Codelco reports higher Jan-Sept profit

AP News
Posted: Nov 22, 2012 2:11 PM

SANTIAGO, Chile (AP) — Chile's state-owned mining company Codelco said Thursday its January-September profits rose 27 percent over the same period last year, boosted by the settlement of a long-running feud with British miner Anglo American Plc over control of a promising copper mine.

The world's largest copper company said Thursday it earned $6.77 billion before taxes versus $5.32 billion in the same period a year ago.

Chief Executive Thomas Keller told reporters the miner produced 1.188 million metric tons of copper, 5 percent less than the 1.25 million metric tons a year earlier due to dwindling ore grades, which have dropped 9 percent on average.

Codelco is involved in ambitious domestic expansion plans, such as turning Chuquicamata, the world's largest open-pit copper mine, into an underground operation that would extend its life by more than 50 years.

After a century of exploitation, the mine has become too big, too deep and too old to continue digging in the open-pit method. But Codelco says it still has much more to give with reserves equal to about 60 percent of all the copper exploited in the mine's history still buried deep beneath the crater.

Chuquicamata, however, suffered the biggest drop in ore grades, which plunged 19 percent, Keller said. "These are aspects that are linked to an operation that reaches its final stage, where we're facing important challenges in the mining exploitation," he said.

Codelco and Anglo American settled their conflict in August with a multi-billion dollar deal. The Chilean miner had sued to enforce an option to buy 49 percent of the Anglo American Sur subsidiary with financing from Mitsui & Co. after Anglo American sold a fourth of its Chile subsidiary to Mitsubishi Corp. instead.

Keller said the company's results incorporate an out of the ordinary profit of nearly $3.52 billion from the purchase of its stake in Anglo American's Sur deposit.

The settlement leaves Anglo American with a controlling 51 percent stake, Codelco with 24.5 percent, Mitsubishi with 19.5 percent and Mitsui with 5 percent. The deal helped Codelco increase its holdings at a discount, and both Japanese companies now have a firm foothold in Chile.


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