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Civil Protests in Chile Loom over Codelco status as Top Copper Producer

Metal News - Published on Thu, 28 Nov 2019

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According to a report in Bloomberg, Codelco’s standing as the world’s top copper producer is increasingly at risk in the wake of a citizen uprising that is shaking Chile to its core. Codelco planned to spend USD20 billion over a decade to modernize its aging mines and hold off a looming production slump. But protests that have sent millions into the street to demand changes in everything from pensions and health care to education could jeopardize the state-owned miner’s push for needed government funding. The alternatives are largely unappealing. The company could delay the work, but its costs for processing lower-quality ore from aging mines is growing. It could boost borrowing, but its debt already sits at a record high. Colin Hamilton at BMO Capital Markets said “Without government funding, the company that now produces about 8% of global copper may soon find itself slipping from its top spot. Targeting flat production is optimistic. Codelco might not be the world’s largest copper miner in three to four years. Short term, there are other priorities for the government.”

President Sebastian Pinera’s center-right government earlier this year said talks on Codelco’s funding would start as soon as Congress passed a tax reform bill. But since the protests began on October 18, bringing violence to the streets, there’s been no further discussion on Codelco’s needs.

Codelco’s annual production has remained roughly unchanged for the past few years. But while the company has been able to maintain its output, the ore it’s extracting from its aging mines is increasingly lower quality, boosting the company’s costs to process it. In 2018, Codelco reported 1.81 million tonnes of output from its own mines, and from stakes it owns in other mines. Close behind is BHP Group with 1.69 million tonnes for the fiscal year ended on June 2019.

Chile’s worst unrest in decades has transformed into a nationwide uprising for change. The spark that lit the flame was a 3% hike in subway fares, but after mass protests and street violence, Chile’s worst unrest in decades has transformed into a nationwide uprising demanding dramatic changes to the country’s economic and political system. Eighteen people have died in the violence and 7,000 have been arrested amid widespread outbreaks of violence and arson, and credible allegations of human rights abuses by the security forces. The leaderless movement has forced the billionaire president, Sebastián Piñera, on the defensive, prompting him to replace eight ministers and announce a string of emergency measures including a small increase in the minimum wage and higher taxes on wealthy Chileans. But such moves have not been enough to defuse the protests, which are driven by deep-rooted disillusionment over inequality that has left millions of citizens frozen out of Chile’s economic rise. One per cent of Chile’s population earns 33% of the nation’s wealth, making it the most unequal country in the Organization for Economic Cooperation and Development group of nations.

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Posted By : Rabi Wangkhem on Thu, 28 Nov 2019
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