LatinFinance - May/June 2015 - 30

CHILE
MINING

Across Latin America, mining companies are reeling from the crash in commodity
prices. In Chile, that's pushing Codelco to step up its defensive strategy.
By Jennifer P. Roig

After the boom

30 L ATINFINA NCE.COM - May/June 2015

CLEANING UP: A worker washes copper
cathodes at a Codelco refinery

©REUTERS

R

ight before midday on March 27, Codelco's executive team was
at a peak of activity. The timing for the presentation of the Chilean state-owned copper mining company's annual results was unusually stressful. Nelson Pizarro, chief executive since
August, would speak on behalf of the company for the first time. Beyond answering questions about numbers, profits, investment plans, and hurdles to overcome, he would be asked
about Codelco's future - at a time when the stakes for the world's largest copper mining
company are as high as they have ever been.
On top of that, the devastating
effects of heavy rains in the northern desert regions of Chile were
on everybody's minds. Codelco's
team would face questions regarding worker safety. They would
be asked to speculate on how the
company would make up shortfalls due to damages caused by the
rains, not to mention lower copper
prices, and ultimately, its contribution to the Chilean economy. In a
country where people are sadly
used to natural disasters, the last
week of March was testing Chileans' resilience once again.
Yet when the presentation
ended, Pizarro had left the tacit
understanding that the company's
biggest challenges were still to
come. In 2014, although the corporation increased copper production by 3.1% and reduced direct
costs by 7.8%, Codelco was able to

generate pre-tax profits worth only $3.033
billion. That was $856 million below 2013's
gains. The main reason was the drop in
copper prices.
"I want to highlight that we have left behind the peak of the copper mining boom,"
Pizarro told investors. "There's nothing
more relevant than copper prices when
it comes to the industry's profits. Nothing
compares to the positive or negative impact
that copper prices exert on our profits."
For years, commodity prices have been
declining, but last year's drop was particu-


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LatinFinance - May/June 2015

Table of Contents for the Digital Edition of LatinFinance - May/June 2015

Contents
LatinFinance - May/June 2015 - Cover1
LatinFinance - May/June 2015 - Cover2
LatinFinance - May/June 2015 - Contents
LatinFinance - May/June 2015 - 2
LatinFinance - May/June 2015 - 3
LatinFinance - May/June 2015 - 4
LatinFinance - May/June 2015 - 5
LatinFinance - May/June 2015 - 6
LatinFinance - May/June 2015 - 7
LatinFinance - May/June 2015 - 8
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