May 25, 2018 / 7:45 PM / in a year

UPDATE 1-Chile's Codelco profits up slightly despite rising costs

(Updates with quotes from Pizarro, context on rising prices, challenges at Codelco)

By Fabian Cambero

SANTIAGO, May 24 (Reuters) - Chilean state copper company Codelco reported a slight increase in first quarter profits over the same period the previous year, as rising copper prices offset increasing costs at the world’s top producer of the red metal.

Codelco, which delivers all its profits to the Chilean state, reported pre-tax earnings of $537 million between January and March, an increase of nearly 1 percent and above the goal of $502 million set by the government.

Codelco chief executive Nelson Pizarro said a strong copper price in early 2018 had offset the impacts of rising production costs and a 2.7 percent decline in ore grades versus the same period in 2017.

“We are seeking to meet our targets and maintain the confidence of the Chilean state so that it will continue to invest in us,” Pizarro told reporters at a press conference announcing the results.

The world’s top copper miner produced 446,300 tonnes of copper in the first quarter, marking a 7 percent increase over the previous year, boosted primarily by increased output from its century-old Chuquicamata mine and its Radomiro Tomic division.

Costs this quarter rose 1 percent to $1.351 per pound, but remained below the industry average, Pizarro said.

“That cost (per pound) is tremendously competitive,” Pizarro said.

Pizarro said he expected the copper price to settle between $3 and $3.10 per pound this year despite market volatility in recent weeks.

Despite strong results, challenges remain for the company. Codelco is seeking stable financing from the government for a $39 billion, ten-year overhaul of its sprawling but aging mines.

The company also faces more than a dozen remaining contract negotiations with unions at its mines throughout the country before year’s end, Pizarro said. (Reporting by Fabian Cambero, writing by Dave Sherwood Editing by Chizu Nomiyama)

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