Codelco workers fear copper production push hard to maintain

By Fabian Cambero

SANTIAGO (Reuters) -Codelco pushed hard to lift its copper production from a 25-year-low at the end of 2024, but union workers and analysts question whether its tactics are sustainable as it targets annual output of 1.7 million metric tons by the end of the decade.

Codelco's production reached 1.328 million tons in 2024, at the low end of its target range and just about 3,500 tons higher than the quarter-century low in 2023, an internal document seen by Reuters showed.

Four workers interviewed by Reuters said the world's largest copper producer had shortened downtime, changed shift schedules and intensified production targets while delaying some needed maintenance until 2025, in its second-half push.

Analysts, meanwhile, questioned how deeply Codelco tapped its reserves to make its numbers, and said new mines or sources of copper are needed to compensate for degradation of minerals at aging facilities.

An equipment operator at one of Codelco's largest mines, Chuquicamata, said there was more pressure in the second half of 2024 to reduce routine stoppages and avoid incidents that could cause a stoppage.

The worker, who asked not to be identified because they were not authorized to talk about internal operations, said Codelco has yet to fix bottlenecks in transporting minerals in the mine.

Codelco said in February 2024 that it needed to stop ore transport at Chuquicamata to replace conveyor belts. That maintenance was expected this year.

Workers said maintenance was delayed at smelters in Chuquicamata and El Teniente, another key mine.

Codelco said in a statement that it had carried out scheduled maintenance on the Chuquicamata smelter in December, while maintenance at the Caletones smelter at El Teniente began last month and would continue until February.

"This does not imply a stoppage for the entire period, because one of its two lines remains operational most of the time," Codelco said.

It added maintenance at the huge Chuquicamata underground mine was planned for the second quarter, which would involve around 1,000 people working for "about a month" due to the challenging and unique nature of the mine.

"The first stage of the process has already been completed, so the new belt has already arrived at the site. Precautions are being taken for the treatment of minerals from other divisions to meet the production goals for 2025," it said.

Chairman Maximo Pacheco said Codelco produced 160,000 tons of copper in December, its biggest month since 2019. Miners typically dip into reserves to increase December production, yet analysts said Codelco may have tapped them more than usual.

"Although it is normal for production to increase in December, we believe this huge jump can be attributed to a very aggressive reduction in inventories," said Juan Carlos Guajardo, head of the consultancy firm Plusmining.

"Codelco will have to replenish these inventories at some point."

LONG-TERM ISSUES

"The real battle will continue to be the advancement of the larger projects like Chuquicamata Underground or El Teniente, because these are the projects that will get the company to the level of 1.7 million tons per year," Guajardo said.

These large mine overhaul projects have been plagued by delays, accidents and construction mistakes.

In its latest results, Codelco said two new phases of El Teniente will start later than expected. Andesita, which had been scheduled to begin extraction in October, will now start "in the coming months." It said Andes Norte, originally slated for December, will start extracting in the first quarter.

Cristian Cifuentes, an analyst at the Center for Copper Studies (CESCO), said that the Ministro Hales mine is still at reduced capacity and the ramp up of Chuquicamata Underground has been "slower than we all thought."

"You can see the difficulties when you add all these things together," Cifuentes said, adding he thinks production will increase, but not at the levels Codelco wants.

Company data indicated that much of Codelco's 2024 win could be attributed to its small Salvador mine coming online, which added 2,800 tons in October and November.

One analyst, who asked not to be named, said Codelco will show more output stemming from its purchase of 10% of Teck's Quebrada Blanca mine.

"I don't see how they will address (mineral) degradation except by entering new areas," the analyst said. "Every year Codelco invests between $4 and $4.5 billion and figures are still falling."

(Report by Fabian Andres Cambero; Editing by Alexander Villegas, David Gregorio and Alexander Smith)