Macro

Codelco's El Teniente Mine Sees 32% Output Drop Due to Rock Collapse

Codelco's El Teniente mine production drops 32% in April, contributing to lowest annual output in 25 years.

By Mackenzie Crow

6/10, 18:53 EDT
S&P 500
iShares 20+ Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF
article-main-img

Key Takeaway

  • Codelco's El Teniente mine saw a 32% production drop in April due to last year's rock collapse, impacting overall output.
  • Despite the decline, Codelco maintains that the situation was anticipated and does not affect its committed production budget.
  • Chairman Maximo Pacheco expects a recovery in the second half of the year after hitting the lowest annual output levels in 25 years.

El Teniente Mine Production Drop

Codelco, the world’s leading copper supplier, has reported a significant decline in production at its flagship El Teniente mine. The state-owned company attributed this sharp drop to the lingering effects of a rock collapse that occurred last year. According to Codelco, "This situation was foreseen in annual planning and does not affect the committed production budget." Despite these assurances, the impact on production has been substantial, with first-half output tracking lower than the same period last year as repairs continue in the affected underground areas.

Impact on Codelco's Overall Output

The production issues at El Teniente are part of a broader trend of setbacks at various mines and projects, which have collectively driven Codelco’s annual output to its lowest levels in a quarter century. In April alone, production at El Teniente plunged by 32% compared to the same month last year, according to data from Chile’s state copper commission, Cochilco. This significant drop was a major factor behind Codelco experiencing its worst monthly production in at least three years. Chairman Maximo Pacheco has acknowledged these challenges but has vowed that a recovery will begin in the second half of the year.

Strategic Response and Future Outlook

Codelco’s management remains optimistic about reversing the downward trend in production. Chairman Maximo Pacheco has committed to initiating a recovery in the second half of the year, despite the setbacks. The company’s strategic response includes ongoing repairs and adjustments to its operational plans to mitigate the impact of the rock collapse and other disruptions. The company has emphasized that the production issues were anticipated and incorporated into their annual planning, suggesting that they have contingency measures in place to meet their production commitments.

Management Quotes

  • Codelco (State-owned company):

    "This situation was foreseen in annual planning and does not affect the committed production budget."

  • Maximo Pacheco, Chairman of Codelco:

    [Paraphrased] Vowed last week that a recovery will begin in the second half.