Codelco reports bumper year for profits despite pandemic
Chile´s Codelco, the world´s top copper producer, reported pre-tax profits of $2.078bn in 2020 and said it had upped output from its own mines by 2% to 1.618mn tonnes, despite being forced to rely on skeleton crews for almost half the year amid strict measures aimed at curbing the coronavirus outbreak.
The 55% increase in profits came amid a surge in global metal prices and higher sales as global markets including Chile’s main buyer China begin to rally from the pandemic, reports Reuters.
The company, which turns over all its profits to the Chilean state, told Reuters earlier this week that the recent spike in the price of the red metal as a “good opportunity” to generate cash for investments and hold down debt, but warned it could also drive up the miner’s costs.
Codelco said an 8.6% drop in direct cash costs to $1.294 per pound had also helped bolster profits, attributing these primarily to the lower price of inputs, a strengthening peso, upped production and a cash-saving drive by managers.
Codelco said its own copper sales increased by 1.5% year-on-year, and a higher ore grade generated positive performances in its Ministro Hales, Andina, Chuquicamata and Salvador mines, making up for declines in other divisions.
The company views the recent spike in the price of the red metal as a “good opportunity” to generate cash for investments and hold down debt, but warned it could also drive up the miner’s costs, a senior executive told Reuters.
The price of copper shot above $9,000 a tonne for the first time last week since 2011, as a nascent global economic recovery has prompted demand to boom for the commodity, critical to global construction and manufacturing sectors.
Codelco vice president of sales Carlos Alvarado said the growing expectations would likely also spur goods and service providers to hike prices, leading to higher overall costs for the state-run miner.
The executive said it was still “too early” to know if the spike in the global copper price represented a new “super-cycle,” similar to that seen in the early 2000s following a tectonic demand boost from industrialisation and urbanisation in emerging nations.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.