Codelco Raises $2 Billion for Investments through Bond Offerings

Written by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--Chilean state miner Codelco (Santiago) is seeking to finish several developments to increase its copper production.

This week, the company raised US$2 billion through bond offerings to finance its structural projects. The bonds are of 10 and 30 years with 5.966% and 6.331% yields, respectively. The bond emission was led by BNP Paribas, Citi, JP Morgan, Santander, and Scotiabank.

This year, the company aims to invest US$4.1 billion across operations including structural projects. These assets under construction are expected to increase Codelco's production in the next years. Since 2010, the company has invested around US$40 billion in these developments, with some US$15 billion more remaining, according to a Codelco presentation given last month.

"This placement allows us to continue advancing in the development of the structural projects in execution, which today includes three megaprojects: Chuquicamata Underground, El Teniente Development Plan and Rajo Inca; in addition to strengthening the liquidity of the company," said Codelco's vice president of Administration and Finance, Alejandro Rivera.

The mining company, however, is facing strong headwinds as its copper volumes have decreased in the last few years, raising doubts about the long-term status of the company.

As a result of lower outputs, Codelco has a projected copper production of 1.31-1.35 million tons for 2023, one of the lowest amounts in recent years. This results from lower ore grades, harsh weather conditions, and operational issues, according to Moody's (New York, New York).

The company's weaker shape raises alarms in international markets, with credit agencies such as Moody's warning of possible credit downgrades.

Without the development of these structural projects, Codelco will only produce a fraction of its current output.

Among these projects is the Chuquicamata underground expansion, which aims to extend the mine's life and production volumes to 140,000 tons per day, leading to 366,000 tons of copper annually. The underground mine was inaugurated in 2019, though the project continues its scale-up process. Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Database can click here for a detailed project report.

The expansion of the El Teniente mine is another of the megaprojects launched by the company. This mine produced 174,000 tons of fine copper in the second quarter of 2023, compared to 204,000 tons during the same period last year. Nevertheless, once the expansion projects have been finished, the mine is expected to produce 20% more than its current output. The Andres Norte expansion is at 79.6% completion, while two other sections are at 29% to 30%. Subscribers can see detailed reports on the Andres Norte, Diamante, and Andesita projects.

Codelco could have a challenging path ahead, as delays in completing structural programs could lead to further pressure on ongoing operations and lower production volumes.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 Trillion (USD).