May 29, 2020 / 3:32 PM / a month ago

Chile state miner Codelco sees first-quarter profits in free fall

FILE PHOTO: The logo of Codelco, the world's largest copper producer, is seen at their headquarters in downtown Santiago, Chile March 29, 2018. REUTERS/Ivan Alvarado

SANTIAGO (Reuters) - World top copper producer Codelco saw profits plunge 85% in the first quarter of 2020, the company said on Friday, ravaged by the falling price of the red metal amid the global coronavirus pandemic.

Chile’s state-run Codelco, which turns over all its profits to government coffers, reported earnings of just $54 million during the January to March period. Sales of copper from its wholly-owned mines fell 32%, the company said.

“Profits were strongly affected by the economic effects of the sanitary crisis,” the company said in its quarterly results statement. The copper price had fallen 10%, the miner said, and the price of several by-products it produces, including molybdenum, had also dropped sharply.

While markets have rebounded slightly in recent weeks, the dire results will likely prove a hurdle for top Chilean miner as it forges ahead with a $40 billion, 10-year upgrade of its aging mines. The company has already warned the economic fallout from the pandemic could force it to shelve some of those projects. Codelco said it nonetheless boosted output by 6% in the first three months of 2020, hitting 361,000 tonnes at its wholly owned mines, and 387,000 tonnes overall.

The company told Reuters in May that its production and sales continued in line with its plans despite the strict measures it has implemented to stave off the spread of coronavirus at its operations.

The firm, however, has suspended construction on some projects, as well as some third-party contract work since the virus hit Chile in March.

Codelco´s direct production costs fell 1.5% to $1.327 per pound of copper, the miner said in its results statement on Friday, benefited by a stronger dollar and efficiencies in the output of byproducts.

Reporting by Fabian Cambero, writing by Dave Sherwood; editing by Diane Craft

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