Higher copper prices boost Codelco profits even as output drops

The world’s largest copper producer, Codelco, has reported a big increase in half-year profits even as output declined.

Aided by higher prices, the state-owned Chilean company said gross profits in the six months to June almost doubled to $990m as production from its mines slipped to 798,000 tonnes, from 843,000 tonnes in the same period last year.

In spite of the decline, Codelco, which transfers all of its profits to the state, said it was on course to produce 1.7m tonnes of copper this year.

Codelco chief executive Nelson Pizarro told reporters on Tuesday that Chinese copper demand was likely to remain solid in the near future. China is the world’s biggest consumer of copper, buying around half of annual output of 23m tonnes.

Copper, widely used in household wiring, has been one of the best-performing major commodities of 2017.

The price has risen 25 per cent this year to almost $7,000 a tonne, helped by Chinese demand and a string of outages at major mines, which have helped tighten the market.

“Prominent disruptions have taken time to work their way through the metal markets and have played a prominent role in recent price appreciation,” analysts at UBS wrote in a report on Tuesday. “But it appears mine disruption has continued into July so metal markets may be tight for several months more”