Copper

Chilean government announces US$975 million recapitalization package for Codelco

Chilean Treasury Minister Rodrigo Valdés announced on 1 December 2016 the government would inject US$975 million of public funds into Codelco, the state-owned mining company. Of this amount, US$475 million correspond to a special allocation provided by the executive to mitigate the effects of the Copper Reservation Law, which dictates that 10 percent of Codelco's copper sales must be given to the Chilean Armed Forces in 2016 and 2017 (La Nación). The remaining US$500 million was granted as part of the Law on Codelco Capitalization, which stipulated that the government is to support Codelco with US$3 billion in the period 2014-2018. In addition, this law was extended until 2019. It is worth noting that Codelco had requested US$800 million in government funds in 2016, so the executive's allocation exceeds the company's requested amount (La Tercera).

Chilean copper mining company posts better than expected third quarter results

Codelco, Chile's state-owned copper mining company, announced better than expected third quarter results on 25 November 2016. Third quarter profits reached US$79 million, marking the second consecutive profitable quarter. However, on a yearly basis, the company still has losses of US$18 million for 2016 (La Nación). The main causes behind increased profitability include a rise in productivity levels, and appreciation of the US$. Codelco produces 11 percent of the world's copper and has generated revenues of US$733 million for the Chilean government so far in 2016 (BioBio). 

Prices for Chile's main export, copper, soar following Trump victory

Following Donald Trump's victory in the US election, on 9 November 2016 prices for Chile's main export, copper, increased by 5.8 percent. This increase was followed by a further 5.6 percent rise on 10 November 2016, taking the price up to US$2.5 per pound, the highest level since July 2015 (La Tercera). The initial reaction of copper prices to Trump's victory was, as with most commodities, a sharp drop in prices due to increased uncertainty, but following his victory speech the prices recovered and starting rising rapidly. This was due to Trump's announcement that his government will include a US$ 500 billion infrastructure plan (focused on roads, bridges and airports), which led to increased demand expectations, according to Saxo Bank's Chief Strategist for raw materials, Ole Hansen (Diario Financiero).

Codelco to invest US$ 371 million to reduce arsenic in Chilean copper

On 31 October 2016, Chilean state owned copper mining company (Codelco) announced a US$ 371 million investment on a processing plant to reduce the levels of arsenic detected in its copper. The project will be led by Codelco's sister company, EcoMetales, and entails the building of a processing facility in Calama (Northern Chile) by 2020, with the capacity to process up to 200k tons of copper per year. Given the size of the required investment, EcoMetales is considering incorporating partners to help finance the project (La Tercera). The level of arsenic present in Chilean copper has become a significant problem for the industry, given the increasingly stricter environmental requirements for transport and processing on a global level (Tele13).