plans after the copper market maintains its high levels of unpredictability, an unpredictability that has significantly dried up the company’s earnings.
Chief Executive of the state-owned company, Nelson Pizarro, has labelled the current state of the company’s position as the ‘worst crisis’ the business has ever faced. The dire situation has forced the company to reduce its investment budget by a staggering $2.25 billion, although, when pinned next to the overall budget of the original $25 billion (now $18 million) it doesn’t appear to be a make or break figure.
The company have altered their strategy and will now undertake projects in a sequential manner as opposed to a simultaneous one. Among the affected plans, Codelco noted that phase two of its Radomiro Tomic sulphide project will be postponed to 2024, while construction of a new level at El Teniente, originally set to be done by 2020, now it is expected to complete in 2023. Chuquicamata, the largest open pit copper mine in the world, is not going to be effected by the changes and will continue with its much needed expansion project, that is due to be completed by 2019.
As evidence to the dire state of the company, the investment cuts have come about despite the company being given an injection of $600 million earlier this year. Although, the state are perhaps due some criticism considering over the last decade they have reinvested just 10% of the profits received, which is rather negligible when compared to the average 40% reinvested by private copper companies.
The company remains the largest copper supplier in the world, with global output levels accounting for 10% of the world’s copper and the company being a major reason for the economic growth experienced by Chile in recent decades.
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