The world's biggest copper producer Codelco is bracing for a couple of difficult years as it slashes more costs and streamlines operations to prepare for further price weakness, its chairman said on Tuesday. All possibilities had to be considered to ensure the long-term future of the Chilean state-owned company, including letting go of more contract workers, Chairman Oscar Landerretche told Reuters.
"Everything is on the table," he said in an interview. "We are going to go through a hard year, or maybe years, but it's our responsibility to bring back the industry back to a sustainable situation." Prices are likely to fluctuate within a range of $2.00-$2.50 per lb ($4,409-$5,512 per tonne) over the next couple of years, he added. Benchmark copper prices on the London Metal Exchange have roughly halved since hitting a peak of $10,190 a tonne in February 2011.
After two to three years, a longer-term price is expected to settle around $2.8-$3.00, Landerretche said. Codelco had delivered on its target set in January to cut $1 billion in costs, but more needed to be done. "The profits that we are going to transfer to the government are slightly less than $1 billion and this means something very critical because if we had not launched $1 billion of cutbacks in January the transfer would have been zero," he said.
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