SANTIAGO – Chilean copper miner Codelco said on Monday that the drop in copper prices has put some of its projects "at risk."
The miner, the world's largest of the red metal, said in a letter sent to all its workers that the significant decline "casts doubt on our ability to generate resources and also questions the viability of some of the projects that we have been vigorously promoting until now."
"The measures we take today will be crucial to ensure Codelco's sustainability and future," the letter, signed by CEO Octavio Araneda, added.
Codelco has a $40-billion,ten-year upgrade planned for its mines around the country to maintain output despite rapidly falling ore grades.
Copper prices have tumbled 22% so far this year from an already low base last year because of the US-China trade war with the outbreak of coronavirus first in China and now spreading globally.
A slide in copper demand is expected to fuel a surplus this year of up to a million tonnes in what had previously been expected to be a balanced market, with the loss of consumption from key buyers likely greater than the decline in supply due to coronavirus-related disruption, analysts believe.
Last week Codelco said it would slow production to a level of "operational continuity" for a period of 15 days from March 19 to comply with a state of catastrophe announced by the government to curb the virus' spread.
The letter comes as some mining unions are pressing its management to take more drastic measures to curb the spread of the virus, including stopping operations altogether.