SANTIAGO, March 29 (Reuters) – Chile’s state copper company Codelco said on Thursday it produced 1.734 million tonnes of copper in 2017, its second highest output ever, despite persistently low ore grades at its aging mines.

The world’s top copper miner posted a 2017 pre-tax profit of $2.885 billion, a six-fold increase over its earnings in 2016, even as production costs jumped 7.8 percent to $1.359 per pound of copper.

Codelco CEO Nelson Pizarro said a sharp increase in copper prices in 2017 assured a healthy profit despite only a 1.5 percent rise in production over the previous year.

The company was nationalized in the 1970s and provided an important source of income to Chile.

“Codelco greatly surpassed its commitments to the state,” Pizarro said.

Pizarro said he expected copper prices to be slightly under $3 per pound for 2018, though he added that a looming global supply deficit could see prices increase in 2019.

Codelco is striving to produce slightly more than 1.7 million tonnes of copper in 2018, Pizarro said, counter-balancing decreasing ore grades with a $22 billion multi-year investment drive to open new projects and revamp older ones.

(Reporting by Fabian Cambero; Writing by Dave Sherwood; Editing by Paul Simao)

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