CODELCO Stares at Risk of Insolvency: CESCO Report

SEATTLE (Scrap Monster): The latest report published by Chile’s Centre for Copper and Mining Studies (CESCO) stated that CODELCO- the world’s largest copper producer is at the risk of insolvency.

According to the report by the industry body, the company has been witnessing huge surge in net debts over the past several years. The cost overruns on structural projects could lift the net debt levels of the company from current levels of $18 billion to at least $30 billion by the end of the current decade.

The report cited notable decline in Codelco’s copper production. The company need to take immediate steps to revive its production from various mines. CESCO noted that the output has dropped despite $15 billion investment in projects including El Teniente and Chuquicamata, which have seen cost overruns by 75% and 53% respectively. However Codelco declined to comment on the figures.

The company must seriously look at projects that missed output targets. CODELCO must conduct a proper evaluation of technical feasibility of various projects to see whether they will be able to meet committed production goals.

The company is experiencing one of the most complex moments in its 52-year old history, said the CESCO report.