CODELCO AWARDED US$62.5 MILLION IN INSURANCE SETTLEMENT

Monday, 31 August 2009

State-run copper company CODELCO will be awarded a cumulative insurance claim of over US$62 million for three incidents that occurred in the company’s Northern Division in 2006 and 2007.

The Superintendent of Insurance and Securities has ordered insurance companies La Interamericana, Generales S.A, and Penta Security to pay CODELCO a total of US$62,513,937.

The Superintendent said that the three incidents claimed by CODELCO – a collapsed wall in the Chuquicamata mine, a fire in the Radomiro Tomic electric station, and later a machinery breakdown also in Radomiro Tomic – had “distinct meaning for the business,” and that the amount to be paid was a “fair appraisement of the compensable damages.”

CODELCO said the actual damages were higher, in the realm of US$100 million, counting reparations paid to workers and technical damages, but that the numbers rose as high as US$1 billion when accounting for the potential value lost in the Chuquicamata collapse when they lost use of the tunnel.

This news came on the heels of a similar insurance payout in Australia, where Melbourne-based mining company Newcrest won a US$30 million insurance claim from an explosion in Varanus Island, which supplies gas to one of the company’s gold mines. The total cost of the accident to Newcrest fell from US$38.6 million to US$8.6 million, and the company reported a full-year profit of almost half a billion dollars, significantly better than analysts had predicted.

CODELCO reported US$722 million in earnings in the first half of 2009, 82 percent less than the corresponding dates from 2008, despite a 16 percent increase in production.

SOURCES: LA TERCERA, THE AUSTRALIAN

By Daniel Zarchyeditor@santiagotimes.cl)

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