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REGIONAL ROUNDUP

Whoever wins Chile election,
Codelco may get boost

The world’s largest copper miner, Codelco has been hit hard by copper prices, but is looking to rebound with
Codelco, may see a boost in invest- help from a supportive Chilean government
ment cash regardless of who wins this
month’s presidential run-off in Chile, as The law dates back to 1958 and was The Frente Amplio has called for the
both candidates have vowed to end the overhauled in 1976 under former dicta- recapitalisation of Codelco, and mining
state-run firm’s funding of the military. tor Augusto Pinochet to fund the growing royalties worth billions of dollars to pay
military. for increased social spending.
Conservative front-runner Sebastian
Pinera and his centre-left rival Alejandro The next Chilean president, who Codelco, which produced 1.7mt of cop-
Guillier, set to face off in the December will take over from President Michelle per in 2016, has a five-year investment
17 vote, have both pledged to overturn Bachelet in March and will have a strong plan that includes construction of a new
the dictatorship-era law that transfers hand assembling Codelco’s board, will level at its century-old El Teniente mine
to the military 10% of Codelco’s export weigh heavily on the company’s invest- and expansion at Radomiro Tomic. Both
sales, worth $US866 million last year. ment plans. were delayed last year as a result of the
copper price slump.
There is no guarantee that Codelco, Though the candidates agree that the
which delivers all its profits to the state, military funding law should be eliminated, The company is also eyeing projects
would keep the funds should the law they differ on what Codelco’s priorities as far off as Mongolia, though the dip in
be overturned. That decision would ulti- should be. copper prices forced it to slash its explo-
mately lie with Congress. ration budget by 47% last year.
Pinera, who has been skeptical of
But the candidates’ rare agreement Codelco’s management and says he Some in Chile are sceptical about the
that the tax should be eliminated bodes would like to see greater emphasis on ef- chances of the military funding law being
well for the cash-strapped miner, which ficiency, has called for a “realistic invest- repealed. Repeated attempts to overturn
needs to invest an estimated $US20 bil- ment plan” and for “maximising perfor- it in the past have failed, scuttled by sup-
lion to revamp its ageing mines, expand mance of existing assets”. porters of the politically powerful military.
abroad and keep output flowing.
Guillier, who hails from the northern “I’m not very optimistic ... because
“This tax affects the competitiveness mining province of Antofagasta, has em- we’ve been talking about it for 25 years,”
of Codelco, its ability to finance its op- phasised new investment and prioritised Gustavo Lagos, a mining professor with
erations and investments and its possi- company-worker relations, similar to the Universidad Catolica, said.
bilities to grow internationally,” Guillier, a Bachelet.
senator and former journalist, wrote in a – Dave Sherwood and
proposal describing his plans for Chile’s But his plans could be swayed by ne- Fabian Cambero, Reuters
mining industry. gotiations with the leftist Frente Amplio
bloc, which garnered a larger-than-antic-
Billionaire businessman Pinera, who ipated share of the vote in Sunday’s first-
served as president between 2010 and round presidential and Congressional
2014, has likewise criticised the law, call- elections.
ing for a new formula for financing that
would increase Codelco’s autonomy and
stabilise its finances in the long term.

A Codelco spokeswoman said the
company would not comment on how
the funds might be used ahead of any
change in the law.

Codelco, which ships around two-
thirds of its copper to Asia, was the
world’s top copper producer based on its
annual output to June 2017, according to
rating agency Moody’s.

But it has been hard-hit by a downturn
in copper prices in recent years, and de-
clining ore grades at its mines.

Those factors, alongside the punitive
tax, have left the miner hamstrung, ac-
cording to Juan Carlos Guajardo, of Chil-
ean mining consultancy Plusmining.

“It’s a 10% royalty. Ask any mining
company and they’ll tell you the same
thing. It’s asphyxiating, it’s brutal,” he
said.

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