Chilean copper giant Codelco's January production plummeted 47% month-on-month, raising suspicions that the year-end production increase data was "inflated."

Codelco's production data has shown severe fluctuations, raising market concerns about the authenticity of its year-end surge and the credibility of its long-term production increase targets.

On March 17, according to Reuters, data from the Chilean National Copper Corporation indicated that Codelco's copper production in January this year was 91,000 tons, a sharp decline of 47% compared to 172,300 tons in December last year, and a year-on-year decrease of 1.8%. In December last year, the company recorded its highest monthly production in a decade, far exceeding the average of 105,600 tons from January to November.

This significant discrepancy has prompted inquiries within the industry regarding the formation of its production data. Reports indicate that four unnamed former Codelco executives expressed doubts about the aforementioned data and the company's production increase target for 2030. Codelco, however, insists that the production increase results are genuine and attributes them to inventory utilization and improvements in operations at certain mines.

Year-End Data Faces Internal Doubts

The skepticism initially comes from former executives. “The entire industry adjusts data to better meet targets, but the gap here is clearly worth questioning,” a former Codelco executive who requested anonymity told Reuters. “To take a step back, this also reflects inadequate planning.”

Juan Ignacio Guzmán, general manager of mining company Horizonte, stated that year-end surges are common in the industry, but such a significant fluctuation could be a warning signal or indicate adjustments in statistical criteria.

According to an internal production document obtained by Reuters, in December, the Chuquicamata mine's oxidized copper production reached 25,000 tons, exceeding the forecast by more than six times; the Andina mine recorded its highest monthly production since 2014; and the Salvador mine's production reached 11,500 tons, far exceeding the expected 4,600 tons.

Codelco: Production Increase is Verifiable

In response to Reuters, Codelco attributed the surge in December production to three factors: utilization of leaching stockpiles, use of unplanned source inventories, and improvements in the operational performance of certain mines.

The company stated that the increase in Chuquicamata's production was mainly due to the effective use of leaching stockpiles; the rise in Andina's production was attributed to improved ore grades and processing efficiency; and the increase in Salvador's production was related to the ramp-up of the Rajo Inca project and the release of accumulated inventory during the shutdown of the Potrerillos smelter in June this year.

Codelco stated, “This result is crucial in emergency response situations, confirming the company's strength in maintaining production capacity in terms of technology and talent.”

Long-Term Concerns Behind Production Increases

This controversy reflects deeper structural pressures faced by Codelco. The company's copper production in 2023 has fallen to a 25-year low, primarily due to the continuous decline in ore grades and delays in advancing several key mining projects. **

Production is expected to rebound in 2024, with further increases in 2025 to 1.33 million tons, an increase of 3,000 tons compared to 2024. However, this level is still far from its production target of 1.7 million tons by 2030.

Reuters cited several industry insiders who pointed out that the surge in production in December followed by a sharp decline has made the market cautious about Codelco's ability to achieve sustainable structural increases, and the credibility of its 2030 target is facing more doubts.

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