Posts Tagged ‘copper’

President Michelle Bachelet gave her support Tuesday to a bill that would repeal the Copper Reserve Law. The Copper Reserve Law, a relic of the Pinochet dictatorship, guaranteed that 10 percent of all sales made by the state-owned CODELCO copper company will be given to Chile’s Armed Services.

Bachelet was flanked by Finance Minister Andrés Velasco and Defense Minister Francisco Vidal at the ceremony and the bill is expected to pass in Congress this week.

The law, initially imposed in 1958 as a 15 percent tax on mining profits, changed to a 10 percent tax on total sales from the state-run copper exporter CODELCO during the Pinochet dictatorship (1973-1990).

Abolishing this law would “free CODELCO of the burden that… has affected the valuation of the company and its risk rating,” Bachelet said. “This, combined with the reform of the corporate governance of CODELCO, will reinvigorate it as an actor in the international mining industry.”

The law also overhauls the military finance system, and has won support from military leaders. The armed forces would receive its funding from the state general fund, rather than the current mix of general fund and copper revenues, and would be built around a 12-year plan broken into four-year segments.

“We are quite satisfied with the replacement of this law, and we believe it can give us a peace of mind in the medium and long-term,” said NavyAdmiral Edmundo Gonzalez.

Army Commander in Chief Óscar Izurieta agreed, adding, “Defense cannot be funded or planned on a year-to-year basis.”

CODELCO, which was nationalized under President Salvador Allende in 1971, is the largest copper exporting company in the world. CODELCO earned more than US$23.3 billion between 2006 and the first half of 2009, US$4.2 billion of which went to the military.

Spending by the Chilean military has at times heightened tensions with Peru, who, along with Bolivia, fought a war with Chile in the 1870s.

Peruvian President Alan García expressed pleasure with the change, according to Peruvian newspaper El Comercio, although he remains doubtful that it will provide the transparency of military spending that Bachelet promises (ST, Sept 9 ).

SOURCES: LA NACIÓN, EL MERCURIO, EL COMERCIO, CODELCO

By Daniel Zarchy ( editor@santiagotimes.cl)

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.”

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The Chilean mining industry has regained more than half of the jobs lost in the recent recession and is anticipating further growth, spurred in large part by a growing value for copper, according to the latest numbers from the Minister of Mining.

The price of copper has risen steadily since crashing in mid-January 2009, settling at roughly US$2.54 per pound on Monday, almost a 15 percent increase in just the last two weeks, though it has fallen to roughly US$2.45 since then.

Twelve thousand jobs had disappeared in the mining sector at the economy’s lowest point, but over 7,000 of those have returned, said the Ministry.

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Minera Escondida, the world’s largest copper mine in terms of annual output, will be closing part of its mining operations for repairs.

Escondida will be repairing the Laguna Seca semi-autonomous grinding (SAG) mill for 45 days, the company said this week, citing persistent problems that led to a decrease in output over the past year. During the first quarter of this year, output fell by about one third compared to 2008, Escondida said.

BHP Billiton, the largest mining company in the world, owns a majority share of Escondida and runs the mine. The company, which manages over 100 operations across 25 countries, reported a record US$15.39 billion profit in the 2007-08 financial year. The company, however, expects a much smaller profit margin this year due to drop in commodity demand through the world.

Copper has seen a steady rise in value over the last several months after crashing near the beginning of 2009. The metal is currently valued at around US$2.42 per pound. BHP Billiton, which had a stock value floating between US$59 and US$62 on Thursday, has seen similar trends, hitting an all-time high of US$95 per share in May 2008 before plummeting as low as US$24.62 per share in Nov. 2008.

SOURCES: EL MERCURIO, REUTERS, MINING WEEKLY, EASY BOURSE

By Daniel Zarchy ( editor@santiagotimes.cl)

Conservative presidential candidate Sebastián Piñera’s economic proposals range from misguided to erroneous, Finance Minister Andrés Velasco said in an interview published Wednesday in the daily El Mercurio.

Velasco, one of President Michelle Bachelet’s few ministers to have held onto his job since the 2006 inauguration, and regularly the most popular member of the administration aside from Bachelet herself, defended the government’s stimulus plans and criticized Piñera’s plans as either already in place by the government, “factually incorrect” or simply “inexplicable paradoxes.”

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