Mining minister slams door on proposed Codelco privatization

Chilean mining minister Baldo Prokurica has directly ruled out the privatization of state-owned copper miner Codelco, which was suggested earlier this week by the right-wing UDI party.

“The president [Sebastián Piñera] has never talked about it, not even considering the extraordinary circumstances created by the pandemic. I totally rule out any initiative in this regard within the government,” Prokurica was quoted as saying by local media.

Chile’s mining chamber and the copper workers federation FTC also rejected the proposal.

Consulted by BNamericas, a Codelco spokesperson said they would not issue any formal statement on the matter.

Codelco was nationalized by President Salvador Allende in 1971 and, since then, all of its pre-tax profit has gone to the state’s copper fund or to income tax and specific mining taxes.

When proposing the privatization of the company, UDI representatives suggested that it could continue to generate funds for the nation through tax revenues.

Codelco is the world’s largest copper producer and its board of director aims to add US$1bn a year to earnings starting in 2021. However, pre-tax profit tumbled 85% to US$54mn in 1Q20, with revenues down to US$802mn from US$1.01bn reported in 1Q19.

“Codelco has made enormous contributions to public revenues throughout its history, but we shouldn’t forget that it currently has very large investment commitments of more than US$32bn to maintain production. Therefore, from the ownership point of view, it isn’t only about extrapolating contributions from previous years, but resolving the company’s current situation in the best way possible,” Juan Carlos Guajardo, head of consultancy firm Plusmining, told BNamericas.

Last month, the miner halted expansion works at the El Teniente mine in central Chile and suspended construction projects in northern regions due to increases in the numbers of COVID-19 cases in those areas. The Chuquicamata smelter and reifnery were also shut down.

The miner is currently facing the additional problem of a water lawsuit presented by state defense council CDE over damage caused to the Salar de Pedernales ecosystem in Atacama region. The situation may threaten the important expansion of the Salvador mine, which is otherwise expected to deplete the current orebody by the end of 2021.

Source: BNamericas