(This Aug. 1 story corrects to show that the smelter is ramping up; adds Codelco statement)
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
By Zandi Shabalala
LONDON (Reuters) – The full reactivation of a smelter belonging to Chile’s state-run Codelco, the world’s top copper producer, will be delayed until the end of October after missing a previous target of April, four industry sources told Reuters.
Codelco said in a statement that the Chuquicamata smelter in northern Chile was ramping up, in line with plans, after incorporating two new acid plants and re-powering its flash furnace.
It added that the plant, with those three units, was operating normally and that shutdowns had been minor, corresponding only to corrections or tests.
Codelco [COBRE.UL] is also buying copper cathode on the spot market, the sources added.
One of the sources said that was part of efforts to build up an in-house trading unit.
Codelco, in the statement, said it was not efficient for the company to be developing a trading office.
The Chuquicamata smelter is one of the world’s largest, producing 320,000 tonnes of metal in 2018, and was originally halted in December last year for changes to meet new emissions standards.
More broadly Chuquicamata, or “Chuqui”, one of Codelco’s key copper deposits, is undergoing a complex $5 billion-plus transformation into an underground shaft mine from an open pit facility to counter deteriorating ore grades.
The 24-million-tonne copper market is expected to see a deficit of 189,000 tonnes this year which will widen to 250,000 tonnes in 2020, the International Copper Study Group said.
Prices of the metal used widely in power and construction are around $5,880 a tonne on the London Metal Exchange.
Smelters are charging miners less to refine concentrates into metal due to falling availability of mine supply, reflected in declining treatment and refining charges.
Treatment charges in China, the world’s top consumer of copper, are around $60 a tonne, their lowest since November 2012.
The smelter delay will also affect the output of molybdenum, a byproduct of copper smelting and used to make stainless steel, where Codelco is the world’s second-largest producer in the 265,000-tonne market.
As part of efforts to modernise state-owned Codelco, about 200 employees lost their jobs at the company in July, a source said.
Codelco appointed company veteran Octavio Araneda chief executive last month as it pushed forward with a 10-year, $40 billion plan to overhaul its flagship mines against a backdrop of falling ore grades and wavering markets.
Reuters reported in May that production at the Chuquicamata mine would drop by 40% over the next two years.
Reporting by Zandi Shabalala; Additional reporting by Fabian Cambero in Santiago; Editing by Alexandra Hudson and Dale Hudson